Month: August 2024

Source: United States Department of Justice Criminal Division

A Texas man made his initial appearance in court and pleaded guilty today to violating the Endangered Species Act by importing protected Australian reptiles into the United States on behalf of a fake zoo which he represented as legitimate.

According to court documents, Don Church imported 165 native Australian reptiles by providing false information to Australian and U.S. authorities. The imported reptiles included three Rusty Monitor (Varanus Semiremex) lizards, which are protected internationally by the Convention on International Trade in Endangered Species (CITES).

Church imported the reptiles on behalf of the “Austin Reptile Center,” a non-existent facility. He submitted documents to Australian authorities containing misrepresentations about the facility, including photographs of reptile exhibits, employee names and positions, floor plans, location and financial information. But Church knew no facility suitable for reptile care existed.

To gain purported legal authority to import the reptiles, Church submitted documentation containing misleading and erroneous information about the fictious Austin Reptile Center to the U.S. Fish and Wildlife Service (USFWS). He then imported the reptiles on behalf of the Austin Reptile Center, knowing that import was unlawful. 

To protect species against over-exploitation, CITES regulates trade in endangered and threatened species through permit and quota requirements. The U.S. and 183 countries are signatories to the CITES treaty. The United States implements CITES through the Endangered Species Act, and the USFWS enforces it.

Church pleaded guilty to a criminal information charging violation of the Endangered Species Act. He faces a maximum penalty of one year in prison, one year of supervised release and a fine of up to $50,000.

Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division and Assistant Director Edward Grace of the USFWS’ Office of Law Enforcement made the announcement.

The USFWS is investigating the case.

Trial Attorney Sarah M. Brown of the Environment and Natural Resources Division’s Environmental Crimes Section is prosecuting the case.

Source: United States Department of Justice Criminal Division

The Justice Department today announced that it has reached settlements with the City of El Paso, Texas (the City); United Road Towing Inc., doing business as UR Vehicle Management Solutions (URT); and Rod Robertson Enterprises Inc (RRE) to resolve allegations that they violated the Servicemembers Civil Relief Act (SCRA). The United States’ complaint, which was filed on Feb. 2, 2023, alleges that the City and its contractors auctioned or otherwise disposed of over 170 vehicles owned by protected servicemembers without first obtaining court orders allowing them to do so.

“Members of our armed forces should not have to worry about their cars being auctioned off while they are on the front lines defending our freedoms, liberties and rights,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “These settlements should send a strong message to other cities that they should not take advantage of the rights of our servicemembers while they are defending us from harm.

“My office is committed to safeguarding the rights of servicemembers who call the Western District of Texas home,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “I am proud of our partnership with the Civil Rights Division and our work fighting for the men and women in this district who have been deployed overseas.”

Under the agreements, which are subject to court approval, the City must develop new policies and procedures to ensure that contractors who are responsible for auctioning or otherwise disposing of impounded vehicles comply with the SCRA in the future. The City is also responsible for the payment of a $20,000 civil penalty.

RRE, which was the City’s contractor from January 2015 until April 2019, must establish a $140,000 settlement fund to compensate the affected servicemembers and pay a $20,000 civil penalty.

URT, which has been the City’s contractor since June 2019, must establish a $57,395 settlement fund to compensate servicemembers, pay a $24,980 civil penalty, provide SCRA training to its employees, adopt policies and procedures to investigate the military status of any registered owner prior to auctioning a vehicle and obtain a court order or a valid SCRA waiver prior to auctioning a vehicle owned by a protected servicemember.

The department launched its investigation after receiving a complaint from U.S. Army Lieutenant Colonel Lisa Dechent. While she was deployed to Afghanistan, the City had her 2016 White Chevrolet Silverado truck towed to the impound lot. URT sold it at auction for $6,200, without obtaining the court order required by the SCRA. At the time of the auction, Lieutenant Colonel Dechent still owed approximately $13,000 on the loan she had used to finance the purchase of the truck.

The department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorneys’ Offices throughout the country. Since 2011, the department has obtained over $481 million in monetary relief for over 147,000 servicemembers through its enforcement of the SCRA. For more information about the department’s SCRA enforcement efforts, please visit www.servicemembers.gov.

Servicemembers and their dependents who believe that their rights under SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at legalassistance.law.af.mil/.

View the consent order here.

View the order approving settlement here.

Source: United States Department of Justice Criminal Division

Three real estate investors have pleaded guilty to engaging in an extensive, multi-year conspiracy to fraudulently obtain a $74 million loan and a $45 million loan and fraudulently acquire multifamily properties.

Fredrick Schulman, 72, of New York, and Chaim “Eli” Puretz, 29, of New Jersey, pleaded guilty today to one count of conspiracy to commit wire fraud affecting a financial institution. Moshe “Mark” Silber, 34, of New York, pleaded guilty on July 9 to one count of conspiracy to commit wire fraud affecting a financial institution.

According to court documents, between 2018 and 2020, Silber, Schulman, and Puretz conspired with others to deceive lenders into issuing a mortgage loan for a multifamily property and Fannie Mae into funding or purchasing the mortgage loan. Silber and Schulman were managing members of Rhodium Capital Advisors, an entity that was involved in the acquisition and management of Williamsburg of Cincinnati, an apartment complex in Cincinnati, Ohio. Puretz was one of the owners of commercial property Troy Technology Park in Troy, Michigan. Silber, Schulman, Puretz, and their co-conspirators provided the lenders and Fannie Mae with falsified documents, including a purchase contract with an inflated purchase price and other fraudulent documents.

In March 2019, Williamsburg of Cincinnati was acquired for $70 million. However, Silber, Schulman, and other co-conspirators utilized a stolen identity to present a lender and Fannie Mae with a purchase and sale contract for $95.85 million and other fraudulent documents. On March 8, 2019, two closings were performed, one for the true $70 million sales price and another for the fraudulent $95.85 million sales price presented to the lenders. Based on the co-conspirators’ false statements, the lender and Fannie Mae funded a loan in the amount of $74.25 million for the purchase of Williamsburg of Cincinnati.

In September 2020, Troy Technology Park was acquired by Puretz and co-conspirators for $42.7 million. However, to support an inflated purchase price of $70 million, Puretz and his co-conspirators submitted to the lender and appraiser a fraudulent letter of intent to purchase the property from another party for $68.8 million and other fraudulent documents. Based on the fraudulent documents, the lender funded a loan for $45 million. To conceal the fraudulent nature of the transaction, Puretz and his co-conspirators arranged for a short-term $30 million loan, which was used to make it appear that they had the funds needed to close on the sale. On Sept. 25, 2020, a title company based in Lakewood, New Jersey, performed two closings, one for the true $42.7 million sales price and another for the fraudulent $70 million sales price presented to the lender.

Silber, Schulman, and Puretz are scheduled to be sentenced on Dec. 3 and each face 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.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Philip R. Sellinger for the District of New Jersey; Inspector General Brian M. Tomney of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG); and Postal Inspector in Charge Eric Shen of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group made the announcement.

The FHFA-OIG and USPIS are investigating the case.

Trial Attorney Siji Moore of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Martha Nye for the District of New Jersey are prosecuting the case.

Anyone with information concerning similar multifamily or commercial mortgage fraud can report it by contacting the FHFA-OIG Hotline at 800-793-7724 or via the web at www.fhfaoig.gov/ReportFraud#hotlineform.

Source: United States Department of Justice Criminal Division

The U.S. District Court for the Southern District of Mississippi entered permanent injunctions yesterday against Thomas Walt Dallas, Jason Todd Mardis and Capital Preservation Services LLC to bar them from making statements about tax benefits for compensation, among other relief. The defendants consented to entry of the injunctions.

According to the complaint, Dallas, Mardis and Capital Preservation Services marketed a tax scheme at numerous professional conferences and media appearances targeting medical professionals and small business owners. They allegedly, falsely claimed that customers following their “Tax Plans” could claim multiple deductions to which they were not actually entitled. This included false claims that (1) customers’ businesses could take deductions for paying large, unnecessary “marketing fees” to newly-created, sham marketing companies; (2) the marketing companies could employ family members, including minor children, and take deductions for family meals, vehicle expenses and tuition, among other items; and (3) customers could “rent” their homes to their businesses on a short-term basis at exorbitant rates and avoid paying taxes on the rental income.

The complaint further alleges that Dallas, Mardis and Capital Preservation Services knew or had reason to know that their statements to customers about the supposed tax benefits of the tax plans were false. The alleged the harm from the scheme could be as much as $130 million in lost tax revenue since 2014.

Deputy Assistant General David A. Hubbert of the Justice Department’s Tax Division made the announcement.

Each year the IRS highlights some of the tax scams that put taxpayers at risk of losing money, personal information, data and more. In the IRS’ most recent list, it specifically warned taxpayers “to beware of promoters peddling bogus tax schemes aimed at reducing taxes or avoiding them altogether.”

Working with the IRS, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters over the past decade. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Source: United States Department of Justice Criminal Division

The Justice Department (DOJ) and Federal Trade Commission (FTC) virtually cohosted the first public meeting of the Strike Force on Unfair and Illegal Pricing (Strike Force) to discuss Strike Force enforcement actions taken to lower prices for Americans.

DOJ Acting Associate Attorney General Benjamin C. Mizer, Assistant Attorney General Jonathan Kanter of the Antitrust Division, Principal Deputy Assistant Attorney General Brian Boynton, head of the Civil Division, and FTC Chair Lina M. Khan, along with other agencies on the Strike Force, assembled to highlight the following Strike Force enforcement actions:

• FTC Chair Khan highlighted the FTC’s recent work to stop corporate lawbreaking that raises prices for Americans, including uncovering evidence of corporate conduct that may raise the price of gas, working to lower the cost of many asthma inhalers to just $35 out-of-pocket, and making it easier for Americans to cancel online subscriptions they don’t want. Chair Khan announced that she will ask the Commission to launch an inquiry into grocery prices in order to probe the tactics that big grocery chains use to hike prices and extract profits from everyday Americans at the checkout counter.
• DOJ Acting Associate Attorney General Mizer described DOJ’s efforts to tackle unlawful behavior that affects the prices Americans pay for their groceries, transportation, and health care. Assistant Attorney General Kanter highlighted the historic and concrete actions Antitrust Division staff are undertaking to enforce the law and lower prices in higher education, housing, transportation, food, agriculture, live music, healthcare, and other vital industries. Principal Deputy Assistant Attorney General Boynton highlighted the Civil Division’s work to combat fraudulent pricing schemes involving government agencies and financial institutions, as well as schemes designed to defraud consumers through unfair and deceptive marketing or billing practices.
• Deputy Secretary Xochitl Torres Small of the U.S. Department of Agriculture (USDA) highlighted the all-of-USDA approach to tackling food and agricultural pricing challenges for farmers and consumers alike, including an ongoing investigative study on retail concentration and market practices as well as landmark efforts to modernize the Packers & Stockyards Act rulebook and build a competition partnership with state attorneys general.
• Deputy Secretary Andrea Palm of the U.S. Department of Health and Human Services (HHS) spoke on HHS’ work to make health care affordable, transparent, and fair for everyone. Increasing competition and transparency, lowering prescription drug prices, and expanding access to health care are key ways to make sure our health care system is working for all Americans.
• Acting General Counsel Subash Iyer of the U.S. Department of Transportation (DOT) spoke about DOT’s work to protect airline passengers from unfair practices that can make it more expensive to fly, including by proposing a ban on family seating junk fees and investigating Delta’s refund, reimbursement, and customer service problems during the recent IT meltdown.
• Chair Gary Gensler of the U.S. Securities and Exchange Commission (SEC) spoke about the SEC’s work to address unfair, deceptive, and anticompetitive business practices. The SEC is the cop on the beat for the securities markets. The agency’s rulemaking projects promote transparency, access, and fair dealing in the markets. And through market oversight, including examining registrants and reviewing tens of thousands of filings each year, the SEC guards against fraud and deceptive practices and promotes competition.
• Chair Jessica Rosenworcel of the U.S. Federal Communications Commission (FCC) spoke about the FCC’s work to tackle unfair and deceptive pricing tactics in the communications sector, including by implementing new rules that will slash the exorbitant rates that incarcerated people and their families pay to stay connected.
• Director Rohit Chopra of the Consumer Financial Protection Bureau (CFPB) spoke about the CFPB’s work on junk fees, highlighting a report on school lunch fees, and a recently launched inquiry into junk fees in mortgage closing costs. The CFPB continues its work on all aspects of the credit card market, including looking into bait-and-switch rewards tactics, curbing excessive fees, and ensuring competition, all against the backdrop of interest rate margins hitting an all-time high. Additionally, the agency announced further scrutiny on the role of private equity investors in price gouging.

In March, at the sixth meeting of the White House Competition Council, President Biden announced the launch of the Strike Force to strengthen interagency efforts to root out and stop illegal corporate behavior that hikes prices on American families through anti-competitive, unfair, deceptive, or fraudulent business practices.