GCIS INTELLIGENCE BRIEFING: Latest Department of Justice Updates

8/20/2010 02:48:00 PM

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ISSUED BY: GCIS Communications Command Center

SOURCE: DOJ Office of Public Affairs

20August2010 2:48pmEDT

GCIS INTELLIGENCE UPDATE:

Former U.S. Army Sergeant Pleads Guilty to Bribery in Afghanistan Fuel Theft Scheme

WASHINGTON - A former U.S. Army Sergeant pleaded guilty today to bribery in connection with a fuel theft scheme to solicit more than $400,000 in bribes from a government contractor in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.

http://ping.fm/6iGXuMichael Dugger, 27, of Jonesboro, Ga., pleaded guilty today before U.S. District Court Judge T. S. Ellis, III in the Eastern District of Virginia to a one-count criminal information charging him with bribery as a public official. Dugger was originally charged in a criminal complaint filed on June 24, 2010. The complaint charged him and Stevan Nathan Ringo, a former U.S. Army staff sergeant in Afghanistan, with one count of conspiracy to commit theft of government property. The charge against Ringo remains pending. The charge in the complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.

According to court documents, Ringo and Dugger were stationed at Forward Operating Base (FOB) Shank, a U.S. Army installation in the Logar Province of Eastern Afghanistan. FOB Shank supports U.S. military operations in Afghanistan in various ways, including through fuel receipt and redistribution. More specifically, the Army stores large quantities of fuel at FOB Shank and redistributes that fuel to installations in the surrounding area through government contractors. Dugger�s responsibilities included supervision of FOB Shank�s fuel redistribution process.

In his guilty plea, Dugger admitted that between January and February 2010 he aided and abetted a co-conspirator�s solicitation and acceptance of more than $400,000 in bribes from a government contractor, all in exchange for his co-conspirator�s creation and submission of fraudulent paperwork permitting that contractor to steal fuel from FOB Shank. Dugger also admitted that he helped his co-conspirator conceal the money in various locations in and around FOB Shank. The total value of the fuel stolen during the course of the scheme was at least $1.39 million.

At sentencing, Dugger faces a maximum penalty of 15 years in prison and a fine of $250,000; twice the gross gain or loss from the scheme; or three times the value of the payments solicited or received. Dugger�s sentencing is currently scheduled for Nov. 5, 2010, at 9:00 a.m.

The case is being prosecuted by Trial Attorney Ryan S. Faulconer of the Criminal Division�s Fraud Section and Assistant U.S. Attorney Edmund P. Power for the Eastern District of Virginia. Substantial assistance was provided by Trial Attorney Dan E. Stigall of the Criminal Division�s Office of International Affairs. The case is being investigated by the FBI, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Division, other military law enforcement at FOB Shank, and members of the National Procurement Fraud Task Force (NPFTF) and the International Contract Corruption Task Force (ICCTF).

The NPFTF, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate, and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations worldwide, including in Kuwait, Afghanistan and Iraq.

Two Defendants Sentenced to Prison in International Child Pornography Conspiracy Case

WASHINGTON - Two defendants were sentenced today to prison in connection with a series of superseding indictments charging 26 individuals for their participation in an online child pornography conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Timothy M. Morrison of the Southern District of Indiana.

child_porn_predator Roger Lee Loughry Sr., 57, of Baltimore, Md., was sentenced by U.S. District Court Judge William T. Lawrence in the Southern District of Indiana to 30 years in prison for his role as an administrator of an online bulletin board. On April 15, 2010, Loughry was convicted by a federal jury in the Southern District of Indiana following a four-day trial. Loughry was found guilty of one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 12 counts of advertising child pornography and two counts of distributing child pornography.

Evidence presented at trial revealed that Loughry had been an active member of the child pornography bulletin board since November 2005 and had participated in numerous administrative functions on the online board during his membership, including adding new members to the board. In addition, evidence introduced at trial established that Loughry�s home was searched in September 2008, at which time computers and computer media were seized. According to trial evidence, upon review of the seized materials, investigators discovered images and videos depicting the sexual abuse of minors, including videos in which adult males were engaged in sexual intercourse with prepubescent girls.

Charles Trull, 43, of Carterville, Ill., was sentenced today by Judge Lawrence to 19 years in prison for his role in the child pornography conspiracy. Trull pleaded guilty on April 7, 2010, to one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, and two counts of advertising child pornography before Judge Lawrence in Indianapolis. During the sentencing hearing, the government presented testimony showing that Trull produced child pornography involving a minor girl over a three-year period while she was only 13 to 15 years of age.� Trull then sent multiple images of her to numerous members of several internet bulletin boards trafficking in child pornography.

Loughry and Trull also were sentenced to lifetime supervised release following their respective prison terms.

The charges against Loughry, Trull and 24 co-defendants are a result of �Operation Nest Egg,� an ongoing and joint investigation led by the Criminal Division�s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney�s Office for the Southern District of Indiana, the U.S. Postal Inspection Service (USPIS) and U.S. Immigration and Customs Enforcement (ICE). Operation Nest Egg, launched in February 2008, targeted 26 defendants charged in the Southern District of Indiana, as well as approximately 500 additional individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.

According to court documents filed in the Southern District of Indiana, the 26 co-conspirators participated in a sophisticated, password-protected Internet bulletin board group, which existed to allow members to meet like-minded individuals with a sexualized interest in children, to discuss that interest and to trade images of child pornography. The defendants are charged with conspiring to advertise and distribute child pornography, along with substantive counts of advertising and distributing child pornography. Twenty-two of the 26 defendants charged in the conspiracy have been arrested. Twenty of the 22 individuals arrested have been convicted or have pleaded guilty. Fifteen of the 20 individuals who have pleaded guilty for their role in the conspiracy have been sentenced to prison on previous dates.

Four of the 26 individuals charged in the conspiracy remain at large and are known only by their online identities. Efforts to identify and apprehend these four individuals continue.

To date, as a result of Operation Nest Egg, more than 80 searches have been conducted in the United States. In total, more than 50 individuals have been arrested and 40 individuals have been convicted. The investigation is ongoing. Numerous members of the Internet-based bulletin board were found to have been personally sexually abusing children. For example, lead administrator Delwyn Savigar of the United Kingdom was identified and arrested in partnership with the U.K.�s Child Exploitation and Online Protection Centre, for his involvement in the conspiracy. After his initial arrest, Savigar was identified through DNA testing as the perpetrator of a previously unsolved sexual assault against a minor female in Great Britain, to which he pleaded guilty. Following this discovery, Savigar was linked to additional incidents of sexual assaults. Ultimately, he pleaded guilty to either abusing or attempting to abuse three minors from 1999 to 2002. He was sentenced to 14 years in prison in the United Kingdom. To date, 16 child victims have been identified through Operation Nest Egg.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys� Offices and the Criminal Division�s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The case is being prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana, Assistant U.S. Attorney of the Eastern District of Virginia and former CEOS Trial Attorney Elizabeth M. Yusi and CEOS Trial Attorney Alecia Riewerts Wolak. The investigation was conducted jointly by CEOS� High Technology Investigative Unit, USPIS and ICE, with assistance provided by the Indiana Internet Crimes Against Children (ICAC) Taskforce, Indiana State Police, and numerous local and international law enforcement agencies across the United States and Europe.

Missouri Man Pleads Guilty to Racketeering Conspiracy and Fraud in Foreign Labor Contracting Charges

WASHINGTON - Andrew Cole pleaded guilty today to racketeering conspiracy and fraud in foreign labor contracting charges arising from his role in a criminal enterprise that engaged in numerous criminal activities, including forced labor, fraud in foreign labor contracting, visa fraud, mail fraud, identity theft, tax evasion and money laundering, the Justice Department announced today.

http://ping.fm/v17ICAccording to court documents, Cole recruited various foreign nationals from the Dominican Republic by falsely representing the terms, conditions and nature of their employment as hotel workers in the Kansas City area. At the time Cole recruited these foreign nationals, he knew that they would not be paid the wages promised, that many would be sent to work in factory positions in Alabama and that threats of deportation and other adverse immigration consequences would be made to the foreign nationals by members of the criminal enterprise in order to maintain the foreign nationals� labor.

"The defendant took advantage of foreign workers� hopes to live the American Dream. He recruited them with false promises and with the knowledge that these workers would be exploited and their labor coerced," said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. "The Department of Justice will continue to vigorously prosecute these cases."

Multiple co-defendants have previously pleaded guilty in connection with the case. Ilkham Fazilov pleaded guilty on Aug 9, 2010, to racketeering conspiracy for his role in aiding and abetting others in the scheme. Jakhongir Kakhkharov also pleaded guilty to racketeering conspiracy on March 17, 2010. Alexandru Frumusache pleaded guilty on Oct. 7, 2009, to forced labor trafficking. Trial for the remaining defendants is set for Oct. 18, 2010.

The case was investigated by the Department of Homeland Security, the FBI, the Department of Labor, the Internal Revenue Service, the Kansas Department of Revenue and the Independence, Mo., Police Department. U.S. Attorney Criminal Chief Gene Porter, Assistant U.S. Attorney William Meiners and Civil Rights Division Human Trafficking Prosecution Unit Trial Attorney Jim Felte prosecuted this case for the government.

Barclays Bank PLC Agrees to Forfeit $298 Million in Connection with Violations of the International Emergency Economic Powers Act and the Trading with the Enemy Act

WASHINGTON - Barclays Bank PLC, a United Kingdom corporation headquartered in London, has agreed to forfeit $298 million to the United States and to the New York County District Attorney�s Office in connection with violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and District Attorney Cyrus R. Vance Jr., of the New York County District Attorney�s Office. The violations relate to transactions Barclays illegally conducted on behalf of customers from Cuba, Iran, Sudan and other countries sanctioned in programs administered by the Office of Foreign Assets Control (OFAC).

http://ping.fm/koygRA criminal information was filed Aug. 16, 2010, in the U.S. District Court for the District of Columbia charging Barclays with one count of violating the IEEPA and one count of violating the TWEA.� Barclays waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its criminal conduct.� Barclays agreed to forfeit the funds as part of the deferred prosecution agreements reached with the Department of Justice and the New York County District Attorney�s Office. The deferred prosecution agreement was approved today by U.S. District Court Judge Emmet G. Sullivan.

"Banks like Barclays will not be permitted to disregard sanctions put in place by the U.S. government," said Assistant Attorney General Lanny A. Breuer of the Criminal Division.� "Not just once, but numerous times over more than a decade, Barclays stripped vital information out of payment messages that would have alerted U.S. financial institutions about the true origins of the funds.� This serious conduct has now resulted in a serious sanction � forfeiture of $298 million, a public admission of its illegal acts, and the implementation of stringent compliance measures.� As I�ve said repeatedly, when corporations self-disclose their criminal wrongdoing to us, as Barclays did, they will not get a pass, but we will take their disclosure, cooperation and remedial efforts into consideration."

"Criminal activity of the type we found at Barclays does more than deceive our financial institutions, it threatens the security of our country," said District Attorney Cyrus R. Vance Jr. "The Manhattan District Attorney�s Office has been a leader in these investigations, and I am committed to continuing our work with federal law enforcement agencies in this arena."

"Barclays implemented practices designed to evade U.S. sanctions for the benefit of sanctioned countries and persons," said OFAC Director Adam J. Szubin. "The substantial economic benefit to sanctioned parties and the systemic nature of the apparent violations could have resulted in a much more onerous OFAC fine had Barclays not voluntarily self-disclosed and had it not cooperated with OFAC throughout the investigation. This is the first settlement of this magnitude where OFAC determined that all of the apparent violations were voluntarily self-disclosed by the bank."

Under IEEPA and TWEA, it is a crime to willfully violate, or attempt to violate, any regulation issued under the act, including those related to Cuba, Iran, Libya, Sudan and Burma. The IEEPA and TWEA regulations are administered by OFAC.

According to court documents, from as early as the mid-1990s until September 2006, Barclays knowingly and willfully moved or permitted to be moved hundreds of millions of dollars through the U.S. financial system on behalf of banks from Cuba, Iran, Libya, Sudan and Burma, and persons listed as parties or jurisdictions sanctioned by OFAC in violation of U.S. economic sanctions.

According to court documents, Barclays followed instructions, principally from banks in Cuba, Iran, Libya, Sudan and Burma, not to mention their names in U.S. dollar payment messages sent to Barclays� branch in New York and to other financial institutions located in the United States. Barclays routed U.S. dollar payments through an internal Barclays account to hide the payments� connection to OFAC-sanctioned entities and amended and reformatted the U.S dollar payment messages to remove information identifying the sanctioned entities. Barclays also deliberately used a less transparent method of payment messages, known as cover payments, as another way of hiding the sanctioned entities identifying information.

"Barclays Bank has admitted a decade-long pattern of violating U.S. banking laws, and taking certain steps to conceal prohibited transactions," said FBI Assistant Director-in-Charge Janice K. Fedarcyk.� "Corporate responsibility entails more than just acting discreetly on behalf of one�s clients.� It means, first and foremost, acting lawfully."

"In the world�s increasingly complex financial markets, it�s critical that global institutions follow U.S. law, including sanctions against other countries," said Victor S. O. Song, Chief, Internal Revenue Service (IRS) Criminal Investigation.� "The IRS is proud to share its hallmark financial investigative expertise in this and other increasingly sophisticated financial investigations.� Creating new strategies of cooperation among governments on international financial compliance is a top priority for the IRS."

Barclay�s forfeiture of $149 million to the United States and $149 million to the New York County District Attorney�s Office will settle forfeiture claims by the Department of Justice and the state of New York.� In light of the bank�s remedial actions to date and its willingness to acknowledge responsibility for its actions, the department will recommend the dismissal of the information in two years, provided Barclays fully cooperates with, and abides by, the terms of the deferred prosecution agreement.

OFAC has also entered into a settlement agreement with Barclays for IEEPA violations that will require Barclays to pay $176 million, which is concurrent with the forfeiture paid as a result of the deferred prosecution agreements. The Federal Reserve Board and the New York State Banking Department announced today the issuance of a consent order to cease and desist against Barclays.� The order requires Barclays to improve its program for compliance with U.S. economic sanctions requirements on a global basis.

The case was prosecuted by Senior Trial Attorney Frederick Reynolds and Trial Attorney Kevin Gerrity of the Criminal Division�s Asset Forfeiture and Money Laundering Section (AFMLS).� The case was investigated by the FBI�s New York Field Office and the IRS-Criminal Investigation�s Washington Field Division and Jeremy Wade and Laurie Bender of AFMLS. The Department of Justice expresses gratitude to Executive Assistant District Attorney, Chief of Investigation Division Adam Kaufmann; Principal Deputy Bureau Chief Gary Fishman; Assistant District Attorneys Richard Preiss and Aaron Wolfson of the New York County District Attorney�s Office, Major Economic Crimes Bureau. The Department of Justice also expresses gratitude to the OFAC, the Federal Reserve Bank of New York, the Board of Governors of the Federal Reserve System and the New York State Banking Department for their significant and valuable assistance.

EUDL: A Legacy of Protecting America�s Youth Through Enforcing Underage Drinking Laws

The following post appears courtesy of Jeff Slowikowski, Acting Administrator, Office of Juvenile Justice and Delinquency Prevention

Tragic consequences can result when youth use alcohol. According to the National Institute on Alcohol Abuse and Alcoholism, some 5,000 youth under the age of 21 die each year as a result of underage drinking, including nearly 2,000 who die on our nation�s roadways. And they are not the only victims who pay the ultimate price for the lethal cocktail of youth, alcohol, and driving.

http://ping.fm/fQhHHFor more than a decade, the Department of Justice has worked diligently to safeguard our nation�s youth and protect the public through the Enforcing Underage Drinking Laws (EUDL) Program, administered by its Office of Juvenile Justice and Delinquency Prevention (OJJDP). Enacted in 1998 with strong support from the late Senator Robert Byrd of West Virginia the program�s block grants support the activities of the states, the District of Columbia, and the U.S. territories in preventing underage drinking through law enforcement.

Through its EUDL discretionary grant program, OJJDP has addressed underage drinking problems in rural areas and launched a demonstration partnership between communities and Air Force bases in six states to reduce drinking by junior enlisted men. Training and technical assistance provided by OJJDP�s Center for Enforcing Underage Drinking Laws equip states and communities with research-based tools to help them focus their prevention, intervention, and enforcement activities. Annually, OJJDP awards nearly $25 million in EUDL funding.

Research informs our efforts to address this problem. It tells us that young people who start drinking before they are 15 years old are five times more likely to experience alcohol-related problems later in life than those who began drinking when they were at least 21 years old. Research also indicates that alcohol may impair the developing adolescent brain.

On August 18-20, 2010, more than 2,000 individuals from across America -youth and adults- who share OJJDP�s commitment to preventing underage drinking will gather in Anaheim, CA, to discuss what is being done and what needs to be done to make a difference. To this end, OJJDP�s 12th Annual National EUDL Leadership Conference will feature programs and strategies that have successfully implemented research-based strategies to reduce youth access to alcohol.

I commend the hard work of all those involved in combating underage drinking and assure them of OJJDP�s continued support for our common cause. The stakes are too high for anything less.

Statement on Accused Arms Trafficker Viktor Bout by Acting Deputy Attorney General Gary G. Grindler

http://ping.fm/rMkqk"We are extremely pleased that the Appeals Court in Thailand has granted the extradition of Viktor Bout to the United States on charges of conspiring to sell weapons to a terrorist organization for use in killing Americans. We have always felt that the facts of the case, the relevant Thai law and the terms of our bilateral extradition treaty clearly supported the extradition of Mr. Bout on these charges.

The prosecution of Viktor Bout is of utmost priority to the United States, but the criminal charges he faces are not solely an American concern. He has been sanctioned by the United Nations for alleged arms trafficking activity and support of armed conflicts in Africa."

Dominion & Marathon Oil to Pay $6.9 Million to Resolve Allegations of Royalty Underpayments from American Indian and Federal Lands

WASHINGTON - Dominion Oklahoma Texas Exploration & Production Inc. and Marathon Oil Company have agreed to pay the United States $2,219,9674.98 and $4,697,476.57, respectively, to resolve claims that the two companies separately violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases, the Justice Department announced today. Marathon is among the world�s leading integrated energy companies with operations around the globe, and Dominion is one of the nation�s largest producers and transporters of energy.

http://ping.fm/lyHVJThe Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) (formerly known as the Minerals Management Service) of the U.S. Department of the Interior is responsible for collecting and disbursing royalties from energy production that occurs on federal and American Indian lands, both on shore and offshore. Each month, companies are required to report to BOEM the value of the natural gas produced from their federal and Indian leases and to pay a percentage of the reported value as royalties. These settlements resolve claims that Dominion and Marathon improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, and that Dominion improperly reported processed gas as unprocessed gas to reduce royalty payments.

"Mineral royalties provide an important source of income for Native Americans, the United States and various states," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We are committed to protecting public and Indian lands and to ensuring that companies with leases to take natural gas from those lands pay their fair share of royalties."

"The Department of Justice must remain vigilant in protecting both American and tribal financial interests from unscrupulous business practices," said John Bales, U.S. Attorney for the Eastern District of Texas. "These latest two settlements underscore that commitment."

"We will aggressively pursue every dollar due to American citizens from energy production on federal and American Indian lands," said BOEM Director Michael R. Bromwich. "That means companies must accurately report and pay the proper royalties on a monthly basis, with no exceptions."

The settlements with Dominion and Marathon arise from a lawsuit filed by Harold Wright under the False Claims Act. Under the qui tam, or whistleblower, provisions of the act, private citizens may file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive a $1.822 million share of the settlements. The Justice Department intervened against several defendants in the Wright lawsuit. Settlements in the case to date include agreements with Burlington Resources for $105.3 million, with Shell for $56 million, with Chevron, Texaco and Unocal for $45.5 million, and with Mobil for $32.2 million.

The investigation and settlement of these matters were jointly handled by the Justice Department�s Civil Division and the U.S. Attorney for the Eastern District of Texas, with assistance from the Department of the Interior�s Office of Inspector General, BOEM and Office of the Solicitor.

The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.)