Month: March 2023

Source: United States Department of Justice

Remarks as Delivered

Good afternoon. I am Kristen Clarke, Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice. It is my honor to be joined today by U.S. Attorney Kenneth Parker for the Southern District of Ohio. And it is a pleasure to be here at the Martin Luther King Jr. Branch of the Columbus Metropolitan Library.

Every year during the month of February, the nation pauses to reflect on the impact of the multitude of contributions and sacrifices that Black Americans have made to this country. Those impacts can be felt right here in Columbus. The transformative work of Aminah Robinson, who used art to tell the stories of the African experience and to critique the roles that racism and discrimination have played in American society; the contributions of the Second Baptist Church in the King-Lincoln District, which is the oldest Black church here in Columbus, has served as a cultural and social force for nearly 200 years; and the legacy of Hansford Village, which has been listed in the National Register of Historic Places and has served for decades as a community and safe haven for Black residents of this city, including veterans who served as Tuskegee airmen – these are all just a few examples of the ways that Black residents of Columbus have not only shaped the legacy of this great city, but of the entire country.

Black History Month also serves as an opportunity to reflect on the barriers that have prevented Black people from enjoying full citizenship and equal opportunity. Redlining, the discriminatory and unlawful practice of systematically denying financial services to residents in certain communities simply because of their race or ethnicity, is one blatant example of such a barrier. Redlining not only harms Black people and people of color who are denied equal access to credit and the opportunity to build wealth. It also spans generations, as communities have been deprived of investment, which in turn, contributes to the widening racial wealth gap in the United States. Unfortunately, redlining has not yet been relegated to the dustbin of history. That redlining persists to this day in the form of lenders who avoid providing mortgage lending services in communities of color is unacceptable and unlawful.

Today, I am pleased to announce that we have secured a $9 million agreement with Park National Bank. Park National, headquartered just 40 miles away in Newark, Ohio, offers a range of businesses and consumer products and services, including home mortgage lending. It also has 92 full-service branches across four different states, including 20 in the Columbus metropolitan area. This settlement resolves allegations that Park National, from 2015 to 2021, engaged in a pattern or practice of redlining predominately Black and Hispanic neighborhoods in the Columbus metropolitan area. As set forth in our complaint, filed in federal court today, for many years Park National failed to operate any branches in majority-Black and Hispanic census tracts in the Columbus area. They did not assign mortgage lenders to serve these neighborhoods and significantly lagged behind its peer lenders in terms of mortgage lending activity in majority-Black and Hispanic communities. Specifically, Park National’s peer banks generated mortgage applications at a rate at least five times and sometimes as much as over ten times as Park National’s rate. While 19% of census tracts in Park National’s lending area here in the Columbus region are majority Black and Hispanic, the bank did not maintain a single branch in these communities.

Under the terms of today’s settlement, Park National will invest over $7 million in a loan subsidy fund that will help borrowers of color access credit, and they’ll open new offices to service the needs of the Black and Hispanic communities in Columbus. U.S. Attorney Parker, our partner in this matter, will discuss the terms of the settlement in greater detail shortly.

This announcement is part of the Justice Department’s Combatting Redlining Initiative, which was announced by Attorney General Merrick Garland in October of 2021. This initiative is the Justice Department’s most aggressive and coordinated effort ever to address redlining. It demonstrates our firm commitment to combating modern-day redlining and our commitment to holding banks and other lenders accountable when they deny people of color equal access to lending opportunities. Since 2021, the department has resolved six redlining cases, and collectively, these settlements provide over $84 million in relief to borrowers, including $75 million in funds for loan assistance, and this is relief that stretches from Houston to Memphis, Philadelphia, Newark, Los Angeles, and today, right here in Columbus. Never before has the department resolved so many redlining cases in such a timeframe, and with this extent of financial relief for impacted borrowers.

Our colleagues in U.S. Attorney’s Offices across the country are critical partners in this work, including the Southern District of Ohio. And we’re grateful to U.S. Attorney Parker and his team in the Southern District of Ohio for their continued collaboration and partnership with us in this matter.

Through our redlining compliance work, we have observed that the provisions in our settlements yield substantial benefits for impacted borrowers and their communities. Our settlements are creating new home ownership opportunities for borrowers, particularly borrowers of color. The down payment, interest rate reduction and other forms of financial assistance provided through the subsidy funds mandated by our settlement are literally opening the doors of homeownership to qualified borrowers. We’ve also developed and strengthened partnerships between lenders and community organizations. And these partnerships have not only helped lenders gain credibility in communities where they have not had a historical presence, but they are often vital in assisting lenders in assessing the credit needs of a community and in focusing their efforts on increasing access to credit in underserved communities.

We recognize Park National for cooperating with our investigation and committing to remedying – to providing a remedy – to the redlining concerns that we have identified. We are confident that the actions that are required by our agreement will expand credit opportunities in communities of color here in the Columbus area. And we encourage other lenders to take initiative in evaluating their fair lending risks and embrace opportunities to better serve all communities. And for those banks that fail to take these steps, know that the Justice Department stands vigilant and ready to hold them accountable.

In closing, while today may mark the last day of Black History Month, know that the Justice Department will continue to fight to fulfill the promise of our nation’s fair lending laws while striking down unlawful barriers to access to credit across the country. We must eliminate modern day redlining root and branch. This is about ensuring racial justice, economic justice and equal access to opportunity for all communities in our country.

I’ll now turn the floor over to U.S. Attorney Parker.

Source: United States Department of Justice News

COLUMBUS, Ohio – The Justice Department announced today an agreement to resolve allegations that Park National Bank (Park National), headquartered in Newark, Ohio, engaged in a pattern or practice of lending discrimination by “redlining” in the Columbus metropolitan area. This resolution is part of the Justice Department’s nationwide Combating Redlining Initiative.

“For far too long the doors to home ownership have been shut for Black families and many other people of color because of unlawful redlining by banks and other financial institutions,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern day redlining and exacerbate the racial wealth gap in our country. The Justice Department will continue to fight to fulfill the promise of our nation’s fair lending laws while tearing down the discriminatory barriers that deny Black people and other people of color access to economic opportunity and homeownership.” 

“Let today’s settlement send a very clear message to banks: we will not tolerate discriminatory lending practices and we will hold you accountable,” said U.S. Attorney Kenneth L. Parker for the Southern District of Ohio. “We are committed to enforcing fair lending laws, which require financial institutions to provide equal opportunity for every American to obtain home loans and credit. We take very seriously our duty and honor to uphold those laws.”

“Redlining” is an illegal practice in which lenders avoid providing credit services to individuals living in communities of color because of the race, color or national origin of the residents in those communities.

The complaint filed in federal court today alleges that, from at least 2015 to 2021, Park National failed to provide mortgage lending services in majority-Black and Hispanic neighborhoods in the Columbus area. Specifically, the department alleges that all of Park National’s branches and mortgage lenders in the Columbus area were concentrated in majority-white neighborhoods, and that the bank did not take effective measures to compensate for its lack of physical presence in majority-Black and Hispanic communities.

Under the proposed consent order, which is subject to court approval and was filed today in the U.S. District Court for the Southern District of Ohio along with the complaint, Park National has agreed, among other things, to do the following:

• Invest at least $7.75 million in a loan subsidy fund to increase access to credit for home mortgage, improvement, and refinance loans, as well as home equity loans and lines of credit, in majority-Black and Hispanic neighborhoods in the Columbus area; $750,000 in outreach, advertising, consumer financial education, and credit counseling initiatives; and $500,000 in developing community partnerships to provide services to residents of majority-Black and Hispanic areas that expand access to residential mortgage credit;
• Open one new branch and one new mortgage loan production office in majority Black-and Hispanic neighborhoods in the Columbus area; ensure that a minimum of four mortgage lenders, at least one of whom is Spanish-speaking, are assigned to serve these neighborhoods; and maintain the full-time position of Director of Community Home Lending and Development, who is responsible for overseeing lending in majority-Black and Hispanic areas; and 
• Conduct a Community Credit Needs Assessment, a research-based market study, to help identify the needs for financial services in majority-Black and Hispanic census tracts in the Columbus area.

Park National worked cooperatively with the department to remedy the redlining concerns that were identified and has agreed to settle this matter without contested litigation.

The Justice Department’s Combating Redlining Initiative is a coordinated enforcement effort to address this persistent form of discrimination against communities of color. Since the initiative was launched in October 2021, the Department has announced six redlining cases and settlements and secured $84 million in relief for communities of color that have been victims of lending discrimination across the country.

More information about the department’s fair lending enforcement can be found at www.justice.gov/fairhousing. Individuals may report lending discrimination by calling the Justice Department’s housing discrimination tip line at 1-833-591-0291 or submitting a report online. The public can also report potential civil rights violations through the U.S. Attorney’s Office main webpage or at https://www.justice.gov/usao-sdoh/file/1513341/download.

Deputy Civil Chief Brandi Stewart and Assistant United States Attorney Michael J.T. Downey represented the U.S. Attorney’s Office in this matter.

 

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Source: United States Department of Justice News

Today, on behalf of the U.S. Environmental Protection Agency (EPA) and in coordination with the U.S. Attorney’s Office for the Eastern District of Louisiana, the U.S. Department of Justice filed a complaint under Section 303 of the Clean Air Act against Denka Performance Elastomer LLC (Denka) to compel Denka to significantly reduce hazardous chloroprene emissions from its neoprene manufacturing facility in LaPlace, Louisiana. The complaint asserts that the LaPlace plant’s operations present an imminent and substantial endangerment to public health and welfare due to the cancer risks from Denka’s chloroprene emissions.  

“We allege that Denka’s emissions have led to unsafe concentrations of carcinogenic chloroprene near homes and schools in St. John the Baptist Parish, Louisiana,” said Associate Attorney General Vanita Gupta. “The Justice Department’s environmental justice efforts require ensuring that every community, no matter its demographics, can breathe clean air and drink clean water.  Our suit aims to stop Denka’s dangerous pollution.”

“When I visited Saint John the Baptist Parish during my first Journey to Justice tour, I pledged to the community that EPA would take strong action to protect the health and safety of families from harmful chloroprene emissions from the Denka facility,” said EPA Administrator Michael S. Regan. “This complaint filed against Denka delivers on that promise. The company has not moved far enough or fast enough to reduce emissions or ensure the safety of the surrounding community. This action is not the first step we have taken to reduce risks to the people living in Saint John the Baptist Parish, and it will not be the last.”

“The Justice Department and EPA have worked closely together to bring decisive action to address Denka’s harmful air pollution,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “Today’s complaint is part of our ongoing effort to advance environmental justice in overburdened communities through the enforcement of laws.”

Denka’s facility manufactures neoprene, a flexible, synthetic rubber used to produce common goods like wetsuits, beverage cozies, laptop sleeves, orthopedic braces, and automotive belts and hoses. Chloroprene is a liquid raw material used to produce neoprene and is emitted into the air from various areas at the facility.

According to the complaint, filed today in the U.S. District Court for the Eastern District of Louisiana, air monitoring – conducted by both the EPA and Denka over the past several years – consistently shows long-term chloroprene concentrations in the air near Denka’s LaPlace facility that are as high as 14 times the levels recommended for a 70-year lifetime of exposure. This complaint seeks to compel Denka to eliminate the public health endangerment caused by its emissions by greatly reducing the levels of chloroprene to which this community is being exposed.

The complaint also names DuPont Specialty Products USA LLC – the owner of the land beneath Denka’s facility and Denka’s landlord.  DuPont is a necessary party to ensure there are no delays in any actions that Denka is ordered to take to reduce its chloroprene emissions as a result of the rights DuPont holds under its lease agreement with Denka.

In 2010, EPA published its peer-reviewed assessment of chloroprene that concluded the chemical is “likely to be carcinogenic to humans.” According to guidance that looks at impacts of certain cancer-causing chemicals to children, EPA also acknowledged that children accumulate excess lifetime cancer risk from breathing chloroprene faster than adults. Approximately 20% of the total population living within two-and-a-half miles of Denka are children under the age of 18, and about 800 to 1,000 children are under the age of five.  Children are particularly vulnerable to carcinogens like chloroprene because they change DNA and harm cells, meaning they are “mutagenic.” Denka’s chloroprene’s emissions reach more than 300 young children who attend the 5th Ward Elementary School, located within approximately 450 feet of Denka’s facility. Approximately 1,200 children who attend East St. John High School, located roughly a mile-and-a-half north of Denka, are also exposed to the facility’s chloroprene emissions.

Justice Department Attorneys Steven Shermer, Davis Forsythe, and Hannah Frazier of the Environment and Natural Resources Division’s Environmental Enforcement Section are handling this matter.

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced today the sentencing of all seven defendants who previously pled guilty to defrauding the federal “E-Rate” program, designed to provide information technology to underprivileged schools, in connection with E-Rate funds provided to private religious schools in Rockland County, New York.  PERETZ KLEIN, BEN KLEIN, MOSHE SCHWARTZ, SIMON GOLDBRENER, SHOLEM STEINBERG, ARON MELBER, and SUSAN KLEIN had each pled guilty in White Plains federal court to one count of conspiring against the United States and were sentenced in proceedings held between June 2022 and today.  PERETZ KLEIN was sentenced to 48 months in prison; BEN KLEIN was sentenced to 27 months in prison; MOSHE SCHWARTZ was sentenced to 27 months in prison; SIMON GOLBRENER was sentenced to 24 months in prison; SHOLEM STEINBERG was sentenced to 12 months and one day in prison; AARON MELBER was sentenced to nine months in prison; and SUSAN KLEIN was sentenced to time served.  U.S. District Judge Kenneth M. Karas imposed all sentences.

U.S. Attorney Damian Williams said: “The seven defendants who have now pled guilty in this case sought to steal from our most vulnerable population: economically disadvantaged children.  The defendants created elaborate schemes with complete disregard for the fact that the money they selfishly stole should have gone towards providing children with much-needed technology to further their education and brighten their future.  Each defendant now faces serious penalties for their callous crime.”

According to the allegations made in the Indictment and the Informations to which the defendants pled guilty, as well as the defendants’ admissions in court:

The E-Rate program distributes funds to schools and libraries mostly serving economically disadvantaged children so that those institutions can afford needed telecommunication services, internet access, and related equipment.  Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period, and every year, requests for E-Rate funds have exceeded funds available.  In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor.  If approved, the program defrays the cost by up to 90%.  The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor then submit a series of certifications that they comply with a number of requirements of the E-Rate program.  A school applying for E-Rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E-Rate funded equipment and services.

The schools at issue in this case never received millions of dollars’ worth of these items and services for which the defendants billed the E-Rate program.  In other cases, the schools and the defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population.  For example, from 2009 through 2015, one day care center that served toddlers from the ages of two through four requested over $700,000 – nearly $500,000 of which was ultimately funded – for equipment and services – including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet – from companies controlled by certain defendants.  In still other instances, the schools received equipment and services that fulfilled the functions for which the schools had requested E-Rate funds (such as providing the school with internet access), but the schools and the defendants materially overbilled the E-Rate program for the items provided in order to enrich themselves at the expense of the underprivileged children the program was designed to serve.

The defendants also perverted the fair and open bidding process required by the E‑Rate program.  Defendants who held themselves out as independent consultants working for the schools in truth worked for and were paid by other defendants who controlled vendor companies.  These defendants presented the schools with forms to sign or certify, awarding E-Rate funded contracts to companies owned by several defendants.  As a result of false and misleading filings, the defendants received millions of dollars in E-Rate funds for equipment and services that they did not, in fact, provide and which the schools did not use, and the defendants purporting to act as consultants accepted payments totaling hundreds of thousands of dollars from the vendors, despite falsely presenting themselves as independent of the vendors.

In return for their participation in the scheme to defraud the E‑Rate program, certain schools and school officials received a variety of improper benefits from certain defendants, including a percentage of the funds fraudulently obtained from E-Rate for equipment and services that were not, in fact, provided to the schools; free items paid for with E-Rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E-Rate program does not authorize) installed at the schools; and free services for which the E-Rate program authorizes partial reimbursement (such as internet access) but for which the schools did not – contrary to their statements in filings – make any payment at all.

PERETZ KLEIN, SUSAN KLEIN, BEN KLEIN, and SHOLEM STEINBERG held themselves out as vendors to schools participating in the E‑Rate program.  Corporations controlled by these defendants requested over $35 million in E‑Rate funds and received over $14 million in E‑Rate funds from in or about 2010 to in or about 2016.  Each of these defendants has now admitted that the companies they controlled did not, in fact, provide much of the equipment for which they billed the federal government.

SIMON GOLDBRENER and MOSHE SCHWARTZ held themselves out as consultants who worked for educational institutions supposedly helping schools to participate in the E-Rate program by, among other things, holding a fair and open bidding process to select cost-effective vendors.  GOLDBRENER and SCHWARTZ have now admitted that they were, in fact, paid hundreds of thousands of dollars by the vendors to complete and file false E-Rate documents that circumvented the bidding process and resulted in the payment of millions of dollars to the vendors.

ARON MELBER was an official at a private religious school in Rockland County, New York, that participated in the E-Rate program with some of the defendants.  MELBER has now admitted that he filed false certifications with the E-Rate program, falsely claiming to have obtained authorized E‑Rate funded equipment and services from vendors selected through a fair and open bidding process.

Each defendant pled guilty to one count of a conspiracy to commit wire fraud.

*                *                *

PERETZ KLEIN, 68, of Spring Valley, New York, was sentenced on June 8, 2022, to 48 months in prison followed by 24 months of supervised release and was ordered to forfeit $1,144,288.37 and to pay restitution of the same amount. 

BEN KLEIN, 43, of Monsey, New York, was sentenced on October 19, 2022, to 27 months in prison followed by 24 months of supervised release and was ordered to forfeit $412,586.37 and to pay restitution of the same amount. 

MOSHE SCHWARTZ, 50, of Monsey, New York, was sentenced on June 9, 2022, to 27 months in prison followed by 24 months of supervised release and was ordered to forfeit $275,160.00 and to pay restitution of the same amount. 

SIMON GOLDBRENER, 59, of Monsey, New York, was sentenced on November 7, 2022, to 24 months in prison followed by 24 months of supervised release and was ordered to forfeit $479,357.18 and to pay restitution of the same amount.

SHOLEM STEINBERG, 43, of Monsey, New York, was sentenced on November 7, 2022, to 12 months and one day in prison followed by 24 months of supervised release and was ordered to forfeit $191,423.50 and to pay restitution of the same amount. 

ARON MELBER, 47, of Monsey, New York, was sentenced on February 28, 2023, to nine months in prison followed by 24 months of supervised release and was ordered to forfeit $127,654.55 and to pay restitution of the same amount.

SUSAN KLEIN, 62, of Spring Valley, New York, was sentenced on June 8, 2022, to time served followed by 12 months of supervised release and was ordered to forfeit $1,144,288.37 and to pay restitution of the same amount. 

Mr. Williams thanked the Federal Bureau of Investigation, the Federal Communications Commission – Office of the Inspector General, and the Rockland County District Attorney’s Office for their outstanding work on the investigation. 

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg are in charge of the prosecution.