CHEMICAL DISTRIBUTOR TO PAY $1.5 MILLION FOR ILLEGAL STORAGE AND TRANSPORT OF HAZARDOUS WASTE

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, December 22, 2015

Roanoke Chemical Distributor, Chem-Solv Inc., Pleads Guilty to Illegally Storing and Transporting Hazardous Waste and Agrees to Pay $1.5 Million in Penalties

Chem-Solv Inc. (Chem-Solv), formerly known as Chemicals & Solvents Inc., pleaded guilty today to illegally storing hazardous waste at its facility in Roanoke, Virginia, and to illegally transporting hazardous waste from that facility to another location, Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division and U.S. Attorney John P. Fishwick of the Western District of Virginia announced today.

As a part of the plea agreement, Chem-Solv has agreed to pay a $1 million criminal fine for these violations, as well as an additional $250,000 to fund environmental community service projects.  Chem-Solv has agreed to serve five years’ probation, during which time it must develop and implement an environmental compliance plan and be subjected to yearly independent environmental audits.  In conjunction with the criminal settlement, the U.S. Environmental Protection Agency has reached a civil settlement with Chem-Solv that requires the company to pay a $250,000 penalty to settle alleged violations of improper hazardous waste storage at Chem-Solv’s Roanoke facility.

Chem-Solv operates a chemical blending and distribution facility on Industry Avenue S.E. in Roanoke as well as distribution facilities in Colonial Heights, Virginia, Rock Hill, South Carolina, and Piney Flats, Tennessee.  Chem-Solv is in the business of purchasing chemicals and then reselling them to customers, either directly or after repackaging.  As part of its ordinary business practices, Chem-Solv generated hazardous waste.  A hazardous waste is waste which, because of its designation, quantity, concentration, or characteristics, poses a substantial present or potential hazard to human health or the environment.

Count one of the information is based on a spill of several hundred gallons of ferric chloride – a hazardous substance – on the Chem-Solv facility in Roanoke in June 2012.  Although most of the waste was cleaned up using vacuum trucks, some of the ferric chloride flowed from the Chem-Solv facility onto an adjoining property both before, and during, the cleanup.  The pleadings allege that the adjoining property owner was not notified that ferric chloride had leaked onto their property.  Chem-Solv then employed a waste transportation company to transport the waste to a disposal facility.  Hazardous waste may only be transported by permitted carriers, and it must be properly placarded and be accompanied by a hazardous waste manifest identifying the waste and its characteristics.  The pleadings allege that, although Chem-Solv was aware of the hazardous nature of ferric chloride, it did not properly test the waste and instructed the transporter to transport the waste as non-hazardous, without the proper placards and manifests.

Count two of the information charges Chem-Solv with the improper storage of hazardous waste.  Chem-Solv was given advance notice of an EPA inspection in December 2013.  At the time the advance notice was given, Chem-Solv was storing numerous containers of chemical waste on its facility that should have been disposed of properly.  The pleadings allege that Chem-Solv directed its employees to load three trailers with the chemical waste in an attempt to prevent EPA inspectors from discovering it.  Two of the three trailers were taken offsite.  The third trailer, which was not road worthy, was stored on the Chem-Solv property for almost a year and its contents were discovered by law enforcement officers on Nov. 19, 2014, while executing a search warrant.  That trailer was found to contain hazardous waste that Chem-Solv did not have a permit to store on its facility.

“With this plea agreement, Chem-Solv has an opportunity to put its egregious conduct behind it and learn from these mistakes by developing a strong environmental compliance plan, as required,” said Assistant Attorney General Cruden.  “The Justice Department and our federal partners will continue to investigate and prosecute anyone whose illegal conduct puts workers and the public at risk of harm from hazardous and toxic materials.”

“A corporation’s concern with the bottom line profit can cause it to cut corners by attempting to circumvent laws that are intended to protect the community and the environment,” said U.S. Attorney Fishwick.  “The prosecution of Chem-Solv should send a strong message that such corporate actions will not be tolerated and will be punished.”

“The chemicals in this case are toxic, highly corrosive and acidic, and today’s plea demonstrates that when companies put the public at serious risk, they will be held accountable for their actions,” said Assistant Special Agent in Charge Jennifer Lynn of EPA’s criminal enforcement program in Virginia.

“The guilty plea entered today by Chem-Solv for illegally storing and transporting hazardous waste is a clear signal to those that would seek to circumvent or disregard transportation-related laws and regulations that there are serious repercussions for doing so,” said Regional Special Agent in Charge William Swallow of the U.S. Department of Transportation Office of Inspector General.

The investigation was conducted by Special Agents of EPA’s Criminal Investigation Division and the U.S. Department of Transportation’s Office of Inspector General.  Assistance in the investigation was provided by the Virginia Department of Environmental Quality, Roanoke City Police Department and the Roanoke Fire-EMS Department and the Blue Ridge Environmental Task Force.  The prosecution was handled by Assistant U.S. Attorney Jennie L. M. Waering, Senior Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section, and EPA Regional Criminal Enforcement Counsel David Lastra.

OFCCP Sues Convergys for Refusing to Comply with Investigation of Employment Practices

OFCCP Sues Convergys for Refusing to Comply with Investigation of Employment Practices

POWER COMPANY TO PAY $722 MILLION CHEMICAL FINE TO RESOLVE BRIBERY CHARGES

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, November 13, 2015

Alstom Sentenced to Pay $772 Million Criminal Fine to Resolve Foreign Bribery Charges

Represents Largest-Ever Criminal Foreign Bribery Fine

Alstom S.A., a French power and transportation company, was sentenced today to pay a $772,290,000 fine to resolve criminal charges related to a widespread corruption scheme involving at least $75 million in secret bribes paid to government officials in countries around the world, including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Michael J. Gustafson the District of Connecticut and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement.

Alstom was sentenced by U.S. District Judge Janet Bond Arterton of the District of Connecticut.  Alstom pleaded guilty on Dec. 22, 2014, to a two-count criminal information charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls.

In addition, Alstom Network Schweiz AG, formerly Alstom Prom AG (Alstom Prom), Alstom’s Swiss subsidiary, which pleaded guilty on Dec. 22, 2014, to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA, was also sentenced today pursuant to its plea agreement.  Alstom Power Inc. and Alstom Grid Inc., formerly Alstom T&D Inc., two U.S. subsidiaries, both entered into deferred prosecution agreements on Dec. 22, 2014, admitting that they conspired to violate the anti-bribery provisions of the FCPA.

According to the companies’ admissions, Alstom, Alstom Prom, Alstom Power and Alstom T&D, through various executives and employees, paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.  In Indonesia, for example, Alstom, Alstom Prom and Alstom Power paid bribes to government officials—including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara, the state-owned electricity company in Indonesia—in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million.  In total, Alstom paid more than $75 million to secure more than $4 billion in projects around the world, with a profit to the company of approximately $300 million.

Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants who purportedly provided consulting services on behalf of the companies, but who actually served as conduits for corrupt payments to the government officials.  Internal Alstom documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”

The sentence, which is the largest criminal fine ever imposed in an FCPA case, reflects a number of factors, including: Alstom’s failure to voluntarily disclose the misconduct, even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges with the department in connection with a power project in Italy; Alstom’s refusal to fully cooperate with the department’s investigation for several years; the breadth of the companies’ misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials; Alstom’s lack of an effective compliance and ethics program at the time of the conduct; and Alstom’s prior criminal misconduct, including conduct that led to resolutions with various other governments and the World Bank.

After the department publicly charged several Alstom executives, however, Alstom began providing thorough cooperation, including assisting the department’s prosecution of other companies and individuals.

To date, the department has announced charges against five corporate executives for alleged corrupt conduct involving Alstom.  Frederic Pierucci, Alstom’s former vice president of global boiler sales, pleaded guilty on July 29, 2013, to conspiring to violate the FCPA and a charge of violating the FCPA for his role in the Indonesia bribery scheme.  David Rothschild, Alstom Power’s former vice president of regional sales, pleaded guilty on Nov. 2, 2012, to conspiracy to violate the FCPA.  William Pomponi, Alstom Power’s former vice president of regional sales, pleaded guilty on July 17, 2014, to conspiracy to violate the FCPA.  Lawrence Hoskins, Alstom’s former senior vice president for the Asia region, was charged in an indictment in connection with the Indonesia bribery scheme, and is pending trial in the District of Connecticut in April 2016.  The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty.  The high-ranking member of Indonesian Parliament was also convicted in Indonesia of accepting bribes from Alstom, and is currently serving a three-year prison term.  In addition, Marubeni Corporation, which partnered with Alstom on the Indonesia project, pleaded guilty on March 19, 2014 to a criminal information charging conspiracy to violate the FCPA and seven counts of violating the FCPA, and was sentenced on May 15, 2014, to pay an $88 million criminal fine.

In connection with a corrupt scheme in Egypt, Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, was the fifth individual charge and pleaded guilty on Dec. 4, 2014, in the District of Maryland to mail fraud, conspiring to launder money and tax fraud for accepting kickbacks from Alstom and other companies, and was sentenced on March 23, 2015, to serve 42 months in prison and forfeit approximately $5.2 million in proceeds.

This case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s Meriden, Connecticut, Resident Agency.  The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Switzerland Office of the Attorney General and the United Kingdom’s Serious Fraud Office, as well as authorities in France, Germany, Italy, Singapore and Taiwan.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey on the investigation of Alstom T&D, and Assistant U.S. Attorney David I. Salem of the District of Maryland on the investigation of Asem Elgawhary.  The Criminal Division’s Office of International Affairs also provided substantial assistance.      

OFCCP Settles with G&K Services to Resolve Findings of Hiring and Pay Discrimination Violations

OFCCP Settles with G&K Services to Resolve Findings of Hiring and Pay Discrimination Violations

DOJ TAKES ACTION AGAINST DIETARY SUPPLEMENT MAKERS AND MARKETERS

FROM:  U.S. JUSTICE DEPARTMENT SUPPLEMENT 

Tuesday, November 17, 2015

Justice Department and Federal Partners Announce Enforcement Actions of Dietary Supplement Cases

Criminal Charges Brought against Bestselling Supplement Manufacturer

As part of a nationwide sweep, the Department of Justice and its federal partners have pursued civil and criminal cases against more than 100 makers and marketers of dietary supplements.  The actions discussed today resulted from a year-long effort, beginning in November 2014, to focus enforcement resources in an area of the dietary supplement market that is causing increasing concern among health officials nationwide.  In each case, the department or one of its federal partners allege the sale of supplements that contain ingredients other than those listed on the product label or the sale of products that make health or disease treatment claims that are unsupported by adequate scientific evidence.

Among the cases announced today is a criminal case charging USPlabs LLC and several of its corporate officers.  USPlabs was known for its widely popular workout and weight loss supplements, which it sold under names such as Jack3d and OxyElite Pro.

The sweep includes federal court cases in 18 states and was announced today by Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division; Deputy Commissioner for Global Regulatory Operations and Policy Howard Sklamberg J.D. of the Food and Drug Administration (FDA); Acting Deputy Director J. Reilly Dolan of the Federal Trade Commission (FTC)’s Bureau of Consumer Protection; Acting Deputy Chief Inspector Gary Barksdale of the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber of the Internal Revenue Service’s (IRS) Criminal Investigation (CI) Division.  The Department of Defense (DoD) and the U.S. Anti-Doping Agency (USADA) are also participating in the sweep to unveil new tools to increase awareness of the risks unlawful dietary supplements pose to consumers and, in particular, to assist service members targeted by illegitimate athletic performance supplements.

“The Justice Department and its federal partners have joined forces to bringing to justice companies and individuals who profit from products that threaten consumer health,” said Principal Deputy Assistant Attorney General Mizer.  “The USPlabs case and others brought as part of this sweep illustrate alarming practices the department found—practices that must be brought to the public’s attention so consumers know the serious health risks of untested products.”

During the period of the sweep, 117 individuals and entities were pursued through criminal and civil enforcement actions.  Of these, 89 were the subject of cases filed since November 2014.

Criminal Matters

An 11-count indictment was unsealed earlier today against USPlabs LLC, a Dallas firm, which formerly manufactured highly popular workout and weight loss supplements.  The indictment charges USPlabs, S.K. Laboratories Inc., based in Anaheim, California, and their operators with a variety of charges related to the sale of those products.  Jacobo Geissler, 39, of University Park, Texas, the CEO of  USPlabs; Jonathan Doyle, 37, of Dallas, the president of  USPlabs; Matthew Hebert, 37, of Dallas, responsible for product packaging design at USPlabs; Kenneth Miles, 69, of Panama City, Florida, the quality assurance executive in charge of compliance at USPlabs; S.K. Laboratories Inc.; Sitesh Patel, 32, of Irvine, California, the vice president of  S.K. Laboratories; and Cyril Willson, 34, of Gretna, Nebraska, a consultant to USPlabs, are charged with various counts associated with the unlawful sale of dietary supplements.  Additionally, USPlabs, Geissler, Doyle and Hebert are charged with obstruction of an FDA proceeding and conspiracy to commit money laundering.

Four of the defendants were arrested earlier today and the other two will self-surrender.  Along with the arrests, FDA and IRS-CI special agents seized assets in dozens of investment accounts, real estate in Texas and a number of luxury and sports cars.

The indictment alleges that USPlabs engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling and then lied about the source and nature of those ingredients after it put them in its products.  According to the indictment, USPlabs told some of its retailers and wholesalers that it used natural plant extracts in products called Jack3d and OxyElite Pro, when in fact it was using a synthetic stimulant manufactured in a Chinese chemical factory.

The indictment also alleges that the defendants sold some of their products without determining whether they would be safe to use.  In fact, as the indictment notes, the defendants knew of studies that linked the products to liver toxicity.

The indictment also alleges that in October 2013, USPlabs and its principals told the FDA that it would stop distribution of OxyElite Pro after the product had been implicated in an outbreak of liver injuries.  The indictment alleges that, despite this promise, USPlabs engaged in a surreptitious, all-hands-on-deck effort to sell as much OxyElite Pro as it could as quickly as possible.  It was sold at dietary supplement stores across the nation.

“This joint agency effort is a testament to our commitment to protecting consumers from potentially unsafe dietary supplements and products falsely marketed as dietary supplements,” said Deputy Commissioner Sklamberg.  “The criminal charges against USPlabs should serve as notice to industry that if products are a threat to public health, the FDA will exercise its full authority under the law to bring justice.”

Today’s criminal charges are among 14 criminal cases prosecuted by the Civil Division’s Consumer Protection Branch and U.S. Attorney’s Offices across the country from November 2014 to November 2015.  See this chart.  Of the 14 criminal cases prosecuted during this timeframe, 11 cases against 29 individuals and entities have been filed since November 2014.

The charges and allegations in the indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Civil Cases

The Department of Justice also filed in the past week five civil cases seeking injunctive relief against a number of businesses and individuals that allegedly sold supplements as disease cures or that were otherwise in violation of the law.  These matters, investigated by USPIS and the FDA, include the following:

United States v. Clifford Woods LLC, doing business as Vibrant Life, and Clifford Woods.  A complaint, filed in the U.S. District Court for the Central District of California, alleges that the defendants unlawfully sold Taheebo Life Tea, Life Glow Plus, Germanium and Organic Sulfur (identified as methyl sulfonyl methane) as treatments for various diseases including Alzheimer’s disease and cancer.  The complaint alleges that the defendants’ conduct defrauded consumers through the sale of unapproved new and misbranded drugs.
United States v. James R. Hill, doing business as Viruxo.  A complaint, filed in the U.S. District Court for the Middle District of Florida, alleges that the defendants unlawfully sold a dietary supplement called Viruxo as a treatment for herpes.  The complaint alleges that the defendants’ conduct defrauded consumers through the sale of unapproved new and misbranded drugs.
United States v. Lehan Enterprises, Inc., doing business as Optimum Health, and Lesa Sverid.  A complaint, filed in the U.S. District Court for the District of Massachusetts, alleges that the defendants unlawfully sold products called DMSO Cream, DMSO Cream with Aloe and DMSO Roll On as treatments for conditions and diseases including arthritis and cancer.  The complaint alleges that defendants sold unapproved new and misbranded drugs.
United States v. Bethel Nutritional Consulting, Felix Ramirez, and Kariny Ramirez.  A complaint, filed in U.S. District Court for the District of New Jersey, alleges that the defendants distribute dietary supplements in a manner that does not conform to current good manufacturing practice for dietary supplements and that they are making claims about the uses for many of the products that render them unapproved and misbranded drugs.  Furthermore, FDA testing has revealed that some of defendants’ products contain active pharmaceutical ingredients that are not listed on the products’ labels, including one ingredient that was withdrawn from the market in 2010 because of safety concerns.  The defendants in this matter have agreed to be bound by a consent decree of permanent injunction banning them from selling dietary supplements until they come into compliance with the law.
United States v.  VivaCeuticals, Inc., doing business as Regeneca Worldwide, and Matthew Nicosia.  A complaint filed in U.S. District Court for the Central District of California alleges that dietary supplements sold by the defendants are adulterated because they are not manufactured in accordance with the FDA’s current good manufacturing practice regulations.  One of the dietary supplements, a product called RegeneSlim Appetite Control (RegeneSlim), contains the ingredient 1, 3 dimethylamylamine (DMAA), an unsafe food additive under the federal Food, Drug and Cosmetic Act, but does not declare DMAA as an ingredient.  In addition, the defendants market RegeneSlim to be used as a disease cure.
“Postal Inspectors have a long history of effectively enforcing the mail fraud statute to halt snake oil salesmen and medical quacks from using the mails to purvey their wares upon unsuspecting citizens,” said Acting Deputy Chief Postal Inspector Barksdale.  “We look at these latest misrepresentations and frauds as ‘old wine in a new bottle.’  Working with our law enforcement and regulatory partners, we hope to protect American consumers by keeping these scams ‘bottled up’.”

Civil actions brought by the FTC as part of the sweep to combat unsubstantiated supplement claims include the following:

Sunrise Nutraceuticals, LLC.  According to the FTC’s complaint, Sunrise, based in Boca Raton, Florida, deceptively claims that its dietary supplement Elimidrol, a “proprietary blend” of herbs and other compounds, alleviates opiate withdrawal symptoms and increases a user’s likelihood of overcoming opiate addiction.  The FTC’s complaint alleges, however, that Sunrise’s ads for Elimidrol are deceptive because they are false or unsubstantiated.
Health Nutrition Products.  The FTC’s complaint charged Crystal Ewing, five other individuals and five companies with making false and misleading health and efficacy claims in direct mail ads and on a website owned by Ewing.  In ads for W8-B-Gone, CITRI-SLIM 4 and Quick & Easy diet pills, the defendants featured bogus weight-loss experts.  Citing fake scientific studies, the defendants also deceptively claimed to have clinical proof that consumers would experience a “RAPID FAT meltdown diet program” that lets them shed five pounds in four days with one pill, or up to 20 pounds in 16 days with four pills.  The proposed court orders announced today will settle the FTC’s charges against three defendants involved in the scheme.  The order against repeat offender Ewing and her company Classic Productions LLC requires them to admit liability in the case, bans them from selling weight-loss programs, products and services, and imposes a non-suspended judgment of $2.7 million.
NPB Advertising, Inc.  According to the FTC’s complaint filed in the U.S. District Court for the Middle District of Florida’s Tampa Division, Florida-based NPB and others capitalized on the green coffee bean diet fad by using false weight-loss claims and fake news websites to market a dietary supplement called Pure Green Coffee.  The proposed court order announced today settles the FTC’s charges, bars the defendants from the deceptive acts and practices described in the complaint and imposes a $30 million judgment that will be suspended upon the sale of certain assets, payment of $160,800, and the collection and turnover of an additional $155,760 that was lent to a third party.
“People looking for a dietary supplement to improve their health have to wade through a swamp of misleading ads,” said Director Jessica Rich of the FTC’s Bureau of Consumer Protection.  “Be skeptical of ads for supplements that claim to cure diseases, reverse the signs of aging or cause weight loss without diet or exercise.”

Today’s cases are among 25 civil actions pursued by the Civil Division’s Consumer Protection Branch, U.S. Attorney’s Offices and the FTC from November 2014 to November 2015.  Of the 25 actions, 22 civil cases against 60 individuals and entities have been filed since November 2014.  To date, courts have entered judicial orders in 11 cases, requiring dietary supplement makers to change their business practices to ensure that they are selling their products in compliance with the law.

Educational materials

As part of today’s sweep, the Uniformed Services University of the Health Sciences’ Consortium for Health and Military Performance partnered, through its Human Performance Resource Center (HPRC), with the USADA to develop educational resources for service members to protect them from risky dietary supplements.  Through this partnership, the organizations will jointly launch an online interactive educational module called “Get the Scoop on Supplements: Realize, Recognize, and Reduce Your Risk.”  Also launching today are two mobile applications: the HPRC’s Operation Supplement Safety (OPSS) High-Risk Supplement List mobile application for Service members and USADA’s Supplement 411 mobile application for athletes (both accessible via the Google Play and Apple App stores and available to the general public).

These educational products will augment the important information available on USADA’s Supplement411.org [external link] website and the OPSS website [external link], including the OPSS High-Risk Supplement List which was launched in February 2015.  To access more information available to service members, consult the OPSS website and a recently released video at http://hprc-online.org/blog/decoding-the-dietary-supplement-industry [external link].  To access the educational resources USADA provides for athletes and general consumers to help realize, recognize and reduce the risks associated with using supplement products visit USADA’s website http://www.supplement411.org [external link].

 “Ensuring readiness of the force is one of the Department of Defense’s top goals,” said Deputy Assistant Secretary of Defense for Health Affairs Dr. Dave Smith of DoD’s Military Health System.  “Unsafe dietary supplements are a threat to readiness in DoD.”

“A combined effort like this is vitally important to protecting the health and safety of athletes at every level,” said USADA CEO Travis T. Tygart.  “We work to educate athletes on the risks associated with choosing to use supplements, and we will continue to support further action at a national level to prevent dangerous substances and products from being allowed in the marketplace where they can easily be attained by unsuspecting athletes and other consumers.”

To promote today’s joint sweep, the FTC created an infographic to help consumers understand the range of dietary supplement products and claims, the potential risks of taking supplements and questions to ask a health professional before taking any supplements.  The FTC also published blogs for consumers and businesses, and has articles and videos with more information at ftc.gov/dietary supplements.

The FDA continues to warn consumers about the risks associated with some over-the-counter products, falsely marketed as dietary supplements, which contain hidden active ingredients that could be harmful.  In the last year, the agency has warned of more than 100 products found to contain hidden active ingredients. These products are most frequently marketed for sexual enhancement, weight loss and body building.

Within the last year, the FDA also sent warning letters to manufacturers selling dietary supplements that contain BMPEA and DMBA, two ingredients that do not meet the statutory definition of a dietary ingredient as well as to several companies selling pure powdered caffeine products that the agency determined to be dangerous and present a significant or unreasonable risk of illness or injury to consumers.

TAX PREPARER ORDERED TO STOP ASSISTING CLIENTS WHO UNDERSTATE TAX LIABILITY

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, September 23, 2015

Court Orders Florida Tax Return Preparation Company and Owner to Stop Assisting in Knowing Understatements of Tax Liability; Requires Monitoring at Company's Expense

A federal district judge in Miami has ordered a tax return preparation business based in Miami and its owner to stop assisting in the preparation of federal income tax returns that knowingly understate federal income tax liability, the Justice Department announced today.

The injunction also requires Miami-based Ebenezer Tax Services Inc. and its owner, Ernice Joseph, to exercise due diligence in preparing returns that claim the Earned Income Tax Credit and bars them from preparing any return that claims the Fuel Excise Tax Credit.  In addition, the judge ordered Ebenezer and Joseph to gather documentation to substantiate the deductions and credits claimed on the returns they prepare and to retain the documentation for a period of five years.  The defendants are also required to send a copy of the injunction to customers and others.  Finally, the injunction requires that a neutral monitor be engaged at Ebenezer’s and Joseph’s expense to review and monitor their compliance with the injunction and provide a report of its findings to the United States.

If the court later finds that Ebenezer or Joseph have violated any of the terms of the injunction, they will be permanently barred from preparing federal tax returns for others.  The court previously barred Primo Tax Services Inc., another company partly owned by Joseph, from preparing returns for others.

According to the complaint, Joseph and Ebenezer Tax Services have prepared federal income tax returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.  The complaint alleged that Ebenezer Tax Services prepared returns that unlawfully claimed the Earned Income Tax Credit by reporting fictitious Schedule C businesses or business income.  The complaint also alleged that Ebenezer and Joseph prepared returns that claimed credits to which the taxpayers were not entitled in order to overstate their clients’ refunds.  According to the complaint, the Internal Revenue Service (IRS) estimates that the activities of Ebenezer Tax Services and Joseph may have led to millions of dollars in revenue losses.

In consenting to the injunction, Ebenezer and Joseph admitted that they had engaged in conduct subject to penalty under Section 6701 of the Internal Revenue Code.  Section 6701 penalizes the knowing preparation of documents whose use would result in an understatement of tax liability.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on its website for choosing a tax return preparer, and has launched a free directory of federal tax return preparers.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters.  Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax DivisionEmail links icon with details.

KYB PLEADS GUILTY TO PRICE FIXING PRICE OF SHOCK ABSORBERS

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, September 16, 2015

KYB Agrees to Plead Guilty and Pay $62 Million Criminal Fine for Fixing Price of Shock Absorbers

Kayaba Industry Co. Ltd., dba KYB Corporation (KYB) has agreed to plead guilty and to pay a $62 million criminal fine for its role in a conspiracy to fix the price of shock absorbers installed in cars and motorcycles sold to U.S. consumers.

According to charges filed today, KYB conspired from the mid-1990s until 2012 to fix the prices of shock absorbers sold to Fuji Heavy Industries Ltd. (manufacturer of Subaru vehicles), Honda Motor Co. Ltd., Kawasaki Heavy Industries Ltd., Nissan Motor Company Ltd., Suzuki Motor Corporation and Toyota Motor Company, including their subsidiaries in the United States.

“KYB turned the competitive process on its head by agreeing with its competitors to fix the prices of shock absorbers installed in cars and motorcycles sold in the U.S.,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Working with the FBI and our other law enforcement partners, the Antitrust Division will continue to protect American car buyers and hold automotive part suppliers accountable for their illegal conduct.”

“Any collusive agreement among competitors to restrict price competition undercuts our free enterprise system and violates the law,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio.  “We will continue to work to prosecute these fraudulent arrangements in order to protect consumers’ right to free and open competition, particularly in the auto parts industry.”

“Fixing prices and rigging bids is against the law and ultimately harms consumers by artificially inflating prices and creating a corrupt marketplace,” said Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division.  “The FBI and our partners will continue to investigate anticompetitive practices and promote fair competition.”

According to the information filed in the U.S. District Court of the Southern District of Ohio, KYB, based in Tokyo, and its two co-conspirators agreed to allocate the supply of shock absorbers sold and determine the price submitted to the targeted vehicle manufacturers.  To keep prices up, KYB and its co-conspirators also agreed to coordinate on price adjustments requested by the vehicle manufacturers and strived to keep their conduct secret.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  KYB has agreed to cooperate with the department’s ongoing investigation and the plea agreement is subject to court approval.  Including KYB, 37 companies and 55 executives have been charged in the division’s ongoing investigation and have agreed to pay a total of more than $2.6 billion in criminal fines.  KYB is being prosecuted by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office, with assistance from the U.S. Attorney’s Office of the Southern District of Ohio.

MSHA News Release: MSHA, Murray Energy reach global settlement of 1,753 violations issued to five mines previously owned by Consol Energy [09/16/2015]

MSHA News Release: MSHA, Murray Energy reach global settlement of 1,753 violations issued to five mines previously owned by Consol Energy [09/16/2015]

FRENCH PHARMA SUBSIDIARY COMPANY TO PAY $32 MILLION TO RESOLVE CHARGES OF VIOLATING FDCA

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, September 3, 2015

Genzyme Corporation to Pay $32.5 Million to Resolve Criminal Liability Relating to Seprafilm

Sanofi Subsidiary Admits Unlawful Conduct and Agrees to Enhance its Compliance Program

Genzyme Corporation, a wholly-owned biotechnology subsidiary of French pharmaceutical company Sanofi, agreed today to resolve criminal charges that it violated the federal Food, Drug and Cosmetic Act (FDCA) with regard to the unlawful distribution of Seprafilm, a surgical device it markets and promotes, the Justice Department announced.

As part of the agreed resolution, the department filed a two-count criminal information in the U.S. District Court for the Middle District of Florida charging that between 2005 and 2010, Genzyme caused a medical device to become adulterated and misbranded while being held for sale.  The conduct occurred prior to Sanofi’s acquisition of Genzyme, based in Cambridge, Massachusetts, in 2011.  To resolve these charges, Genzyme agreed to enter into a deferred prosecution agreement with the government for a term of at least two years.  As part of the agreement, Genzyme agreed to admit to and accept responsibility for the facts underlying the charges and pay a monetary penalty of $32,587,439.  It further agreed to undertake several groundbreaking measures to enhance its internal compliance program.  The agreement also acknowledges the significant level of cooperation Genzyme provided to the government during its investigation as well as the company’s independent remediation efforts.

Along with the information, the government also filed a consent motion with the court, requesting that its case against Genzyme be stayed during the term of the agreement.  If Genzyme fulfills its obligations under the agreement, the government will dismiss the charges it filed today at the end of the agreement’s term.

Today’s agreement is in addition to a separate $22.28 million civil agreement the government reached with Genzyme in December 2013 to resolve allegations under the False Claims Act related to Seprafilm.  After today’s agreement, Genzyme will have paid almost $55 million to resolve government allegations regarding Seprafilm.  If Genzyme fulfills its obligations under the agreement, the government will dismiss the charges it filed today at the end of the agreement’s term.

“Today’s action demonstrates that the Department of Justice will evaluate the facts of each case and choose the most appropriate tool of the several available to it to best address criminal misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of  the Justice Department’s Civil Division.  “The deferred prosecution agreement with Genzyme is yet another example of the department’s continuing efforts to ensure that pharmaceutical and medical device manufacturers adhere to laws and regulations that have been put in place to protect the health and safety of the American public.”

According to the papers filed in the district court today, Seprafilm is a clear piece of film that can be applied to internal tissues during pelvic and abdominal surgeries to reduce the formation of adhesions—bands of scar tissue that can form between traumatized tissues and organs after surgery, causing them to stick together.  Seprafilm was approved by the U.S. Food and Drug Administration (FDA) for use in patients undergoing open abdominal or pelvic laparotomy, which is a traditional surgical technique that utilizes a relatively large incision to permit the surgeon to open and view the patient’s abdominopelvic contents.  Over time, laparotomy became a less common surgical technique in favor of laparoscopic surgery, which is perceived to have several advantages for the patient.

To respond to the diminishing number of laparotomies performed, some Genzyme sales representatives taught surgeons and other medical staff how to mix the Seprafilm sheets into a liquid “slurry” that could be squirted through the narrow tubes used during laparoscopic surgery, even though Seprafilm was never indicated or FDA-approved for use in laparoscopic procedures.  Genzyme sales representatives’ participation in the preparation of slurry in the operating room caused Seprafilm to become adulterated, according to the criminal charges.

During the course of the government’s investigation regarding Seprafilm slurry, Genzyme voluntarily disclosed to the government that it had distributed promotional material for Seprafilm that implied that Seprafilm had been proven safe and effective for use in gynecologic cancer surgeries, even though Seprafilm’s FDA-approved label cautioned that the device had not been clinically evaluated in the presence of malignancies.  Genzyme based its claim on a study that involved only fourteen patients, which was far too few to support such an assertion.  A separate count in the government’s information charges that Genzyme’s use of this misleading promotional material caused Seprafilm to become misbranded while held for sale.

“Patients rely heavily on the integrity and efficacy of claims made by manufacturers of medical products,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “When manufacturers make misleading statements about using their products in ways that have not been approved by the FDA, patient care, confidence, and safety are put at risk.”

The case has been handled by Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Simon Gaugush, Chief of the General Crimes Section at the U.S. Attorney’s Office of the Middle District of Florida, with support from FDA’s Office of Criminal Investigations and Office of Chief Counsel.

OWNER, MANAGERS AMBULANCE COMPANY CONVICTED FOR ROLES IN MEDICARE FRAUD SCHEME

 FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, August 19, 2015

Ambulance Company Owner, Operator and Managers Found Guilty in Medicare Fraud Conspiracy

A federal jury in Los Angeles late yesterday convicted the former owner, operator and managers of a Southern California ambulance company of health care fraud charges in connection with a Medicare fraud scheme of at least $2.4 million.  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Acting Special Agent in Charge Steve Ryan of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Los Angeles Region and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division made the announcement.

Yaroslav Proshak, aka Steven Proshak, 47, of Valley Village, California; Emilia Zverev, 58, of Van Nuys, California; and Sharetta Michelle Wallace, 37, of Inglewood, California, each were convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud following a two-week trial.  Proshak’s sentencing is scheduled for Nov. 24, 2015, and Zverev’s and Wallace’s sentencing is scheduled for Nov. 30, 2015, all before U.S. District Judge S. James Otero of the Central District of California, who presided over the trial.

Proshak owned and operated ProMed Medical Transportation, an ambulance transportation company in the greater Los Angeles area that provided non-emergency ambulance transportation services to Medicare beneficiaries, many of whom were dialysis patients.  Zverev was the billing manager, and Wallace supervised ProMed’s emergency medical technicians (EMTs).

The evidence at trial demonstrated that, between May 2008, and October 2010, the defendants conspired to bill Medicare for ambulance transportation services for individuals whom the defendants knew did not need such services.  In addition, the evidence showed that the defendants instructed EMTs who worked at ProMed to conceal the true medical conditions of patients they were transporting by altering requisite paperwork and creating fraudulent documents to justify the transportation services.

According to evidence admitted at trial, during the course of the conspiracy, ProMed submitted at least $2.4 million in false and fraudulent claims to Medicare for medically unnecessary transportation services.  Medicare paid at least $1.2 million of those claims.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case was investigated by the FBI and HHS-OIG.  The case was prosecuted by Trial Attorneys Blanca Quintero, Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,300 defendants who have collectively billed the Medicare program for more than $7 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.

Labor Department News Releases Update

Labor Department News Releases Update

Recall - Stuffed Chicken/Possible Salmonella Enteritidis Contamination

Recall - Stuffed Chicken/Possible Salmonella Enteritidis Contamination

FTC SAYS SUPPLEMENT MARKETERS TO PAY $1.4 MILLION IN SETTLEMENT OF ALLEGED DECEPTIVE ADVERTISING CASE

FROM:  U.S. FEDERAL TRADE COMMISSION 

Supplement Marketers Will Relinquish $1.4 Million to Settle FTC Deceptive Advertising Charges

Ads Claimed Procera AVH Would Restore 10 to 15 Years of Memory Loss

The marketers of a dietary supplement called Procera AVH will relinquish $1.4 million under settlements resolving Federal Trade Commission charges that they deceived consumers with claims that the supplement was clinically proven to significantly improve memory, mood, and other cognitive functions.

Under the terms of the settlements, the defendants will pay $1 million to the FTC, and another $400,000 to satisfy a judgment in a case brought by local California law enforcement officials. They also will be barred from making similar deceptive claims in the future and from misrepresenting the existence, results, or conclusions of any scientific study.

“The defendants in this case couldn’t back up their claims that Procera AVH would reverse age-related mental decline and memory loss," said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Be skeptical of ads promising quick and easy cures.”

According to the FTC’s complaint, the defendants marketed and sold Procera AVH as a “solution” to memory loss and cognitive decline, including as associated with aging. The defendants advertised the product using infomercials, direct mail flyers, newspapers, and the Internet.

In one newspaper ad for the product the headline stated: “Memory Pill Helps the Brain Like Prescription Glasses Help the Eyes … Remarkable changes observed, helps users match the memory power of others 15 years younger in as little as 30 days!”

The cover of a multi-page direct mail ad was called a “Special Edition” of the “Physician’s Mind and Memory Alert.” Inside the text stated: “The thought of being a prisoner in one’s own home, or being unable to recall who you are, where you live, or to whom you are related is sending forgetful baby boomers and retirees scrambling for a solution.” The ad then promoted Procera AVH as “the memory pill preferred by many doctors.”    

Procera AVH typically cost $79 per bottle, or $119 for three bottles for consumers who signed up for the continuity purchase plan and agreed to get automatic refills.

The complaint names KeyView Labs LLC, Brain Research Labs, LLC, George Reynolds (a/k/a Josh Reynolds), John Arnold, and three related companies.

The Commission’s complaint alleges that efficacy claims for Procera AVH were false, misleading, or unsubstantiated and that the defendants falsely claimed that a scientific study proved the products efficacy. The complaint also charges Reynolds, the founder and chief science officer of Brain Research Labs, with making deceptive expert endorsements for Procera AVH.

The two proposed settlement orders against the defendants impose a $61 million judgment against KeyView and a $91 million judgment against the remaining defendants.

The judgments direct the defendants to pay $1 million to the FTC, and an additional $400,000 to satisfy a judgment obtained by local law enforcement in Santa Cruz, California against Brain Research Labs and Reynolds. If the $400,000 is not paid to satisfy the Santa Cruz judgment, it is immediately due to the Commission. Once the $1.4 million is paid, the judgments will be suspended.

The Commission votes approving the complaint and two proposed stipulated final orders were each 5-0. The orders are subject to court approval. The FTC filed the complaint and proposed orders in the U.S. District Court for the Central District of California.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Council’s goal of increasing the number of Americans who are healthy at every stage of life. These cases are part of the FTC’s ongoing effects to protect consumers from misleading advertising.

ASTRAZENECA AND CEPHALON TO PAY MILLIONS FOR ALLEGED UNDERPAYMENT OF REBATES OWED MEDICAID DRUG REBATE PROGRAM

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, July 6, 2015

AstraZeneca and Cephalon to Pay $46.5 Million and $7.5 Million, Respectively, for Allegedly Underpaying Rebates Owed Under Medicaid Drug Rebate Program

AstraZeneca LP has agreed to pay the United States and participating states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program, the Justice Department announced today.  Of that amount, AstraZeneca will pay roughly $26.7 million, plus interest, to the United States, and the remainder to states participating in the settlement.

In a separate settlement arising out of the same case, Cephalon Inc. has agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations.  Of that amount, Cephalon will pay roughly $4.3 million, plus interest, to the United States, and the remainder to states participating in the settlement.

“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”

“We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs,” said First Assistant U.S. Attorney Louis D. Lappen of the Eastern District of Pennsylvania.  “As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process.”

Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs.  The quarterly rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs.  Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug.  These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers.  As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.

The two settlements partially resolve a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The amounts to be received by the whistleblower in this suit, Ronald J. Streck, a pharmacist, have not yet been determined.

These settlements illustrate the government’s emphasis on combating health care fraud and mark another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24.8 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlements with AstraZeneca LP and Cephalon Inc. were the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Eastern District of Pennsylvania and the Department of Health and Human Services-Office of Inspector General.

FTC SETTLES WITH APP DEVELOPER ACCUSED OF HIJACKING PHONES TO MINE CRYPTOCURRENCY

FROM:  U.S. FEDERAL TRADE COMMISSION  

App Developer Settles FTC and New Jersey Charges It Hijacked Consumers’ Phones to Mine Cryptocurrency

Defendants’ App Installed Malware that Left Phones With Drained Batteries, Depleted Data Plans

A smartphone app developer has agreed to settle charges by the Federal Trade Commission and the New Jersey Attorney General that it lured consumers into downloading its “rewards” app, saying it would be free of malware, when the app’s main purpose was actually to load the consumers’ mobile phones with malicious software to mine virtual currencies for the developer.

The Ohio-based defendants behind the app, called “Prized,” agreed to a settlement that will permanently ban them from creating and distributing malicious software.

“Hijacking consumers’ mobile devices with malware to mine virtual currency isn’t just deplorable; it’s also illegal,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These scammers are now prohibited from trying such a scheme again.”

The defendants, Equiliv Investments and Ryan Ramminger, began marketing the Prized app around February 2014, making it available in the Google Play Store, Amazon App Store and others. Thousands of consumers downloaded the app believing they could earn points for playing games or downloading affiliated apps and then spend those points on rewards such as clothes, gift cards and other items. Consumers were promised that the downloaded app would be free from malicious software – malware – or viruses, according to the complaint.

What consumers got instead, according to the complaint, was an app that contained malware that took control of the device’s computing resources to “mine” for virtual currencies like DogeCoin, LiteCoin and QuarkCoin.

Virtual currencies are created by solving complex mathematical equations, and the complaint alleges that the app attempted to harness the power of many users’ devices to solve the equations more quickly, thus generating virtual currency for the defendants. The use of that power caused the device’s battery to drain faster and recharge more slowly, and to burn through consumers’ monthly data plans.

“Consumers downloaded this app thinking that at the very worst it would not be as useful or entertaining as advertised,” said Acting New Jersey Attorney General John J. Hoffman. “Instead, the app allegedly turned out to be a Trojan horse for intrusive, invasive malware that was potentially damaging to expensive smartphones and other mobile devices.”      

The complaint in the case alleges that the defendants violated both the FTC Act and the New Jersey Consumer Fraud Act. In addition to the ban on creating and distributing malicious software, the court order also requires the defendants to destroy all information about consumers that they collected through the marketing and distribution of the app.

The settlement also includes a $50,000 monetary judgment against the defendants payable to the state of New Jersey, of which $44,800 is suspended upon payment of $5,200 and compliance with the injunctive provisions of the stipulated order.

This case is part of the FTC’s ongoing work to protect consumers taking advantage of new and emerging financial technology, also known as FinTech. As technological advances expand the ways consumers can store, share, and spend money, the FTC is working to keep consumers protected while encouraging innovation for consumers’ benefit.

The Commission vote authorizing the staff to file the complaint and approving the proposed stipulated court order was 5-0. The FTC and state of New Jersey filed the complaint and order in the U.S. District Court for the District of New Jersey.

Statement by Chairman Pearce on 80th Anniversary of the NLRA

Statement by Chairman Pearce on 80th Anniversary of the NLRA

Statement on Proposed Rule and Rule Amendments on Listing Standards for Recovery of Erroneously Awarded Compensation

Statement on Proposed Rule and Rule Amendments on Listing Standards for Recovery of Erroneously Awarded Compensation

VMWARE AND CARAHSOFT AGREE TO PAY $75.5 MILLION TO SETTLE CLAIMS RELATED TO OVERCHARGING THE GOVERNMENT

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, June 30, 2015

VMWare and Carahsoft Agree to Pay $75.5 Million to Settle Claims that they Concealed Commercial Pricing and Overcharged the Government

VMware Inc. and Carahsoft Technology Corporation have agreed to pay $75.5 million to resolve allegations that they violated the False Claims Act by misrepresenting their commercial pricing practices and overcharging the government on VMware software products and related services, the Department of Justice announced today.  VMware is a Delaware corporation that specializes in computer virtualization software and has its principal place of business in Palo Alto, California.  Carahsoft is a privately held Maryland corporation that distributes information technology products to federal, state and local governments and has its principal place of business in Reston, Virginia.

“Today’s settlement demonstrates our continuing vigilance to ensure that those doing business with the government give the taxpayers a fair deal,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice’s Civil Division.  “Government contractors who seek to profit improperly at the expense of taxpayers face serious consequences.”

“Transparency by contractors in the disclosure of their discounts and prices offered to commercial customers is critical in the award of GSA Multiple Award Schedule contracts and the prices charged to government agency purchasers,” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia.

“We will continue to look into all allegations of false claims in GSA contracts,” said Acting Inspector General Robert C. Erickson of the U.S. General Services Administration (GSA).  “I appreciate the hard work of our auditors, our agents and the attorneys on this complex case that has resulted in a large amount of money being returned to the United States.” Under the Multiple Award Schedule (MAS) Program, prospective vendors agree to disclose commercial pricing policies and practices to the GSA in exchange for the opportunity to gain access to the broad federal marketplace and the ease of administration that comes from selling to any government purchaser under one central contract.  GSA regulations require that, during contract negotiations with GSA, prospective vendors seeking an MAS contract make “current, accurate and complete” disclosures of the standard and non-standard discounts they offer to commercial customers.  The GSA relies on the accuracy of these disclosures in order to negotiate fair pricing for government purchasers.  Additionally, after the MAS contract is awarded, regulations require that MAS Program vendors disclose to the GSA changes in their commercial pricing practices, including improved discounts that are offered to commercial customers, after the MAS contract is in place.

The settlement resolves allegations that VMware and Carahsoft made false statements to the government in connection with the sale of VMware products and services under Carahsoft’s MAS contract.  These false statements allegedly concealed the companies’ commercial pricing practices and enabled the companies to overcharge the government for VMware’s products and services from 2007 through 2013.

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Eastern District of Virginia by Dane Smith, who is a former vice president of the Americas at VMware Inc.  Mr. Smith’s share of the recovery has not been determined.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Eastern District of Virginia and the GSA’s Office of Inspector General, with assistance from the Defense Criminal Investigative Service Mid-Atlantic Field Office.  The case is captioned United States ex rel. Smith v. VMware, Inc., et al., Case No. 10-CV-769 (E.D. Va.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.    

HEALTH CARE CLINIC OWNERS PLEAD GUILTY FOR ROLES IN $2.5 MILLION MEDICARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 24, 2015

Owners of Orlando Health Care Clinic Plead Guilty to Engaging in $2.5 Million Medicare Fraud Scheme

Husband and wife owners of an Orlando health care clinic pleaded guilty today to engaging in a $2.5 million health care fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida and Special Agent in Charge Shimon R. Richmond of the Florida Region of U.S. Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Juan Carlos Delgado, 58, and Nereyda Infante, 48, both of Orlando, Florida, each pleaded guilty to conspiracy to commit health care fraud before U.S. District Judge Paul G. Byron of the Middle District of Florida.  Sentencing hearings are scheduled for Sept. 29, 2015.

Delgado and Infante owned and operated several health care clinics in Orlando, Florida, under variations of the name Prestige Medical.  According to admissions made in connection with their guilty pleas, between February 2012 and September 2014, the defendants fraudulently billed Medicare approximately $2.5 million on behalf of the Prestige clinics for services that never were administered.  Specifically, Delgado and Infante admitted to billing Medicare over $1.2 million for pentostatin, an expensive anticancer chemotherapeutic medication used to treat Leukemia despite never administering any pentostatin.

The case is being investigated by 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 of the Middle District of Florida.  The case is being prosecuted by Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

EDUCATION COMPANY TO PAY $13 MILLION RESOLVING ALLEGED FALSE CLAIM SUBMISSIONS FOR STUDENT AID

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 24, 2015

For-Profit Education Company to Pay $13 Million to Resolve Several Cases Alleging Submission of False Claims for Federal Student Aid

Settlement Resolves Allegations and Administrative Claims Involving Schools in Five States

Education Affiliates (EA), a for-profit education company based in White Marsh, Maryland, has agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs.  EA operates 50 campuses in the United States under various trade names, including All State Career, Fortis Institute, Fortis College, Tri-State Business Institute Inc., Technical Career Institute Inc., Capps College Inc., Driveco CDL Learning Center, Denver School of Nursing and Saint Paul’s School of Nursing, which provide post-secondary education training programs in several professions in the states of Alabama, Florida, Maryland, Ohio and Texas.

“Today’s settlement is an excellent example of cooperation among multiple offices of the federal government to achieve a result that protects federal student aid funding and the interests of individual students,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds.”

The government alleged that employees at EA’s All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications, and that multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas.  These allegations also led to criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell.

“Students who apply for federal financial aid to attend trade and professional schools are required to show that they have the necessary skills to complete the educational program and work in the field,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland.  “This settlement resolves the government's allegations that Education Affiliates defrauded the government by changing students' test scores and enrolling students with invalid diploma mill high school ‘diplomas’ ordered online.”

“The various cases that were settled here include numerous allegations of predatory conduct that victimized students and bilked taxpayers,” said Under Secretary Ted Mitchell of the U.S. Department of Education.  “In particular, the settlement provides for repayment of $1.9 million in liabilities ordered by Secretary of Education Arne Duncan that resulted from EA awarding federal financial aid to students at its Fortis-Miami campus based on invalid high school credentials issued by a diploma mill.  Secretary Duncan made clear that such abusive behavior would not be tolerated, and we will continue to work with the Justice Department and other federal agencies to ensure that postsecondary institutions face consequences when they violate the law.”

The settlement agreement also resolves allegations related to EA schools in Birmingham, Alabama, Houston and Cincinnati, including violations of the ban on incentive compensation for enrollment personnel, misrepresentations of graduation and job placement rates, alteration of attendance records and enrollment of unqualified students.

“Using fake high school diplomas is a particularly insidious abuse of the federal student aid system,” said Inspector General Kathleen Tighe of the U.S. Department of Education’s Office of Inspector General (OIG).  “Students received only a worthless piece of paper.”  Tighe commended the efforts of OIG staff and Department of Justice attorneys, whose outstanding investigative work led to this significant settlement.

The settlement resolves five lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in the recovery.  As part of this resolution, the five whistleblowers will receive payments totaling approximately $1.8 million.  

The settlements were the result of a coordinated effort by the U.S. Attorneys’ Offices of the District of Maryland, the Southern District of Texas, the Northern District of Alabama, Southern District of Ohio and the Middle District of Tennessee, as well as the Civil Division’s Commercial Litigation Branch, and the Department of Education and its OIG.    

EXIM Chairman Hochberg Addresses Foreign Policy’s Competiveness Forum

EXIM Chairman Hochberg Addresses Foreign Policy’s Competiveness Forum

A Threefold Cord1 — Working Together to Meet the Pervasive Challenge of Cyber-Crime

A Threefold Cord1 — Working Together to Meet the Pervasive Challenge of Cyber-Crime

AZ AND NEW MEXICO POWER PLANT OWNERS TO REDUCE EMISSIONS AT NAVAJO NATION POWER PLANT

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 24, 2015

U.S. Requires Arizona and New Mexico Plant Owners to Reduce Emissions at Navajo Nation Four Corners Power Plant

Today, the U.S. Department of Justice and the Environmental Protection Agency (EPA) announced a federal Clean Air Act settlement with several Arizona and New Mexico-based utility companies to install pollution control technology to reduce harmful air pollution from the Four Corners Power Plant located on the Navajo Nation near Shiprock, New Mexico.

The settlement requires an estimated $160 million in upgrades to the plant’s sulfur dioxide (SO2) and nitrogen oxide (NOx) pollution controls.  The settlement also requires $6.7 million to be spent on three health and environmental mitigation projects for tribal members and payment of a $1.5 million civil penalty.  EPA expects that the actions required by the settlement will reduce harmful emissions by approximately 5,540 tons per year.

“This settlement is a significant achievement for air quality and the health of the people of the Navajo Nation and the surrounding region,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “The agreement will require stringent pollution controls as well as public health and environmental projects that will have lasting benefits for the Navajo people.  It is also a reflection of how serious we are about addressing environmental justice issues in Indian country.”

“All power plants should be using the latest air pollution control technology,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “The law requires companies to protect clean air, and those living nearby – like Navajo communities – expect it.  In addition to installing pollution controls, Arizona Public Service will also take the responsible steps to protect the health of those living near the Four Corners plant, which is one of the largest sources of harmful pollution in the country.”

“This settlement will reduce pollution from the Four Corners Power Plant for years to come, and requires the Plant's owners to fund significant health and environmental projects that will further benefit the Navajo Nation and other communities impacted by the Plant,” said U.S. Attorney Damon P. Martinez for the District of New Mexico.  “We also applaud the efforts of the citizen groups and other co-plaintiffs who helped represent the interests of the Navajo people and the environment so well, and who contributed significantly to obtaining such a fine result for the Four Corners Region.”

Arizona Public Service Company (APS) is the operator and primary owner of the Four Corners Plant.  El Paso Electric Company, Public Service Company of New Mexico, Salt River Project Agricultural Improvement and Power District and Tucson Electric Power Company are current co-owners of the plant and Southern California Edison Company is a former co-owner of the plant.  The settlement resolves claims that the companies violated the New Source Review provisions of the federal Clean Air Act by unlawfully modifying the Four Corners Power Plant without obtaining required permits or installing and operating the best available air pollution control technology.

The pollution controls for NOx required by the settlement improve the Selective Catalytic Reduction controls for the Four Corners Power Plant finalized by EPA in 2012 under the Clean Air Act’s regional haze program.  The current controls for SO2 will be upgraded to increase their efficiency. These additional upgrades will reduce SO2 emissions by approximately 4,653 tons per year and NOx emissions by approximately 887 tons per year.

The settlement requires $6.7 million of mitigation funds to be spent on three types of projects, including cleaner heating systems, weatherization and a Health Care trust fund. Southern California Edison will spend approximately $3.2 million on a project to replace or retrofit local residents’ inefficient, higher-polluting wood-burning or coal-burning appliances with cleaner-burning, more energy-efficient heating systems.  In addition, APS and the other current co-owners will spend approximately $1.5 million for weatherization projects for local homes to reduce energy use.  Examples include the installation of floor, wall and attic insulation; sealing of windows and doors; duct sealing; passive solar retrofits; and testing and repair of combustion appliances.

Finally, APS and the other current co-owners will spend $2 million to establish a Health Care Project trust fund.   The Health Care Project trust will pay for certain medical expenses for people living on the Navajo Nation, near the Four Corners Power Plant, who require respiratory health care.  The funds may be used to pay for complete medical examinations, tests, review of current medications, prescriptions, oxygen tanks and other medical equipment.  The funds may also be used to pay for transportation to and from the hospital or doctors’ offices.

SO2 and NOx, two predominant pollutants emitted from power plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze.  These pollutants form particulates that can cause severe respiratory and cardiovascular impacts and premature death.

This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes coal-fired power plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements.  The total combined SO2 and NOx emission reductions secured from all these settlements will exceed 2 million tons each year, once all the required pollution controls are installed and implemented.

Citizen groups including Diń́é Citizens Against Ruining Our Environment, To’ Nizhoni Ani and National Parks Conservation Association are co-plaintiffs to the settlement and will simultaneously be resolving their own currently pending lawsuit against the companies.

Education Department Appoints Special Master to Inform Debt Relief Process

Education Department Appoints Special Master to Inform Debt Relief Process

Education Department Appoints Special Master to Inform Debt Relief Process

Education Department Appoints Special Master to Inform Debt Relief Process

WHD News Release: Federal enforcement effort finds more than 3,000 Gulf Coast workers owed nearly $3.5 million in back wages by staffing agencies [06/22/2015]

WHD News Release: Federal enforcement effort finds more than 3,000 Gulf Coast workers owed nearly $3.5 million in back wages by staffing agencies [06/22/2015]

Anti-Money Laundering: An Often-Overlooked Cornerstone of Effective Compliance

Anti-Money Laundering: An Often-Overlooked Cornerstone of Effective Compliance

FDIC ANNOUNCES BANK OF MINGO TO PAY $3,5 MILLION PENALTY FOR VIOLATING BANK SECRECY, ANTI-MONEY LAUNDERING LAWS

FROM:  FEDERAL DEPOSIT INSURANCE CORPORATION 

June 15, 2015

The Federal Deposit Insurance Corporation (FDIC) announced the assessment of civil money penalties of $3.5 million against Bank of Mingo, Williamson, West Virginia, for violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) laws and regulations.

In a concurrent action, the Financial Crimes Enforcement Network (FinCEN) assessed civil money penalties of $4.5 million. Bank of Mingo also settled criminal charges, on related activities, brought by the U.S. Department of Justice, U.S. Attorney's Office for the Southern District of West Virginia, in a deferred prosecution agreement providing for $2.2 million in asset forfeiture against the institution. FinCEN's $4.5 million civil money penalty is offset by the FDIC's $3.5 million assessment and both are offset by the $2.2 million asset forfeiture. The $2.2 million asset forfeiture will be paid to the Department of Justice, and the remaining $2.3 million in penalties will be paid to the United States Treasury.

In taking this action, the FDIC determined that the bank failed to implement an effective BSA/AML Compliance Program over an extended period of time. The inadequate internal controls environment resulted in unacceptable risk to the institution in terms of illicit financial transactions. Furthermore, the institution failed to file multiple currency transaction reports and suspicious activity reports associated with this risk.

AG LYNCH'S REMARKS ON $712 MEDICARE FRAUD

FROM:  U.S JUSTICE DEPARTMENT
Attorney General Loretta Lynch Delivers Remarks at the Press Conference to Announce a National Medicare Fraud Takedown
Washington, DCUnited States ~ Thursday, June 18, 2015
Remarks as prepared for delivery

Good morning. Before we begin today’s announcement, I want to take a moment to address the heartbreaking and deeply tragic events at Emanuel AME Church in Charleston, South Carolina – a crime that has reached into the heart of that community.  The Department of Justice has opened a hate crime investigation into this shooting incident.  The FBI, ATF, U.S. Marshals Service, Civil Rights Division and U.S. Attorney’s Office are working closely with our state and local partners, and we stand ready to offer every resource, every means and every tool that we possess in order to locate and apprehend the perpetrator of this barbaric crime.  Acts like this one have no place in our country.  They have no place in a civilized society.  And I want to be clear: the individual who committed these unspeakable acts will be found and will face justice.

As we move forward, my thoughts and prayers – and those of our entire law enforcement community, here at the Department of Justice and around the country – are with the families and loved ones of the victims in Charleston.  Even as we struggle to comprehend this heartbreaking event, I want everyone in Charleston – and everyone who has been affected by this tragedy – to know that we will do everything in our power to help heal this community and make it whole again.

I encourage the people of Charleston and the wider area to continue circulating the photos of the alleged perpetrator and report any tip, no matter how minor, to the tip line, which can be reached at 1-800-CALL-FBI.

Today, I’m joined by Secretary [Sylvia] Burwell from the Department of Health and Human Services; Director [Jim] Comey of the FBI; Assistant Attorney General [Leslie] Caldwell of the Justice Department’s Criminal Division; Inspector General [Daniel] Levinson of the HHS Office of Inspector General; and Deputy Administrator and Director Dr. [Shantanu] Agrawal of the Centers for Medicare and Medicaid Services in announcing a major advance in the federal government’s fight against fraud in our nation’s health care system.

Over the last three days, as part of a coordinated, nationwide takedown, the Medicare Fraud Strike Force – a joint initiative of the Departments of Justice and Health and Human Services comprising federal, state and local investigators and law enforcement officials from across the country – joined seven additional U.S. Attorney’s Offices in charging or unveiling charges against 243 defendants in 17 federal districts for their alleged participation in Medicare fraud schemes involving approximately $712 million. This is the largest takedown in the Strike Force’s eight-year history.  It is the largest criminal health care fraud takedown in the history of the Department of Justice.  And it adds to an already remarkable record of enforcement.

The defendants charged include doctors, patient recruiters, home health care providers, pharmacy owners, and others.  They are accused of an array of serious crimes ranging from conspiracy to commit health care fraud to wire fraud to money laundering.  They billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered.  In one of the more egregious allegations of exploitation of both the Medicare system and vulnerable patients, the owners of a mental health facility in Miami billed for intensive psychotherapy sessions that resulted in tens of millions in reimbursements for the doctors based on treatment that was nothing more than moving patients to different locations.  Several of these patients suffered from illnesses like Alzheimer’s and dementia and were unable even to communicate with their supposed caregivers.

Further, nearly 50 of the defendants in this takedown are charged with fraud related to the Medicare prescription drug benefit program known as Part D, which is the fastest-growing component of the Medicare program overall.  One owner of a health care provider in the Southern District of Florida received $1.6 million from Medicare Part D for prescription drugs the provider never purchased and never dispensed.  Another defendant – a doctor in the Eastern District of Michigan – is alleged to have prescribed unnecessary narcotic pain medications to patients in exchange for the use of their identification information to generate false billings.  Patients who attempted to withdraw from the scheme were threatened with loss of access to prescription narcotics.  Having deepened these patients’ addiction, the doctors then used that addiction to keep patients bound to their scheme.  Taken in total, today’s action represents the first large-scale effort to focus on Medicare Part D fraud – and demonstrates an expanded federal focus on this important issue.

The charges we are announcing today are the culmination of a truly national effort, involving approximately 900 law enforcement personnel acting in concert to execute a set of highly complex and highly coordinated law enforcement activities stretching across the country from Florida to Alaska.  This takedown, like those before it, would not have been possible without the key partnerships forged by the Strike Force over the last eight years among federal, state, and local officials, and the cooperation spurred by the joint initiative known as the Health Care Fraud Prevention and Enforcement Action Team, or HEAT, that was launched by DOJ and HHS in 2009.  As a result of Strike Force operations since 2007, we’ve filed charges against more than 2,300 individuals, accounting for over $7 billion in Medicare losses.  This is a crucial part of the department’s health care fraud enforcement efforts, which include recovery of a total of $15.3 billion through False Claims Act cases involving fraud against federal health care programs since 2009.

Those are extraordinary figures, and they reflect our administration-wide commitment to safeguard precious public resources, to rid our health-care systems of fraud and abuse, and to sustain the integrity of programs that are essential to the public welfare.  In the days ahead, we will continue our focus on preventing wrongdoing and prosecuting those whose criminal activity drives up medical costs and jeopardizes a system that our citizens trust with their lives.  The Department of Justice is prepared – and I am personally determined – to continue working with our federal, state and local partners to bring about the vital progress that all Americans deserve.

I want to thank all of the law enforcement officials who were part of the team that made this sweeping takedown possible.  Their tireless efforts enabled us to move quickly and aggressively and their inspiring collaboration will be a model for us going forward.

At this time, I’d like to turn things over to Secretary [Sylvia] Burwell, who has been a dedicated leader and indispensable partner in this important work and who will provide additional details on today’s announcement.

CAR DEALER TO PAY $90,000 CIVIL PENALTY FOR NOT DISPLAYING 'BUYERS GUIDES'

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Action Leads Arkansas Car Dealer to Pay $90,000 Civil Penalty for not Displaying ‘Buyers Guides’ on Used Cars

An Arkansas auto dealer and its owners have agreed to pay a $90,000 civil penalty to settle Federal Trade Commission charges that they failed to display a “Buyers Guide” on used vehicles offered for sale, as required by the FTC’s Used Car Rule.

In March 2014, the FTC charged Abernathy Motor Company, Wesley Abernathy and David Abernathy with violating the Rule, which is designed to ensure that consumers have important purchasing and warranty information when shopping for a used car.

The Buyers Guide informs consumers:

whether the vehicle comes with a warranty and, if so, whether it is a “full” or limited warranty;
which systems are covered by the warranty and its duration;
if it is a limited warranty, what percentage of the cost for covered parts and labor the dealer will pay for; or
whether the car is sold with no written or implied warranty (“As Is”); and
whether the car is sold with no written warranty, but with implied warranties. (Some states and Washington, D.C. do not allow dealers to sell cars without implied warranties.)
The Rule also provides that the Buyers Guide becomes a part of the sales contract and overrides any contrary provisions in the contract.

In addition to the $90,000 civil penalty, under the proposed final order, Abernathy Motor Company and its owners are prohibited from misrepresenting material facts about used vehicles offered for sale, including mechanical condition, the terms of any warranty offered, and that there is a warranty when a vehicle is sold without one. They are also barred from failing to disclose, before a sale, material terms and conditions, including that a used vehicle is sold without a warranty if none is offered, and the terms of any warranty.

The proposed order also requires the defendants to display prominently a properly completed Buyers Guide on used vehicles, with all of the disclosures required by the Used Car Rule and reflecting the warranty coverage, and to include this statement in sales contracts: “The information you see on the window form for this vehicle is part of this contract. Information on the window form overrides any contrary provisions in the contract of sale.” For sales conducted in Spanish, the defendants are barred from failing to provide the same information in Spanish.

The Commission vote authorizing the staff to file the proposed stipulated order for permanent injunction was 5-0. It was filed in the U.S. District Court for the Eastern District of Arkansas, Jonesboro Division.

Statement from U.S. Secretary of Education Arne Duncan on House Republicans Proposing to Block Gainful Employment Regulations

Statement from U.S. Secretary of Education Arne Duncan on House Republicans Proposing to Block Gainful Employment Regulations

DOL REPORTS HEATER IGNITED VAPORS IN RAILCAR CAUSING INJURIES

FROM:  U.S. LABOR DEPARTMENT 

Explosive Combination' as Heater Ignites Vapors in Railcar in Kansas

Two workers in Kansas endured several weeks of skin graft surgery and physical therapy after suffering second-degree burns when gas vapors exploded in a railcar last December. Owned by GBW Railcar Services LLC of Cummings, the railcar was being prepared for cleaning when an electric heater ignited the flammable gas. Five other workers were injured and hospitalized. After the incident, Occupational Safety and Health Administration inspectors identified 11 serious safety violations and proposed penalties totaling $46,900. "Two employees suffered painful injuries that put them out of work for three months because GBW Railcar Services ignored worker safety," said Judy Freeman, OSHA's area director in Wichita. "Failing to eliminate potential ignition sources from areas where flammable substances were likely to be present proved an explosive combination."

NORWEGIAN SHIPPING COMPANY CHARGED WITH ENVIRONMENTAL CRIMES AND OBSTRUCTION OF JUSTICE

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, June 12, 2015

Norwegian Shipping Company and Engineering Officers Charged in Second Indictment with Environmental Crimes and Obstruction of Justice

A federal grand jury in Lafayette, Louisiana, has returned a three-count indictment charging Det Stavangerske Dampskibsselskab AS (DSD Shipping) and four employees with violating the Act to Prevent Pollution from Ships (APPS) and obstruction of justice in connection with the illegal discharge of contaminated waste-water directly into the sea, announced Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division and U.S. Attorney Stephanie A. Finley for the Western District of Louisiana.  DSD Shipping is a Norwegian-based shipping company that operates the oil tanker M/T Stavanger Blossom, a vessel engaged in the international transportation of crude oil.  Also indicted were four engineering officers employed by DSD Shipping to work aboard the vessel: Daniel Paul Dancu, 51, of Romania; Bo Gao, 49, of China; Xiaobing Chen, 34, of China; and Xin Zhong, 28, of China.

The operation of marine vessels, like the M/T Stavanger Blossom, generates large quantities of waste oil and oil-contaminated waste water.  International and U.S. law requires that these vessels use pollution prevention equipment to preclude the discharge of these materials.  Should any overboard discharges occur, they must be documented in an oil record book, a log that is regularly inspected by the U.S. Coast Guard.

“Companies operating vessels in navigable waterways have a responsibility to prevent oil spills and protect the public and the environment,” said U.S. Attorney Finley.  “One of our priorities is to help preserve the natural resources of this state.  Violators should be clear - charges will be filed against entities and persons who harm these resources and obstruct investigations.”

According to the indictment, in 2014, DSD Shipping and its employees discharged oil-contaminated waste water generated aboard the M/T Stavanger Blossom directly into the sea.  To hide the illegal discharges, DSD Shipping and its employees maintained a fictitious oil record book that failed to record the disposal, transfer, or overboard discharge of oil from the vessel.  The indictment further alleges that prior to an inspection by the U.S. Coast Guard, Chen ordered crewmembers to remove piping connected to the vessel’s overboard discharge valve, install new piping, and repaint the piping to hinder an inspection by the U.S. Coast Guard.

DSD Shipping and the engineering officers were charged with violating the APPS for failing to record overboard discharges in the vessel’s oil record book and with obstruction of justice for presenting false documents and deceiving the Coast Guard during an inspection in the Port of Lake Charles.  If convicted, DSD Shipping could be fined up to $500,000 per count, in addition to other possible penalties.  Dancu, Gao, Chen and Zhong face a maximum penalty of 20 years in prison for the obstruction of justice charges.  An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until and unless proven guilty.

This is the second indictment arising from a joint, multi-district investigation by the U.S. Coast Guard, Sector Mobile, U.S. Coast Guard Investigative Services and the Criminal Investigation Division for the Environmental Protection Agency.  DSD Shipping, Dancu, Gao, Chen and Zhong were previously indicted in the Southern District of Alabama with a seven-count indictment charging related conduct.  Assistant U.S. Attorney Howard Parker with the U.S. Attorney's Office for the Western District of Louisiana, Assistant U.S. Attorney Mike Anderson with the U.S. Attorney’s Office for the Southern District of Alabama and Trial Attorney Shane N. Waller Environmental Crimes Section are prosecuting the case.