DOJ ATTEMPTS TO STOP CHICAGO BUSINESSES FROM PREPARING TAX RETURNS,

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 26, 2014

Justice Department Sues to Stop Chicago-Area Woman and Her Businesses from Preparing Tax Returns

Tax Services Provider Allegedly Prepared Fraudulent Amended and Original Returns in Chicago-Area Hotel Rooms

The United States filed a complaint in federal court in Chicago to bar Laurie G. Helfer, aka Laurie G. Powell, individually and through her businesses Laurie’s Freelance & Tax Preparation Services and Tax Lady Laurie Inc., from preparing federal tax returns for others, the Justice Department announced today.

The complaint alleges that Helfer prepares and files amended tax returns for individuals claiming refunds that they are not legally entitled to receive.  According to the complaint, Helfer has prepared hundreds of amended tax returns for customers in the Chicago area and the tax loss to the U.S. Treasury as a result of her fraudulent conduct could exceed $3 million.

According to the civil injunction complaint, Helfer promises her customers that she can obtain tax refunds for them by amending their tax returns from prior years.  To do this, Helfer allegedly fabricates expenses from businesses that do not exist and enters those expenses on a Schedule C-Profit or Loss From Business that she files with her customers’ amended tax returns.  The complaint alleges that the expenses offset her customers’ income from prior years and illegally generates a refund.  The complaint further alleges that Helfer also prepares original returns for customers during tax-filing season using this same scheme to generate a refund.  In an attempt to avoid detection by the Internal Revenue Service (IRS), Helfer stopped signing the tax returns that she prepares and also frequently changes the locations in which she prepares customers’ tax returns, including various Chicago-area hotel rooms, the complaint alleges.

Return preparer fraud is one of the IRS'   Dirty Dozen Tax Scams for 2014 .  The IRS has some tips   on their website   for choosing a tax preparer.  In the past decade, the department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the 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 Division   with details.

SAMSUNG ELECTRONICS AMERICA TO PAY $2.3 MILLION TO SETTLE FALSE CLAIMS ACT ALLEGATIONS

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, August 19, 2014

Samsung Electronics America Agrees to Pay $2.3 Million to Resolve False Claims Act Allegations

Samsung Electronics America Inc. (Samsung) has agreed to pay $2.3 million to resolve allegations that it caused the submission of false claims for products sold on General Service Administration (GSA) Multiple Award Schedule (MAS) contracts in violation of the Trade Agreements Act of 1979 (TAA), the Justice Department announced today.  Samsung is an electronics distributor and marketer headquartered in Ridgefield Park, New Jersey.

“The Department of Justice is committed to protecting public funds and guarding against abuse of federal procurement programs,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division.  “This settlement upholds important trade priorities by ensuring that the United States only uses its buying power to purchase from countries that trade fairly with us.”

MAS contracts are contracts awarded by GSA to multiple companies supplying comparable products and services.  Once GSA negotiates and awards the contract, any federal agency may purchase under it.  Like many other federal procurement contracts, GSA MAS contracts require the vendor to certify that all products it offers for sale comply with the TAA.  The TAA generally requires the United States to purchase products made in the United States, or another designated country with which the United States has a trade agreement.

Samsung has authorized resellers who hold GSA MAS contracts.  Samsung certifies to the authorized resellers that Samsung will provide TAA compliant products and the resellers in turn list those products on the resellers’ GSA MAS contracts.  The settlement resolves allegations that, from January 2005 through August 2013, Samsung caused resellers of its products to sell items on their GSA MAS contracts in violation of the TAA by knowingly providing inaccurate information to the resellers regarding the country of origin of the goods.  The United States alleges that Samsung represented to the resellers, who in turn represented to federal agencies, that the specified products were made in TAA designated countries, generally Korea or Mexico, when the specified products were in fact manufactured in China, which is not a TAA designated country.

“It is unacceptable to sell unauthorized foreign electronics to the United States,” said GSA Acting Inspector General Robert C. Erickson.  “We expect all companies doing business with the federal government to comply with contracting laws.”

The allegations resolved by the settlement were originally brought in a lawsuit filed by Robert Simmons, a former Samsung employee, under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery.  Mr. Simmons’ share of the settlement has not yet been determined.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the District of Maryland, the Commercial Litigation Branch of the Justice Department’s Civil Division and the GSA’s Office of Inspector General.
         
The case is United States ex rel. Simmons v. Samsung Electronics America, Inc. et al., No. AW-11-2971 (D. Md.).  The claims resolved by the settlement are allegations only and there has been no determination of liability.

Final Rules Relating to Cross-Border Security-Based Swap Activities

Final Rules Relating to Cross-Border Security-Based Swap Activities

SEC ANNOUNCES VERDICT AGAINST STOCK PUMP-AND-DUMPSTER

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Securities and Exchange Commission v. BIH Corporation, et al., Civil Action No. 2:10-CV-577-FTM-29DNF (M.D. FL)

Jury Finds Orchestrator of Microcap Stock Pump-And-Dump Scheme Liable in SEC Enforcement Case

A federal court jury in Fort Myers, Fla., returned a unanimous verdict on August 8 finding Edward W. Hayter of Brooklyn, N.Y., liable for five counts of violating the federal securities laws in connection with a scheme to pump up the stock of a microcap corporation purportedly headquartered in Fort Myers in which Hayter profited by approximately $500,000. Hayter was the lone remaining defendant in the SEC's enforcement case filed in 2010.

Evidence at the trial showed that among other things, press releases that Hayter and BIH issued in 2008 and 2009 falsely claimed BIH was purchasing a restaurant services corporation that purportedly had contracts with such major corporations as Citi Field and Applebee's Restaurants. Other evidence showed that in order to hide his involvement in the scheme, Hayter and others created a fictitious businessman named Cris Galo who was allegedly an accomplished entrepreneur running BIH. Evidence showed all of BIH's contact information traced back to Hayter and an associate in New York, with the Fort Myers office being only a mail drop. Trading records showed the false press releases contributed to BIH's stock rising more than 2,700 percent in a matter of months, allowing colleagues of Hayter to sell stock and funnel approximately $500,000 in proceeds to his own corporations.

The SEC filed its complaint against Hayter, BIH, Wayne A. Burmaster Jr. on Sept. 20, 2010, alleging that they had engaged in fraud and illegal sales of securities. The SEC also alleged securities registration violations by Christopher L. Astrom and his company Bimini Reef Real Estate Inc., Damian B. Guthrie and his company Riverview Capital Inc., and Burmaster's company North Bay South Corporation. The SEC named Baron International Inc., Beaver Creek Financial Corporation, and The Caddo Corporation as relief defendants.

According to the SEC's complaint, Burmaster and Hayter released false information about BIH's operations and business relationships, the company's stock and dividend payments, and the identity of the individuals directing BIH's affairs. The SEC alleged that as part of the scheme, Burmaster and Hayter illegally distributed BIH's stock to North Bay, Bimini Reef, and Riverview, and those entities then dumped more than $1 million of BIH's stock and divided illegally obtained sales proceeds among the defendants and relief defendants.

On Oct. 25, 2010, the Honorable John E. Steele, United States District Court Judge for the Middle District of Florida, entered judgments of permanent injunction and other relief against Astrom and Bimini Reef Real Estate as well as Guthrie and Riverview Capital, enjoining them from violating Sections 5(a) and 5(c) of the Securities Act of 1933. In addition to injunctive relief, the judgments order them to pay disgorgement, prejudgment interest, and penalties in amounts to be determined at a later date. Astrom and Guthrie are barred from participating in the offering of any penny stock. They consented to the entry of the judgments without admitting or denying the allegations in the complaint.

On Sept. 26, 2012, the court entered a default judgment against BIH and North Bay South Corporation and relief defendants The Caddo Corporation and Beaver Creek Financial, ordering disgorgement with a penalty against BIH and North Bay South Corporation to be determined at a later date. On Dec. 17, 2012, the court entered a default judgment against Baron International.

On July 14, 2014, the court entered a default judgment of permanent injunction and other relief against Burmaster, enjoining him from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5. In addition to injunctive relief, the judgment orders Burmaster to pay, jointly and severally, disgorgement and prejudgment interest of $1,349,158 and a penalty in an amount to be determined at a later date. Burmaster is barred from participating in the offering of any penny stock.

The SEC's investigation was conducted by Julie Russo and Timothy Galdencio, with the assistance of paralegal Raynalda Milord, under the supervision of Gary Miller and Eric Busto. The SEC's litigation was conducted by Christopher Martin and Patrick Costello, with the assistance of paralegal Lilia Gonzalez, under the supervision of Robert Levenson.

Labor Department News Releases Update

Labor Department News Releases Update

NLRB News: Southern Bakeries, LLC ordered to recognize Union, bargain in good faith

NLRB News: Southern Bakeries, LLC ordered to recognize Union, bargain in good faith

SEC CHARGES BAHAMAS-BASED BROKERAGE WITH FRAUD

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission charged a Bahamas-based brokerage firm and its president for enabling a fraud that was halted when the SEC charged the hedge fund manager at the center of the scheme.

The SEC alleges that Julian R. Brown and his firm Alliance Investment Management Limited (AIM) purported to be the “custodian” for assets under the management of Nikolai Battoo.  The SEC obtained a court-ordered freeze over Battoo’s assets after charging him in 2012 with defrauding investors around the world by hiding major losses while falsely boasting that their investments were performing remarkably during the financial crisis. 

According to the SEC’s complaint filed today against Brown and AIM in federal court in Chicago, they misrepresented themselves to investors as Battoo’s custodian when, since at least 2009, their firm did not have custody of most of the assets listed on investor account statements.  Brown and AIM allowed Battoo to create false account statements on AIM letterhead that vastly overstated the value of investors’ assets by more than $150 million.  Brown and AIM then routinely provided the false account statements to auditors and others acting on behalf of Battoo’s investors. 

The SEC further alleges that Brown and AIM permitted Battoo to misappropriate at least $45 million of investor funds by transferring money at Battoo’s behest from investor accounts to Battoo’s direct control.  Battoo used investor funds to pay AIM and Brown more than $5 million in return for their critical assistance.

“We allege that Brown and his firm enabled Battoo’s scheme by providing investors with false assurances about who was holding their money and how much money they had in their accounts,” said Timothy Warren, associate director of the SEC’s Chicago Regional Office.

The SEC’s complaint alleges that Brown and AIM violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and aided and abetted Battoo’s violations of the antifraud provisions of the federal securities laws. 

The SEC’s investigation, which is continuing, has been conducted by John D. Mitchell in the Chicago office, and assisted by Carlos CostaRodrigues, Marianne Olson, and Alberto Arevalo in the agency’s Office of International Affairs.  The litigation will be led by Daniel J. Hayes.  The SEC appreciates the assistance of the Securities Commission of the Bahamas, British Virgin Islands Financial Services Commission, and Guernsey Financial Services Commission.