Detroit-area Mortgage Broker Charged with Conspiring to Defraud the IRS and Filing False Tax Returns

Source: United States Department of Justice News

A federal grand jury in Detroit returned an indictment yesterday charging a Michigan man with conspiring to defraud the United States and filing false income tax returns. 

According to the indictment, from 2012 to 2018, Todd A. Marra of Shelby Township was a fifty-percent shareholder and co-managing partner of a mortgage brokerage in Troy, Michigan. During that time, Marra and another individual allegedly conspired to defraud the IRS by diverting more than $1.6 million in business proceeds. The indictment alleges that Marra and his coconspirator withdrew cash shortly after depositing checks into the business’s bank account and did not record all deposits and withdrawals on the business’s books and records. Marra and his coconspirator allegedly used these business proceeds to pay for personal expenses and debts and then provided false records to their return preparer that underreported gross receipts and concealed the diversion of funds. The indictment alleges that their actions caused the filing of false partnership returns that substantially underreported the business’s gross receipts and overreported expenses, and also caused the filing of false personal income tax returns that substantially underreported Marra’s income.

If convicted, he faces a maximum penalty of five years in prison for the conspiracy count and a maximum penalty of three years in prison for each false tax return count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement.

IRS-Criminal Investigation is investigating the case.

Assistant Chief Jorge Almonte and Trial Attorney Catriona M. Coppler of the Justice Department’s Tax Division 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.

Laurence Doud, Former CEO Of Pharmaceutical Distributor, Sentenced To 27 Months In Prison For Conspiring To Unlawfully Distribute Controlled Substances And Defrauding The DEA

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, announced that LAURENCE F. DOUD III, the former Chief Executive Officer of Rochester Drug Co-Operative, Inc. (“RDC”), was sentenced today in Manhattan federal court to 27 months in prison for conspiring to unlawfully distribute oxycodone and fentanyl and conspiring to defraud the Drug Enforcement Administration (“DEA”).  DOUD was sentenced today by United States District Judge George B. Daniels after being convicted at trial in February 2022.

U.S. Attorney Damian Williams said: “Laurence Doud cared more about his own paycheck than his responsibility as CEO of RDC to prevent dangerous opioids from making their way to pharmacies, drug dealers, and people struggling with addiction.  The sentence imposed today holds Doud responsible for shipping massive amounts of dangerous and highly addictive oxycodone and fentanyl to pharmacies that he knew were illegally dispensing those controlled substances and reaffirms this Office’s commitment to seeking justice for the many victims of the opioid epidemic.”

According to the Indictment and the evidence at trial:

Violations of the Federal Narcotics Laws

From 2012 through March 2017, DOUD knowingly and intentionally violated the federal narcotics laws by distributing, through RDC, dangerous, highly addictive opioids to pharmacy customers that he knew were being sold and used illicitly.  At the direction of its senior management, including DOUD, RDC supplied large quantities of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined were dispensing those drugs to individuals who had no legitimate medical need for them.  RDC, at the direction of DOUD and others, distributed controlled substances to those pharmacies even after identifying “red flags” of diversion, including dispensing highly abused controlled substances in large quantities; dispensing primarily controlled substances; dispensing quantities of controlled substances in amounts consistently higher than accepted medical standards; accepting a high percentage of cash for controlled substance prescriptions; dispensing to out-of-state patients; and filling controlled substances prescriptions issued by practitioners acting outside the scope of their medical practice, under investigation by law enforcement, or on RDC’s “watch list.”  In addition, and at DOUD’s direction, RDC frequently brought on pharmacy customers that had been terminated by other distributors.

Conspiracy to Defraud the DEA

From 2012 through March 2017, DOUD took steps to conceal RDC’s illicit distribution of controlled substances from the DEA and other law enforcement authorities.  Among other things, DOUD made the deliberate decision not to investigate, monitor, or report to the DEA pharmacy customers that DOUD and others at RDC knew were diverting controlled substances for illegitimate use.  Because they knew that reporting these pharmacies would likely result in the DEA investigating and shutting down RDC’s customers, RDC’s senior management, including DOUD, directed the company’s compliance department not to report them and instead to continue supplying those customers with dangerous controlled substances that the company knew were being dispensed and used for illicit purposes.  Among other things, pursuant to DOUD’s instructions, and contrary to the company’s representations to the DEA, RDC opened new customer accounts without conducting due diligence and supplied those customers – some of whom had been terminated by other distributors – with dangerous controlled substances.  Additionally, DOUD caused RDC to avoid filing suspicious order reports with the DEA as required by law.  As a result, the DEA’s ability to identify and prevent the illicit dispensing of highly addictive controlled substances by several of RDC’s pharmacy customers was impeded.

*                *                *

In addition to his prison term, LAURENCE F. DOUD III, 79, of Port Orange, Florida, was sentenced to three years of supervised release and ordered to pay a $100,000 fine.

Mr. Williams praised the outstanding investigative work of the DEA’s Westchester Tactical Diversion Team and thanked Special Agents of United States Attorney’s Office for their assistance.

The prosecution of this case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Thomas Burnett, Nicolas Roos, and Alexandra Rothman are in charge of the prosecution and represented the Government at trial.  Assistant U.S. Attorney Louis Pellegrino also participated in the investigation into RDC and DOUD.

Assistant Attorney General Kristen Clarke Delivers Remarks on Civil Rights Violations by the Louisville Metro Police Department and Louisville/Jefferson County Metro Government

Source: United States Department of Justice News

Remarks as Delivered

Good Morning.

Three years ago, in the wake of Breonna Taylor and George Floyd’s tragic and brutal deaths, the nation once again turned its eyes to the state of policing in America. People across the country came together to demand action from their leaders, accountability from the police departments that protect and serve them and reforms that can ensure public safety while restoring public trust. At the heart of many of the demonstrations that unfolded in this city, and across the country, was a call for constitutional policing and respect for people’s civil rights.

People in Louisville deserve policing. They deserve policing that is constitutional, fair and non-discriminatory. Our investigation found that the police department and city government failed to adequately protect and serve the people of Louisville, breached the public’s trust and discriminated against Black people through unjustified stops, searches and arrests. The police used excessive force, subjecting people to unlawful strikes, tasings and canine bites. The police sought search warrants without justification and carried out no-knock warrants unlawfully, evading the Constitution, defying federal law and putting ordinary citizens in harm’s way. Today marks a new day and a new chapter for the people of Louisville.

For the last two years, the Justice Department has led an exhaustive investigation in Louisville to determine whether Louisville Metro Government and the Louisville police department engaged in a pattern or practice of conduct that violated the Constitution or federal law. We left no stone unturned.

And we found that LMPD routinely seeks search warrants for residences without establishing legal justification for invading someone’s home. Officers regularly seek warrants that are overly broad, sweeping in people who have, at most, a remote connection to the investigation, who have committed no crime, harbor no evidence and have a constitutional right to not be subject to unreasonable search and seizure.

Officers also violate the law when they act on these warrants by unjustifiably barging into people’s homes without knocking and announcing their presence. And, they often serve these warrants at night. These tactics are dangerous. Officers can be misidentified as intruders, and they may misinterpret shock and surprise as a threat. All of this puts the public at risk and officers too.

Officers also routinely conduct stops, searches and arrests without the required constitutional justification. These tools are essential to enhance public safety, but when used without restraint, they turn into weapons of oppression, submission and fear.

We found that LMPD officers use excessive and dangerous tactics, such as neck restraints, canines and tasers even against people who pose no imminent threat to the officer or others.

We also found that officers misdirect their resources and violate fundamental principles of equal justice by selectively targeting and disproportionately subjecting Black residents to unlawful policing.

LMPD disproportionately stops and cites Black drivers for minor traffic offenses. In fact, Black drivers were nearly twice as likely as white drivers to be cited for having one headlight out. Black drivers were nearly four times as likely as white drivers to be cited for improperly tinted windows, and Black drivers were nearly five times as likely as white drivers to be cited for improper tags.

LMPD also disproportionately searches Black drivers who are stopped and cited. Even when comparing traffic stops where Black and white drivers were engaged in similar behavior before the stop, Black drivers were almost 50% more likely to be searched than whites.

LMPD charges Black people at higher rates than white people for the same misdemeanor offenses. For example, LMPD charges Black people for loitering at more than four times the rate of white people, for disorderly conduct at two and half times the rate of white people, and for littering at three times the rate of white people. This pattern of racial discrimination fuels distrust and impedes the community’s confidence in the LMPD and their law enforcement operations.

LMPD’s improper activity extends beyond use of force, street enforcement and search warrants. We also found that LMPD often responds aggressively to people criticizing the police, both in routine day-to-day police encounters and during lawful demonstrations and both before and after the racial justice protests that occurred in 2020.

We saw unnecessarily aggressive behavior against people experiencing behavioral health crises.

One person, a Black man with an apparent behavioral health disability, had more than 25 encounters with LMPD in less than two years. And in some of these interactions, LMPD officers needlessly escalated the situation and used unreasonable force. At times they even mocked him. The man ultimately died in a Louisville Metro Detention Center after he had once again been arrested by LMPD. Such unnecessary escalation of encounters that could have and should have remained nonviolent was far too common. 

These findings are not based on any one incident or event. They turn on evidence showing long-standing dysfunction at LMPD.

The pattern or practice of unlawful conduct compromises LMPD’s ability to serve and protect safely, constitutionally and effectively. Instead, LMPD has practiced an extreme, misdirected and counter-productive style of policing.  

And, as Attorney General Garland noted, these findings give us reasonable cause to believe that Louisville Metro and LMPD engaged in a pattern or practice of conduct that violates both the Constitution and federal law.

Together, our findings have at their core a lack of effective management, training and accountability. The Louisville Police Department can do better and will do better – better at respecting the civil rights of this community and better at working with the community to fight crime. 

Our investigation was guided by a few core principles:

  • First, policing in America, and particularly Louisville, is complex. We know that interactions with members of the public don’t happen in a vacuum. Dynamics like racial segregation, poverty and violence all affect how officers do their jobs.

  • Second, being a police officer is hard and dangerous work. Officers are often faced with complex, fast-paced situations which, at times, threaten their lives and the lives of others.

  • Third, members of the public may see the police in different ways. Some see the police as pillars of the social order who get us through the worst days of their lives. Others view the police with skepticism and worry that any encounter poses the risk of being unfairly targeted and victimized.

With these realities in mind, again, our efforts were exhaustive. We talked to hundreds of people across the city. We rode with officers in their cars on patrol, and we spoke with city and union officials, judges and attorneys, advocacy groups, religious leaders and community members from different walks of life. Along with our experts, we reviewed thousands of documents regarding LMPD’s enforcement activities, and we watched thousands of hours of body worn camera footage.

We know sustainable police reform requires going beyond mere surface-level changes. It requires digging deep into the root causes of systemic problems. It requires creative ideas from many sources that can help LMPD and Louisville Metro achieve their public safety mission in line with the Constitution, federal law and the community’s values. It requires an optimism that change is possible and a hard-nosed realism about the solutions that can achieve that change.

So, to the people of Louisville, I say let your voice be a part of the change. Louisville residents have a rich history of community organizing and demanding better from your leaders. And we want your activism and engagement to energize and advance this reform process.

In the road ahead, as we focus on creating solutions that will drive real, lasting change in the city, the Justice Department will be reaching out to community members and law enforcement to hear about the kind of police department that people want for their city. We are relying on the diverse communities of this vibrant city to stay engaged, to push us, to advocate and to work with us to create a safer, more just Louisville.

As I close, I want to extend my gratitude to Mayor Greenberg, Council President Winkler and Interim Chief of Police Jacquelyn Gwinn-Villaroel for joining us today. In addition, I want to recognize former Mayor Greg Fischer and former Chief of Police Erika Shields for their cooperation and leadership throughout our investigation.

And I also want to extend gratitude to the hundreds of people across Louisville community who worked with us throughout this investigation. Thanks to the police officers, the civil rights advocates, leaders and many others for exercising your voice in this process. Law enforcement works when the community is engaged, and we at the Justice Department thank you all.

Finally, as we prepare to embark on a path towards reform, we want the citizens of Louisville to hear us loudly and clearly, that we will stand with you every step of the way.

I’d now like to invite Mayor Greenberg to the podium.

Former United States Congressional Candidate Pleads Guilty in Conduit Campaign Contribution Case

Source: United States Department of Justice News

            WASHINGTON – A former primary candidate for the U.S. House of Representatives pleaded guilty today to violating the Federal Election Campaign Act (FECA) by accepting a conduit campaign contribution.

            According to court documents, Lynda Bennett, 65, of Maggie Valley, North Carolina, was a primary candidate for North Carolina’s 11th Congressional District in 2020. In late December 2019, Bennett borrowed $25,000 from a family member, representing that she needed the money for personal expenses because she had to spend a large amount of her own money on her campaign.  The day after depositing the loaned money into a personal account, Bennett then caused $80,000, including the $25,000 in loaned money, to be transferred to the bank account of Lynda Bennett for Congress (“LBC”), her authorized federal campaign committee. Under the FECA, Bennett was required to report a loan from a third-party individual as a campaign contribution.  Bennett knowingly and willfully violated the FECA by reporting through LBC that the full $80,000 was a loan to her campaign using her own personal funds, rather than disclosing that $25,000 of that amount was a loan from another individual.

            Bennett pleaded guilty to one count of accepting contributions in the name of another.  She is scheduled to be sentenced on June 20, 2023 and faces a maximum penalty of five 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 Matthew M. Graves for the District of Columbia; and Assistant Director in Charge David Sundberg of the FBI Washington Field Office made the announcement.

            The FBI Washington Field Office is investigating the case.

            Trial Attorney Ryan R. Crosswell of the Justice Department’s Public Integrity Section and Assistant U.S. Attorney Joshua S. Rothstein of the U.S. Attorney’s Office for the District of Columbia are prosecuting the case. Former Assistant U.S. Attorney Amanda R. Vaughn for the District of Columbia provided assistance.

Former Claims Examiner for Michigan Unemployment Agency Pleads Guilty In COVID-19 Fraud Scheme

Source: United States Department of Justice News

DETROIT – A former unemployment examiner for the Michigan Unemployment Insurance Agency (MUIA) pleaded guilty today to conspiring to steal federal unemployment insurance benefits during the Covid-19 pandemic, United States Attorney Dawn N. Ison announced today.

Ison was joined in the announcement by Irene Lindow, Special Agent in Charge, Chicago Region, U.S. Department of Labor, Office of Inspector General, and Acting Special Agent in Charge Charles Miller, Internal Revenue Service, Criminal Investigation Division in Detroit.

According to court documents, Semaje Reffigee, 26, of Detroit, began working as a contract unemployment insurance examiner with the MUIA in October 2020. In this position, she had electronic access to the MUIA claims database. Reffigee was able to use her credentials to access and approve specific fraudulent unemployment insurance claims submitted to the agency, including claims outside her assigned workflow.

Court documents indicate that shortly after she began her contract employment with MUIA, Reffigee entered into an agreement with various individuals to defraud the MUIA by obtaining unemployment benefits through the submission of false claims. Reffigee’s co-conspirators would electronically submit fraudulent claims to MUIA in the names of various individuals, some of whom would be victims of identity theft and some of whom were entirely fictitious people. These co-conspirators made false statements in the applications attesting to the eligibility of these purported claimants and would upload fictitious documentation to support those fraudulent claims. The co-conspirators would then communicate with Reffigee, either directly or through intermediaries, and identify the claims that they had submitted.  Reffigee would then use her insider access to the MUIA system to approve the claims and release benefits. Most of the time, benefits would be electronically loaded onto Bank of America debit cards and mailed to addresses controlled by Reffigee’s co-conspirators. Reffigee was often paid a “kickback” for her services, typically receiving a few hundred dollars per claim.  Reffigee herself also unlawfully received approximately $9,000 in unemployment insurance benefits during the course of her employment with MUIA.

U.S. Attorney Ison stated, “This case reflects our ongoing commitment to prosecute those who took advantage of the Covid-19 pandemic by stealing funds intended for those in need.  We treat this kind of fraud especially seriously because corruption within these programs undermines trust and confidence in government programs generally.”

“Semaje Reffigee was a state contract employee who was trusted to handle sensitive employment information. She abused her position for personal gain by using her access to state data systems to approve fraudulent UI claims submitted by her co-conspirators. Many of the fraudulent claims used the personally identifiable information of identity theft victims. Protecting the integrity of the unemployment insurance program remains one of our highest priorities. We will continue to work with our law enforcement partners to safeguard unemployment benefits for those who need them and to bring to justice those who commit unemployment insurance fraud,” said Irene Lindow, Special Agent in Charge, Chicago Region, U.S. Department of Labor, Office of Inspector General.

“Semaje Reffigee was entrusted to work for the State of Michigan.  She, along with her co-conspirators, devised a scheme to steal money that was intended to provide financial assistance to those in need during the COVID-19 pandemic,” said Charles Miller Acting Special Agent in Charge, IRS-Criminal Investigation Detroit Field Office.  “IRS-CI is proud to work with our law enforcement partners as we continue the pursuit of criminals who steal from the American taxpayer.”

Reffigee pleaded guilty before U.S. District Judge Matthew F. Leitman.  She is scheduled to be sentenced on July 13, 2023.  She faces a maximum of twenty years in prison, and a fine of up to $250,000.  Per the terms of her plea agreement, Reffigee will also be required to repay $313,497 in restitution to the State of Michigan.

The case is being prosecuted by Assistant U.S. Attorneys Ryan A. Particka and Sarah Youngblood.

This investigation is being conducted jointly by the U.S. Department of Labor Office of the Inspector General and the Internal Revenue Service Criminal Investigation, with assistance from the Michigan Unemployment Insurance Agency.