Trenton Mayor Sentenced to 58 Months in Prison on Federal Extortion, Bribery, and Mail and Wire Fraud Charges

TRENTON, NJ—Trenton Mayor Tony F. Mack was sentenced today to 58 months in prison after being convicted at trial in February on all six federal extortion, bribery, and mail and wire fraud charges against him, U.S. Attorney Paul J. Fishman announced.

Mack’s brother, Ralphiel Mack, who was also convicted on three of the charges but found not guilty on three mail fraud and wire fraud counts, was sentenced to 30 months in prison. The Macks had been convicted following a five-week trial before U.S. District Judge Michael A. Shipp, who imposed the sentences today in Trenton federal court.

The Macks were charged in connection with a scheme to accept $119,000 in bribes in exchange for Mayor Mack’s official actions and influence in assisting cooperating witnesses in the development of an automated parking garage on city-owned land.

“Nearly four years ago, Tony Mack raised his hand and swore to uphold the state and federal constitutions as he assumed the office of mayor of the capital city of New Jersey,” U.S. Attorney Fishman said. “Within 10 weeks, he began selling that office and, with the help of his brother and others, he sold out the people of Trenton in the process. Today, he learned the true cost of his actions: He will spend 58 months in federal prison.”

“Instead of providing transparent government to the citizens of Trenton, Tony Mack and his brother allowed themselves to succumb to self-interest and greed,” FBI Special Agent in Charge Aaron T. Ford said. “This investigation brought to light the unsavory underworld of secret meetings with convicted felons, the calculated use of ‘buffers’ and bagmen, and bribe payments associated with inside deals to give away the city’s treasures, its property. The citizens of Trenton are entitled to political figures who discharge their duties with goodness of heart and not those motivated by personal gain.”

Tony F. Mack, 48, and Ralphiel Mack, 41, both of Trenton, originally were charged by complaint on September 10, 2012, with one count of conspiracy to obstruct commerce by extortion under color of official right related to the $119,000 extortion scheme. Also charged at that time was Joseph A. Giorgianni, 64, of Ewing, New Jersey. An indictment returned in December 2012 added charges against all three defendants.

Giorgianni pleaded guilty on December 13, 2013, to one count of conspiring with the Macks and others to obstruct interstate commerce by extorting individuals under color of official right, in addition to a separate extortion scheme, a narcotics charge and illegal weapons possession, all charges unrelated to the Macks.

Mayor Mack was convicted of the six counts charged in the indictment:

• Conspiracy to obstruct and affect interstate commerce by extortion under color of official right
• Attempted obstruction of commerce by extortion under the color of official right
• Accepting and agreeing to accept bribes
• Two counts of wire fraud
• Mail fraud

Ralphiel Mack was convicted on the same first three counts and found not guilty of the mail and wire fraud charges. The jury members deliberated for seven hours before returning their verdicts.

According to documents filed in this case and the evidence presented at trial:

Tony Mack, Giorgianni, and Ralphiel Mack conspired to accept approximately $119,000 in cash and other valuables, of which $54,000 was accepted and another $65,000 that the defendants planned to accept from two cooperating witnesses (CW-1 and CW-2). In exchange for the payments, Tony Mack agreed to and did assist CW-1 and CW-2 in their efforts to acquire a city-owned lot (East State Street Lot) to develop an automated parking garage (the Parking Garage Project). The scheme included a plan to divert $100,000 of the purchase amount that CW-2 had indicated a willingness to pay to the city of Trenton for the lot as a bribe and kickback payment to Giorgianni and Tony Mack. The mayor authorized and directed a Trenton official responsible for disposition of city-owned land to offer the East State Street Lot to CW-2 for $100,000, significantly less than the amount originally proposed by CW-2.

The defendants went to great lengths to conceal their corrupt activity to keep Tony Mack “safe” from law enforcement. For example, Giorgianni and Ralphiel Mack acted as intermediaries, or “buffers,” who accepted cash payments for Tony Mack’s benefit. Tony Mack also used another city of Trenton employee involved in the scheme, Charles Hall, III, 49, of Trenton, to contact other Trenton officials to facilitate the Parking Garage Project and to inform the mayor when Giorgianni had received corrupt cash payments. Hall pleaded guilty before Judge Shipp in February 2013 to an information charging him with one count of conspiracy to obstruct commerce by extortion under color of official right and one count of conspiring to distribute narcotics with others, including Giorgianni.

To conceal the corrupt arrangement, the defendants avoided discussing matters related to the scheme over the telephone. When those matters were discussed, they used code words and aliases. One such code word was “Uncle Remus,” which both Giorgianni and Hall regularly used to communicate to Tony Mack that a corrupt payment had been received. For example, on October 29, 2011, Giorgianni telephoned Hall and informed him that Giorgianni had to “see” Tony Mack and that “I got Uncle Remus for him,” meaning a corrupt cash payment that Giorgianni had received from CW-1 two days earlier. Giorgianni directed Hall to bring Tony Mack to a meeting location controlled by Giorgianni (Giorgianni’s Clubhouse), stating “we gotta talk” because “I got something that might be good for him” and that “they’ve already come with Uncle Remus,” meaning a corrupt cash payment. On June 13, 2012, Giorgianni telephoned Tony Mack and informed him that “Uncle Remus,” meaning a corrupt cash payment, “was there.” Tony Mack replied, “I’ll call you, J. Okay?” In text messages to Tony Mack related to the scheme, Giorgianni would refer to himself as “Mr. Baker.”

The defendants also concealed their activities by holding meetings concerning the corrupt activity away from Trenton City Hall, including at Giorgianni’s residence, a restaurant maintained by Giorgianni known as JoJo’s Steakhouse, Giorgianni’s Clubhouse, and Atlantic City restaurants. At one Atlantic City meeting among Tony Mack, Giorgianni, Hall, and CW-2, Tony Mack instructed Giorgianni to ensure that no photographs were taken in order to conceal the corrupt arrangement.

In addition to the prison terms, Judge Shipp sentenced Tony Mack to three years of supervised release, 100 hours of community service, and fined him $3,000. He sentenced Ralphiel Mack to three years of supervised release and fined him $1,500.

U.S. Attorney Fishman credited special agents of the FBI’s Trenton Resident Agency, Newark Field Office, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s sentencings.

The government is represented by Assistant U.S. Attorneys Eric W. Moran and Matthew J. Skahill of the U.S. Attorney’s Office Special Prosecutions Division in Trenton and Camden, respectively.

Hewlett-Packard Russia Agrees to Plead Guilty to Foreign Bribery Violations

WASHINGTON—ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), has agreed to plead guilty to felony violations of the Foreign Corrupt Practices Act (FCPA) and admit its role in bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
Deputy Assistant Attorney General Bruce Swartz of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office, and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
A criminal information filed today in U.S. District Court for the Northern District of California charges HP Russia with conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. In addition, the government is entering into criminal resolutions with HP subsidiaries in Poland and Mexico relating to contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. (HP Poland) with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. (HP Mexico) has entered into a non-prosecution agreement with the government pursuant to which it will forfeit proceeds and admit and accept responsibility for its misconduct as set forth in the statement of facts. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. agreed to pay $31,472,250 in disgorgement, prejudgment interest, and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties paid by HP Co. and its subsidiaries (collectively, HP) to more than $108 million.
“Hewlett-Packard subsidiaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous e-mail accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said Deputy Assistant Attorney General Swartz. “Even as the tradecraft of corruption becomes more sophisticated, the department is staying a step ahead of those who choose to violate our laws, thanks to the diligent efforts of U.S. prosecutors and agents and our colleagues at the SEC, as well as the tremendous cooperation of our law enforcement partners in Germany, Poland, and Mexico.”
“The United States Attorney’s Office, working alongside our colleagues in the Criminal Division, will vigorously police any efforts by companies in our district to illegally sell products to foreign governments using bribes or kickbacks in violation of the FCPA,” said U.S. Attorney Haag. “Today’s resolution with HP reinforces the fact that there is no double standard: U.S. businesses must respect the same ethics and compliance standards whether they are selling products to foreign governments or to the United States government.”
“This case demonstrates the FBI’s ability to successfully coordinate with our foreign law enforcement partners to investigate and bring to justice corporations that choose to do business through bribery and off-the-book dealings,” said Assistant Director in Charge Parlave. “I want to thank the agents who worked on this case in Washington, New York, and in our Legal Attaché offices in Mexico City, Moscow, Berlin, and Warsaw, as well as the prosecutors. Their work ensures a level playing field for businesses seeking lucrative overseas government contracts.”
“This agreement is the result of untangling a global labyrinth of complex financial transactions used by HP to facilitate bribes to foreign officials,” said IRS-CI Chief Weber. “IRS-CI has become a trusted leader in pursuit of corporations and executives who use hidden offshore assets and shell companies to circumvent the law. CI is committed to maintaining fair competition, free of corrupt practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to court documents, in 1999, the Russian government announced a project to automate the computer and telecommunications infrastructure of its Office of the Prosecutor General of the Russian Federation (GPO). Not only was that project itself worth more than $100 million, but HP Russia viewed it as the “golden key” that could unlock the door to another $100 to $150 million dollars in business with Russian government agencies. To secure a contract for the first phase of project, ultimately valued at more than €35 million, HP Russia executives and other employees structured the deal to create a secret slush fund totaling several million dollars, at least part of which was intended for bribes to Russian government officials.
As admitted in a statement of facts, HP Russia created excess profit margins for the slush fund through an elaborate buy-back deal structure, whereby (1) HP sold the computer hardware and other technology products called for under the contract to a Russian channel partner, (2) HP bought the same products back from an intermediary company at a nearly €8 million mark-up and paid the intermediary an additional €4.2 million for purported services, and (3) HP sold the same products to the GPO at the increased price. The payments to the intermediary were then largely transferred through a cascading series of shell companies—some of which were directly associated with government officials—registered in the United States, United Kingdom, British Virgin Islands, and Belize. Much of these payments from the intermediary were laundered through off-shore bank accounts in Switzerland, Lithuania, Latvia, and Austria. Portions of the funds were spent on travel, cars, jewelry, clothing, expensive watches, swimming pool technology, furniture, household appliances, and other luxury goods. To keep track of these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of recipients of the corrupt funds and sanitized versions that hid the corrupt payments from others outside HP Russia. They also entered into off-the-books side agreements. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company that was linked to a director of the Russian government agency responsible for managing the GPO project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia and conducted no due diligence of the shell company.
According to an agreed statement of facts, in Poland, from 2006 through at least 2010, HP Poland falsified HP books and records and circumvented HP internal controls to execute and conceal a scheme to corruptly secure and maintain millions of dollars in technology contracts with the Komenda Główna Policji (KGP), the Polish National Police agency. HP Poland made corrupt payments totaling more than $600,000 in the form of cash bribes and gifts, travel, and entertainment to the KGP’s Director of Information and Communications Technology. Among other things, HP Poland gave the government official bags filled with hundreds of thousands of dollars of cash; provided the official with HP desktop and laptop computers, mobile devices, and other products; and took the official on a leisure trip to Las Vegas, which included drinks, dining, entertainment, and a private tour flight over the Grand Canyon. To covertly communicate with the official about the corrupt scheme, an HP Poland executive used anonymous e-mail accounts, prepaid mobile telephones, and other methods meant to evade detection.
In Mexico, according to the non-prosecution agreement, HP Mexico falsified corporate books and records and circumvented HP internal controls in connection with contracts to sell hardware, software, and licenses to Mexico’s state-owned petroleum company, Petroleos Mexicanos (Pemex). To secure the contracts, HP Mexico understood that it had to retain a certain third-party consultant with close ties to senior executives of Pemex. HP agreed to pay a $1.41 million “commission” to the consultant and hid the payments by inserting into the deal structure another third party, which had been approved by HP as a channel partner. HP Mexico made the commission payment to the channel partner, which in turn forwarded the payments to the consultant. Shortly thereafter, the consultant paid one of the Pemex officials approximately $125,000.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s New York City Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin, and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Adam Reeves of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain, and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Fresno Police Department Detective and Fresno Marijuana Trafficker Indicted in Bribery Scheme

FRESNO, CA—A federal grand jury returned a four-count indictment today against Derik Carson Kumagai, 40, resident of Clovis, California, and Saykham Somphoune, a/k/a, “Oat,” 40, resident of Fresno, California, charging them with conspiracy, bribery, and extortion, United States Attorney Benjamin B. Wagner announced.
According to court documents, detective Kumagai accepted a $20,000 bribe from an individual who was under investigation for marijuana trafficking. In return for the bribe payment, Kumagai and co-conspirator Somphoune (who is not a law enforcement officer) promised the person under investigation that he would be signed up as a confidential informant for the Fresno Police Department. On November 6, 2013, the person under investigation paid Kumagai approximately $20,000 cash. A few hours later, the person under investigation completed purported documents regarding work as a confidential informant for the Fresno Police Department.
This case was the product of an investigation by the Drug Enforcement Administration, Federal Bureau of Investigation, and Internal Revenue Service-Criminal Investigation Division. The Department of Homeland Security-Homeland Security Investigations and the United States Postal Inspection Service also provided investigative assistance in this case. Assistant United States Attorneys Grant B. Rabenn and Kevin P. Rooney are prosecuting the case.
Derik Kumagai was released from pretrial custody on March 19, 2014. Saykham Somphoune is currently detained as a flight risk.
If convicted of conspiracy, the defendants face a maximum statutory penalty of five years in prison and a $250,000 fine. If convicted of bribery, they face a maximum statutory penalty of 10 years in prison and a $500,000 fine. If convicted of extortion or conspiracy to commit extortion, they face a maximum statutory penalty of 20 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Correctional Officer and Prison Inmate Indicted in Conspiracy to Smuggle Heroin and Methamphetamine into the Taft Correctional Facility

FRESNO, CA—A federal grand jury returned a five-count superseding indictment today against Ramon Cano, 28, a resident of Bakersfield, and Gerardo Alvarez-Montanez, 32, an inmate at the Taft Federal Correctional Facility, charging them with conspiracy to provide and possess contraband in prison and with various substantive counts, including distribution and attempted distribution of a controlled substance and bribery of a public official. United States Attorney Benjamin B. Wagner announced.
According to court documents, Cano, a full-time contract correctional officer employed at the Taft Federal Correctional Facility, was involved in smuggling heroin, methamphetamine, and other items of contraband, including cash and cell phones, to Alvarez-Montanez in return for payments of cash.
This case was the product of an investigation by the Federal Bureau of Investigation and the Office of the Inspector General U.S. Department of Justice. Assistant United States Attorney Brian K. Delaney is prosecuting the case.
If convicted, Cano and Alvarez face a maximum statutory penalty of 40 years in prison and a $5,000,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Charlotte Mayor Arrested on Federal Public Corruption Charges

CHARLOTTE, NC—Charlotte Mayor Patrick DeAngelo Cannon was arrested today by FBI agents for alleged violations of federal public corruption laws, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. The federal criminal complaint filed in U.S. District Court charges Cannon, 47, of Charlotte, with theft and bribery concerning programs receiving federal funds, honest services wire fraud, and extortion under color of official right.
John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division, joins U.S. Attorney Tompkins in making today’s announcement.
According to allegations contained in the charging document and the affidavit filed in support of the criminal complaint, during the course of a separate criminal investigation, the FBI received reliable information that Cannon was potentially involved in illegal activities associated with his position as an elected official and began an undercover investigation in or about August 2010. The complaint and affidavit allege that during the course of that investigation, Cannon allegedly solicited and accepted money bribes and things of value from undercover FBI agents, posing as commercial real estate developers and investors wishing to do business in Charlotte. As alleged in the filed documents, Cannon solicited and accepted such bribes and things of value in exchange for the use of his official position as Charlotte mayor, mayor pro tem, and/or as a city council member.
The complaint and law enforcement affidavit allege that Cannon accepted the bribes from the undercover FBI agents on five separate occasions. On the last occasion, on February 21, 2014, Cannon allegedly accepted $20,000 in cash in the mayor’s office. According to the complaint and the affidavit, between January 2013 and February 2014, Cannon allegedly accepted from the undercover agents more than $48,000 in cash, airline tickets, a hotel room, and use of a luxury apartment in exchange for the use of his official position.
Cannon had his initial appearance today and has been released on bond, pending indictment. The charge of theft and bribery concerning programs receiving federal funds carries a statutory maximum sentence of 10 years in prison and a $250,000 fine; the charge of honest services wire fraud carries a statutory maximum sentence of not more than 20 years in prison and a $1,000,000 fine; and the charge of extortion under color of official right carries a statutory maximum sentence of not more than 20 years in prison and a $250,000 fine.
The charges contained in the criminal complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond reasonable doubt in a court of law.
The case is being prosecuted by Assistant United States Attorney Michael E. Savage of the U.S. Attorney’s Office for the Western District of North Carolina. The case is being investigated by the Federal Bureau of Investigation.

New York State Assemblyman William F. Boyland, Jr. Convicted on Bribery, Fraud, Extortion, Conspiracy, and Theft Charges

Earlier today, sitting New York State Assemblyman William F. Boyland, Jr. was convicted by a jury at the federal courthouse in Brooklyn, New York, of 21 felony counts, including federal programs bribery, conspiracy to commit federal programs bribery, conspiracy to violate the Travel Act and commit federal programs bribery, extortion, extortion conspiracy, honest services wire fraud, conspiracy to commit honest services wire fraud, federal programs theft, and conspiracy to commit mail fraud. Boyland committed each of these offenses by corruptly exploiting his public position representing the 55th Assembly District in Brooklyn, which is composed of Ocean Hill, Brownsville, Bedford-Stuyvesant, Crown Heights, and Bushwick. Upon his convictions, Boyland was automatically expelled from the Assembly. When sentenced, Boyland faces prison terms of up to 20 years on each of the extortion, extortion conspiracy, honest services wire fraud, honest services wire fraud conspiracy, and mail fraud conspiracy counts; up to 10 years on each of the federal programs bribery and federal programs theft counts; and up to five years on each of the other conspiracy counts. Following his convictions, the Honorable Sandra L. Townes, who presided over the trial, ordered Boyland remanded into custody pending his sentencing on June 30, 2014. Boyland is also subject to up to at least $250,000 in fines on each of the counts of conviction, as well as criminal forfeiture and mandatory restitution.
The convictions were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.
“The breadth and pervasiveness of the corruption exposed by this prosecution is staggering. Wherever there was an opportunity for William Boyland to corruptly line his own pockets, he took it. By soliciting bribes, by stealing funds intended to help the elderly, and by defrauding New York State and the Assembly, Boyland cravenly pursued his own interest at the expense of his constituents. In doing so, Boyland not only broke the law but broke faith with the public he was elected to serve. Today’s verdict ensures that Boyland will be held accountable for his corrupt actions,” stated United States Attorney Lynch. “When our elected officials engage in self-dealing, when they abdicate their responsibilities, when they succumb to greed, the average citizen pays for it dearly, and our democratic system suffers on so many levels. The verdict sends a clear message that we and our partners in the FBI will vigorously investigate and prosecute any public official who trades on a position of power to line his own pocket.” United States Attorney Lynch praised the hard work and dedication of the FBI agents who investigated the case and expressed her thanks to the New York State Comptroller’s Office, the New York State Office of the Aging, the Internal Revenue Service Criminal Investigation Division, the New York State Assembly Department of Finance, and the New York City Department of Investigation for their assistance with the investigation.
The evidence admitted at trial proved that, beginning in January 2007 and continuing through December 2011, Boyland engaged in four separate corrupt schemes, ranging from soliciting and accepting over $250,000 in bribe payments, to submitting false travel vouchers to New York State, to stealing state funds intended for the elderly:
Carnival Scheme
Boyland extorted and accepted over $14,000 in bribes in exchange for undertaking official action to benefit a carnival promoter (the “promoter”) and an undercover FBI agent. Specifically, in August 2010, Boyland met with the Promoter and this undercover FBI agent (UC1) on multiple occasions in New York City and discussed the desire of the promoter and UC1 to hold carnivals in Boyland’s district, for which they needed government approvals. During those meetings, Boyland requested payments in exchange for assisting the promoter and UC1, and the promoter and UC1 agreed. Boyland also described various ways in which the bribes could be disguised to hide their true purpose. After these meetings, Boyland directed his Assembly staff to assist the promoter and UC1 in their efforts to gain government approvals. Boyland then represented to the promoter and UC1 that he and his staff (i) engaged in discussions with government agencies to assist the Promoter in obtaining carnival-related leases and permits and (ii) arranged for a non-profit organization to sponsor the Promoter’s carnivals. Boyland also directed his staff to give the promoter letters of support, on Boyland’s Assembly letterhead, that the promoter needed in order to operate carnivals in Boyland’s district. In exchange, UC1 paid Boyland three separate bribes: $7,000 in cash; a $3,000 check with the “payee” line left blank; and $3,800 worth of money orders that were deposited into Boyland’s campaign bank account. As was shown to the jury during the trial, Boyland was captured on videotape personally accepting the $7,000 cash bribe at his district office.
Real Estate Scheme
Boyland also accepted the $7,000 cash bribe described above in exchange for undertaking official action to benefit UC1 and a second undercover FBI agent (UC2) in a purported real estate venture in Boyland’s district. Specifically, Boyland proposed a brazen scheme in which UC1 and UC2 would purchase the former St. Mary’s Hospital in Boyland’s district for $8 million, obtain state grant money to renovate the hospital, and resell it for $15 million to a non-profit organization that Boyland claimed to control. Boyland assured UC1 and UC2 that he would use his influence as an assemblyman to secure state grant money for the project and handle any zoning issues that arose. After accepting the $7,000 cash bribe described above, Boyland was later recorded demanding an additional $250,000 bribe payment from UC1 and UC2 as a condition of using his official position to realize the real estate scheme he had proposed.
Recordings of meetings in hotel rooms in Atlantic City and New York City where Boyland discussed the real estate scheme revealed that he recognized the scheme’s corrupt and illegal nature and sought to conceal his own involvement. At the meeting in the hotel in Atlantic City, Boyland stated, “I got a middle guy by the way...I gotta stay clean...I got a bag man....” Boyland further explained that he did not want to talk on the telephone and preferred in-person meetings: “I stopped talking on the phone a while ago...I’m just saying there is no real conversation that you can have...especially with what we’re talking about.”
At the meeting in the hotel room in New York City, Boyland reiterated that he wanted UC1 and UC2 to pay him a $250,000 bribe in exchange for the St. Mary’s Hospital project. When UC2 instead countered Boyland’s demand by offering to pay Boyland $5,000 for introductions to other government officials who would be involved in the project, Boyland rejected the counter-proposal, stating that the people whom Boyland could introduce to UC1 and UC2 were worth more than $5,000: “I’m not talking about $5,000 folks. I’m talking about...people that can actually get these projects done.”
False Voucher Scheme
From January 2007 to December 2011, Boyland stole New York State funds by submitting false New York State Assembly Member Travel Vouchers (vouchers). Boyland submitted over two hundred fraudulent vouchers where he falsely claimed to be in Albany on legislative business when he in fact was not in Albany, including days when Boyland was in New York City meeting with the undercover FBI agents and demanding $250,000 in bribes; days when he was in North Carolina and Virginia visiting with family and friends; and for days when he was in Istanbul, Turkey. In reliance on Boyland’s false Vouchers, New York State paid Boyland more than $70,000 in fraudulent mileage expense reimbursements and per diem payments.
Theft of State Funds for the Elderly
From July 2007 to September 2010, Boyland conspired to defraud New York State and the New York State Office of the Aging (NYSOA). Boyland, a member of the Assembly’s Committee on the Aging, steered $200,000 of New York State “member item” funds to a Brooklyn-based non-profit organization whose mission, as described on its website, was to provide a “social setting that enable[s] elderly individuals to maintain their independence and remain at home in the community.” Notwithstanding his certification, in writing to the NYSOA that these state funds would not be used for any partisan or political purpose, Boyland directed that the majority of these $200,000 in state funds be used for the benefit of Boyland and his political campaigns by paying for community events that promoted Boyland such as a Senior Lunch Cruise on the Spirit of New York Cruise Line, a fireworks show, and a large end of the summer picnic held at a park in his district, as well as goods that promoted Boyland, such as “Team Boyland” T-shirts distributed at those community events.
The government’s case is being prosecuted by Assistant United States Attorneys Christina B. Dugger, Robert L. Capers and Lan X. Nguyen.
Defendant
Willia F. Boyland, Jr.
Age: 43
Residence: Brooklyn, New York

Former Chairman of Woodland Park Democratic Committee Sentenced to Two Years in Prison for Bribing IRS Official

CAMDEN, NJ—The former chairman of the Woodland Park, New Jersey Democratic Committee was sentenced today to 24 months in prison for bribing two individuals he thought were IRS officials to eliminate his tax debt, U.S. Attorney Paul J. Fishman announced.
Michael Kazmark, 61, of Woodland Park, previously pleaded guilty before Chief U.S. District Judge Jerome B. Simandle to an information charging him with one count of bribing a federal public official in exchange for official action. Judge Simandle imposed the sentence today in Camden federal court.
According to documents filed in this case and statements made in court:
Kazmark failed to pay federal income taxes from 1997 through 2005. In 2010, Kazmark owed the IRS $98,046 in unpaid federal income taxes, interest, and penalties. On April 18, 2010, Kazmark made an application to the IRS for an offer in compromise, requesting that he pay $48,800 to the IRS in order to settle his entire federal tax debt.
On October 5, 2010, Kazmark paid a $1,000 bribe to an undercover FBI agent and IRS employee, posing as IRS officials, in exchange for their official assistance in transferring his offer in compromise file to one of the officials for acceptance. On November 23, 2010, Kazmark made a $17,500 bribe payment to the individuals, believing it was in exchange for their official assistance in placing his federal tax liability in noncollectible status for two years and agreeing to accept Kazmark’s offer in compromise for the amount of the check that he had already paid to the IRS—$9,760—if he did not incur any additional federal tax liability for two years.
In addition to the prison term, Judge Simandle sentenced Kazmark to two years of supervised release. As a condition of that release, Kazmark is required to pay his full tax liability to the IRS.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and special agents of the U.S. Treasury Inspector General for Tax Administration, under the direction of Special Agent in Charge Robert Geary, for the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorney Vikas Khanna of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

Former Virginia Subcontractor Pleads Guilty to Bribery Offenses

Dwayne Allen Hardman, 44, of Charleston, West Virginia, pleaded guilty today to paying bribes to public officials.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Dana J. Boente, Acting U.S. Attorney for the Eastern District of Virginia; Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service Mid-Atlantic Field Office (DCIS); Acting Executive Assistant Director Charles T. May, Jr. of the Naval Criminal Investigative Service (NCIS) Atlantic Operations; and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement after the plea was accepted by U.S. Magistrate Judge Douglas E. Miller in the Eastern District of Virginia.
Hardman was charged by criminal information on February 12, 2014, with paying a bribe to public officials. Hardman faces a maximum penalty of 15 years in prison when he is sentenced on June 6, 2014.
According to a statement of facts filed with the plea agreement, in November 2004, Hardman and another businessman established a government contracting corporation in Chesapeake, Virginia, to provide support to the Military Sealift Command (MSC) on various telecommunications projects. Shortly thereafter, in early 2005, Hardman and his business partner agreed to pay cash bribes to two MSC officials in exchange for official action to steer government contracts to Hardman’s corporation. From March 2005 and until 2007, Hardman, his business partner, and others paid the MSC officials approximately $3,000 each month in cash bribes. During this time, Hardman and his business partner withdrew approximately $144,000 in cash, which was then provided to the two MSC officials in exchange for their assistance in securing MSC contracting and subcontracting business for Hardman’s company.
According to court documents, in February 2009, Hardman left his former business and formed another government contracting company in Chesapeake with another businessman. The two MSC officials again agreed to steer contracting work to Hardman’s new company in exchange for receiving bribes from Hardman and his new business partner. In May 2009, Hardman and his new business partner paid each of the two MSC officials $25,000 in cash bribes.
On February 12, 2014, one of the MSC officials, Kenny Toy, who was the afloat programs manager for MSC’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes in conjunction with this scheme.
This case was investigated by special agents of the FBI, the Naval Criminal Investigative Service, and the Defense Criminal Investigative Service. Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie are prosecuting the case.

Former CEO of Oil Services Company Pleads Guilty to Foreign Bribery Charges

CAMDEN—A former chief executive officer of PetroTiger Ltd.—a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey—today admitted his role in a scheme to pay bribes to foreign government officials and defraud PetroTiger.
U.S. Attorney Paul J. Fishman of the District of New Jersey, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement.
Knut Hammarskjold, 42, of Greenville, South Carolina, a former co-CEO of PetroTiger, pleaded guilty before U.S. District Judge Joseph E. Irenas in Camden federal court to an information charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud. Gregory Weisman, 42, of Moorestown, New Jersey, the former general counsel of PetroTiger, pleaded guilty to the same charges on November 8, 2013. Charges remain pending against Joseph Sigelman, 42, of Miami, Florida, and the Philippines, the other former co-CEO of PetroTiger, for conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money, and substantive violations of the FCPA.
According to the charges, the defendants allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million. To conceal the bribes, the defendants first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform. The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information. The defendants made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.
In addition, court documents allege that the defendants attempted to secure kickback payments at the expense of PetroTiger’s board members. According to the criminal charges, the defendants were negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition. In exchange for negotiating a higher purchase price for the acquisition, two of the owners of the target company agreed to kick back to the defendants a portion of the increased purchase price. According to the charges, to conceal the kickback payments, the defendants had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments, and used the code name “Manila Split” to refer to the payments amongst themselves.
Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on November 8, 2013. Hammarskjold was arrested November 20, 2013, at Newark Liberty International Airport. Sigelman was arrested on January 3, 2014, in the Philippines. The charges against Sigelman, Hammarskjold, and Weisman were unsealed on January 6, 2014.
The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. Sentencing for Hammarskjold is scheduled for May 16, 2014.
As to the charges in the complaint pending against Sigelman, they are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter. The department also thanks the Republic of the Philippines, including the Bureau of Immigration, for its assistance in this matter. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s Newark Division. The case is being prosecuted by Assistant U.S. Attorney Aaron Mendelsohn of the District of New Jersey and Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Former Portsmouth Sheriff’s Office Sergeant Sentenced on Conspiracy and Bribery Charges

WASHINGTON—A former sergeant of the Portsmouth Sheriff’s Office (PSO) was sentenced to serve 15 months in prison today for accepting bribes in exchange for favors and referrals.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia made the announcement.
Melvin Hike, 65, of Portsmouth, Virginia, was sentenced by U.S. District Judge Arenda L. Wright Allen of the Eastern District of Virginia. Hike was also sentenced to serve three years of supervised release and to pay a $10,000 fine.
On October 8, 2013, Hike pleaded guilty to conspiracy and federal programs bribery. According to court documents, throughout the relevant time period of 2008 to 2012, Hike was a PSO sergeant assigned to the warrant squad. Ulysses Stephenson, aka “Tugger,” was a bail bondsman based in Portsmouth whose income depended on the number of arrestee clients he served. At various times between 2008 and 2012, Stephenson gave Hike cash payments and other items of value, and in exchange, Hike referred arrestees to Stephenson as prospective clients. Stephenson previously pleaded guilty to conspiracy and federal programs bribery in connection with bribing Hike, and he was sentenced to 30 months in prison on November 2, 2012.
This case was investigated by the FBI. The case was prosecuted by Trial Attorneys Monique Abrishami and Peter Mason of the Criminal Division’s Public Integrity Section and Special Assistant U.S. Attorney Amy E. Cross of the Eastern District of Virginia.

Virginia Businessman Sentenced to 46 Months in Prison for Role in Contracting Scheme Involving U.S. Army

WASHINGTON—Oh Sung Kwon, 48, a Northern Virginia businessman, was sentenced today to 46 months in prison on federal charges stemming from a bribery scheme in which he paid thousands of dollars to an army official in return for government contracts, as well as a separate scheme involving fraudulent real estate sales and refinances.
Kwon, also known as Thomas Kwon, of Vienna, Virginia, pled guilty in September 2012 in the U.S. District Court for the District of Columbia to one count each of bribery, conspiracy to commit bank fraud, and willful failure to file a tax return. He was sentenced by the Honorable Emmet G. Sullivan. Judge Sullivan also ordered Kwon to pay $1,188,500 in restitution and the same amount in a forfeiture money judgment. Upon completion of his prison term, Kwon will be placed on three years of supervised release.
Kwon was the co-founder and chief executive officer of Avenciatech Inc., a government contractor based in Annandale, Virginia. He is among 17 people and one corporation that pled guilty to federal charges for their roles in the largest domestic bribery and bid-rigging scheme in the history of federal contracting. The investigation is continuing.
The plea was announced by U.S. Attorney Ronald C. Machen, Jr.; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Peggy E. Gustafson, Inspector General for the Small Business Administration (SBA); Robert E. Craig, Special Agent in Charge of the Mid-Atlantic Field Office of the Defense Criminal Investigative Service (DCIS); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).
According to a statement of offense signed by the government and the defendant, Kwon learned of a contract-steering scheme from two business contacts: Alex N. Cho, who was then the chief technology officer for Nova Datacom LLC, and a second Nova Datacom employee. This scheme involved contracts and subcontracts awarded through the U.S. Army Corps of Engineers in return for hundreds of thousands of dollars in payments to Kerry F. Khan. At the time, Khan was a program manager at the Army Corps of Engineers.
Kwon’s role in the scheme involving the Army Corps of Engineers included Kwon arranging for Cho and another Nova Datacom employee to exchange checks for approximately $700,000 in cash, which was paid to Khan in exchange for government contracts. Kwon later attempted to obstruct the resulting criminal investigation by destroying evidence. However, he also disclosed to law enforcement authorities the efforts by Cho and another Nova Datacom employee to obstruct the criminal investigation, including Cho’s attempts while wearing a recording device to prevent Kwon from making incriminating statements.
Kwon learned of a second, similar scheme involving another business contact: Nick Park, a former Nova Datacom employee who was then the president of Unisource Enterprise Inc. Kwon learned through Park that he had obtained a subcontract for his company by agreeing to pay bribes to a person identified in court documents as “Public Official C.” This official, based at the time in Seoul, South Korea, was an assistant project manager for the U.S. Army who had responsibilities for a major contract.
In or about February 2009, Kwon traveled to South Korea to meet Public Official C. In exchange for an undisclosed ownership interest in Avenciatech, Public Official C agreed to use his official position to steer subcontracts from the Army to Avenciatech. Plans later called for Public Official C to have a 40 percent ownership interest in the company.
In September 2009, Avenciatech obtained an army subcontract in the amount of $366,844. However, army change orders later increased the value of this subcontract to $1,913,059. Avenciatech also obtained a second contract in February 2011 in the amount of $551,093. Change orders later increased its value to $1,413,513.
In exchange for the official assistance of Public Official C, Kwon made a series of bribe payments. They included cash payments; payments for hotel stays for Public Official C and family members, including a trip to the Atlantis resort in the Bahamas; payments to finance the purchase of a 2010 Lexus automobile; and payments for other things of value.
Kwon also assisted Public Official C in obtaining financing for the purchase of a home in Fairfax Station, Virginia, where Public Official C resided following his reassignment in 2010 to a position at Fort Belvoir. Public Official C wanted to make a $230,000 down payment on the home purchase but did not want to face questions about the source of the money in Public Official C’s bank account. Instead, Public Official C transferred the $230,000 to an account of an Avenciatech employee, Helen Woo. Kwon caused Woo, in turn, to execute a phony “gift letter” claiming that she was Public Official C’s cousin and that she was providing the $230,000 to a settlement company for the home purchase.
Kwon also pled guilty and was sentenced today on charges in a separate scheme involving bank fraud. In addition to running Avenciatech, Kwon was the operations manager for Onyx Financial Services, a mortgage broker based in Annandale. He admitted involvement in at least six fraudulent real estate sales and refinances in northern Virginia, with loan amounts of about $1.8 million. Finally, Kwon pled guilty and was sentenced today for the willful failure to file a tax return. This charge involved his 2010 income tax return.
Cho, Khan, Park, and Woo are among those pleading guilty in the case.
Cho pled guilty to one count of conspiracy to commit bribery, money laundering, and wire fraud and to defraud the United States and one count of bribery. Khan pled guilty to one count each of bribery and conspiracy to commit money laundering. Park pled guilty to two counts of bribery. Woo pled guilty to a misdemeanor fraud charge for her role in the home financing scheme.
Khan was sentenced to 19 years and seven months in prison. Woo was sentenced to two years of probation. Cho and Park are awaiting sentencing.
In announcing Kwon’s sentence, U.S. Attorney Machen, Assistant Director in Charge Parlave, Special Agent in Charge Kelly, Inspector General Gustafson, Special Agent in Charge Craig, and Director Robey thanked those who investigated the case from the FBI’s Washington Field Office; the Washington Field Office of the Internal Revenue Service-Criminal Investigation; the Office of the Inspector General for the Small Business Administration; the Department of Defense’s Defense Criminal Investigative Service; the Defense Contract Audit Agency; and the Army Criminal Investigation Command. They also expressed thanks to the U.S. Marshals Service for its assistance on the forfeiture matter.
They also praised the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson and Bryan Seeley of the Fraud and Public Corruption Section and Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by former Special Assistant U.S. Attorney Christopher Dana; Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, Shanna Hays, Taryn McLaughlin, Sarah Reis, Christopher Samson, and Nicole Wattelet; and Legal Assistants Krishawn Graham and Jessica McCormick.

Amid corruption inquiry, Turkish prosecutor slams police

A Turkish prosecutor has openly accused police of interfering with a high-level corruption investigation.

"Court orders have not been carried out and there has been open pressure on the judicial process from both the chief prosecutor's office and from the police force, which is supposed to carry out the decisions of the courts," Muammer Akkas said in a Thursday statement.

He spoke one day after three Cabinet ministers resigned their posts, after their sons were arrested or temporarily detained in an anti-graft sting, semiofficial news agency Anadolu reported.

One of them, Urbanization and Environment Minister Erdogan Bayraktar, went further than the other two, not just resigning his Cabinet position but also calling on Prime Minister Recep Tayyip Erdogan to step down.

Turkish media reported a possible second wave of detentions as imminent late Wednesday, but the raids did not materialize.

Instead, an apparent deadlock within the judiciary emerged as Akkas, the prosecutor, issued his statement saying the judiciary was under the heel of the government.

Akkas accused police and prosecutors of ignoring a decision of the courts by refusing to carry out more raids.

In a televised statement, Chief Istanbul Prosecutor Turan Colakkadi fired back, saying that Akkas had mishandled the investigation and leaked information to the press, leading to his removal from the case.

Economy Minister Zafer Caglayan and Interior Minister Muammer Guler, whose sons were also arrested in the investigation, also resigned Wednesday. Erdogan accepted the resignations, Anadolu reported.

The sons were detained in a roundup that included the head of a public bank, several bureaucrats and high-profile businessmen. The roundup came after a two-year investigation by the Istanbul Prosecutor's Office into allegations of corruption including money laundering, gold smuggling and bribery.

Many analysts see the corruption investigation as a public fight between Erdogan and Fethullah Gulen, an Islamist preacher living in self imposed exile in Pennsylvania.

Erdogan has repeatedly said since the corruption arrests began that international organizations with branches inside Turkey are trying to destabilize the country.

"This country has never been and never will be the operational space of international organizations. We will not allow the interest lobby, the war lobby, the blood lobby to carry out an operation under the guise of a corruption operation," he said Sunday.

Turkey is expected to hold local elections next year, and some analysts see the raids as a test of Erdogan's grip on power, especially after a turbulent year of unprecedented anti-government protests.

Demonstrations continued Thursday, with marches in Istanbul, Mersin, Izmir and Adana, where police used water cannons on marchers.

Protesters chanted: "The ministers are thieves," "Everywhere is bribery, everywhere is corruption," the "Public will clean this dirt" and the "Prime Minister is a thief."

The Prime Minister had been expected to reorganize his Cabinet, because some of his ministers will be running for office in March. Late Wednesday, he announced a Cabinet shuffle, naming 10 new people.

After the announcement, former Culture Minister Ertugrul Gunay tweeted his displeasure.

"I wish success to the new members of the Cabinet. I will suffice to say for now that I don't find the choices for Justice and Interior positions suitable," he wrote Wednesday.

One day later, he and two other members of parliament -- Izmir MP Erdal Kalkan and Ankara MP Haluk Ozdalga -- were sent to Erdogan's ruling Justice and Development Party's disciplinary committee with a request for their dismissal.

According to Anadolu, the party announced it is taking this disciplinary action against three of its members for "disparaging remarks" against its ideals and core policies.

ADM Subsidiary Pleads Guilty to Conspiracy to Violate the Foreign Corrupt Practices Act

WASHINGTON—A subsidiary of Archer Daniels Midland Company (ADM) pleaded guilty today and has agreed to pay more than $17 million in criminal fines to resolve charges that it paid bribes through vendors to Ukrainian government officials to obtain value-added tax (VAT) refunds, in violation of the Foreign Corrupt Practices Act (FCPA).
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney James A. Lewis of the Central District of Illinois and Special Agent in Charge David A. Ford of the FBI’s Springfield Division made the announcement.
“As today’s guilty plea shows, paying bribes to reap business benefits corrupts markets and undermines the rule of law,” said Acting Assistant Attorney General Raman. “ADM’s subsidiaries sought to gain a tax benefit by bribing government officials and then attempted to deliberately conceal their conduct by funneling payments through local vendors. ADM, in turn, failed to implement sufficient policies and procedures to prevent the bribe payments, although ultimately ADM disclosed the conduct, cooperated with the government, and instituted extensive remedial efforts. Today’s corporate guilty plea demonstrates that combating bribery is and will remain a mainstay of the Criminal Division’s mission. We are committed to working closely with our foreign and domestic law enforcement partners to fight global corruption.”
Alfred C. Toepfer International Ukraine Ltd. (ACTI Ukraine), a subsidiary of ADM, pleaded guilty in the Central District of Illinois to one count of conspiracy to violate the anti-bribery provisions of the FCPA and agreed to pay $17.8 million in criminal fines. The Department of Justice also entered into a non-prosecution agreement (NPA) with ADM in connection with the company’s failure to implement an adequate system of internal financial controls to address the making of improper payments both in Ukraine and by an ADM joint venture in Venezuela.
In a parallel action, ADM consented with the U.S. Securities and Exchange Commission (SEC) to a proposed final judgment that orders the company to pay roughly $36.5 million in disgorgement and prejudgment interest, bringing the total amount of U.S. criminal and regulatory penalties to be paid by ADM and its subsidiary to more than $54 million.
According to the charges, from 2002 to 2008, ACTI Ukraine, a trader and seller of commodities based in the Ukraine, together with Alfred C. Toepfer International G.m.b.H. (ACTI Hamburg), another subsidiary of ADM, paid third-party vendors to pass on bribes to Ukrainian government officials to obtain VAT refunds. The charges allege that, in total, ACTI Ukraine and ACTI Hamburg paid roughly $22 million to two vendors, nearly all of which was to be passed on to Ukrainian government officials to obtain over $100 million in VAT refunds, resulting in a benefit to ACTI Ukraine and ACTI Hamburg of roughly $41 million.
According to the NPA with ADM, a number of concerns were expressed to ADM executives, including an e-mail calling into question potentially illegal “donations” by ACTI Ukraine and ACTI Hamburg to recover the VAT refunds, yet nonetheless failed to implement sufficient anti-bribery compliance policies and procedures to prevent corrupt payments.
In addition to the monetary penalty, ADM and ACTI Ukraine also agreed to cooperate with the department, to periodically report the companies’ compliance efforts, and to continue implementing enhanced compliance programs and internal controls designed to prevent and detect FCPA violations.
The agreements acknowledge ADM’s timely, voluntary, and thorough disclosure of the conduct; ADM’s extensive cooperation with the department, including conducting a world-wide risk assessment and corresponding global internal investigation, making numerous presentations to the department on the status and findings of the internal investigation, voluntarily making current and former employees available for interviews, and compiling relevant documents by category for the department; and ADM’s early and extensive remedial efforts.
The department acknowledges and expresses its appreciation for the cooperation and assistance of German law enforcement authorities, which, in a parallel investigation, reached a resolution with ACTI Hamburg regarding its role in the bribery scheme.
In addition, the department acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement.
This ongoing investigation is being conducted by the FBI. The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eugene Miller of the Central District of Illinois, with significant assistance from the Criminal Division’s Office of International Affairs.

Orange County Criminal Defense Attorney Sentenced to a Year in Prison in Federal Bribery Case

SANTA ANA, CA—An Orange County criminal defense attorney, who was convicted by a jury of executing a bribery scheme to obtain dismissal of a state criminal case against one of his clients, was sentenced today to 12 months and one day in federal prison.
Lawrence Anthony Witsoe, age 70, a resident of Mission Viejo, California, was sentenced by United States District Judge Andrew J. Guilford. In September, Witsoe’s co-defendant, Aaron Scott Vigil, who was a police officer with the Rialto Police Department and a task force officer with the U.S. Drug Enforcement Administration (DEA), was sentenced to 33 months in prison for his role in the bribery scheme.
In addition to his prison sentence, Witsoe’s license to practice law was suspended on August 12, 2013, as a result of his conviction in this case, according to state bar records.
Earlier this year, a federal jury convicted both Witsoe and Vigil of conspiring to solicit a $2,500 bribe from one of Witsoe’s clients, who was charged with assault in a state criminal case, in exchange for having Officer Vigil falsely represent to the Orange County District Attorney’s Office that Witsoe’s client had been cooperating with Officer Vigil and the DEA in connection with drug investigations. In addition to the conspiracy count, Witsoe was also found guilty of two other counts, namely, soliciting the bribe payment from his client and offering and giving the bribe payment to Officer Vigil.
The case was investigated by the Federal Bureau of Investigation.

Former Wichita Police Officer Sentenced in Scheme to Pay Bribe

WICHITA—A former officer of the Wichita Police Department has been sentenced to a year on federal probation after pleading guilty in a scheme to pay a bribe as part of an unsuccessful effort to keep from losing her job, U.S. Attorney Barry Grissom.
Former officer Joletta Vallejo, 35, Wichita, Kansas, pleaded guilty to one count of conspiracy to commit wire fraud. Vallejo was employed by the police department from January 9, 2006 to August 24, 2012. In her plea, she admitted that on October 16, 2011, two citizens approached her to make a report that they were victims of an aggravated robbery, aggravated kidnaping, aggravated battery, and attempted first-degree murder. Vallejo did not follow the police department’s policies in responding and filing their complaints.
As a result of her failure to follow department policies, Vallejo was investigated by the police department’s Professional Standards Bureau. When she was interviewed, she lied to the investigators. When she became aware she was going to be fired, she and co-defendant Patrick Melendrez devised a scheme to attempt to keep her job.
On August 22, 2012, Vallejo created a Google Voice number in the name of Melendrez. They used that number to call and text one of the citizens to offer him money to recant the statements he had made to police about Vallejo’s conduct. The citizen’s response was part of an undercover investigation.
Co-defendant Patrick Melendrez was sentenced to two years on probation. Co-defendant Courtney Foster is awaiting trial.
Grissom commended the Wichita Police Department, the FBI, and Assistant U.S. Attorney Debra Barnett for their work on the case.

Three More Eagle Pass Businessmen Indicted in Connection with Maverick County Bribery, Kickback, and Bid-Rigging Scheme

In Eagle Pass this morning, Federal Bureau of Investigation agents, along with Texas Department of Public Safety investigators, arrested 64-year-old Saul Lombrana, owner and operator of Fiesta Contractors based in Eagle Pass, in connection with an alleged bribery, kickback, and bid-rigging scheme, announced United States Attorney Robert Pitman and FBI Special Agent in Charge Armando Fernandez.
Lombrana is charged by a federal grand jury indictment returned yesterday with one count of paying a bribe to an agent of an organization receiving federal funds. According to the indictment, in March 2011, Lombrana submitted a $14,500 bid to construct 155 linear feet of concrete drain swell on Rafael Street in Precinct 1. Lombrana was awarded the contract. The indictment alleges that Lombrana never constructed the concrete drain swell but requested and received full payment for the project. The indictment also alleges that in exchange for being awarded the contract, Lombrana paid a monetary bribe to a Maverick County employee.
In addition to indicting Lombrana, the federal grand jury sitting in Del Rio returned separate indictments against 46–year-old Alejandro Wheeler, owner and operator of TVAW, a media outlet based in Eagle Pass, and 55– year-old Marcelo Alvarez, a surveyor and consultant in Maverick County. Alvarez surrendered to federal authorities this morning. Authorities are still looking for Wheeler.
Wheeler is charged with one count of aiding and abetting paying a bribe to an agent of an organization receiving federal funds and one count of aiding and abetting theft concerning programs receiving federal funds. According to his indictment, in 2010 and 2011, Wheeler and Maverick County commissioners devised a scheme to have two contractors awarded Maverick County construction contracts. As part of the scheme, Wheeler allegedly received money from the contractors and the commissioners received bribes from the construction funds, as well as discounted campaign advertising and media time.
Alvarez is charged with one count of paying a bribe to an agent of an organization receiving federal funds. According to his indictment, from 2010 to 2012, Alvarez corruptly paid money to Maverick County officials, including two county commissioners, in order to guarantee that engineering, project management and consulting services contracts valued at approximately $800,000 were awarded to a specific company. Alvarez, in turn, was designated as the Resident Project Representative on those projects and received payment for his services.
Upon conviction each charge calls for up to 10 years in federal prison and a maximum $250,000 fine.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the Texas Department of Public Safety. Individuals who have first-hand information about corruption, fraud, or bribery related to Maverick County are urged to contact the FBI at (210) 225-6741. Assistant United States Attorneys Michael Galdo and Bryan Reeves are prosecuting this case on behalf of the government.
An indictment is merely a charge and should not be considered as evidence of guilt. The defendants are presumed innocent until proven guilty in a court of law.

Two New York Doctors Admit Taking Bribes in Test Referrals Scheme with New Jersey Clinical Lab

NEWARK, NJ—Two doctors with a practice in New York admitted today to accepting bribes in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey; its president; and numerous associates, New Jersey U.S. Attorney Paul J. Fishman announced.
Richard Goldberg, 60, of Weston, Connecticut, and Gary Leeds, 60, of Greenwich, Connecticut, each pleaded guilty today before U.S. District Judge Stanley R. Chesler in Newark federal court to one count of accepting bribes.
Including Goldberg and Leeds, 20 people have now pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.
According to documents filed in this and related cases and statements made in court:
During today’s guilty plea proceedings, Goldberg and Leeds admitted to accepting thousands of dollars per month in cash between September 2010 and April 2013 in return for referring patient blood specimens to BLS. The pair acknowledged they each accepted more than $100,000 in cash from BLS in exchange for referring at least a combined $1.8 million in lab business from their joint practice, Family Medical Group of Manhattan.
As part of their guilty pleas, Goldberg and Leeds each agreed to forfeit $108,000.
On April 9, 2013, federal agents arrested David Nicoll, 39, of Mountain Lakes, New Jersey; Scott Nicoll, 33, of Wayne, New Jersey; a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 35, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC—one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 44, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman, and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme.
So far, 11 employees or associates of BLS and nine physicians have pleaded guilty to their roles in the bribery scheme. The investigation has recovered more than $6.5 million to date through forfeiture.
The bribery count to which Goldberg and Leeds pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing for both defendants is scheduled for April 1, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell; IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorney Joseph Minish, Senior Litigation Counsel Andrew Leven and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, and as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.
U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $500 million in health care fraud and government fraud settlements, judgments, fines, restitution, and forfeiture under the False Claims Act; the Food, Drug and Cosmetic Act; and other statutes.

Former Member of Moreno Valley City Council Agrees to Plead Guilty to Federal Bribery Charge for Taking $2.3 Million Cash Payment

RIVERSIDE, CA—In a case stemming from what is believed to be the largest bribe ever accepted by a public official in an undercover operation, a former member of the Moreno Valley City Council has agreed to plead guilty to a federal bribery charge for taking a $2.36 million cash payment from an undercover operative posing as a real estate broker.
Marcelo Co, 64, was charged this morning with one bribery count and one count of filing a false corporate tax return. In court documents filed this morning in United States District Court, Co agreed to plead guilty to the two charges that could send him to federal prison for as long as 13 years.
“Mr. Co orchestrated an elaborate and brazen scheme to undermine the democratic process in Moreno Valley,” said United States Attorney André Birotte, Jr. “Whether he was motivated by power or greed, these crimes constitute a wholesale violation of his oath to work for the citizens who elected him.”
Co, who was elected to the city council in November 2010 and resigned from his seat in August after being charged in state court in an unrelated welfare fraud case, is expected to make his initial court appearance in the federal bribery case early next month.
“It is a very sad day for the citizens of Moreno Valley when one of their elected council members sacrifices his legal and ethical obligations for power and greed,” said Riverside County District Attorney Paul Zellerbach. “This type of unlawful conduct by Mr. Co undermines the very fabric of good government and what we all hope and expect from our elected officials.”
The case against Co is the result of an ongoing investigation by the Inland Regional Corruption Task Force, which is composed of prosecutors, agents, and investigators from the Federal Bureau of Investigation, IRS-Criminal Investigation, the Riverside County District Attorney’s Office, and the United States Attorney’s Office.
“Mr. Co regularly traded votes, land, and confidential information in exchange for cash to fund his personal bank account, rather than what was in the best interest of the residents of Moreno Valley," said Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. "This case was a result of seamless collaboration by the Inland Regional Corruption Task Force, whose members share a mission of rooting out corruption across the Inland Empire."
The court documents filed this morning outline a bribery scheme in which Co told a businessman and an undercover FBI operative posing as a real estate broker that he would control a voting majority of the Moreno Valley City Council and would be able to guarantee land use decisions that would benefit the businessman and the land broker. Co also promised to always vote in favor of land use decisions that would benefit the real estate broker.
Co solicited campaign donations from the businessman, who was cooperating with the investigation, and the FBI undercover operative. Co eventually received payments of $5,000 and $10,000 that he said were to be used to finance the campaigns of individuals who would vote with him on land use issues.
In the fall of 2012, Co met with the undercover operative to discuss a multi-million-dollar sale of a 30-acre parcel that he owned. Co told the real estate broker that once he had control of the city council, he could change the zoning of the property, and the land value would dramatically increase. With the city council election in November 2012, Co told the undercover investigator that he had the votes to alter the zoning and increase the value of Co’s 30-acre parcel, which had been appraised at $710,000. Co proposed that the undercover operative purchase the property for $5.36 million, which would include a cash payment of $2.36 million.
At a meeting on January 30, 2013, Co agreed to sell the property for $5.36 million, but that the publicly filed documents would reflect a sale price of only $3 million. At this meeting, Co accepted $2.36 million in cash.
The tax charge that was filed today concerns a United States Corporation Income Tax Return (Form 1120) that Co filed for his company, Qwik Pack Systems, for tax year 2010. In that filing with the IRS, Co failed to report well over $100,000 in income. This tax charge is not related to the bribery scheme.
“Mr. Co’s intentional omission of more than $112,000 in taxable income—and failure to pay $31,000 in tax to the IRS—was committed for his own private gain and was an insult to honest taxpayers and the citizens of Moreno Valley,” said Joel P. Garland, Acting Special Agent in Charge for IRS-Criminal Investigation, Los Angeles Field Office. “Today’s action is an example of IRS-CI’s vigilance when it comes to enforcing tax laws, particularly when it involves our public officials. IRS-CI, in partnership with our law enforcement partners, is committed to bringing to justice public officials who use their political office to commit crimes.”
At Co’s initial appearance in federal court, which is expected to be in early December, the case will be assigned to a district judge who will schedule a hearing for Co to formally enter the guilty pleas.

Army Soldier and Civilian Sentenced on Bribery Charges for Facilitating Thefts of Fuel in Afghanistan

WASHINGTON—A former U.S. Army sergeant and a co-conspirator have been sentenced in the District of Colorado for their roles in stealing fuel at Forward Operating Base (FOB) Fenty, Afghanistan, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced.
U.S. Army Sergeant Christopher Weaver, 30, of Fort Carson, Colorado, was sentenced on October 28, 2013, to serve 37 months in prison. Weaver pleaded guilty October 20, 2012, and was sentenced by U.S. District Court Judge Marcia S. Krieger.
Jonathan Hightower, 31, of Houston, Texas, who worked at FOB Fenty as a civilian employee of a contractor and who had conspired with Weaver, was also sentenced on October 28, 2013, to serve 27 months in prison. He pleaded guilty August 3, 2012, and was sentenced by U.S. District Court Judge William J. Martinez.
A third conspirator, former soldier Stephanie Charboneau, pleaded guilty on September 5, 2013, before U.S. District Court Judge Philip A. Brimmer. Her sentencing is set for December 9, 2013.
Weaver and Hightower were also ordered to pay $1,225,000 in restitution, jointly with Charboneau. Hightower was also ordered to pay $400,000 in restitution for a related fuel theft scheme that was the subject of the prosecution.
According to court documents, from in or about January 2010 through June 2010, Weaver, Hightower, and Charboneau were involved in handling the uploading and transportation of fuel from FOB Fenty, near Jalalabad, Afghanistan, to nearby military bases. Weaver and Charboneau created false and fraudulent documents purporting to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation was required. Hightower was a civilian who worked at the base’s “fuel point” uploading fuel trucks, occasionally filling the trucks with fuel to be stolen, and taking other steps to assist the conspiracy. At the direction of Weaver and Charboneau, fuel truck drivers used the fraudulent documents to justify the filled trucks’ departures from FOB Fenty. In truth, after the filled fuel truck left the base, the fuel was simply stolen, and Weaver and Charboneau would receive cash from the representative of the trucking company that supplied the fuel trucks. The cash would be split among the three conspirators.
All three conspirators pleaded guilty to receiving payments from a representative of the trucking company in exchange for facilitating the theft of approximately 70 5,000-gallon truckloads of fuel. Each of the three acknowledged that the loss to the United States was in excess of $1 million.
The cases were investigated by the Special Inspector General for Afghanistan Reconstruction, the Department of the Army, Criminal Investigations Division (CID); the Defense Criminal Investigative Service; and the FBI.
These cases were handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, who is on detail from the Special Inspector General for Afghanistan Reconstruction (SIGAR).

Diebold Incorporated Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $25.2 Million Criminal Penalty

WASHINGTON—Diebold Inc. (Diebold), the Ohio-based provider of integrated self-service delivery and security systems, including automated teller machines (ATMs), has agreed to pay a $25.2 million penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by bribing government officials in China and Indonesia and falsifying records in Russia in order to obtain and retain contracts to provide ATMs to state-owned and private banks in those countries.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio made the announcement.
The department today filed in U.S. District Court for the Northern District of Ohio a criminal information and a deferred prosecution agreement. The two-count information charges Diebold with conspiring to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s books and records provisions.
“In China, Indonesia, and Russia, Diebold chose to pay bribes for business and falsify documents to cover its tracks,” said Acting Assistant Attorney General Raman. “Through its corrupt business practices, Diebold undermined the sense of fair play that is critical for the rule of law to prevail. Today’s action—which holds Diebold accountable for its criminal conduct, while also recognizing its cooperation and voluntary disclosure to the government of its conduct—underscores that fighting global corruption is and will remain a mainstay of the Criminal Division’s mission.”
“Companies that pay bribes to public officials, whether those officials are in Cleveland, in Ohio, or overseas, violate the law,” said U.S. Attorney Dettelbach. “Corporate earnings cannot be placed above the rule of law, and today’s penalties—nearly $50 million in all—send the message again, loud and clear, that such conduct is unacceptable. We hope that Diebold will use this opportunity, including the internal controls and compliance monitor required by today’s agreement, to turn the page to a newer and more ethical corporate culture.”
According to court documents, Diebold paid bribes and falsified documents in connection with the sale of ATMs to bank customers in China, Indonesia, and Russia. With respect to China and Indonesia, the court documents allege that from 2005 to 2010, in order to secure and retain business with bank customers, including state-owned and state-controlled banks, Diebold repeatedly provided things of value, including payments, gifts, and non-business travel for employees of the banks, totaling approximately $1.75 million. Diebold attempted to disguise the payments and benefits through various means, including by making payments through third parties designated by the banks and by inaccurately recording leisure trips for bank employees as “training.” The court documents also allege that from 2005 to 2009, Diebold created and entered into false contracts with a distributor in Russia for services that the distributor was not performing. The distributor, in turn, used the money that Diebold paid to it, in part, to pay bribes to employees of Diebold’s privately owned bank customers in Russia in order to obtain and retain ATM-related contracts with those customers.
In addition to the monetary penalty, Diebold agreed to implement rigorous internal controls, cooperate fully with the department, and retain a compliance monitor for at least 18 months. The department agreed to defer prosecution for three years, and, if Diebold abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires. The agreement acknowledges Diebold’s voluntary disclosure and extensive internal investigation and cooperation.
In a related matter, Diebold reached a settlement with the SEC and agreed to pay approximately $22.97 million in disgorgement and prejudgment interest. The SEC settlement was filed today.
The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Justin J. Roberts of the Northern District of Ohio. The case was investigated by the FBI’s Cleveland Field Office. The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.