A packaged-ice company, headquartered in St. Paul, Minn., has agreed to plead guilty and to pay a $9 million criminal fine for allocating customers, the Department of Justice announced today. In addition, three of the company’s former executives pleaded guilty for their roles in the conspiracy to allocate customers.

According to a one-count felony charge filed under seal on Sept. 10, 2009, and unsealed today in the U.S. District Court in Cincinnati, Arctic Glacier International Inc. engaged in a conspiracy to suppress and eliminate competition by allocating packaged-ice customers in the Detroit metropolitan area and southeastern Michigan, beginning Jan. 1, 2001, and continuing until at least July 17, 2007. Under the plea agreement, which must be approved by the court, Arctic Glacier has agreed to cooperate with the Department’s ongoing investigation.

According to separate one-count felony charges, also filed under seal on Sept. 10, 2009, and unsealed today in the U.S. District Court in Cincinnati, Frank Larson, Arctic Glacier’s former senior vice president of operations, and Keith Corbin, the company’s former vice president of sales and marketing, participated in the same conspiracy beginning at least as early as March 1, 2005, and continuing at least until July 17, 2007. According to an additional one-count felony charge filed under seal on Sept. 10, 2009, in the U.S. District Court in Cincinnati and unsealed today, Gary Cooley, the company’s former vice president of sales and marketing, also participated in the conspiracy from at least as early as June 1, 2006, until July 17, 2007. Under the three separate plea agreements, which must be approved by the court, the former executives have agreed to cooperate with the Department’s ongoing investigation.

In court documents, the Department said that the three former executives and Arctic Glacier, conspired with another packaged-ice competitor to allocate packaged-ice customers in southeastern Michigan and the Detroit metropolitan areas. As a part of the conspiracy, Arctic Glacier, its former executives and other co-conspirators exchanged information for the purpose of monitoring and enforcing adherence to the agreed customer allocations and refrained from competing for the allocated customers.

Arctic Glacier, Larson, Corbin and Cooley are each charged with allocating packaged-ice customers in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and a $100 million fine for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the Sherman Act maximum fines.

These charges stem from an ongoing antitrust investigation into the packaged-ice industry. As a part of the same investigation, Home City Ice Company pleaded guilty on June 17, 2008, for its participation in a conspiracy to allocate customers and territories in the packaged-ice industry. The investigation is being conducted by the Antitrust Division’s Cleveland Field Office and by FBI offices in Ann Arbor, Mich.; Indianapolis, Ind.; Dallas, Texas; and Cincinnati and Toledo, Ohio.

Anyone with information concerning customer or territorial allocation agreements, or other anticompetitive conduct in the packaged-ice industry, should contact the Cleveland Field Office of the Antitrust Division at 216-687-8400.

As directed by the President’s Jan. 22, 2009 Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of each of these cases. As a result of that review, these detainees were approved for transfer from Guantanamo Bay. In accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer each of these detainees at least 15 days in advance.

Khalid Abdullah Mishal al Mutairi, a native of Kuwait, was transferred to the Government of Kuwait. On July 29, 2009, a federal court ruled that al Mutairi may no longer be detained under the Authorization for the Use of Military Force (AUMF) and ordered the government to release him from detention at Guantanamo Bay.

Another detainee was transferred from Guantanamo Bay to the Government of Belgium. Pursuant to a request from the Government of Belgium, the identity of this individual is being withheld for privacy reasons.

These transfers were carried out under individual arrangements between the United States and the governments of Kuwait and Belgium. The United States has coordinated with the governments of each of these nations to ensure the transfers take place under appropriate security measures and will continue to consult with these governments regarding these matters.

Since 2002, more than 550 detainees have departed Guantanamo for other countries including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Iran, Iraq, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Portugal, Russia, Saudi Arabia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.

In March 2009, Lapierre and his co-defendants, Albert and Lorraine Martin, were convicted of conspiracy and two counts each of tax evasion. According to the indictment and evidence introduced during the eight-day trial, Lapierre and Albert Martin owned and operated Classic Machine, a Woonsocket, R.I.-based machine shop, from which they earned substantial income.

From 1997 to 2004, the defendants engaged in an elaborate scheme to conceal income from the IRS they earned through Classic Machine, and thus avoid paying taxes on that income. Rather than open business accounts for depositing business receipts and income, they used Lorraine Martin’s personal account to conceal business receipts, as well as an anonymous “private” banking service designed to conceal income from the IRS.

The evidence also showed that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises, to conduct the machine shop business. The defendants also made extensive use of cash and money orders. For example, they cashed checks under $10,000 in order to avoid federal Currency Transaction Reports, which are required for currency transactions of $10,000 or more.

According to evidence presented at trial, Lapierre tried to obstruct an IRS investigation of the machine shop’s income by renaming business assets, by sending false and frivolous letters to the IRS claiming he was not required to file tax returns or pay taxes, and by directing a financial institution not to comply with an IRS summons for records.

Sentencing for Albert and Lorraine Martin is scheduled for Nov. 18, 2009. Each defendant faces a maximum of fifteen years in prison and a maximum fine of $750,000.

Acting Assistant Attorney General John A. DiCicco commended the IRS Special Agents who investigated the case, as well as Tax Division Trial Attorneys John Kane and Jorge Almonte who prosecuted the case.

The Indiana hospitals include St. Francis Hospital in Beech Grove, Deaconess Hospital in Evansville and St. John’s Hospital System in Anderson. The hospitals have agreed to pay the United States $3,158,629, $2,110,034 and $826,256, respectively.

The Alabama hospitals include St. Vincent’s East Hospital and St. Vincent’s Birmingham Hospital, both located in Birmingham, and Providence Hospital, located in Mobile. These facilities have agreed to pay the United States $1,459,395, $422,748 and $381,713, respectively.

The settlements resolve allegations that, from 2002 to 2008, the six hospitals overcharged Medicare each time they performed kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. In many cases, the procedure can be performed safely as an out-patient surgery, but the government contends that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.

“The Department of Justice is committed to preventing waste, fraud, and abuse in the Medicare program and ensuring that Medicare funds are not expended for unnecessary services,” said Tony West, Assistant Attorney General for the Department’s Civil Division.

“Hospitals that overcharge Medicare drain critical funds from the Medicare program and increase health care costs,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “This settlement demonstrates the Federal government’s resolve to address this kind of fraudulent conduct.”

The settlements with these Indiana and Alabama facilities follow the government’s June 2009 settlement with three Minnesota hospitals for alleged kyphoplasty-related Medicare fraud claims, as well as the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though in many cases the minimally-invasive procedure should have been done on an out-patient basis.

“By keeping patients overnight, without regard to medical necessity, hospitals could seek greater reimbursement from Medicare and make much larger profits on kyphoplasty,” said Kathy Mehltretter, U.S. Attorney for the Western District of New York in Buffalo.

This lawsuit was filed in 2008 in federal district court in Buffalo, N.Y., by Craig Patrick and Charles Bates under the qui tam or whistleblower provisions of the False Claim Act. Under those provisions, a private party, known as “relator,” can file an action on behalf of the United States and receive a portion of any recovery. Mr. Patrick, of Hudson, Wis., is a former reimbursement manager for Kyphon, and Mr. Bates is a former regional sales manager for Kyphon in Birmingham, Ala. The relators will receive approximately $1.4 million as their share of the settlement proceeds.

Assistant Attorney General West acknowledged that these settlement are the result of a coordinated effort between the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of New York, and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.

“This policy is an important step toward rebuilding the public’s trust in the government’s use of this privilege while recognizing the imperative need to protect national security,” Holder said. “It sets out clear procedures that will provide greater accountability and ensure the state secrets privilege is invoked only when necessary and in the narrowest way possible.”

Earlier this year, Attorney General Holder ordered senior Justice officials to conduct a review of the Department’s existing state secrets policies and procedures, including an internal evaluation of the pending cases in which the privilege had been invoked. The results of that internal review were shared with an interagency group comprised of officials from the Department and the intelligence community, which provided input into the formulation of the new policies and procedures. The new policy and procedures take effect October 1, 2009.

The Attorney General’s memorandum outlines several aspects of the new administrative process that increases accountability and oversight, including:

Facilitation of Court Review – The policy ensures that before approving invocation of the state secrets privilege in court, the Department must be satisfied that there is strong evidentiary support for it. In order to facilitate meaningful judicial scrutiny of the privilege assertions, the Department will submit evidence to the court for review.

Significant Harm Standard – The policy adopts a more rigorous standard to govern when the Department will defend assertions of the state secrets privilege in new cases. Under the new policy, the Department will now defend the assertion of the privilege only to the extent necessary to protect against the risk of significant harm to national security.

Narrow Tailoring of Privilege Assertions – Under this policy, the Department will narrowly tailor the use of the states secrets privilege whenever possible to allow cases to move forward in the event that the sensitive information at issue is not critical to the case. As part of this policy, the Department also commits not to invoke the privilege for the purpose of concealing government wrongdoing or avoiding embarrassment to government agencies or officials.

State Secrets Review Committee – A State Secrets Review Committee will be formed consisting of senior Department officials designated by the Attorney General who will evaluate any recommendation by the Assistant Attorney General of the relevant Division to invoke the privilege. The Committee would make its recommendation to the Associate Attorney General, who would review and refer to the Deputy Attorney General for a final recommendation to the Attorney General or his designee.

Approval by the Attorney General – The policy requires the approval of the Attorney General prior to the invocation of the states secret privilege, except when the Attorney General is recused or unavailable. Previously, the invocation of the state secrets privilege could be approved by the appropriate Assistant Attorney General

Referral to Inspectors General. The policy implements a referral process to relevant Offices of Inspector General whenever there are credible allegations of government wrongdoing in a case, but the assertion of state secrets privilege might preclude the case from moving forward.

Under the policy, the Department also commits to provide periodic reports on all cases in which the privilege is asserted to the appropriate oversight Committees in Congress.

The Department of Justice and the Federal Trade Commission (FTC) announced today that they will solicit public comment and hold joint public workshops to explore the possibility of updating the Horizontal Merger Guidelines that are used by both agencies to evaluate the potential competitive effects of mergers and acquisitions.

The goal of the workshops will be to determine whether the Horizontal Merger Guidelines accurately reflect the current practice of merger review at the Department and the FTC as well as to take into account legal and economic developments that have occurred since the last significant Guidelines revision in 1992.

The Horizontal Merger Guidelines outline the merger enforcement policy of the Department and the FTC. The Guidelines describe the analytical framework and specific standards normally used by the agencies in analyzing mergers. The Guidelines are intended to reduce the uncertainty associated with enforcement of the antitrust laws in the merger area. Merger Guidelines were first adopted in 1968 by the Department of Justice. They were substantially revised in 1982 and again in 1992, when they became the Horizontal Merger Guidelines, jointly issued by the Department and the FTC. The section on efficiencies was revised in 1997. The agencies also issued a detailed Commentary on the Horizontal Merger Guidelines in 2006.

The agencies will issue a set of questions about the current Guidelines and possible revisions. Following receipt of public comments and original research addressing those questions or other issues related to the Guidelines, the agencies will host a series of five workshops. The workshops, which are open to the public and press, will take place in December 2009 and January 2010. The first workshop will be held in Washington, D.C., on Dec. 3, 2009, followed by workshops in Chicago, New York City and San Francisco. A final workshop also will be held in Washington, D.C.

“In light of legal and economic developments that have occurred since the last major revision of the guidelines, it is an appropriate time for the antitrust agencies to conduct a review of the guidelines to determine whether any revisions should be made to better protect American consumers and businesses from anticompetitive mergers,” said Christine A. Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. “Having guidelines that offer more clarity and better reflect agency practice provides for enhanced transparency and gives businesses greater certainty when making merger decisions, resulting in a more competitive marketplace that benefits consumers.”

“The bulk of the Merger Guidelines is over 17 years old,” said FTC Chairman Jon Leibowitz. “The 1992 Guidelines explicitly stated that they would be revised from time to time. We think the time has come to do that.”

The FTC will post a set of questions on its Web site later today to begin the discussion on the Guidelines. The agencies are interested in receiving written comments from attorneys, economists, academics, consumer groups, the business community and other interested parties. The questions can be found at: http://www.ftc.gov/bc/workshops/hmg/hmg-questions.pdf.

Horizontal Merger Guidelines topics to be discussed include: the overall method of analysis used by the agencies; the use of more direct forms of evidence of competitive effects; market definition; market shares and market concentration; unilateral effects, especially in markets with differentiated products; price discrimination; geographic market definition; the relevance of large buyers; the distinction between uncommitted and committed entry; the distinction between efficiencies involving fixed and marginal cost savings; the non-price effects of mergers, especially the effects of mergers on innovation; and remedies. Public comments are also invited on whether to incorporate aspects of the 2006 Commentary on the Horizontal Merger Guidelines into the Guidelines themselves.

Additional information about the date, time and exact location of the workshops will be provided at a later date. Speakers at the workshops will be drawn principally from those filing comments with the agencies. Interested parties should submit comments in accord with the procedures and time frame set forth on the FTC’s Web site.