Category: US Department of Justice

Source: United States Department of Justice 2

A federal grand jury in Greenbelt, Maryland, returned an indictment, unsealed last week, charging a Maryland woman with tax fraud and theft of government funds.

According to the indictment, from 2014 to 2024, Monica Patricia McGinley assisted with the preparation and filing false tax returns, so that McGinley could receive large refunds from the IRS to which she was not entitled. On those returns, McGinley allegedly claimed nonexistent payments or withholdings and requested nearly $12 million in refunds. The IRS allegedly issued refunds to McGinley totaling over $1.5 million. In one instance, she allegedly received a U.S. Treasury check for over $1 million.

If convicted, McGinley faces a maximum penalty of 10 years in prison for the theft of government funds charge and a maximum penalty of three years in prison for each of the six counts of aiding and assisting in the preparation and presentation of false tax returns. Upon conviction, 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.

Trial Attorneys Christina Grimes and Jeffrey McLellan of the Justice Department’s Tax Division are prosecuting the case.

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 2

Three individuals were sentenced yesterday for their roles in founding and operating an illegal pyramid scheme. Alex Dee, 50, of Fate, Texas, was sentenced to 36 months in prison and ordered to pay $1,845,600 in forfeiture; Brian Kaplan, 53, of Fort Collins, Colorado, was sentenced to 22 months in prison and ordered to pay $2,838,700 in forfeiture; and Jerrold Mauer, 58, of North Bellmore, New York, was sentenced to 22 months in prison and ordered to pay $1,545,500 in forfeiture.

According to court documents, from approximately January 2017 through March 2019, Dee, Kaplan and Maurer founded and operated 8 Figure Dream Lifestyle (8FDL), a Wyoming corporation, as an illegal pyramid scheme. Dee, Kaplan, and Maurer advertised 8FDL as an online marketing business that allowed members to easily earn millions of dollars by selling memberships into 8FDL. The business purportedly allowed its members to access various digital videos, mostly related to online marketing and self-help lessons, but the videos had nominal value and served merely as a vehicle for the company to appear legitimate. The main purpose of the company, however, was to allow members to make money by recruiting new members and selling additional memberships. In marketing the 8FDL memberships, Dee, Kaplan, and Maurer falsely represented to the public that typical members with no prior skills or experience would make substantial sums in a short period of time, including earning more than $10,000 within 60-90 days. In fact, the vast majority of 8FDL members never made a single sale, and Dee, Kaplan, and Maurer made these false statements to induce others to join 8FDL. In total, more than 2,800 individuals joined 8FDL, which resulted in approximately $23.5 million in losses to victim members.

In November 2023, both Kaplan and Maurer pleaded guilty to one count of conspiracy to commit wire fraud.

In July, Dee pleaded guilty to one count of conspiracy to commit wire fraud.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group made the announcement.

USPIS investigated the case.

Trial Attorneys Brandon Burkart and Andrew Jaco of the Criminal Division’s Fraud Section prosecuted the case. 

Source: United States Department of Justice Criminal Division

Mahdi Mohammad Sadeghi, 42, a dual U.S.-Iranian national of Natick, Massachusetts, and Mohammad Abedininajafabadi, also known as Mohammad Abedini (Abedini), 38, of Tehran, Iran, have been charged with conspiring to export sophisticated electronic components from the United States to Iran in violation of U.S. export control and sanctions laws. Abedini is also charged with providing material support to a foreign terrorist organization (FTO), , that resulted in the deaths of three U.S. servicemembers who were killed by a one-way attack Unmanned Aerial Vehicle (UAV), also known as a drone, on a military base in Jordan.

Sadeghi was arrested and made his initial appearance today in the District of Massachusetts. Abedini was also arrested today in Italy by Italian authorities at the request of the United States.

“Today, the Justice Department has charged, and our foreign partners haven taken into custody, Mohammad Abedini, who we allege supplied sensitive technology used by the Iranian military to kill three American servicemembers in Jordan earlier this year,” said Attorney General Merrick B. Garland. “In addition, we have charged and arrested Mahdi Mohammad Sadeghi, a dual U.S.-Iranian citizen, for conspiring with Abedini to export sensitive U.S. technology to Iran. Today’s arrests demonstrate that the Justice Department will hold accountable those who enable the Iranian regime to continue to target and kill Americans and undermine the national security of the United States.”

“Earlier this year, Iran-backed militias murdered three American soldiers and wounded dozens more in a brutal drone attack at the Tower 22 base in Jordan,” said Deputy Attorney General Lisa Monaco. “Today, working with our partners here and abroad, we have charged and arrested two men who conspired to evade U.S. sanctions and supply the Iranian government with the type of drone navigation technology used in that attack. Our message is unmistakable: if you provide support to the Iranian regime’s campaign of terror and violence targeting Americans – we will find you, arrest you, and hold you accountable in a U.S. court, no matter where you are.”

“This case reflects our commitment to pursuing those who unlawfully aid Iran’s military drone program and to seeking justice for the U.S. servicemembers killed at the hands of the IRGC-backed militants earlier this year,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Export laws exist to keep cutting-edge U.S. technology out of the hands of foreign terrorist organizations. When sensitive drone technology is supplied to the IRGC – as alleged in this case – it places our military at risk and imperils American citizens.”

“These defendants are charged with supplying sensitive technology to an Iranian company that develops technology the IRGC uses in its one-way attack drones to commit acts of terror around the world,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod of the Department of Commerce Bureau of Industry and Security (BIS). “Export crimes are much more than just regulatory violations – they enable our adversaries to engage in numerous malign activities harmful to U.S. interests, including the sowing of terror worldwide.”

“The FBI will continue to aggressively use all of our authorities to investigate and arrest anyone who assists the Government of Iran in obtaining technology that can be used for deadly purposes,” said FBI Deputy Director Paul Abbate. “These perpetrators allegedly facilitated the transfer of electronic components to an Iranian company which one of them owned.  According to the charges, the company owner then supplied the IRGC with drone technology that was used in various terrorist acts, including an attack on a U.S. military base in Jordan which killed three servicemembers and injured dozens more. Such acts are wholly unacceptable, and the FBI will work tirelessly with our partners to cut off illegal transfers of technology to foreign terrorists and other adversaries.”

“Holding culpable people accountable for the death and maiming of U.S. service men and women bravely serving our nation abroad is about as important a prosecution as there is. These allegations make clear the grievous harm that can result when highly sophisticated American technologies subject to export controls end up in the hands of our adversaries,” said U.S. Attorney Joshua S. Levy for the District of Massachusetts. “These criminal charges are the direct product of the dogged work of the FBI and the Department of Commerce, in close collaboration with DOJ lawyers, as part of the Disruptive Technologies Task Force launched in February 2023, and I commend their outstanding work.”

According to court documents, Abedini is the founder and managing director of an Iranian company, San’at Danesh Rahpooyan Aflak Co. (SDRA or SADRA), that manufactures navigation modules used in the IRGC’s military drone program. SDRA’s main business is the sale of a proprietary navigation system — known as the Sepehr Navigation System — to the IRGC, which the United States designated as an FTO on April 15, 2019. The primary application of SDRA’s Sepehr Navigation System is for use in UAVs, as well as cruise and ballistic missiles. Sadeghi is currently employed by a Massachusetts-based microelectronics manufacturer (U.S. Company 1) and was one of the founders of a Massachusetts-based technology company (U.S. Company 2) that specializes in wearable sensors that provide kinetic monitoring for fitness applications.

As alleged in court documents, Abedini, Sadeghi, and others conspired to evade U.S. export control and sanctions laws by procuring U.S. origin goods, services, and technology from, among others, U.S. Company 1 and causing those goods, services, and technology to be exported or otherwise supplied to Iran and, in particular, Abedini’s Iranian company, SDRA.

As further alleged, in or around 2016, Sadeghi traveled to Iran to request funding for U.S. Company 2 from the Iranian National Elites Foundation (INEF), which is an Iranian governmental organization whose main purpose is to recognize, organize, and support Iran’s elite national talents. In exchange for funding for U.S. Company 2, which Sadeghi’s company ultimately received from the INEF, Sadeghi and others created a second company in Iran (Iranian Company 1). Shortly after forming Iranian Company 1, Sadeghi, through Iranian Company 1, entered into a contract with SDRA for the purchase of SDRA’s technology. It is also alleged that, since in or around 2016, on multiple occasions, Sadeghi has helped Abedini procure U.S. export-controlled electronic components for Abedini’s use in Iran.

Due to U.S. laws restricting exports to Iran, Abedini established a Switzerland front company for SDRA, Illumove SA (Illumove). With Sadeghi’s assistance, Abedini, through Illumove, entered into a contract with U.S. Company 1 to develop a mechanism to evaluate U.S. Company 1’s electronic components, including sophisticated semiconductors. Sadeghi and Abedini subsequently caused U.S.-origin goods, services, and technology to be transferred to Iran, through Illumove, for the benefit of SDRA. Certain of the electronic components that Abedini obtained through Illumove were the same types of electronic components used in SDRA’s Sepehr Navigation System.

Abedini is also charged with providing material support to a foreign terrorist organization, the IRGC, specifically, the IRGC Aerospace Force, which is the strategic missile, air, and space force within the IRGC. Since at least in or about 2014, SDRA has had multiple projects with the IRGC Aerospace Force, including projects for guided rockets and integrated navigation systems. As alleged, between 2021 and 2022, approximately 99% of SDRA’s sales of the Sepehr Navigation System, which are used in IRGC one-way attack drones, were to the IRGC’s Aerospace Force.

On Jan. 28, three U.S. service members were killed, and more than forty others were injured, in a drone attack by IRGC-backed militants on a military base located in northern Jordan, known as Tower 22. According to court documents, FBI analysis of the drone that was recovered from the site of the attack showed that the drone was an Iranian Shahed UAV and that the navigation system used in the drone was the Sepehr Navigation System, which was manufactured by Abedini’s company, SDRA.   

Sadeghi and Abedini were charged by criminal complaint with one count of conspiracy to violate the International Emergency Economics Powers Act, which carries a penalty of up to 20 years in prison, three years supervised release, and a fine of up to $1 million. Abedini was also charged with one count of conspiracy to provide material support to a Foreign Terrorist Organization, resulting in death, and one count of provision and attempted provision of material support to a Foreign Terrorist Organization, resulting in death, which carries a penalty of up to life in prison, lifetime supervised release, and a fine of up to $250,000. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI, Department of the Army Criminal Investigation Division, and BIS are investigating the case.

U.S. Attorneys Jared Dolan and Alathea Porter for the District of Massachusetts, Trial Attorney Christina Clark of the National Security Division’s Counterintelligence and Export Control Section, and Trial Attorneys Katie Sweeten and David Smith of the National Security Division’s Counterterrorism Section are prosecuting the case. The Justice Department’s Office of International Affairs is providing assistance and is seeking extradition of Abedini from Italy.

​This prosecution is being coordinated through the Disruptive Technology Strike Force, an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states. Under the leadership of the Assistant Attorney General for National Security and the Assistant Secretary of Commerce for Export Enforcement, the Strike Force leverages tools and authorities across the U.S. Government to enhance the criminal and administrative enforcement of export control laws. 

A complaint 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 Criminal Division

A Texas physician pleaded guilty today in connection with his role in a $5.5 million over-the-counter (OTC) COVID-19 test fraud scheme.

According to court documents, Mark Mazzare M.D., 57, of Tyler, purchased Medicare beneficiary identifiers (BINs) that were used to bill Medicare millions of dollars for OTC COVID-19 test kits, many of which had not been requested by the beneficiaries. Mazzare entered into a sham agreement with a purported marketer to conceal the purchase of BINs as “lead packages,” which in reality consisted of BINs and fraudulently generated audio recordings purporting to be the voices of the beneficiaries requesting the OTC COVID-19 tests. Mazzare caused OTC COVID-19 tests to be shipped to Medicare beneficiaries whose BINs had been purchased, regardless of whether the Medicare beneficiaries had requested or needed the tests. From in or around November 2022 to in or around June 2023, Mazzare caused more than $5.5 million in claims to be submitted to Medicare for OTC COVID-19 tests that were medically unnecessary and ineligible for reimbursement. Medicare paid approximately $3.44 million on those claims.

Mazzare pleaded guilty to conspiracy to defraud the United States and to purchase, sell, and distribute Medicare beneficiary identification numbers. He faces a maximum penalty of five years in prison. A sentencing hearing will be set at a later date, when 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 Damien M. Diggs for the Eastern District of Texas; Special Agent in Charge Jason E. Meadows of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Dallas Regional Office; and Inspector-in-Charge Kai Pickens of the U.S. Postal Inspection Service (USPIS) Fort Worth Division made the announcement.

HHS-OIG and USPIS are investigating the case, with significant assistance provided by the Texas Attorney General’s Medicaid Fraud Control Unit.

Assistant Chief Brynn Schiess of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Robert Austin Wells for the Eastern District of Texas are prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,400 defendants who collectively have billed federal health care programs and private insurers more than $27 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

Source: United States Department of Justice Criminal Division

Klaus Pflugbeil, 59, of Ningbo, China, was sentenced today to 24 months in prison for conspiring to send trade secrets that belong to a leading U.S.-based electric vehicle company (Victim Company-1). Pflugbeil, a resident of the People’s Republic of China (the PRC or China) and a Canadian and German national, and his co-defendant, Yilong Shao, who remains at large, are owners of a PRC-based business (Business-1) that sold technology used to make batteries, including batteries used in electric vehicles. Pflugbeil and Shao, former employees of a company that was purchased by Victim Company-1, took trade secrets from their employer, and later used the trade secrets to build a business that they marketed as a replacement for Victim Company-1’s products.

“In stealing trade secrets from an American electric vehicle manufacturer to use in his own China-based company, Pflugbeil’s actions stood to benefit the PRC in a critical industry with national security implications,” said Assistant Attorney General for National Security Matthew G. Olsen. “The Justice Department will mobilize every available resource to prevent our adversaries from advancing their global ambitions at the expense of U.S. national security.”

“The defendant built a business in China to sell sensitive technology that belongs to a U.S. company.  His actions were bold — he even advertised that he was selling the victim’s products — because he thought, incorrectly, that he was outside the reach of U.S. prosecutors,” said U.S. Attorney Breon Peace for the Eastern District of New York. “Today’s sentencing sends a clear message to would-be offenders: my Office will do everything it can to protect American innovation and national security no matter where you try to hide.”

Victim Company-1 is a U.S.-based leading manufacturer of battery-powered electric vehicles and battery energy systems. In 2019, Victim Company-1 acquired a Canada-based manufacturer of automated, precision dispensing pumps and battery assembly. Prior to its purchase by Victim Company-1, the Canadian manufacturer sold battery assembly lines to customers who manufactured alkaline and lithium‑ion batteries for consumer use. The battery assembly lines contained or utilized a proprietary technology now owned by Victim Company-1: continuous motion battery assembly. The proprietary technology provided a substantial competitive advantage to Victim Company-1 in the lithium-ion battery manufacturing process.

Both Pflugbeil and his co-defendant Shao are former employees of the Canadian manufacturer, and Shao also worked for Victim Company-1. As detailed in court documents, by no later than 2019, Pflugbeil and Shao planned to use Victim Company-1’s trade secrets for their own business activities. Pflugbeil told Shao that he had “a lot of original documents” related to the technology and sought out more “original drawings” of the trade secrets. Shao confirmed, among other things, that, “we have all of original assembly drawings by PDF.”

The conspirators took measures to obfuscate that they had stolen trade secrets. For example, Pflugbeil wrote to Shao about a document he created based on one that Shao had stolen from Victim Company-1, “[its] in a different format, so it looks very original and not like a copy.”

In or about July 2020, Pflugbeil joined Business-1, a company previously established by Shao, which has since expanded to locations in China, Canada, Germany, and Brazil. Business‑1 makes the same precision dispensing pumps and battery assembly lines that the Canadian manufacturer developed. The battery assembly technology is related to the development of electric vehicles that can compete with U.S.-made vehicles. The potential for Chinese automakers to swamp the U.S. and global market with vehicles like those that can be built using this stolen technology presents a potential national security risk.

Business-1 was marketed by Pflugbeil as an alternative source for the sale of products that relied upon Victim Company-1’s trade secrets, publishing online advertisements on Google, YouTube, and LinkedIn. Pflugbeil repeatedly sent LinkedIn messages that named Victim Company-1 and said Business-1 was not infringing on any intellectual property:

Hello [name], I hope to get some of your busy time. As I like to introduce our company to you. We already have supplied companies such [a]s [list of U.S. Fortune 500 Companies by name] . . . We engineer and manufacture all of our products in-house, and we warrant that none of our products infringe any patents, copyrights, or other intellectual property rights of any third party.

The above reflects a blatant lie, told over and over—that Business-1’s products did not infringe on intellectual property rights of a third party. Pflugbeil also advertised products based on stolen trade secrets on Google. These ads were shown tens of thousands of times per week.

On or about September 11, 2023, undercover agents attended a trade show for the packaging and processing industries in Las Vegas, Nevada. The undercover agents posed as businesspeople who were interested in purchasing a battery assembly line from Business-1 to manufacture batteries at a facility in Long Island, New York. The undercover agents were introduced to Shao at the trade show and later to Pflugbeil via email.

Subsequently, on or about November 17, 2023, Pflugbeil sent, via email, a detailed 66-page technical documentation proposal to an undercover agent (UC-1). The proposal notes, “this technical documentation package contains [Business-1] proprietary information which must be kept confidential.”  In reality, the proposal contained battery assembly trade secret information belonging to Victim Company-1:  at least half a dozen drawings Pflugbeil used in the proposal and sent to UC-1 were, in fact, Victim Company-1’s information related to the battery assembly trade secret. The business proposal quoted the battery assembly line at over $15 million.

Assistant U.S. Attorneys Ellen H. Sise and Samantha Alessi for the Eastern District of New York and Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section prosecuted the case.

The investigation and prosecution were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.