Month: September 2024

Source: United States Department of Justice Criminal Division

WASHINGTON – David Plummer, Spencer Plummer and Terry Green, operators of a fraudulent tax shelter that offered tax benefits in connection with the leasing of thoroughbred mares, pleaded guilty today to a criminal information charging them with one count of conspiracy to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced.

According to the criminal information and statements made in court, the defendants called their fraudulent tax product the Mare Lease Program and marketed it through a company called ClassicStar LLC. David Plummer created the Mare Lease Program and oversaw the program at ClassicStar. Spencer Plummer assisted David Plummer in the operation of the Mare Lease Program. Terry Green was a Certified Public Accountant and assisted investors in the Mare Lease Program in preparing and filing income tax returns on which they reported fraudulent deductions. Green also assisted customers in their IRS audits by creating false and back-dated documents and presenting them to IRS auditors. The investors in the Mare Lease Program filed tax returns with the IRS claiming false tax deductions of over $500 million, which resulted in a tax loss to the Government of over $200 million.

According to the criminal information and statements made in court, ClassicStar’s Mare Lease Program purported to offer wealthy individuals the opportunity to invest in thoroughbred horse breeding. According to Mare Lease Program promotional materials, investors leased the reproductive capacity of specific thoroughbred mares. If the mare had a foal during the time that the investor held the lease, the investor would own the foal. Mare Lease Program promoters told investors that they could take deductions on their federal income tax returns for the losses generated by the thoroughbred horse breeding operation. These deductions reduced or eliminated the investors’ taxes, and many investors received tax refunds, including refunds for years prior to their investments. These deductions were fraudulent because, among other reasons, the Mare Lease Program used fraudulent loans to finance investors’ participation, and the program induced investors to lease thoroughbred mares that the operators of the program knew ClassicStar could not provide.

According to the criminal information and statements made in court, most investors financed at least 50 percent of their investments in the Mare Lease Program through loans from the National Equine Lending Company (NELC), a purportedly independent financial institution. In fact, NELC was controlled by ClassicStar. ClassicStar’s operators claimed that NELC would transfer funds to ClassicStar on behalf of an investor to finance his or her investment in the Mare Lease Program. In reality, NELC had no funds of its own and would instead accept money from ClassicStar. Typically, ClassicStar transferred insufficient funds to NELC to finance an investor’s entire loan. To conceal the lack of funds, NELC and ClassicStar repeatedly transferred the same funds between their bank accounts to create a paper trail that gave the appearance that the investor’s loan was fully funded by NELC. At the conclusion of the investor’s participation in the Mare Lease Program, the investor, often having made no payments on the supposed loan, had the loan extinguished through fictitious trades involving an entity that purportedly owned interests in coal bed methane gas wells.

According to the criminal information and statements made in court, in addition to the fraudulent lending arrangements of the Mare Lease Program, ClassicStar sold Mare Lease Program investments knowing that it lacked sufficient thoroughbred mares to fulfill its contractual obligations to the investors. To justify the deductions that the investors claimed on their income tax returns, ClassicStar substituted less-valuable quarter horse mares for the thoroughbred mares that they had promised.

“U.S. taxpayers who honestly report their income and pay their taxes can rest assured that those who promote fraudulent schemes that illegally conceal assets and income will be investigated and prosecuted by the IRS and Department of Justice,” said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division.

“Tax crimes hurt everyone, by depriving the Treasury of funds needed for important government programs. This nationwide fraudulent scheme is by far the largest criminal tax case in the history of Oregon, and we are grateful for the assistance of the Internal Revenue Service in the investigation of this case,” said Acting U.S. Attorney Robinson.

The case was investigated by special agents of the Internal Revenue Service – Criminal Investigation and is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Allan M. Garten and Department of Justice Tax Division Trial Attorney Jay Nanavati.

“The IRS uses all its investigative tools to uncover abusive tax schemes designed to create fraudulent deductions for investors,” said Eileen Mayer, Chief, IRS Criminal Investigation. “Investment schemes that seem too good to be true should be a signal to investors to stay clear. The IRS is actively pursuing promoters as well as investors who knowingly participate in these types of tax avoidance schemes.”

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.

Source: United States Department of Justice Criminal Division

WASHINGTON – Erin Sharma, a former corrections officer with the Federal Bureau of Prisons, was sentenced today in federal court in Orlando, Fla., on federal civil rights charges related to the fatal assault of an inmate, announced Assistant Attorney General Thomas E. Perez of the Civil Rights Division and U.S. Attorney A. Brian Albritton of the Middle District of Florida. Sharma was sentenced to serve a term of life in prison, three years of post-release supervision and 75 hours of community service.

On July 29, 2009, a federal jury in Orlando found Sharma guilty of two felony federal civil rights charges related to the fatal assault of federal inmate Richard Delano in March 2005. The evidence at trial showed that on Feb. 28, 2005, Sharma and a co-conspirator agreed to move Delano into the cell of another inmate at the Coleman Federal Correctional Complex in Coleman, Fla. The evidence also showed that Sharma and the co-conspirator knew that the other inmate was likely to assault Delano and that this move was in retaliation for a prior altercation between Delano and Sharma. Sharma also encouraged the inmate to assault Delano. The co-conspirator moved Delano into the inmate’s cell on March 1, 2005, and the inmate assaulted Delano three days later, on March 4. On March 17, 2005, Delano died from the injuries he suffered during that assault.

“The brave work of our nation’s law enforcement officers must be guided by adherence to the laws they are sworn to uphold, and the overwhelming majority of officers abide by that principle,” said Assistant Attorney General Perez. “When law enforcement officers betray the great trust placed in them by abusing the individuals in their custody, the Justice Department will vigorously investigate, prosecute and seek appropriate punishment for those actions.”

“Nothing justifies or excuses the defendant’s outrageous conduct in this case,” said U.S. Attorney A. Brian Albritton. “When correction officers make the corrupt choice to act as judge, jury and executioner, the United States will prosecute such actions aggressively, just as it did here.”

The case was prosecuted by Assistant U.S. Attorneys Bruce Ambrose and Carolyn Adams from the U.S. Attorney’s Office, and Senior Litigation Counsel Gerard Hogan and Trial Attorney Douglas Kern from the Civil Rights Division. FBI Special Agent Jim Raby was the lead investigator on the case

The Civil Rights Division is committed to the vigorous enforcement of every federal criminal civil rights statute, including those laws that prohibit the willful use of excessive force or other acts of misconduct by law enforcement or other government officials.

Source: United States Department of Justice Criminal Division

WASHINGTON – The Justice Department today announced the filing of a consent decree settling a Voting Rights Act lawsuit against the town of Lake Park, Fla., that, subject to court approval, will alter the method of electing the town commission. The town will discontinue use of its current at-large method of electing the commissioners. Lake Park will use a limited voting plan beginning with the March 2010 elections.

The lawsuit, filed on March 31, 2009, in federal court in Miami, challenged the at-large method of electing the Lake Park Town Commission on the ground that it dilutes the voting strength of African-American citizens in violation of Section 2 of the Voting Rights Act. Although African-Americans comprise over 38 percent of the town’s total citizen voting-age population, black voters usually have been unsuccessful in electing their candidate of choice and no black candidate for the commission has ever won an election since Lake Park was incorporated in 1923.

“All Americans cherish the right to have our voices heard in the voting booth, and the Voting Rights Act continues to be a vital tool allowing us to protect that right,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are pleased that the Lake Park Town Commission has agreed to adopt a voting plan that will provide African-American citizens with the opportunity to elect commissioners of their choice.”

U.S. Attorney Jeffrey H. Sloman for the Southern District of Florida stated, “In the consent decree, the town of Lake Park conceded that there is a factual and legal basis for concluding that the current at-large method of electing the town’s commissioners results in an unfair dilution of the African-American vote. Today’s consent decree is a first step to remedying that situation and providing equal access to the political process.”

Racially polarized voting patterns prevail in Lake Park elections. The department was prepared to prove through an analysis of statistical and non-statistical evidence, including past town election returns and voting patterns, that the African-American population of Lake Park is politically cohesive and that white persons usually vote sufficiently as a bloc to defeat the preferred candidate of African-American voters.

In the consent decree, the town conceded that there is a basis in both fact and law for believing that the current at-large method of electing commissioners, under all the circumstances, results in African-Americans having less opportunity to participate in the town’s political process and to elect representatives of their choice.

Under the limited voting plan systems, all four commission seats will be up for election and voters will be limited to casting a vote for only one candidate. The four candidates receiving the highest number of votes will be elected to the Lake Park Town Commission for a three-year term. The limited voting plan is in effect permanently, unless changed by the terms in the agreement and in compliance with Section 2 of the Voting Rights Act.

Complaints about discriminatory voting practices may be reported to the Justice Department at 1-800-253-3931. More information about the Voting Rights Act and other federal voting laws is available on the Department of Justice Web site at http://www.usdoj.gov/crt/voting.

Source: United States Department of Justice Criminal Division

WASHINGTON – Attorney General Eric Holder today announced the appointment of nine new U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC). The new appointees include: U.S. Attorney for the Southern District of New York Preet Bharara; U.S. Attorney for the District of Arizona Dennis Burke; U.S. Attorney for the Western District of Washington Jenny Durkan; U.S. Attorney for the District of New Jersey Paul J. Fishman; U.S. Attorney for the Northern District of Illinois Patrick J. Fitzgerald; U.S. Attorney for the Eastern District of Virginia Neil H. MacBride; U.S. Attorney for the District of Rhode Island Peter F. Neronha; U.S. Attorney for the Northern District of Alabama Joyce White Vance; and Acting U.S. Attorney, ex officio, for the District of Columbia Channing D. Phillips. John S. Davis, Criminal Chief for the Eastern District of Virginia, was also appointed to the committee to represent the voice of the Assistant U.S. Attorneys in the field.

“This is a critical and exciting time for the Department of Justice and I will rely heavily on these U.S. Attorneys as we work to further the Department’s efforts to reduce violent crime and gang violence, promote civil rights, ensure fairness in the marketplace and above all, preserve our national security,” said Attorney General Holder.

The AGAC, chaired by U.S. Attorney for the District of Minnesota B. Todd Jones, was created in 1973. The committee, which reports to the Attorney General through the Deputy Attorney General, represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney General on policy, management and operational issues impacting the Offices of the U.S. Attorneys.

“This committee provides crucial advice to the Department’s leadership in helping shape key policies to accomplish our core mission of serving justice, and these distinguished U.S. Attorneys bring the experience, dedication and drive necessary to successfully serve this important role,” said Deputy Attorney General David W. Ogden.

A brief bio on each nominee is below:

Preet Bharara was presidentially appointed U.S. Attorney for the Southern District of New York on Aug. 13, 2009. Bharara previously served as Chief Counsel to U.S. Senator Charles E. Schumer (2005-2009); Adjunct Professor at Fordham University School of Law (2003-2005); Assistant U.S. Attorney for the Southern District of New York (2000-2005); litigation associate with Shereff, Friedman, Hoffman & Goodman LLP (1996-2000); and litigation associate with Gibson, Dunn & Crutcher LLP (1993-1996).

Dennis Burke was presidentially appointed U.S. Attorney for the District of Arizona on Sept. 16, 2009. Prior to his appointment, Burke served as Senior Advisor to the Secretary for Homeland Security (2009) and as a member of the Obama/Biden Transition Team (2008-2009). Burke served as Chief of Staff for the Governor of Arizona (2003-2008); Chief Deputy/Special Assistant for the Arizona State Attorney General (1999-2003); Acting Assistant Attorney General, Office of Legislative Affairs, Department of Justice (1999); Assistant U.S. Attorney for the District of Arizona (1997-1999); Senior Policy Analyst, Domestic Policy Council, The White House (1995-1997); Special Counsel, Office of Legislative Affairs, Department of Justice (1994-1995); and Majority Counsel for the U.S. Senate Judiciary Committee, Subcommittee on Patents, Copyrights and Trademarks (1989-1994).

Jenny Durkan was presidentially appointed U.S. Attorney for the Western District of Washington on Oct. 1, 2009. Durkan previously served as solo practitioner for the law offices of Jenny Durkan (1997-2009); Executive Counsel for the Office of the Governor, Washington State (1994 -1995); associate attorney (1991-1994) and shareholder (1996-1997), Schroeter, Goldmark and Bender; associate attorney, Williams and Connolly (1987-1991); and associate attorney, Foster, Pepper & Riviera (1985-1987).

Paul J. Fishman was presidentially appointed U.S. Attorney for the District of New Jersey on Oct. 14, 2009. Prior to his appointment he served as partner with Friedman, Kaplan, Seiler & Adelman LLP (1997-2009). Fishman served in the Office of the Deputy Attorney General, Department of Justice, as Principal Associate Deputy Attorney General (1997), Associate Deputy Attorney General (1995-1997) and Counsel (1994). Fishman also served as Assistant U.S. Attorney for the District of New Jersey (1983-1994).

Patrick J. Fitzgerald was presidentially appointed U.S. Attorney for the Northern District of Illinois in October 2001, and was Attorney General appointed in August-October 2001. Fitzgerald was a member of the AGAC in 2001-2004 and 2008-2009, serving as interim chair in 2009. Prior to his appointment as U.S. Attorney, Fitzgerald served in the U.S. Attorney’s Office in the Southern District of New York as Chief of the Organized Crime-Terrorism Unit (1995-2001), Chief of the Narcotics Unit (1994), and Assistant U.S. Attorney (1988-1994). Prior to joining the U.S. Attorney’s Office, Fitzgerald was a litigation associate with Christy & Viener, New York, N.Y. (1985-1988).

Neil H. MacBride was presidentially appointed U.S. Attorney for the Eastern District of Virginia on Sept. 18, 2009. McBride previously served as Associate Deputy Attorney General, Department of Justice (2009); General Counsel and Vice President, Anti-Piracy for Business Software Alliance (2005-2009); Chief Counsel and Staff Director for Senator Joseph R. Biden, Jr., U.S. Senate, Committee on the Judiciary (2001-2005); Assistant U.S. Attorney for the District of Columbia (1997-2001); and associate with Verner, Liipfert, Bernhard, McPherson & Hand, Chartered (1993-1997).

Peter F. Neronha was presidentially appointed U.S. Attorney for the District of Rhode Island on September 16, 2009. He previously served as Assistant U.S. Attorney for the District of Rhode Island (2002-2009); Assistant Attorney General (2001-2002) and Special Assistant Attorney General (1996-2001) for the Department of the Attorney General, state of Rhode Island; and Associate with Goodwin Proctor LLP (1989-1995).

Joyce White Vance was presidentially appointed U.S. Attorney for the Northern District of Alabama on Aug. 27, 2009, and was Attorney General appointed in June 2009-August 2009. Vance served as Assistant U.S. Attorney and Appellate Division Chief for the Northern District of Ala. (1991-2009); associate with Bradley, Arant, Rose & White, Birmingham, Ala. (1988-1991); summer associate with McDermott, Will & Emery, Washington, DC (1988); and associate with Arant, ox Kitner, Plotkin & Kahn, Washington, DC (1984-1988).

Channing D. Phillips was appointed Acting U.S. Attorney for the District of Columbia on May 30, 2009. Phillips previously served in the U.S. Attorney’s Office for the District of Columbia as Principal Assistant U.S. Attorney (2004-2009), Chief of Staff (2001-2004), Special Counsel (1997-2001) and Assistant U.S. Attorney (1994-1997). Phillips was a trial attorney with the Organized Crime and Racketeering Section, Department of Justice (1990-1994).