In June 2009, Prescott pleaded guilty to tax evasion and admitted to evading at least $550,000 in personal income taxes for 1998 and 1999. According to the indictment, the plea agreement and the government’s trial brief, Prescott and his former business partner Leroy Fritts (now deceased) earned significant income from the nationwide promotion and sale of abusive trusts through NTS, which they founded in 1988. Prescott and Fritts deposited approximately $3.5 million into various bank accounts through the sale of such trusts. They also earned income from recruiting clients of NTS to invest in Fountainhead Global Trust (FGT), a purported offshore investment that promised returns as high as 50 percent per year.

According to the government’s trial brief, FGT was a Ponzi scheme which collected approximately $20 million in investors’ funds from 1995 through 1999. FGT transferred some of the money to an offshore account in the Cayman Islands at the Bank of Bermuda, ostensibly to be invested in high-interest debt through a Florida entity called “Cash 4 Titles.” Prescott and Fritts then funneled part of the money in the account back to themselves. They also took large sums of investors’ funds without ever sending the money offshore. The government asserts that instead, they spent the funds often by direct payments from FGT bank accounts on luxury goods and real estate. Eventually the scheme broke down and the vast majority of investors lost their full investments.

According to the government’s trial brief, despite making significant income from NTS and FGT, neither Prescott nor Fritts filed any individual federal income tax returns for 1998 or 1999. Prescott last filed a tax return in 1991. Prescott and Fritts used FGT money to purchase, among other items, a nearly $3 million ranch near Grants Pass, Ore., on which they began construction of two custom-built luxury log homes. The construction budget was approximately a combined $2 million, and they spent over $465,000 before halting construction in 1999. Prescott and Fritts also purchased solar panels for the ranch for over $328,000, frozen food in anticipation of a year 2000 apocalypse for over $1.1 million and numerous vehicles and other personal items.

According to the government’s trial brief, Prescott and Fritts used an array of purported trusts and related bank accounts, including numerous offshore bank accounts at the Bank of Bermuda in the Cayman Islands, to conceal their income from the IRS. Prescott and Fritts also used false or fictitious taxpayer identification numbers and offshore credit cards in fake names issued to them by the Bank of Bermuda in the Cayman Islands.

In June 2003, a federal court in San Diego Prescott and his business, Trust Educational Services, from selling trust schemes falsely claiming that personal expenses incurred by customers could be paid through a trust in order to obtain tax benefits not available to individuals. Prescott agreed to the court order and was required to give the Justice Department records showing the names of customers who attended his workshops or used his “trust system. According to papers filed by the Justice Department in the case, Prescott’s bogus trusts encouraged purchasers to under report their income and claim improper deductions on their tax returns, resulting in an estimated $135 million revenue loss to the U.S. Treasury.

Acting Assistant Attorney General John A. DiCicco commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Jay Nanavati and Timothy Stockwell who prosecuted the case.

Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Enforcement Web site. Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.

Mathias, whose last known residence is in the Southern District of Florida, was arraigned today before Magistrate Judge Barry S. Seltzer in U.S. District Court in Fort Lauderdale, Fla.

Mathias was charged in an indictment filed on Oct. 27, 2009, with one count of conspiring to engage in illicit sexual conduct in a foreign place and traveling in foreign commerce for the purpose of engaging in illicit sexual conduct; six counts of offering to buy a child in order to depict the child in child pornography; six counts of coercion and enticement of a minor to engage in sexual activity; three counts of traveling in foreign commerce for the purpose of engaging in illicit sexual conduct; and four counts of engaging in illicit sexual conduct in a foreign place.

Mathias allegedly arranged with the mother of two minor females in the Philippines to travel to the Philippines in April 2007 and December 2007 to engage in sexual conduct with the minors and did so.  Mathias also allegedly arranged to travel again to the Philippines in December 2008 to engage in sexual conduct with the minors.  However, Philippine authorities received information about the arrangements and rescued the children before they met Mathias again.

If convicted, Mathias faces up to life in prison and a fine of up to $250,000.

Charges in an indictment are merely accusations and a defendant is presumed innocent unless and until proven guilty.

The case was investigated by U.S. Immigration and Customs Enforcement and the U.S. Postal Inspection Service, with assistance from the Philippines Department of Justice.  This case is being prosecuted by Trial Attorney Anitha Ibrahim of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida.

James E. Haas Jr., a former representative of a subcontractor that provides common backfill, a type of soil material used to refill an excavation, pleaded guilty in the U.S. District Court of New Jersey, to charges that he engaged in a kickback and fraud conspiracy at the Federal Creosote Superfund site in Manville, N.J. Haas admitted to paying kickbacks to former employees of a prime contractor at Federal Creosote in exchange for the award of a subcontract. He also admitted to inflating prices for the subcontract to include the amount of the kickbacks paid to his co-conspirators. Haas also pleaded guilty to committing fraud against the United States. The indictment was filed on Aug. 31, 2009. Sentencing is set for Feb. 8, 2010. The remaining individuals charged in the indictment, John A. Bennett, the former chief executive officer of subcontractor Bennett Environmental Inc. (BEI), and Gordon D. McDonald, a former project manager for a prime contractor, await trial, which is set for Jan. 5, 2010.

Separately, Frederick Landgraber of Bridgewater, N.J., the president and co-owner of a Martinsville, N.J., landscaping company was sentenced today to serve five months in jail, five months of home detention and to pay a $5,000 criminal fine for his role in a related kickback and fraud conspiracy at Federal Creosote. Landgraber was also ordered to pay $35,000 in restitution to the EPA, jointly and severally with his co-conspirators. Landgraber originally pleaded guilty on June 25, 2009, in the U.S. District Court of New Jersey, to conspiring to defraud the EPA from approximately March 2002 until approximately June 2005.

The clean-up at the Federal Creosote site is partly funded by the EPA. Under an interagency agreement between the EPA and the Army Corps of Engineers, prime contractors oversaw the removal, treatment and disposal of contaminated soil, as well as other operations at the Federal Creosote site.

Today’s plea and sentencing are the result of an ongoing federal antitrust investigation being conducted by the Antitrust Division’s New York Field Office, the EPA Office of Inspector General and the Internal Revenue Service Criminal Investigation. To date, a total of three companies and eight individuals have pleaded guilty as a part of the investigation. BEI was sentenced on Dec. 15, 2008, to pay criminal fines and restitution totaling more than $2.66 million. Christopher Tranchina was sentenced on July 13, 2009, to serve 20 months in jail and to pay restitution totaling $154,597. The other individuals and companies are awaiting sentencing.

Today’s proceedings reflect the Department’s commitment to protecting U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force. The National Procurement Fraud Initiative, announced in October 2006, is designed to promote the early detection, prosecution, and prevention of procurement fraud associated with the increase in contracting activity for national security and other government programs.

Anyone with information concerning bid rigging, kickbacks or fraud relating to subcontracts awarded at the Federal Creosote Superfund site or the Diamond Alkali Superfund site should contact the New York Field Office of the Antitrust Division at 212-264-9308.

In his plea today, Aziz, a licensed physical therapist, admitted that he began working in approximately May 2005 as a contract therapist for a co-conspirator, Suresh Chand.  Chand owned and controlled several companies operating in the Detroit area that purported to provide physical and occupational therapy services to Medicare beneficiaries.  Aziz admitted that he, Chand, and others created fictitious therapy files appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services were provided.  According to court documents, the fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by co-conspirators.

Chand admitted to paying cash kickbacks and other inducements to Medicare beneficiaries in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had received physical or occupational therapy.  Chand pleaded guilty on Sept. 28, 2009, in U.S. District Court in Detroit to one count of conspiracy to commit health care fraud and one count of conspiracy to launder money. Aziz admitted that he was one of the licensed physical or occupational therapists from whom Chand obtained signatures on fictitious “progress notes” and other documents falsely indicating that the therapists had provided services to the Medicare beneficiaries.

Aziz also admitted that during the course of the scheme, he signed approximately 400 fictitious physical therapy files, indicating that he had provided physical therapy services to Medicare beneficiaries, when in fact he had not. Aziz admitted that he was paid between $70 and $90 for each file he falsified. Aziz also admitted that between approximately May 2005 and December 2006, he falsified physical therapy files that supported claims to the Medicare program totaling approximately $1,895,000. According to court documents, Medicare paid approximately $817,000 on those claims. Aziz admitted that throughout the conspiracy he was fully aware that Medicare was being billed for physical therapy services that he falsely indicated he had performed.

At sentencing, scheduled for Feb. 3, 2010, Aziz faces a maximum prison sentence of 10 years and a $250,000 fine.

The case is being prosecuted by Trial Attorneys John K. Neal, Gejaa T. Gobena and Benjamin Singer of the Criminal Division’s Fraud Section and by Special Assistant U.S. Attorney Thomas W. Beimers of the Eastern District of Michigan. The FBI and the HHS Office of Inspector General (HHS-OIG) conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since the inception of Strike Force operations in March 2007 – Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three) and Houston (Phase Four) – the Strike Force has obtained indictments of more than 331 individuals and organizations that collectively have billed the Medicare program for more than $720 million.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Each of the Strike Force teams across the separate phases is led by a federal prosecutor from the Criminal Division’s Fraud Section or the U.S. Attorney’s Office.  Each team has an agent from the FBI and HHS-OIG.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT) , go to:  www.stopmedicarefraud.gov.

The department’s complaint, filed in May 2009, alleges that the city discriminated against Stacy D. Allen, an African-American and a former part-time patrol officer in the city’s police department, when it did not appoint him as a full-time patrol officer. The complaint alleges that the police department had a history of appointing the most senior part-time patrol officer as a full-time officer when a full-time position became available. However, when Allen, who was the city’s only African-American patrol officer, became the most senior part-time patrol officer and two full-time positions opened, the city appointed two less senior white part-time patrol officers to those positions instead of Allen. The Justice Department’s complaint was based on a charge of discrimination filed by Allen with the Equal Employment Opportunity Commission.

“All Americans are guaranteed the right to know that they can pursue their career of choice without fear of discrimination based on their race,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “Title VII protects individuals, such as Mr. Allen, from having to suffer discrimination in the workplace. The Justice Department will take swift action against those employers who engage in discrimination, and we appreciate the partnership of the EEOC in these matters.”

The settlement agreement requires that the city not discriminate against on the basis of race, or in any way adversely affect the terms and conditions of employment of, any applicant or person employed in the city’s police department. The agreement also requires that the city provide Allen with a monetary award of $16,000 ($2,250 in back pay and $13,750 in compensatory damages).

The Civil Rights Division is committed to the vigorous enforcement of Title VII. Additional information about the Civil Rights Division is available on its Web sites at http://www.justice.gov/crt/; and http://www.justice.gov/crt/emp/.

James Paul Clifton, 35, of Newport News, Va., was also ordered by U.S. District Court Judge Liam O’Grady to serve three years of supervised release following the prison term.  Clifton pleaded guilty to one count of bribery on Aug. 7, 2009, in U.S. District Court for the Eastern District of Virginia.

The U.S. Army operates the Bagram Airfield in support of military operations in Afghanistan.  According to court documents, the Army assigns a contracting officer representative (COR) to review all transportation requests and transportation providers.  The Army assigned Clifton, a staff sergeant, to be the COR at the Bagram Airfield in February 2008.  Clifton’s duties included overseeing the companies providing ground transportation to and from Bagram Airfield and objectively determining whether the companies’ service had been adequate.

According to the plea agreement, employees for AIT, a trucking company operating at Bagram Airfield, began to offer Clifton gifts almost immediately after he was assigned to his position.  Despite initially refusing the gifts, Clifton admitted he accepted a cellular telephone in May 2008, paid for by AIT.  According to court documents, AIT then began to make payments to Clifton at a rate of $20,000 a month.  Clifton admitted that in exchange for the payments, he agreed to assign one extra day of trucking service to the company.  Clifton also admitted that later in the month, another Afghan trucking company, ATT, entered into a similar illegal agreement with him.   Clifton further admitted that in exchange for bribe payments of $15,000 a month, he assigned ATT an additional day of trucking service a month.  Between May and October 2008, Clifton admitted, ATT and AIT made $87,000 in payments to him.  According to court documents, affiliates of both companies wired the payments from Dubai, United Arab Emirates, to Clifton’s then-girlfriend in Newport News, Va.  According to the terms of their agreement, the companies had agreed to pay Clifton an additional $10,000, although he never received the payments.

The case is being prosecuted by Special Assistant U.S. Attorney Steve A. Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorney Liam Brennan.  The investigation is being conducted by Defense Criminal Investigative Service, the FBI and members of the National Procurement Fraud Task Force.

The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs.