Month: April 2023

Source: United States Department of Justice News

Today, the Attorneys General of California, Maryland, New Jersey, and North Carolina joined a civil antitrust lawsuit filed by the Justice Department’s Antitrust Division, the Commonwealth of Massachusetts, the State of New York, and the District of Columbia to block JetBlue’s proposed $3.8 billion acquisition of Spirit Airlines. The Antitrust Division and the state Attorneys General filed an amended complaint in the District of Massachusetts.  

“We look forward to litigating this important case alongside our state law enforcement partners to stop JetBlue from eliminating its rival, Spirit,” said Principal Deputy Assistant Attorney General Doha Mekki. “Today we welcome the States of California, Maryland, New Jersey, and North Carolina, who join the complaint to protect the benefits of competition in the airline industry on behalf of their residents.”

Source: United States Department of Justice News

A federal grand jury returned an indictment yesterday charging three Alabama men with orchestrating an accounting fraud scheme at Austal USA LLC, a Mobile-based shipbuilder that constructs vessels for the U.S. Navy, including the Independence-class Littoral Combat Ship (LCS). Austal USA is a wholly owned subsidiary of Austal Limited, an Australian company that is traded over-the-counter in the United States via American Depositary Receipts, as well as on the Australian Securities Exchange.

According to court documents, from at least in or around 2013 through at least in or around July 2016, Craig Perciavalle, 52, Joseph Runkel, 54, and William Adams, 63, all of Mobile, and their co-conspirators allegedly conspired to mislead Austal Limited’s shareholders and the investing public about Austal USA’s financial condition. Specifically, the defendants are alleged to have artificially reduced and suppressed an accounting metric known as “estimate at completion” (EAC) in relation to multiple LCS ships that Austal USA was building for the U.S. Navy. Suppressing the EACs allegedly falsely overstated Austal Limited’s reported earnings in its public financial statements.

The defendants and their co-conspirators allegedly manipulated the EAC figures in part by using so-called “program challenges” – ostensibly cost-savings goals – but which in reality were “plug” numbers and fraudulent devices to hide growing costs that should have been incorporated into Austal USA’s financial statements, and ultimately reflected in Austal Limited’s reported earnings. The defendants allegedly did this, among other reasons, to maintain and increase the share price of Austal Limited’s stock. When the higher costs were eventually disclosed to the market, the stock price was significantly negatively impacted and Austal Limited wrote down over $100 million.

Perciavalle, Adams, and Runkel are each charged with one count of conspiracy to commit wire fraud and wire fraud affecting a financial institution, five counts of wire fraud, and two counts of wire fraud affecting a financial institution. If convicted, they each face a maximum penalty of 30 years in prison for the conspiracy count and each count of wire fraud affecting a financial institution, and 20 years in prison for each count of wire fraud.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Sean Costello for the Southern District of Alabama, Special Agent in Charge Darrin K. Jones of the Defense Criminal Investigative Service (DCIS) Southeast Field Office, and Acting Special Agent in Charge Michael D. Butler II of the Naval Criminal Investigative Service (NCIS) Economic Crimes Field Office made the announcement.

The DCIS and NCIS are investigating the case.

Assistant Chief Kyle Hankey, Acting Assistant Chief Christopher Jackson, and Trial Attorney Laura Connelly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Christopher Bodnar for the Southern District of Alabama are prosecuting the case.

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. Victims can find case updates and additional information at www.justice.gov/criminal-vns/case/united-states-v-craig-d-perciavalle-et-al.

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

Source: United States Department of Justice News

EAST ST. LOUIS, Ill. – In a U.S. District courtroom Wednesday, a federal jury returned guilty verdicts against a St. Louis man accused of several attempted sex crimes against a minor.

Members of the jury found Vallie Francis Zeller, 46, guilty of Attempted Enticement of a Minor, Travel with Intent to Engage in Sexual Conduct with a Minor and Attempted Sexual Exploitation of a Minor after evidence presented at trial showed he was conversing online with an alleged 15-year-old girl with the intention of having sex with the minor.

“The defendant deliberately tried to exploit a minor for sexual activity and chose to drive across state lines to engage in criminal sex acts, and I’m grateful the jury convicted him on all counts,” said U.S. Attorney Rachelle Aud Crowe. “The FBI works diligently to protect minors from online predators, and I appreciate their collaboration with our office to put this offender behind bars.”

“The FBI’s investigation revealed a deliberate attempt by Vallie Zeller to victimize a child. Our utilization of proactive investigative techniques stopped Zeller from completing the harm he intended,” said FBI Springfield Field Office Special Agent in Charge David Nanz. “We are grateful to the many law enforcement partners who participated in this investigation.”

According to court documents and evidence presented during the trial, Zeller started conversing on an online platform with a profile created by an undercover FBI agent in June 2020. The agent was posing as a 15-year-old girl, and Zeller began sexually explicit conversations with the account, requested sexually explicit images of the minor, and made plans to meet for illegal sexual activity, knowing she was a minor.

Zeller was convicted of driving across the Missouri-Illinois border to engage in criminal sexual activity once the agent gave him an address for a residence in Collinsville to meet the purported minor. In addition, during the conversation over several days, Zeller asked the alleged girl for nude photographs and other sexually-explicit content.

Sentencing is scheduled for July 18, 2023. For his convictions, Zeller faces a mandatory minimum sentence of 15 years in federal prison. Assistant U.S. Attorneys Ali Burns and Zoe Gross are prosecuting the case.

Zeller was one of 14 defendants charged by the U.S. Attorney’s Office in the Southern District of Illinois in June 2020 as the result of an operation involving multiple local, state and federal law enforcement agencies that targeted online predators attempting to meet minors for sex.

The FBI Springfield Field Office led the investigation with assistance by the FBI St.
Louis Field Office, the U.S. Air Force Office of Special Investigations, the Belleville Police Department, the Collinsville Police Department, the Edwardsville Police Department, the Franklin County Sheriff’s Office, the Illinois State Police, the Southern Illinois University-Edwardsville Police Department, the St. Louis County Police Department, the Swansea Police Department, the U.S. Secret Service, the U.S. Marshals Service, the Alton Jail, the Monroe County Jail, and the St. Clair County Jail.

Source: United States Department of Justice News

The Justice Department today announced the filing of a forfeiture complaint against over one million rounds of ammunition, thousands of proximity fuses for rocket-propelled grenades, and thousands of pounds of propellant for rocket-propelled grenades that the U.S. Navy seized in transit from Iran’s Islamic Revolutionary Guard Corps (IRGC) to militant groups in Yemen.

“The United States disrupted a major operation by Iran’s Islamic Revolutionary Guard Corps (IRGC) to smuggle weapons of war into the hands of a militant group in Yemen. The Justice Department is now seeking the forfeiture of those weapons, including over one million rounds of ammunition and thousands of proximity fuses for rocket-propelled grenades,” said Attorney General Merrick B. Garland. “The Justice Department will be relentless in holding accountable those who break our laws and threaten our national security.”

“This forfeiture action prevents ammunition and dangerous weapons from falling into the wrong hands and highlights the importance of our investigative work to deny criminal and terrorist networks their instruments of violence and destruction,” said Secretary of Homeland Security Alejandro N. Mayorkas. “I am extremely proud of the critical investigative role played by Homeland Security Investigations alongside our law enforcement and Department of Defense partners in a collaborative whole-of-government effort.”

“This forfeiture action aims to stop in its tracks yet another attempt by Iran’s Islamic Revolutionary Guard Corps and its proxies to fuel violence and conflict around the globe,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “The U.S. Attorney’s Office for the District of Columbia will use all our tools, including our jurisdiction to seize and forfeit assets, located abroad, to disrupt the IRGC’s efforts to sow discord.”

“Today’s outcome should serve as a stark reminder to individuals and entities seeking to illicitly traffic in armaments that could potentially be used in a manner that is contrary to our nation’s interests,” said Principal Deputy Director James R. Ives of the Defense Criminal Investigative Service (DCIS), the investigative arm of the Department of Defense’s Office of Inspector General. “DCIS and our law enforcement partners will work tirelessly to bring to justice those who engage in unlawful weapons proliferation that serves to destabilize communities and countries, and contributes to a range of nefarious activities, including terrorism, organized crime, and violent conflicts.”

According to court documents, on or about Dec. 1, 2022, U.S. Central Command forces seized the weapons from a flagless vessel in the Arabian Sea. The seizure included 1.063 million rounds of 7.62mmx54mm ammunition; 24,000 rounds of 12.7mmx99mm ammunition; 6,960 proximity fuses for rocket-propelled grenades (RPGs), and 2,000 kg of propellant for rocket-propelled grenades.

The government’s forfeiture action is part of a larger investigation of an Iranian weapons-smuggling network. The network was involved in the illicit trafficking of advanced conventional weapons systems and components by sanctioned Iranian entities that directly support military action by the Houthi movement in Yemen and the Iranian regime’s campaign of terrorist activities throughout the region. The forfeiture complaint alleges a sophisticated scheme by the IRGC to clandestinely ship weapons to entities that pose grave threats to U.S. national security. 

This forfeiture action is a product of the U.S. government’s coordinated effort to enforce U.S. sanctions against the IRGC and the Iranian regime and are merely allegations.

The HSI Washington Field Office and the DCIS Mid-Atlantic Field Office are leading the larger investigation of the Iranian weapons-smuggling network, with substantial assistance from the U.S. Naval Forces Central Command in conducting the seizure. 

Assistant U.S. Attorneys Stuart D. Allen, Brian P. Hudak, Rajbir S. Datta, and Anna D. Walker for the District of Columbia and Trial Attorney S. Derek Shugert of the National Security Division’s Counterintelligence and Export Control Section are litigating the case, with support from Paralegal Specialists Brian Rickers and Angela De Falco.

The burden to prove forfeitability in a forfeiture proceeding is upon the government.

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 Northern District of Ohio, the Justice Department’s Environment and Natural Resources Division announced a complaint against Norfolk Southern Corporation and Norfolk Southern Railway Company (Norfolk Southern) related to the Feb. 3, derailment in East Palestine, Ohio. The complaint seeks penalties and injunctive relief for the unlawful discharge of pollutants, oil, and hazardous substances under the Clean Water Act, and declaratory judgment on liability for past and future costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

This action follows EPA’s issuance on Feb. 21, 2023 of a Unilateral Administrative Order under CERCLA to Norfolk Southern Railway Company requiring the company to develop and implement plans to address contamination and pay EPA’s response costs associated with the order. 

“When a Norfolk Southern train derailed last month in East Palestine, Ohio, it released toxins into the air, soil, and water, endangering the health and safety of people in surrounding communities,” said Attorney General Merrick B. Garland. “With this complaint, the Justice Department and the EPA are acting to pursue justice for the residents of East Palestine and ensure that Norfolk Southern carries the financial burden for the harm it has caused and continues to inflict on the community.” 

“From the very beginning, I pledged to the people of East Palestine that EPA would hold Norfolk Southern fully accountable for jeopardizing the community’s health and safety,” said EPA Administrator Michael S. Regan. “No community should have to go through what East Palestine residents have faced. With today’s action, we are once more delivering on our commitment to ensure Norfolk Southern cleans up the mess they made and pays for the damage they have inflicted as we work to ensure this community can feel safe at home again.”

“Last month, the East Palestine community was upended by a horrific train derailment. By filing this complaint today, we are demanding accountability from Norfolk Southern  for the harm this event has caused,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “We will tirelessly pursue justice for the people living in and near East Palestine, who like all Americans deserve clean air, clean water, and a safe community for their children.”

“The United States Attorney’s Office stands with our district’s residents in pursuing accountability and justice in both the immediate and distant future, as we work together to deal with the damage and destruction this disaster has caused,” said First Assistant U.S. Attorney Michelle Baeppler for the Northern District of Ohio.

On Feb. 3, 2023, a Norfolk Southern train carrying hazardous materials, including hazardous substances, pollutants, and oil derailed in East Palestine, Ohio. The derailment resulted in a pile of burning rail cars, and contamination of the community’s air, land, and water. Residents living near the derailment site were evacuated. Based on information Norfolk Southern provided, the hazardous materials contained in these cars included vinyl chloride, ethylene glycol monobutyl ether, ethylhexyl acrylate, butyl acrylate, isobutylene, and benzene residue. Within hours of the derailment, EPA and its federal and state partners began responding to the incident, including providing on-the-ground assistance to first responders and conducting robust testing in and around East Palestine.

The fire caused by the derailment burned for several days. On Feb. 5, monitoring indicated that the temperature in one of the rail cars containing vinyl chloride was rising. To prevent an explosion, Norfolk Southern vented and burned five rail cars containing vinyl chloride in a flare trench the following day, resulting in additional releases.

Since the EPA’s issuance of the Unilateral Administrative Order to Norfolk Southern Railway Company, the EPA has been overseeing that company’s work under the order. Approximately 9.2 million gallons of liquid wastewater, and an estimated 12,932 tons of contaminated soils and solids have been shipped off-site.

The EPA and other federal agencies continue to investigate the circumstances leading up to and following the derailment. The United States will pursue further actions as warranted in the future as its investigatory work proceeds.  

*This release has been updated to reflect the correct date, March 31, 2023.