Category: US Department of Justice

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. 

Source: United States Department of Justice Criminal Division

WASHINGTON – The Justice Department announced today that it has reached a landmark agreement with the County of Los Angeles to resolve its lawsuit alleging that the county violated the Americans with Disabilities Act (ADA) by denying voters with disabilities an equal opportunity to participate in its voting programs, services and activities when it failed to select and use facilities as polling places that are accessible to persons with disabilities.

“People with disabilities are entitled to full inclusion at the ballot box,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department is committed to safeguarding the right of every eligible voter, including voters with disabilities, to participate in our electoral process. This agreement should send a message to officials across the country regarding the need to ensure the accessibility of the voting process now.”

“The right to vote is essential to our democracy and must be protected for all voters,” said U.S. Attorney Martin Estrada for the Central District of California. “Voters with disabilities are entitled to an equal opportunity to vote in person, privately and independently, alongside their neighbors and friends. We commend Los Angeles County for its commitment to work with the Justice Department to ensure equal access for individuals with disabilities.” 

The lawsuit was filed in June 2023 following a lengthy investigation that found the county excluded individuals with disabilities from participating in the county’s in-person voting program. The U.S. Attorney’s Office for the Central District of California had surveyed hundreds of polling places in the June 2016, March 2020, November 2020 and November 2022 elections and found the vast majority had architectural barriers, such as steep ramps, abrupt level changes at walkways and entrance doors, and lack of accessible parking. These impediments prevented people with mobility and vision disabilities from being able to safely access vote centers and cast their ballots in person. The lawsuit also alleged that the county’s curbside voting program was inaccessible, as certain vote centers lacked signage indicating that curbside voting was available or failed to provide sufficient means by which a voter could contact an election worker for assistance with curbside voting.

The settlement, which was filed with the court earlier today, will increase accessibility for voters with disabilities. Under the agreement, Los Angeles County will work with an independent accessibility expert for three years on site selection policies and procedures to ensure that the county selects voting center locations that are accessible or can be made more accessible during the voting period by employing temporary remedial measures. The county has agreed to work with the expert and the department to implement the expert’s recommendations. The expert will provide semiannual reports on their findings to the county and the department. 

With more than 500 political districts and approximately 4.3 million registered voters, Los Angeles County is the largest election jurisdiction in the nation.

The Los Angeles County investigation is part of the department’s ADA Voting Initiative, which focuses on protecting the voting rights of individuals with disabilities across the country. More information about voting and elections is available at www.justice.gov/voting. For more information on the Civil Rights Division please visit www.justice.gov/crt. For more information on the ADA, please call the department’s toll-free ADA Information Line at 1-800-514-0301 (TTY 1-833-610-1264) or visit www.ada.gov. If you believe you have been discriminated against based on disability please submit a report at www.civilrights.justice.gov.

Assistant U.S. Attorney and Chief of the Civil Rights Section Richard Park and Assistant U.S. Attorneys Katherine Hikida, Matthew Barragan, Margaret Chen and Alexandra Young for the Central District of California handled the matter, in coordination with the Justice Department’s Civil Rights Division’s Disability Rights Section.

Last month marked the 34th anniversary of the ADA, which President George H.W. Bush signed into law on July 26, 1990. The ADA was the world’s first comprehensive civil rights law for persons with disabilities. As we celebrate the 34th anniversary of the ADA, we take time to recognize the benefits of the ADA while also appreciating that there is still work to be done to achieve the enduring goals of equity, inclusion and accessibility for persons with disabilities.

Source: United States Department of Justice Criminal Division

The Justice Department announced today its findings that the Texas Juvenile Justice Department (TJJD) is violating the U.S. Constitution, as well as the Individuals with Disabilities Education Act (IDEA) and the Americans with Disabilities Act (ADA).

“Children are committed to TJJD facilities to receive treatment and rehabilitation so that they may return to their communities as law-abiding, productive citizens,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Our investigation showed that, far from achieving those objectives, TJJD engaged in a pattern of abuse, deprivation of essential services and disability-related discrimination that seriously harms children and undermines their rehabilitation. State officials have an obligation to keep these children safe, to teach them, to provide them necessary health services and to treat them fairly, without discrimination. The Justice Department is committed to protecting the rights of vulnerable children in juvenile facilities. We look forward to working with state officials to remedy these violations, institute needed reform and improve outcomes for Texas children.”

The department’s report details findings from a comprehensive investigation of five TJJD youth facilities, including the Evins Regional Juvenile Center, Gainesville State School, Giddings State School, McClennan County State Juvenile Correctional Facility, and Ron Jackson State Juvenile Correctional Complex. The report concludes that:

• TJJD routinely violates the constitutional rights of children in all five facilities by:
  • Exposing them to excessive force and prolonged isolation;
  • Failing to protect children from sexual abuse; and
  • Failing to provide adequate mental health services.
• TJJD violates the IDEA by failing to provide special education and related services to children with disabilities.
• TJJD discriminates against children with disabilities in violation of the ADA by:
  • Not providing reasonable modifications necessary to permit their participation in programming required for release and
  • Denying them an equal opportunity to benefit from education.

These violations of the Constitution and federal law place children at substantial risk of serious physical and psychological harm and impede successful outcomes for children.

“My office was proud to partner with the Civil Rights Division and with other U.S. Attorneys’ Offices in our state on this thorough investigation of the Texas Juvenile Justice Department,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “The children in these facilities are uniquely vulnerable to harm and abuse, which hinders their prospects for rehabilitation. They deserve to be protected from harm, to receive adequate mental health care and to receive special education services and reasonable modifications that will give them a chance at productive lives in the community, outside of the walls of these institutions.”

“According to our report, TJJD falls short of creating an environment that fosters rehabilitation,” said U.S. Attorney Leigha Simonton for the Northern District of Texas. “Instead, some of its personnel engage in the use of excessive force and subject children to prolonged isolation, both of which are damaging. Texans know that this is not how we rehabilitate our children. We look forward to working with the State and TJJD to eliminate these issues going forward. Together, I am confident that we can implement practices that result in a better rehabilitative environment at the TJJD and ensure a pathway for children in their care to grow, heal and reach their full potential.”

“The conditions in the facilities are unacceptable,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas. “Our investigation found that children in these facilities face sexual abuse by staff and other children. Tragically, this is not the first investigation into allegations of sexual abuse at TJJD facilities. Since the early 2000s, other investigations by Texas state agencies and the Texas Rangers substantiated sexual abuse allegations of the children at TJJD facilities, yet this horrifying problem persists. Working with Texas’s other U.S. Attorneys’ Offices, the Civil Rights Division and the State of Texas, my office hopes to provide protections to the vulnerable and help right wrongs that have existed for far too long.”  

“States that receive federal funds to help educate children with disabilities are required to use those funds appropriately for the benefit of these children,” said U.S. Attorney Damien M. Diggs for the Eastern District of Texas. “Systematically failing to evaluate children suspected of having disabilities inevitably deprives these children of the special education these funds were meant to provide. Texas received funds under the Individuals with Disabilities Education Act, but failed to meet their obligation to ensure that children with disabilities would receive adequate education according to their special needs, among other things. Without appropriate services, children with disabilities in Texas juvenile corrections facilities cannot access the general education curriculum, preventing meaningful rehabilitation and progress. We look forward to working with Texas to rectify the issues we identified in our investigation so that these children, through meeting their educational needs, may have a better chance to succeed when they return to our communities.”

The Justice Department launched its investigation of TJJD’s juvenile justice facilities in October 2021, under the Civil Rights of Institutionalized Persons Act and the Violent Crime Control and Law Enforcement Act of 1994, which authorize the department to address a pattern or practice of deprivation of constitutional and federal rights of children confined to state or local government-run correctional facilities. 

The Civil Rights Division’s Special Litigation Section and the U.S. Attorneys’ Offices in Texas investigated the case.

For more information about the Civil Rights Division and the Special Litigation Section please visit www.justice.gov/crt/special-litigation-section. You can also report civil rights violations to the section by completing the complaint form available at civilrights.justice.gov.

To provide information related to the department’s investigation of TJJD’s facilities please call 1-866-432-0438 or email at TX.Juveniles@usdoj.gov.  

Spanish translation forthcoming. (La traducción al español estará disponible próximamente.)