Month: January 2023

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Justice Department Files Statement of Interest in Fair Housing Act Case Alleging Unlawful Algorithm-Based Tenant Screening Practices

Source: United States Department of Justice News

The Department of Justice and the Department of Housing and Urban Development (HUD) announced today that they filed a Statement of Interest to explain the Fair Housing Act’s (FHA) application to algorithm-based tenant screening systems. The Statement of Interest was filed in Louis et al. v. SafeRent et al., a lawsuit currently pending in the U.S. District Court for the District of Massachusetts alleging that defendants’ use of an algorithm-based scoring system to screen tenants discriminates against Black and Hispanic rental applicants in violation of the FHA.

“Housing providers and tenant screening companies that use algorithms and data to screen tenants are not absolved from liability when their practices disproportionately deny people of color access to fair housing opportunities,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This filing demonstrates the Justice Department’s commitment to ensuring that the Fair Housing Act is appropriately applied in cases involving algorithms and tenant screening software.”

“Algorithms are written by people. As such, they are susceptible to all of the biases, implicit or explicit, of the people that create them,” said U.S. Attorney Rachael S. Rollins for the District of Massachusetts . “As the housing industry and other professions adopt algorithms into their everyday decisions, there can be disparate impacts on certain protected communities. Stable and affordable housing provides a unique pathway to success, opportunity and safety. We must fiercely protect the rights and protections promulgated in the Fair Housing Act. Today’s filing recognizes that our 20th century civil rights laws apply to 21st century innovations.”

“Tenant screening policies are not exempt from the Fair Housing Act’s protections just because decisions are made by algorithm,” said HUD General Counsel Damon Smith. “Housing providers and tenant screening companies must ensure that all policies that exclude people from housing opportunities, whether based on algorithm or otherwise, do not have an unjustified disparate impact because of race, national origin or another protected characteristic.”  

The Louis lawsuit was filed on behalf of two plaintiffs, Mary Louis and Monica Douglas, Black rental applicants who use housing vouchers to pay part of their rent. Plaintiffs applied for rental housing but allege they were denied due to their “SafeRent Score,” a score derived from Defendant SafeRent’s algorithm-based screening software. The plaintiffs allege that SafeRent scores result in disparate impact against Black and Hispanic rental applicants because the underlying algorithm relies on certain factors that disproportionately disadvantage Black and Hispanic applicants, such as credit history and non-tenancy related debts, while failing to consider one highly-relevant factor, that the use of housing vouchers funded by HUD makes such tenants more likely to pay their rents.

The defendants have moved to dismiss the case, and the plaintiffs have opposed the defendants’ motions. Through the Statement of Interest, the department seeks to assist the court by correcting two questions of law erroneously represented in the defendants’ motions to dismiss. First, the statement sets out the appropriate standard for pleading disparate impact claims under the FHA. Second, the statement clarifies that the FHA’s text and caselaw support the FHA’s application to companies providing residential screening services. The motions to dismiss are currently pending before the court.

The Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status (having one or more children under 18), nation origin, and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. 

Individuals who believe they have been victims of housing discrimination can submit a report online at www.civilrights.justice.gov. Such individuals also may contact the U.S. Department of Housing and Urban Development at 1-800-669-9977 or file a complaint online.

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Justice Department and Meta Platforms, Inc. Reach Key Agreement as They Implement Groundbreaking Resolution to Address Discriminatory Delivery of Housing Advertisements

Source: United States Department of Justice

The Justice Department announced today that it has reached a key milestone in its settlement agreement with Meta Platforms Inc. (Meta), formerly known as Facebook Inc., requiring Meta to change its advertisement delivery system to prevent discriminatory advertising in violation of the Fair Housing Act (FHA). As required by the settlement entered on June 27, 2022, resolving a lawsuit filed in the U.S. District Court for the Southern District of New York, Meta has now built a new system to address algorithmic discrimination. Today, the parties informed the court that they have reached agreement on the system’s compliance targets. This development ensures that Meta will be subject to court oversight and regular review of its compliance with the settlement through June 27, 2026. 

“This development marks a pivotal step in the Justice Department’s efforts to hold Meta accountable for unlawful algorithmic bias and discriminatory ad delivery on its platforms,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department will continue to hold Meta accountable by ensuring the Variance Reduction System addresses and eliminates discriminatory delivery of advertisements on its platforms. Federal monitoring of Meta should send a strong signal to other tech companies that they too will be held accountable for failing to address algorithmic discrimination that runs afoul of our civil rights laws.”

“This groundbreaking resolution sets a new standard for addressing discrimination through machine learning,” said U.S. Attorney Damian Williams for the Southern District of New York. “We appreciate that Meta agreed to work with us toward a resolution of this matter and applaud Meta for taking the first steps towards addressing algorithmic bias. We hope that other companies will follow Meta’s lead in addressing discrimination in their advertising platforms. We will continue to use all of the tools at our disposal to address violations of the Fair Housing Act.”

The United States’ complaint alleged, among other things, that Meta uses algorithms in determining which Meta users receive advertisements, including housing advertisements, and that those algorithms rely, in part, on characteristics protected under the FHA. Specifically, the United States alleged that Meta feeds troves of user information into its advertisement delivery system, including information related to users’ FHA-protected characteristics such as sex and race, and uses that information in its personalization algorithms to predict which advertisement is most relevant to which user. As the complaint alleged, Meta’s delivery algorithms introduce bias when delivering advertisements, resulting in a variance along sex and estimated race/ethnicity between the set of users who are eligible to see housing advertisements based on the advertiser’s targeted audience and the set of users who actually see the advertisement. 

Pursuant to the settlement, Meta has developed a new system — the Variance Reduction System (VRS) — to reduce the variances between the eligible audiences and the actual audiences. The United States has concluded that the new system will substantially reduce the variances between the eligible and actual audiences along sex and estimated race/ethnicity in the delivery of housing advertisements. The VRS will operate on all housing advertisements across Meta platforms, and the agreement requires Meta to meet certain compliance metrics in stages. For example, by Dec. 31, for the vast majority of housing advertisements on Meta platforms, Meta will reduce variances to less than or equal to 10% for 91.7% of those advertisements for sex and less than or equal to 10% for 81.0% of those advertisements for estimated race/ethnicity. For more information on the operation of the VRS, read Meta’s technical paper.

The Justice Department and Meta have also selected an independent, third-party reviewer, Guidehouse Inc. (Guidehouse), to investigate and verify on an ongoing basis whether the VRS is meeting the compliance metrics agreed to by the parties. Under the agreement, Meta must provide Guidehouse and the United States with regular compliance reports and make available any information necessary to verify compliance with the agreed-upon metrics. The court will have ultimate authority to resolve any disputes over the information that Meta must provide.

Finally, as also required by the settlement agreement, Meta has ceased delivering housing advertisements using the Special Ad Audience tool (which delivered advertisements to users who “look like” other users), and Meta will not provide any targeting options for housing advertisers that directly describe or relate to FHA-protected characteristics.

This agreement marks the first time that Meta is subject to court oversight for its advertisement targeting and delivery system.

More information about the Civil Rights Division and the civil rights laws it enforces is available at www.justice.gov/crt. More information about the U.S. Attorney’s Office for the Southern District of New York is available at www.justice.gov/usao-sdny. Individuals who believe they have been victims of housing discrimination may submit a report to the U.S. Attorney’s Office for the Southern District of New York online at www.justice.gov/usao-sdny/civil-rights or by telephone at (212) 637-0840; may submit a report online to the Department of Justice at www.civilrights.justice.gov; or may contact the Department of Housing and Urban Development at 1-800-669-9777 or through its website at www.hud.gov. 

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Virginia Man Pleads Guilty to Conspiring to Violate Iranian Sanctions

Source: United States Department of Justice News

Defendant Engaged in Two Separate Schemes to Do Business with Iran Without Obtaining the Necessary Licenses or Permission

Behrouz Mokhtari, 72, of McLean, Virginia, and Tehran, Iran, a naturalized U.S. citizen, pleaded guilty today to two separate conspiracies to violate sanctions imposed by the United States on Iran regarding the exportation, re-exportation, sale, or supply, directly or indirectly, of any goods, technology, or services to Iran.

According to his guilty plea, from at least March 2018 until at least September 2020, Mokhtari conspired with his co-defendant and others to evade Iranian sanctions by engaging in business activities on behalf of Iranian entities without first obtaining the required licenses from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

Mokhtari held management positions and/or maintained ownership control of multiple business in Iran and the United Arab Emirates (UAE), referred to collectively as “the FSR Network.” Mokhtari and his co-conspirators used the FSR Network to provide services to Iranian entities and engage in transactions involving Iranian petrochemical products, including refining petrochemical products and transporting them by sea. Mokhtari and his co-conspirators used bank accounts located in the UAE, including Bitubiz FZE, which was part of the FSR Network and over which Mokhtari exercised partial or complete control, to process these U.S. dollar transactions.

Mokhtari admitted that Bitubiz operated as a conduit for the FSR Network to conceal the fact that Mokhtari and his co-conspirators were engaging in financial transactions with, and providing services to, Iranian entities. Bitubiz maintained daily ledgers which recorded the receipt and transfers of funds. After receiving an incoming wire transfer, Bitubiz would credit most of that amount to Ayegh Isfahan Manufacturing Company (AIM). Mokhtari and others held ownership interests in AIM, which was located in Iran, engaged in the petrochemical industry, and part of the FSR Network.

As stated in his guilty plea, from about February 2013 until at least June 2017, Mokhtari and several Iranian nationals engaged in a separate conspiracy to support illicit shipments of petrochemical products to and from Iran in violation of the Iranian sanctions. In furtherance of the scheme, Mokhtari created a Panama-based front company, East & West Shipping Inc., to purchase two liquid petroleum gas (LPG) tanker vessels to transport Iranian petrochemical products in international commerce on behalf of, and to benefit, Iranian entities associated with the Government of Iran.

After using East & West to purchase the two vessels (LPG Vessels 1 and 2), Mokhtari transferred ownership of the vessels to other entities to conceal the conspirators’ financial and ownership interest. The conspirators then used another entity, Greenline Shipholding Inc., to control the operations of LPG Vessels 1 and 2. For example, through email communications from Greenline email accounts, or email accounts containing some variation of the Greenline name, the conspirators directed Company 5, a ship management company, to oversee the leasing and operation of LPG Vessels 1 and 2 to transport Iranian petrochemical products from Iranian ports to other locations and to participate in ship-to-ship transfers of Iranian products while on the high seas.

The conspirators, including Mokhtari, used the U.S. financial system to engage in transactions related to the vessels and other expenses. In addition, Mokhtari and his co-conspirators frequently communicated by email about the nature and source of the products that the vessels were transporting, as well as the use of false shipping documents and other measures to conceal the fact that the vessels were transporting products to and from Iran in violation of Iranian sanctions.

At some point prior to May 2017, ownership of LPG Vessel 1 was transferred to Russell Shipping Inc., which was owned by Mokhtari. On May 30, 2017, Mokhtari sold LPG Vessel 1 to be scrapped for more than $3.1 million. Mokhtari received a total of $2,862,591.12 from that sale. The purchaser wired funds to accounts at two separate banks – one held in the name of Mori Construction and Development LLC and the other held in the name of Mori Construction. Mokhtari was the sole owner of Mori Construction and controlled both bank accounts. Through a series of inter-account transfers and check payments, by September 2017, the proceeds from the sale of LPG Vessel 1 were located in a third account, over which Mokhtari and his daughter had signature authority. In March 2018, Mokhtari used those proceeds to purchase a home in Campbell, California, for over $1.5 million.

Mokhtari admitted that he knew that, as a U.S. citizen, he was prohibited from engaging in business with or providing services to Iranian entities without first obtaining a license or permission from OFAC to do so. Neither Mokhtari nor any of his co-conspirators ever applied for or obtained such a license. Mokhtari further knew that it was illegal to engage in transactions intended to evade Iranian sanctions or to engage in transactions related to goods and services of Iranian origin or export.

As part of his guilty plea, Mokhtari must forfeit money, property and assets derived from, obtained as the result of, or used to facilitate the commission of his illegal activities, including the residence he purchased in Campbell, California, and a money judgment in the amount of $2,862,598.12.

Mokhtari faces a maximum sentence of five years in federal prison for each of the two conspiracy counts. U.S. District Judge George J. Hazel scheduled sentencing for April 3.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Erek L. Barron for the District of Maryland, Assistant Director Alan E. Kohler Jr. of the FBI Counterintelligence Division and Special Agent in Charge Thomas J. Sobocinski of the FBI Baltimore Field Office made the announcement.

The FBI investigated the case.

Assistant U.S. Attorney Kathleen O. Gavin for the District of Maryland prosecuted the case, with valuable assistance provided by the National Security Division’s Counterintelligence and Export Control Section.

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Detroit Man Sentenced to More than 10 Years in Prison for Federal Drug Crime

Source: United States Department of Justice News

HUNTINGTON, W.Va. – Virgil Montell-Denzel Watkins, 30, of Detroit, Michigan, was sentenced today to 10 years and eight months in prison, to be followed by four years of supervised release, for distributing 5 grams or more of methamphetamine.

According to court documents and statements made in court, Watkins admitted to selling approximately 1 ounce of methamphetamine to a confidential informant at a Marcum Terrace apartment in Huntington on February 3, 2022. Watkins further admitted to selling an additional 6 ounces of methamphetamine to the informant between February 17 and April 18, 2022.

On April 22, 2022, law enforcement officers arrested Watkins and executed a search warrant at the Marcum Terrace apartment. Watkins admitted that the officers found a Glock, Model 30, .45-caliber pistol and approximately 10 grams of fentanyl during the search.

United States Attorney Will Thompson made the announcement and commended the investigative work of the the Federal Bureau of Investigation (FBI).

United States District Judge  Robert C. Chambers imposed the sentence. Assistant United States Attorney Joseph F. Adams prosecuted the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 3:22-cr-74.

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Defense News: U.S. and Seychellois Divers Team Up in the Port of Victoria

Source: United States Navy

The UCT1 divers, assigned to Commander, Task Force (CTF) 68 for deployment, worked in tandem with SCG divers to start salvaging a wreck that posed a hazard to navigation at the site of a future pier expansion project. This mission will be used as a cornerstone for potential future diving engagements between SCG and U.S. forces, further strengthening the bond between the two nations.

“Working with the Seychelles Coast Guard has been a great experience,” said Chief Builder Estephan Lopez, assistant officer in charge for UCT1’s detachment to CTF 68. “They are an extremely professional group of divers and were more than willing to contribute their diving expertise throughout the job. I look forward to working with them more in the future.”

UCT1 divers utilized exothermic cutting tools to break the wreck into small pieces before removing debris from the water, allowing for mission completion while leaving behind a minimal footprint.

“This mission was a perfect way for us to practice what we train on,” said Steelworker 2nd Class Nicholas Ramirez, a diver who participated in the mission. “Underwater cutting is a really specialized part of our job as Seabee Divers and it’s awesome to be able to employ that capability in a way that actually helps the people in Seychelles.”

Seychellois Divers echoed Ramirez’s comments on the importance of events like this to the overall interoperability between the two nations. They also highlighted the opportunity these dives provide to enhance diving skill and expertise.

“It was a great experience for the Seychelles coast guard dive team,” said Capt Luigi Loizeau, Visit, Board, Search and Seizure (VBSS) and Diving Officer, Seychelles Coast Guard. “The CTF 68 divers are a dedicated professional and coordinated team. I wish that these partnerships continue in the future as the collaboration is a great learning opportunity and as the naval military branch of Seychelles Defence Forces we are aspiring to move into the direction of technical and salvage diving operations.”

In addition to salvage operations, Seabee Divers completed a hydrographic survey of the entire port, identifying ship passageways and underwater topography. In total, UCT1 mapped over 1.7 million square meters, constructing a clear, concise and detailed map of the Port of Victoria’s topography while providing 3D imaging of other identified underwater hazards.

Port Victoria, Seychelles has been a vital international port for decades. With the importance of the port for trade, fishing, and tourism, both Seychelles and the U.S. have a strong vested interest in the upkeep of the port. Bilateral dives like this one ensure that this vested interest continues to pay dividends for both partners.

Underwater Construction Team One is a specially trained and equipped unit within the Navy Expeditionary Combat Force which constructs, inspects, repairs, and maintains ports, ocean facilities, underwater systems and general maritime infrastructure. UCT is a key component of port damage repair operations during a disaster or contingency.

CTF 68, headquartered at Naval Station Rota, Spain, commands all Navy Expeditionary Forces in U.S. European Command and U.S. Africa Command areas of responsibility and is responsible for providing EOD operations, naval construction, expeditionary security, and theater security efforts in direct support of U.S. Naval Forces Europe-Africa and U.S. Sixth Fleet.

For over 80 years, 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 USEUCOM and 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.