Category: MIL-OSI

Source: United States Department of Justice Criminal Division

The Justice Department announced today that Grosfillex Inc. (Grosfillex), a patio furniture company located in Pennsylvania, has agreed to pay $4.9 million to resolve allegations that it violated the False Claims Act and other statutes by evading antidumping and countervailing duties (AD/CVD) on items made of extruded aluminum originating from the People’s Republic of China (PRC).

The Department of Commerce assesses, and U.S. Customs and Border Protection (CBP) collects, antidumping and countervailing duties (AD/CVD) to level the playing field for domestic producers. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies. The settlement announced today resolves allegations that Grosfillex knowingly submitted, and caused to be submitted, false customs forms to CBP claiming that certain furniture parts made of extruded aluminum were not subject to AD/CVD. For a subset of such parts, the United States alleged that Grosfillex attempted to camouflage the aluminum extrusions by packaging the parts as sham furniture “kits.” In addition, for a different subset of such parts, Grosfillex knowingly failed to correct customs forms it had submitted previously, even after learning that the forms falsely stated to CBP that certain extruded aluminum parts were not subject to AD/CVD.

“Antidumping and countervailing duties protect American companies from unfair subsidies and trade practices that harm domestic industries,” said Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division. “Today’s settlement demonstrates that the Justice Department will continue to actively pursue those who knowingly fail to pay customs duties.”

“This settlement should serve as a warning that the United States Attorney’s Office for the Eastern District of Pennsylvania will use every tool available to combat fraud in international trade,” said U.S. Attorney David Metcalf for the Eastern District of Pennsylvania. “We will pursue those who seek an unfair advantage in U.S. markets by attempting to evade paying the customs, duties, or tariffs on foreign imports meant to level the playing field for U.S. manufacturers.”

“The investigation into Grosfillex Inc. highlights our relentless dedication to enforcing our nation’s trade laws and protecting the integrity of our economy. By uncovering and dismantling intricate schemes to defraud the government, we ensure that all businesses operate on a fair and level playing field,” said Special Agent in Charge Edward V. Owens of Homeland Security Investigations (HSI) at the Philadelphia office of U.S. Immigration and Customs Enforcement. “The successful settlement of this case is a testament to the outstanding collaboration between HSI, CBP and the U.S. Department of Justice. We remain vigilant in our efforts to identify and hold accountable those who attempt to exploit our trade system for their benefit.”

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by Edward Wisner, a former employee of Grosfillex. Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. Wisner will receive a $962,662.74 share of today’s settlement.

The settlement 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 Eastern District of Pennsylvania, with assistance from CBP.

Trial Attorney Nelson Wagner in the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorney Mark Sherer for the Eastern District of Pennsylvania handled the matter.

The pursuit of this matter illustrates the government’s emphasis on combating fraud, waste, and abuse. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential customs fraud can be reported to CBP at www.help.cbp.gov/s/tip.

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

Source: United States Department of Justice Criminal Division

Defendant Impersonated Federal Agent, Attorney, and Others to Perpetrate $3.5M Fraud

Source: United States Department of Justice Criminal Division

WASHINGTON – Today, the Department of Justice announced the formation of a Strike Force to assess the evidence publicized by Director of National Intelligence Tulsi Gabbard and investigate potential next legal steps which might stem from DNI Gabbard’s disclosures.

This Department takes alleged weaponization of the intelligence community with the utmost seriousness.

Upon the formation of the Strike Force, Attorney General Pamela Bondi stated:

“The Department of Justice is proud to work with my friend Director Gabbard and we are grateful for her partnership in delivering accountability for the American people. We will investigate these troubling disclosures fully and leave no stone unturned to deliver justice.”

Source: United States Department of Justice Criminal Division

A Miami man was sentenced today to 60 months in prison for conspiring to defraud the United States by concealing millions of dollars in assets and income in undisclosed Swiss bank accounts and claiming to the IRS that those assets were not his and instead belonged to foreign nationals.

The following is according to court documents and statements made in court: between 1985 and 2020, Dan Rotta, a dual Brazilian and U.S. citizen, hid more than $20 million in assets in dozens of secret Swiss accounts at five different Swiss banks, including UBS, Credit Suisse, Bank Bonhôte, and Bank Julius Baer. The accounts were held in his own name, in the names of sham structures, and, in one instance, a pseudonym. Over the years, Rotta earned tens of millions of dollars of income from these assets that he did not report on his tax returns and used to fund his lavish lifestyle. He caused a substantial tax loss to the IRS.

Rotta employed increasingly elaborate schemes to keep his accounts hidden. Over the years, he kept his accounts open, in part, by falsely representing that he was not a U.S. citizen, leveraging his Brazilian citizenship to claim he was a Brazilian citizen residing in Brazil.

Starting in 2008, after it was reported publicly that UBS and its bankers were under criminal investigation for helping U.S. taxpayers evade their taxes, Rotta closed his UBS account and moved his funds to Credit Suisse and Bank Bonhôte.

In 2011, after the IRS obtained records related to one of Rotta’s Swiss accounts, he nominally changed the documentation of his accounts at Credit Suisse and Bank Bonhôte to make it appear that his co-conspirator, a Brazilian national and resident, owned the assets in the accounts. Despite the change, Rotta continued to control the assets and transferred millions of dollars out of those accounts for his use.

Shortly after Rotta changed the account documentation, the IRS  audited him. During the audit, Rotta falsely denied that he owned the assets in the foreign financial accounts and, instead, claimed that the millions of dollars he withdrew from the accounts were non-taxable loans from foreign nationals. Rotta provided the IRS with fake promissory notes and false affidavits from the foreign nationals to corroborate his claims. During the audit, Rotta continued to use the funds in his foreign accounts to fund his lifestyle in the United States, but to conceal his use of the funds from the IRS, he often routed transfers from his foreign accounts through nominee accounts and attorney trust fund accounts in the United States.

The IRS did not believe Rotta’s story and assessed millions of dollars of additional taxes as well as penalties and interest against him. Rotta sought to reverse the assessments by filing a false petition in U.S. Tax Court. In that petition, Rotta, through his attorney, falsely denied having any foreign accounts and attached fictitious loan documents. Furthermore, the nominee account owners traveled to the United States to retell the false loan story to IRS attorneys.

In 2017, after Rotta presented the false evidence that the purported loans had been repaid, the IRS reversed the deficiencies and agreed that he owed no additional tax. Unbeknownst to the IRS, however, the “loan repayments” were fake: the funds that Rotta purportedly repaid went back into accounts that he controlled shortly after the IRS dismissed the suit. Also, as part of the conspiracy, Rotta had his U.S.-based attorneys create sham trust structures that he used to transfer his assets to the United States without alerting the IRS. On paper, it appeared that Rotta’s co-conspirator funded the trusts for Rotta’s benefit. In reality, Rotta funded the trusts with transfers from his Swiss accounts.

In 2019, Rotta became aware that the IRS would receive additional account records from Switzerland that contradicted the false claims that he had previously made. In an attempt to avoid criminal liability, Rotta applied to participate in the IRS’s voluntary disclosure practice. Under that practice, taxpayers who failed to comply with their tax and reporting obligations could make timely, accurate, and complete disclosures of their conduct, which might offer a path to resolve their non-compliance and limit their criminal exposure. Rotta made false statements in his submission, including falsely claiming that the assets in the Swiss accounts mostly belonged to others, and that any funds provided to him were non-taxable gifts. Rotta also falsely claimed that the nominee account owner gifted Rotta money because that nominee had no children to benefit from the funds. In fact, that nominee had two children.

In addition to his prison sentence, U.S. District Judge Rodney Smith for the Southern District of Florida ordered Rotta to serve three years of supervised release. The court will determine restitution at a later date.

Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division, U.S. Attorney Hayden O’Byrne for the Southern District of Florida, and Executive Special Agent in Charge Kareem Carter of IRS Criminal Investigation (IRS-CI) Washington, D.C. Field Office made the announcement.

Special Agents from IRS-CI’s International Tax & Financial Crimes specialty group, a team based out of Washington, D.C., and dedicated to uncovering international tax crimes, investigated the case.

Senior Litigation Counsels Sean Beaty and Mark Daly, Trial Attorney William Montague, and former Trial Attorney Patrick Elwell of the Tax Division, as well as Senior Litigation Counsel Christopher J. Clark for the Southern District of Florida, prosecuted the case.

Source: United States Department of Justice Criminal Division

A Colorado man pleaded guilty today to sexually exploiting a minor and possessing child sexual abuse material (CSAM).

According to court documents, Wesley Chambers, 34, of Fort Collins, sexually abused a minor for years and recorded the abuse. Law enforcement found more than 200 sexually explicit videos and photographs of the minor on Chambers’ cell phone, and more than 20,000 photographs and 2,500 videos of the sexual abuse and exploitation of other minors.

Chambers pleaded guilty to two counts of sexually exploiting a child and one count of possessing material depicting the sexual exploitation of minors. As part of his plea agreement, the defendant also admitted to accessing child pornography on the dark web, including “hurtcore” sites. He is scheduled to be sentenced on Oct. 22 and faces a mandatory minimum penalty of 15 years in prison and a maximum penalty of 70 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division, U.S. Attorney Peter McNeilly for the District of Colorado, Assistant Director Jose A. Perez of the FBI Criminal Investigative Division, and Special Agent in Charge Mark Michalek of the FBI Denver Field Office made the announcement.

The FBI’s Child Exploitation Operational Unit and the FBI Denver Field Office investigated the case.

Trial Attorney Rachel L. Rothberg of the Justice Department’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Alecia L. Riewerts for the District of Colorado are prosecuting the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched by the Department of Justice in May 2006 to combat the epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, visit www.justice.gov/psc.