Category: US Department of Justice

Source: United States Department of Justice Criminal Division

The Bloom Firm, a California law firm, and Lisa Bloom and Braden Pollock, members of the firm’s senior management, have agreed to pay a total of $274,000 to settle allegations that they violated the False Claims Act by knowingly providing false information in support of a Paycheck Protection Program (PPP) loan forgiveness application submitted by The Bloom Firm.

Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, to provide emergency financial support to the millions of Americans suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses. In December 2020, Congress approved funding for a “second draw” of PPP loan funds, which became available to borrowers beginning in January 2021. An entity’s first PPP loan is often referred to as a “first draw” PPP loan. When applying for forgiveness of any PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their applications, including that they spent the PPP loan funds on eligible expenses, such as payroll.

The United States alleged that, at the direction and with the assistance of Bloom and Pollock, The Bloom Firm sought and obtained forgiveness of the firm’s first draw PPP loan by falsely certifying that the firm used the PPP loan funds for eligible payroll expenses. The United States contended that The Bloom Firm used a portion of its PPP loan to pay several employees who were ineligible to receive PPP funds or did not work for the firm during the covered period of the loan. As a part of the settlement announced today, The Bloom Firm will pay $204,200.34, and Bloom and Pollock will each pay $35,384.49.

“PPP loans were intended to provide critical relief to small businesses,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to pursuing those who misused this taxpayer funded program.”

“Attorneys have a duty to follow the law to the letter – especially when it comes to government programs aiding individuals and businesses impacted by COVID-19,” said U.S. Attorney Martin Estrada for the Central District of California. “This settlement reaffirms my office’s commitment to affirm and uphold the integrity of pandemic-assistance programs.”

The settlement resolved claims brought under the qui tam or whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The qui tam lawsuit was filed by Liberty Law Office Inc. and is captioned U.S. ex rel. Liberty Law Office Inc. v. The Bloom Firm et al., Dkt. No. 21-cv-06279 (C.D. Cal.). Liberty Law Firm Inc. will receive a total of approximately $44,000 in connection with the settlement.  

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Central District of California, with assistance from the Small Business Administration (SBA)’s Office of General Counsel and the SBA Office of the Inspector General.

Trial Attorney F. Elias Boujaoude of the Civil Division and Assistant U.S. Attorney Aaron Kollitz for the Central District of California handled the matter.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

Source: United States Department of Justice Criminal Division

The Justice Department announced today that Kevin Martin, an owner and manager of residential rental properties in and around Athens, Ohio, has agreed to pay $170,000 to resolve a lawsuit alleging that he sexually harassed female tenants and housing applicants in violation of the Fair Housing Act.

The lawsuit, filed in the U.S. District Court for the Southern District of Ohio, alleges that, from at least 2010 to at least 2020, Martin requested sex acts from female tenants and applicants; subjected female tenants and applicants to unwelcome sexual touching; made unwelcome sexual comments and advances to female tenants and applicants; demanded that female tenants engage in sex acts with him in order not to lose housing and offered to reduce rent or excuse late or unpaid rent in exchange for sex acts. The lawsuit also alleges that Martin initiated evictions or threatened to evict female tenants who objected to or refused his sexual advances. The lawsuit is the result of a joint investigative effort with the Department of Housing and Urban Development’s Office of Inspector General (HUD OIG).

“Every person in our country has the right to seek and obtain safe and affordable housing without being subjected to sexual harassment,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “For over a decade, this landlord sexually harassed and degraded women who were simply seeking the stability and safety that comes with having a roof over your head. The Justice Department will continue to hold landlords accountable when they target and exploit vulnerable tenants and applicants.”

“Fair housing is fundamental and this office will continue to work to enforce the protections guaranteed by the Fair Housing Act,” said U.S. Attorney Kenneth L. Parker for the Southern District of Ohio. “No one should have to experience sexual harassment by their landlord.”

“We will not tolerate landlords threating or committing sexual harassment or abuse against tenants. Every person deserves to feel safe in their home,” said Inspector General Rae Oliver Davis of HUD. “The allegations against the defendant include initiating evictions or threatening female tenants with the loss of their housing if they didn’t comply with his advances. Victims should not hesitate to report such harassment and abuse to law enforcement authorities. HUD OIG will continue to work with its law enforcement and prosecutorial partners to hold housing providers accountable for this type of horrible conduct.”

Under the consent decree, which still must be approved by the district court, Martin has agreed to pay $165,000 to former female tenants and applicants harmed by his harassment and a $5,000 civil penalty to the United States. The consent decree permanently bars Martin from managing residential rental properties, requires him to retain a property manager for properties he continues to own, and mandates training and the adoption of policies and procedures to prevent future discrimination.

The Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. It also prohibits sexual harassment, a form of sex discrimination. Individuals who believe they may have been victims of sexual harassment in housing may contact the Justice Department by calling the U.S. Attorney’s Office’s  Civil Rights Tipline at 513 684-2055, emailing usaohs.civilrights@usdoj.gov or completing a Civil Rights referral form at www.justice.gov/usao-sdoh/file/1513341/download.

Reports may also be made to HUD at 1-800-669-9777 or by filing a complaint online.

The Justice Department’s Sexual Harassment in Housing Initiative is led by the Civil Rights Division, in coordination with U.S. Attorneys’ Offices across the country. The initiative seeks to address and raise awareness about sexual harassment by landlords, property managers, maintenance workers, loan officers and other people who have control over housing. Since launching the initiative in October 2017, the department has filed 45 lawsuits alleging sexual harassment in housing and recovered over $17 million for victims of such harassment.

Source: United States Department of Justice Criminal Division

A Maryland man was sentenced today to 30 years in prison in Baltimore federal court for conspiracy to commit bank fraud.

According to court documents, Theodore Sapperstein, age 67, formerly of Pikesville, and his coconspirators unlawfully debited money from the bank accounts of unknowing victims throughout the United States without their authorization by creating shell companies and falsely representing to banks that debits against consumer-victims’ bank accounts were authorized as payment for services allegedly provided by those shell companies. To both conceal and continue conducting unauthorized debits, the scheme’s shell companies generated “micro debits” against other bank accounts controlled and funded by the scheme. The micro debits artificially lowered shell companies’ return rates to levels that conspirators believed would reduce bank scrutiny and lessen potential negative impact on the scheme’s banking relations. Sapperstein facilitated the scheme’s use of fraudulent micro debits and helped broker payment processing services for the scheme, securing a payment processor whose company processed the unauthorized debits. The scheme caused more than $1.5 million in loss to victims throughout the United States.

“Those who knowingly participate in schemes to use personal financial information about American consumers to steal money from their accounts will be held accountable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We are committed to investigating and prosecuting individuals who facilitate such schemes.”

“For those who think they can take the easy road to financial gains by stealing money people have worked hard for, the U.S. Postal Inspection Service wants you to know we will hold you accountable for the pain and losses you cause,” said Inspector in Charge Eric Shen of U.S. Postal Inspection Service (USPIS) Criminal Investigations Group. “Today’s sentencing of Mr. Sapperstein along with others who knowingly participated in these schemes is the culmination of relentless teamwork by law enforcement to bring these criminals to justice and continue to vigilantly protect the American public.”

“My office is committed to ferreting out and punishing the predatory conduct of white collar fraudsters who utilize, and often hide behind, shell companies and phony accounting and bookkeeping practices to steal money from unsuspecting victims,” said U.S. Attorney Erek L. Barron for the District of Maryland.

In July, Shoaib Ahmad of Canada was charged in the Central District of California with conspiracy to commit bank and wire fraud for his role in the scheme. That matter remains ongoing.

According to court documents, the scheme is related to a longer-running scheme that has been the subject of multiple cases filed in Los Angeles, San Diego and Las Vegas. In May 2023, a grand jury in Los Angeles returned an indictment in United States v. Courdy, et al. charging 14 defendants with RICO conspiracy and other charges in the Central District of California. On July 30, a grand jury in Los Angeles returned an indictment in United States v. LoConti, et al. charging six additional scheme participants with RICO conspiracy and other charges. These indictments allege that the defendants and associates debited consumer-victims’ bank accounts without authorization and used shell entities and “micro debits” to conceal the activity from banks. The “Information for Victims in Large Cases” section on the Consumer Protection Branch’s website contains additional information on United States v. Courdy, et al. In December 2023, scheme participant Luis Ramirez pleaded guilty to conspiracy to commit access device fraud in federal court in San Diego. On May 22, Ramirez was sentenced to 51 months in prison for the access device conspiracy, with 24 months to run concurrently to his sentence in a separate case. A related scheme participant, Harold Sobel, pleaded guilty to bank fraud conspiracy in federal court in Las Vegas. In December 2022, Sobel was sentenced to 42 months in prison.

USPIS is investigating the case.

Trial Attorneys Wei Xiang, Meredith Healy and Amy Kaplan of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Darryl Tarver for the District of Maryland are prosecuting the case against Sapperstein, with assistance from the U.S. Attorney’s Office for the Central District of California.

For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch. Consumer complaints can be filed with the Federal Trade Commission (FTC) at www.reportfraud.ftc.gov/ or at 877-FTC-HELP. The Justice Department provides a variety of resources relating to fraud victimization through its Office for Victims of Crime, which can be reached at www.ovc.gov.

Source: United States Department of Justice Criminal Division

A Michigan company was sentenced today to pay a criminal fine of $6.5 million for its role in conspiracies to rig bids for asphalt paving services contracts in the State of Michigan.

Pontiac-based Asphalt Specialists LLC pleaded guilty for its conduct on Jan. 30. According to court documents and proceedings, the company participated in a conspiracy with Al’s Asphalt Paving Company Inc. (Al’s Asphalt) and its employees from March 2013 through November 2018. The company also participated in a separate conspiracy with F. Allied Construction Company Inc. (Allied) and its employees from July 2017 through May 2021.

Each conspiracy operated in much the same way: the co-conspirators coordinated each other’s bid prices so that the agreed-upon losing company would submit intentionally non-competitive bids. These bids gave customers the false impression of competition when, in fact, the co-conspirators had already decided among themselves who would win the contracts.

“When companies choose to cheat rather than compete, they can expect to pay substantial, punitive criminal fines,” said Deputy Assistant Attorney General Manish Kumar of the Justice Department’s Antitrust Division. “The Antitrust Division and its law enforcement partners will not hesitate in our shared mission to ensure those who violate the antitrust laws do not benefit from their crimes, particularly when those crimes affect critical infrastructure for our country.”

“The sentence imposed today should serve as a significant deterrent for anyone who chooses corporate greed over open and fair competition for transportation projects,” said Acting Special Agent in Charge Anthony Licari Department of Transportation Office of Inspector General (DOT-OIG), Midwestern Region. “Our commitment to working with our law enforcement partners and the Justice Department’s Antitrust Division is unwavering as we continue to pursue and uncover corrupt conduct and hold companies that intentionally engage in wrongdoing accountable.”

“Asphalt Specialist LLC’s sentence reflects the seriousness of conduct that undermines the competitive process,” said Executive Special Agent in Charge Kenneth Cleevely of the U.S. Postal Service (USPS) Office of the Inspector General. “This sentencing represents a win for the USPS and for all law enforcement agencies who work together to protect the competitive process and to ensure that justice is served.”

Asphalt Specialists LLC is one of three companies that have been charged as part of an ongoing federal antitrust investigation into bid rigging and other anticompetitive conduct in the asphalt paving services industry. Al’s Asphalt pleaded guilty and was sentenced to pay a fine of $795,661.81 on July 31. Allied also pleaded guilty and is awaiting sentencing. Six individuals also have been charged as part of the investigation.

DOT-OIG and USPS OIG investigated the case.

The Antitrust Division’s Chicago Office is prosecuting the case.

Anyone with information in connection with this investigation should contact the Antitrust Division’s Complaint Center at 888-647-3258 or visit www.justice.gov/atr/report-violations.

Source: United States Department of Justice Criminal Division

A convicted felon and member of an anti-government extremist group who took part in online discussions to kidnap and attack federal officials on Thanksgiving Day 2022 was sentenced to prison for illegally possessing firearms during a trip to Georgia.

Joshua Colston, 50, of Corinth, Mississippi, was sentenced today to serve 48 months in prison followed by three years of supervised release. Colston previously pleaded guilty to one count of possession of a firearm by a convicted felon on Oct. 18, 2023.

According to court documents and other information presented in court, the FBI learned that Colston and others participated in discussions on a Zello chat channel titled “NCM Leadership.” Zello is an encrypted push-to-talk application used on cellular phones. “NCM” stands for National Constitutional Militia, an anti-government extremist organization. Colston and other NCM members discussed a plan to kidnap or attack elected federal officials on Thanksgiving Day 2022. Ultimately, the Thanksgiving Day plan was never developed due to the group’s lack of resources and the poor health of the members.

FBI agents took Colston into custody in Fitzgerald, Georgia, on Dec. 14, 2022, where Colston went to purchase horses. He told agents that he planned to travel horseback across the country for several years, and he was preparing to go “off the grid.” Colston, who has prior felony convictions, was found to be in illegal possession of five firearms: a 9mm semiautomatic pistol, .40 semiautomatic pistol, .22 semiautomatic rifle, semiautomatic shotgun and .44 lever-action rifle. The semiautomatic rifle was reported stolen in Alcorn County, Mississippi. In addition to the firearms, Colston had a bulletproof vest and more than 3,500 rounds of ammunition, including armor-piercing rounds, in his vehicle. FBI believed that Colston had training in explosives. Colston has prior state convictions in Texas for felony theft and felony criminal mischief. It is illegal for a convicted felon to possess firearms.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Peter D. Leary for the Middle District of Georgia and Executive Assistant Director Robert Wells of the FBI’s National Security Branch made the announcement.

The FBI and Ben Hill County Sheriff’s Office investigated the case.

Deputy Criminal Chief Will Keyes for the Middle District of Florida prosecuted the case with assistance from the National Security Division’s Counterterrorism Section.