Month: November 2022

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Security News: Three Arrested for Illegal Scheme to Export Controlled Data and Defraud the Department of Defense

Source: United States Department of Justice News

Defendants Allegedly Sent Technical Data Drawings Related to U.S. Military Projects to China and then Supplied the Department of Defense with Prohibited Chinese-Origin Items

A federal indictment was unsealed today following the arrest of three defendants and their initial appearances in the U.S. District Court in the Western District of Kentucky.

According to court documents, Phil Pascoe, 60, of Floyds Knobs, Indiana; Monica Pascoe, 45, of Floyds Knobs, Indiana; Scott Tubbs, 59, of Georgetown, Kentucky; and Quadrant Magnetics LLC are charged with wire fraud, violations of the Arms Export Control Act, and smuggling of goods for their roles in an illegal scheme to send export-controlled defense-related technical data to China and to unlawfully supply U.S. Department of Defense (DOD) with Chinese-origin rare earth magnets for aviation systems and military items.  

The indictment alleges that between January 2012 and December 2018, the defendants conspired to send approximately 70 drawings containing export-controlled technical data to a company located in China without a license from the U.S. government, in violation of the Arms Export Control Act and the International Traffic in Arms Regulations. The technical data drawings were the property of two U.S. companies and related to end-use items for aviation, submarine, radar, tank, mortars, missiles, infrared and thermal imaging targeting systems, and fire control systems for DOD.

The indictment further alleges that Quadrant Magnetics imported rare earth magnets that were smelted and magnetized by a company in China. Quadrant then sold these magnets to two U.S. companies which included them in components sold to DOD for use in the F-16, the F-18, and other defense assets in violation of the Defense Acquisition Regulations System (DFARS). Under the DFARS specialty metal clause, rare earth magnets sold to DOD must be produced and magnetized in the United States or an approved country. China is not an approved country. 

Arraignments will be scheduled before a U.S. Magistrate Judge in the U.S. District Court for the Western District of Kentucky. If convicted, Phil Pascoe, Monica Pascoe and Scott Tubbs face statutory maximum penalties of up to 20 years in prison for each count of wire fraud; 20 years in prison for each count of exporting technical data without a license; and 10 years in prison for smuggling goods from the United States. Monica Pascoe and her co-defendants face a penalty of up to five years for conspiracy to defraud the United States. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Michael A. Bennett for the Western District of Kentucky, Assistant Director Alan E. Kohler Jr. of the FBI Counterintelligence Division and Special Agent in Charge Jodi Cohen of the FBI Louisville Field Office made the announcement.

The Defense Criminal Investigative Service, FBI, the Department of Homeland Security, IRS – Criminal Investigation, the Naval Criminal Investigative Service, and the Department of Energy’s Office of Inspector General are investigating the case.

Assistant U.S. Attorneys Joshua Judd and Christopher Tieke for the Western District of Kentucky and Trial Attorneys David Recker and Liz Abraham with the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case. 

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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Security News: City of Elyria, Ohio, Agrees to Federal Plan to Eliminate Sewage Discharges into the Black River

Source: United States Department of Justice News

The city of Elyria, Ohio, has entered into a consent decree with the United States and the State of Ohio to complete a series of capital projects designed to eliminate discharges of untreated sewage from its sewer system into the Black River, 10 miles upstream from Lake Erie.

The projects that Elyria has agreed to implement will significantly increase the amount of wastewater that receives treatment and prevent overflows from sanitary and combined sewer outfalls when the system becomes overloaded. When completed, the water quality of the Black River, around which the City of Elyria is situated, will be greatly improved. Elyria is expected to spend nearly $250 million to improve its sewer system. It will also pay a civil penalty of $100,000 to the United States and pay $100,000 to Ohio’s Surface Water Improvement Fund.

The consent decree would resolve the violations alleged in the underlying complaint filed by the United States and the state of Ohio. The complaint alleges that Elyria’s sanitary sewers overflowed on more than 1,100 occasions since 2011, resulting in discharges of untreated sewage into the Black River or a tributary to the river. The complaint also alleges that Elyria failed to comply with a previous court order to stop these illegal discharges.

“The Clean Water Act requires adequate infrastructure to limit discharges of untreated sewage,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “These settlements require meaningful investments that will improve the health of the Black River and Lake Erie.”

“The City of Elyria’s infrastructure investment will not only reduce untreated sewage from entering the Black River, but also improve water quality for residents,” said Acting Assistant Administrator Larry Starfield of the EPA’s Office of Enforcement and Compliance Assurance. “EPA and the State of Ohio worked with the City of Elyria to develop a comprehensive solution to protect water quality.”

Under the proposed consent decree, Elyria will construct various projects within its sewer system to be completed by Dec. 31, 2044. The most environmentally-significant of these projects will be completed within the first 15 years. This includes completion of the city’s East Side Relief Sewer, increasing capacity at Elyria’s wastewater treatment plant, adding processes to mitigate the harm from any bypasses around the wastewater treatment plant, and 12 other projects that will control waste overflows or the flow of non-wastewater into the sewer system. Elyria will submit semi-annual progress reports to the United States and the state of Ohio until all work has been completed.

The proposed agreements are subject to a 30-day public comment period and final court approval after publication in the Federal Register.

More information about this settlement can be found here.

The consent decree, lodged in the U.S. District Court for the Northern District of Ohio, is subject to a 30-day public comment period and final court approval. The consent decree will be available for viewing at https://www.justice.gov/enrd/consent-decrees.

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Security News: Former Embassy Employee Pleads Guilty to Domestic Violence

Source: United States Department of Justice News

A former employee of the U.S. Embassy in the Republic of Moldova pleaded guilty yesterday in a domestic violence case involving his wife, a U.S. diplomat working at the Embassy.

According to court documents, Ilirjan Shema, 46, accompanied his family to Chisinau, Moldova, where his spouse, an employee of the U.S. Department of State, was assigned to work as a Foreign Service Officer at the U.S. Embassy. While in Moldova, Shema obtained a family member position to work at the Embassy. On April 10, 2021, while inside their official residence provided by the embassy, Shema attacked his wife, striking her, throwing her to the ground, and strangling her. The attack resulted in physical injuries. Shema was subsequently arrested on Aug. 5, 2021, when he traveled from Albania to Atlanta, Georgia. 

Shema pleaded guilty to a charge of interstate domestic violence. He is scheduled to be sentenced on Feb. 23, 2023 and faces a maximum penalty of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia, and Principal Deputy Assistant Secretary and Director Carlos Matus of the U.S. Department of State’s Diplomatic Security Service (DSS) made the announcement.

The DSS Office of Special Investigations is investigating the case with the assistance of the Regional Security Office, U.S. Embassy in Chisinau, Republic of Moldova.

Trial Attorney Brian Morgan of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Stephanie Gabay-Smith for the Northern District of Georgia are prosecuting the case.

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Defense News: Navy’s newest aircraft carrier joins allies for exercise Silent Wolverine

Source: United States Navy

Silent Wolverine tests the first-in-class aircraft carrier capabilities through integrated high-end naval warfare scenarios alongside participating NATO allies. Exercise participants include Canada, Denmark, Germany, France, the Netherlands, Spain, and the United States.

“The challenges of tomorrow are upon us – in the here and now. Silent Wolverine demonstrates our commitment to deepening interoperability with our allies and partners, while testing the advanced, cutting-edge warfighting capabilities of the Ford-class aircraft carrier in a highly relevant operational environment,” said Adm. Stuart B. Munsch, commander, U.S. Naval Forces Europe and Africa, and Allied Joint Force Command Naples.

Gerald R. Ford is a first-in-class U.S. aircraft carrier that incorporates 23 new technologies comprised of significant advances in propulsion, power generation, ordnance handling, and aircraft launch systems. The Ford-class aircraft carrier generates an increased aircraft launch and recovery capability with a 20 percent smaller crew than Nimitz-class aircraft carriers.

Along with their Carrier Strike Group (CSG), this deployment tests Gerald R. Ford’s operational readiness and future ability to support combatant command requirements. The CSG’s participation in Silent Wolverine previews the decisive, precise, and lethal advantage that Gerald R. Ford brings to future naval operations.

“We are honored to be sailing alongside some of the most capable navies in the world during our first deployment as we increase our proficiencies and demonstrate the warfighting capabilities that Ford brings to the fight,” said Rear Adm. Greg Huffman, commander, Carrier Strike Group 12. 

The Gerald R. Ford CSG consists of the Ford-class aircraft carrier USS Gerald R. Ford (CVN 78), Ticonderoga-class guided-missile cruiser USS Normandy (CG 60), and Arleigh Burke-class guided missile destroyers USS McFaul (DDG 74), and USS Thomas Hudner (DDG 116).  The Gerald R. Ford CSG is conducting their first deployment to the U.S. European Command (EUCOM) area of responsibility to exercise with allies.

For over 80 years, U.S. Naval Forces Europe-U.S. Naval Forces Africa (NAVEUR-NAVAF) has forged strategic relationships with allies and partners, leveraging a foundation of shared values to preserve security and stability.

Headquartered in Naples, Italy, NAVEUR-NAVAF operates U.S. naval forces in the U.S. European Command (USEUCOM) and U.S. Africa Command (USAFRICOM) areas of responsibility. U.S. Sixth Fleet is permanently assigned to NAVEUR-NAVAF, and employs maritime forces through the full spectrum of joint and naval operations.

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Security News: Omega Healthcare Investors, Inc. Agrees to Pay $3 Million to Settle Civil False Claims Act Allegations

Source: United States Department of Justice 2

AUSTIN – Omega Healthcare Investors, Inc., as successor-in-interest to MedEquities Realty Trust, Inc. (MedEquities), has agreed to pay $3 million to resolve allegations that MedEquities violated the False Claims Act by submitting false claims to the Medicare and Medicaid programs. Omega subsidiaries MRT of Lakeway TX – ACH, LLC (MRT-Lakeway) and Lakeway Realty, LLC (Lakeway Realty) are also parties to the settlement agreement.

The United States alleges that MedEquities paid kickbacks to physicians to induce them to refer patients to a hospital developed by Lakeway Regional Medical Center, LLC (LRMC). MedEquities offered the physicians a low-risk, high-reward investment in Lakeway Realty, a joint venture formed by MRT-Lakeway to purchase the hospital and lease it back to LRMC. The government contends that claims for reimbursement based on these referrals and submitted by LRMC to the Medicare and Medicaid programs between March 2, 2015 and August 31, 2016 were unlawful under the federal Anti-Kickback Statute.

The allegations in this case were initially brought by Robert Van Boven, M.D. and Sharon Van Boven in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The Van Boven’s qui tam suit remains under seal, subject to an order of the Court permitting the United States to disclose this settlement.

The United States previously announced a settlement with LRMC to resolve allegations regarding the hospital’s role in the alleged kickback scheme.

U.S. Attorney Ashley C. Hoff of the Western District of Texas made the announcement and thanked the Department of Health and Human Services Office of Inspector General and the Civil Medicaid Fraud Division of the Office of the Attorney General of Texas for their assistance.

Assistant U.S. Attorneys Thomas Parnham and Samuel Shapiro represented the United States in the settlement.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

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