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I am honored to be joined by FBI Director Chris Wray, National Security Division Assistant Attorney General John Demers, and Southern District of New York U.S. Attorney Geoffrey Berman.

Today, the Department of Justice is announcing a criminal indictment of two computer hackers associated with the Chinese government. The charges include conspiracy to commit computer intrusions against dozens of companies in the United States and around the world. As with all American criminal charges, individual defendants are presumed innocent unless proven guilty in a court of law.

This case is significant because the defendants are accused of targeting and compromising Managed Service Providers, or MSPs. MSPs are firms that other companies trust to store, process, and protect commercial data, including intellectual property and other confidential business information. When hackers gain access to MSPs, they can steal sensitive business information that gives competitors an unfair advantage.

The indictment alleges that defendants worked for a group known to cyber security experts as APT-10. These groups are designated as APTs, or Advanced Persistent Threats, because they use malware to gain access to computer networks and exfiltrate data over an extended period of time.

These defendants allegedly compromised MSP clients in at least a dozen countries. The victims included companies in banking and finance, telecommunications and consumer electronics, medical equipment, packaging, manufacturing, consulting, healthcare, biotechnology, automotive, oil and gas exploration, and mining.

The defendants allegedly committed these crimes in association with a Chinese intelligence service known as the Ministry of State Security.

This is not the first time the Department of Justice has accused Chinese state actors and associates of stealing commercial information. Since the indictment of five uniformed members of the People’s Liberation Army in 2014, our Department has repeatedly cast a spotlight on Chinese state-sponsored criminal activity targeting U.S. companies.

More than 90 percent of the Department’s cases alleging economic espionage over the past seven years involve China. More than two-thirds of the Department’s cases involving thefts of trade secrets are connected to China. In the last few months of this year, our Department has announced charges in three cases alleging crimes committed at the behest of a branch of the Chinese Ministry of State Security.

It is unacceptable that we continue to uncover cybercrime committed by China against other nations. In 2015, China promised to stop stealing trade secrets and other confidential business information through computer hacking “with the intent of providing competitive advantages to companies or commercial sectors.” The activity alleged in this indictment violates the commitment that China made to members of the international community.

We want China to cease illegal cyber activities and honor its commitment to the international community, but the evidence suggests that China may not intend to live up to its promises.

For example, the Chinese industrial policy, known as “Made in China 2025,” lists ten strategic advanced manufacturing industries that the nation has targeted for promotion and development. Many of the companies allegedly targeted recently by Chinese defendants operate in sectors identified by that official policy. Whether through computer hackers operating from China, or Chinese nationals recruited to steal trade secrets from companies in other countries, the goal is the same: to dominate production in strategically important industries by stealing ideas from other nations.

Today’s charges mark an important step in revealing to the world China’s continued practice of stealing commercial data. Responding to that conduct requires a strategic approach to the threats that China poses. That is why the Department of Justice recently announced an initiative to address the full range of threats. One tactic is to increase our enforcement efforts. Another is to conduct foreign investment reviews to protect against China improperly acquiring sensitive information. A third is to find ways to better protect our telecommunications networks.

China stands accused of engaging in criminal activity that victimizes individuals and companies in the United States, violates our laws, and departs from international norms of responsible state behavior. Exposing these actions through the criminal justice system is a valuable tool. Faced with the detailed factual allegations released today, and the corroborating statements of other victimized nations, China will find it difficult to feign ignorance.

America and many allies know what China is doing. We know why they are doing it. And in some cases, we even know which individual people are doing it in association with the Chinese government.

The alleged criminals in this case are named Zhu Hua and Zhang Shilong. We hope the day will come when the defendants face justice under the rule of law in a federal courtroom.

Until then, they and other hackers who steal from our companies for the apparent benefit of Chinese industries should remember: there is no free pass to violate American laws merely because they do so under the protection of a foreign state. The Department of Justice and the FBI will continue to use all available tools to respond to China’s economic aggression and the threat that these actions pose to the prosperity and security of the United States and other nations that respect the rule of law.

WASHINGTON —
Two Defense Department artificial-intelligence experts testified on Capitol Hill yesterday on DOD’s efforts to transform delivery of capabilities enabled by artificial intelligence to the nation’s warfighters.

Lisa Porter, deputy undersecretary of defense for research and engineering, and Dana Deasy, DOD’s chief information officer, testified at a hearing of the House Armed Services Committee’s subcommittee on emerging threats and capabilities.

The John S. McCain National Defense Authorization Act for fiscal year 2019 directed the defense secretary to conduct a comprehensive national review of advances in AI relevant to the needs of the military services. Section 238 directed the secretary to craft a strategic plan to develop, mature, adopt and transition AI technologies into operational use.

“Today we are experiencing an explosion of interest in a subfield of AI called machine learning, where algorithms have become remarkably good at classification and prediction tasks when they can be trained on very large amounts of data,” Porter told the House panel. Today’s AI capabilities offer potential solutions to many defense-specific problems, such as object identification in drone video or satellite imagery and detection of cyber threats on networks, she said.

However, she added, several issues must be addressed to effectively apply AI to national security mission problems.

“First, objective evaluation of performance requires the use of quantitative metrics that are relevant to the specific use case,” she said. “In other words, AI systems that have been optimized for commercial applications may not yield effective outcomes in military applications.”

Challenges, Vulnerabilities

DOD is working to address such challenges and vulnerabilities in multiple ways, she said, most of which will leverage the complementary roles of the new Joint Artificial Intelligence Center and the department’s research and engineering enterprise.

Second, Porter said, existing AI systems need enormous amounts of training data, and the preparation of that data in a format that the algorithms can use, in turn, requires a large amount of human labor.

“AI systems that have been trained on one type of data typically do not perform well on data that are different from the training data,” she noted.

The JAIC’s focus on scaling and integration will drive innovation in data curation techniques, while the Defense Advanced Research Projects Agency will pursue algorithms that can be “robustly trained with much less data,” Porter said.

“The high-performance computing modernization program is designing new systems that will provide ample processing power for AI applications on the battlefield,” she added.

Countering adversarial AI is one of the key focus areas of DARPA’s “AI Next” campaign, she emphasized. “Ultimately, as we look to the future, we anticipate a focus on developing AI systems that have the ability to reason as humans do, at least to some extent,” Porter said. “Such a capability would greatly amplify the utility of AI, enabling AI systems to become true partners with their human counterparts in problem solving. It is important that we continue to pursue cutting-edge research in AI, especially given the significant investments our adversaries are making.”

Three Themes of JAIC Effort

Deasy detailed the JAIC and highlighted three themes of its effort.

“The first is delivering AI-enabled capabilities at speed,” he said. “JAIC is collaborating now with teams across DOD to systematically identify, prioritize and select mission needs, and then rapidly execute a sequence across functional use cases that demonstrate value and spur momentum.”

The second theme is all about scale, he said.

“JAIC’s early projects serve a dual purpose: to deliver new capabilities to end users, as well as to incrementally develop the common foundation that is essential for scaling AI’s impact across DoD,” he explained. “This means [the use of] shared data, reusable tools, libraries, standards, and AI cloud and edge services that helped jumpstart new projects.”

The third theme is building the initial JAIC team.

“It’s all about talent,” he said. “And this will be representative across all the services and all components. Today, we have assembled a force of nearly 30 individuals. Going forward, it is essential that JAIC attract and cultivate a select group of mission-driven, world-class AI talent, including pulling these experts into service from industry.”

Two weeks ago, before more than 600 representatives of 380 companies, academic institutions and government organizations at DOD’s AI Industry Day, Deasy said, he announced that the department had achieved a significant milestone: “JAIC is now up and running and open for business.”

(Follow Terri Moon Cronk on Twitter @MoonCronkDoD)

MISSION
The mission of the Department of Defense is to provide a lethal Joint Force to defend the security of our country and sustain American influence abroad.

WASHINGTON —
Democracy is succeeding in Latin America and can be a beacon to the rest of the world, Defense Secretary James N. Mattis said yesterday at the Defense Ministerial in Cancun, Mexico.

Defense Secretary Jim Mattis speaks with Mexican Army Gen. Salvador Cienfuegos Zepeda, the secretary of national defense, during an armed forces parade in Mexico City, Sept. 15, 2017. DOD photo by Air Force Staff Sgt. Jette Carr
Defense Secretary Jim Mattis speaks with Mexican Army Gen. Salvador Cienfuegos Zepeda, the secretary of national defense, during an armed forces parade in Mexico City, Sept. 15, 2017. DOD photo by Air Force Staff Sgt. Jette Carr
The Conference of Defense Ministers of the Americas, co-hosted by Mexican Secretary of National Defense Gen. Salvador Cienfuegos Zepeda and Mexican Secretary of Navy Adm. Vidal Francisco Soberon Sanz, allows defense ministers from Canada to Chile to gather and discuss shared hemispheric defense challenges. The forum was founded by then-Defense Secretary William J. Perry.

“From Ottawa to Buenos Aires to Santiago, from south to north and from east to west, our nations increasingly represent an island of democratic stability amidst a global sea of instability due to malign influence,” Mattis said during his address. “In bringing us together, Mexico continues to show important strategic leadership building trusted relationships between us based on respect, cooperation, and mutual understanding.”

Mattis said there are challenges to stability and security in the Americas, from transnational criminal syndicates to illegal immigration to humanitarian issues.

Partnership is Crucial

Partnership among the nations of the hemisphere is crucial to addressing these challenges, he said.

Cuba, Nicaragua and Venezuela are the exceptions to the rule in the region. Mattis called the leadership in Cuba “sad and unresponsive.” Nicaragua and Venezuela tried to model their countries after Cuba. But the nations, “cannot hide from the reality they face as the world recognizes that the Cuba model no longer works for anyone, even Cuba,” he said.

“Democracy is working,” Mattis said. “Our democratic nations send a message as we uphold our shared values, including respect for human rights, the rule of law, and sovereignty. And that message reverberates around the globe.”

The success is seen even in nations like Russia and China that still try to tear down the existing international order to emplace something that benefits them alone. Mattis said those countries “threaten sovereignty with predatory investments, piling up massive debt and seeking undue influence over other countries diplomatic, political, and economic decisions.”

Fostering Understanding, Cooperation

He called on the hemispheric nations to remain steadfast in the commitment to foster greater understanding and cooperation. “We see the positive impact our growing partnerships have for ensuring peace and stability in this region and beyond,” Mattis said. “We see it in this very room as we listen with respect to each other and the vision we have so we can collaborate better together.”

The challenges in the hemisphere cannot be addressed by one nation alone, Mattis said. “In tackling such difficult challenges together, we prove that like-minded nations are stronger when we collaborate, that we are then more responsive in serving our populations when disaster strikes,” he said. “So I express my support for making humanitarian assistance and disaster relief a permanent theme for the CDMA and for the Inter-American Defense Board to play a more intense role in strengthening regional humanitarian assistance/disaster relief cooperation, and my Department will stand with you, will stand alongside you, when trouble looms.”

Mattis noted the decision to send the hospital ship USNS Comfort is one example of cooperation. The ship will help relieve the strain on local health care systems overburdened by caring for refugees from Venezuela.

“We note that in the midst of … this man-made disaster in Venezuela that Russia is sending a bomber, while the U.S. Navy is sending a hospital ship with doctors,” he said.

The Comfort’s medical staff will come from the U.S. Navy, as well as Mexico and other area countries.
Conference of Defense Ministers of the Americas Defense Secretary James N. Mattis Navy USS Comfort

MISSION
The mission of the Department of Defense is to provide a lethal Joint Force to defend the security of our country and sustain American influence abroad.

A grand jury in the Western District of Pennsylvania has indicted seven defendants, all officers in the Russian Main Intelligence Directorate (GRU), a military intelligence agency of the General Staff of the Armed Forces of the Russian Federation, for computer hacking, wire fraud, aggravated identity theft, and money laundering.

According to the indictment, beginning in or around December 2014 and continuing until at least May 2018, the conspiracy conducted persistent and sophisticated computer intrusions affecting U.S. persons, corporate entities, international organizations, and their respective employees located around the world, based on their strategic interest to the Russian government.

Among the goals of the conspiracy was to publicize stolen information as part of an influence and disinformation campaign designed to undermine, retaliate against, and otherwise delegitimize the efforts of international anti-doping organizations and officials who had publicly exposed a Russian state-sponsored athlete doping program and to damage the reputations of athletes around the world by falsely claiming that such athletes were using banned or performance-enhancing drugs.

The charges were announced at a press conference by Assistant Attorney General for National Security John C. Demers, United States Attorney for the Western District of Pennsylvania Scott W. Brady, FBI Deputy Assistant Director for Cyber Division, Eric Welling, and Director General Mark Flynn for the Royal Canadian Mounted Police.

“State-sponsored hacking and disinformation campaigns pose serious threats to our security and to our open society, but the Department of Justice is defending against them,” Attorney General Jeff Sessions said. “Today we are indicting seven GRU officers for multiple felonies each, including the use of hacking to spread the personal information of hundreds of anti-doping officials and athletes as part of an effort to distract from Russia’s state-sponsored doping program. The defendants in this case allegedly targeted multiple Americans and American entities for hacking, from our national anti-doping agency to the Westinghouse Electric Company near Pittsburgh. We are determined to achieve justice in these cases and we will continue to protect the American people from hackers and disinformation.”

“The investigation leading to the indictments announced t (link is external)oday is the FBI at its best,” said FBI Director Christopher Wray. “The actions of these seven hackers, all working as officials for the Russian government, were criminal, retaliatory, and damaging to innocent victims and the United States’ economy, as well as to world organizations. Their actions extended beyond borders, but so did the FBI’s investigation. We worked closely with our international partners to identify the actors and disrupt their criminal campaign – and today, we are sending this message: The FBI will not permit any government, group, or individual to threaten our people, our country, or our partners. We will work tirelessly to find them, stop them, and bring them to justice.”

“We want the hundreds of victims of these Russian hackers to know that we will do everything we can to hold these criminals accountable for their crimes,” said U.S. Attorney Brady. State actors who target U.S. citizens and companies are no different than any other common criminal: they will be investigated and prosecuted to the fullest extent of the law.”

The defendants, all Russian nationals and residents, are Aleksei Sergeyevich Morenets, 41, Evgenii Mikhaylovich, Serebriakov, 37, Ivan Sergeyevich Yermakov, 32, Artem Andreyevich Malyshev, 30, and Dmitriy Sergeyevich Badin, 27, who were each assigned to Military Unit 26165, and Oleg Mikhaylovich Sotnikov, 46, and Alexey Valerevich Minin, 46, who were also GRU officers.

The indictment alleges that defendants Yermakov, Malyshev, Badin, and unidentified conspirators, often using fictitious personas and proxy servers, researched victims, sent spearphishing emails, and compiled, used, and monitored malware command and control servers.

When the conspirators’ remote hacking efforts failed to capture log-in credentials, or if the accounts that were successfully compromised did not have the necessary access privileges for the sought-after information, teams of GRU technical intelligence officers, including Morenets, Serebriakov, Sotnikov, and Minin, traveled to locations around the world where targets were physically located. Using specialized equipment, and with the remote support of conspirators in Russia, including Yermakov, these close access teams hacked computer networks used by victim organizations or their personnel through Wi-Fi connections, including hotel Wi-Fi networks. After a successful hacking operation, the close access team transferred such access to conspirators in Russia for exploitation.

Among other instances, the indictment alleges that following a series of high-profile independent investigations starting in 2015, which publicly exposed Russia’s systematic state-sponsored subversion of the drug testing processes prior to, during, and subsequent to the 2014 Sochi Winter Olympics (according to one report, known as the “McLaren Report”), the conspirators began targeting systems used by international anti-doping organizations and officials. After compromising those systems, the defendants stole credentials, medical records, and other data, including information regarding therapeutic use exemptions (TUEs), which allow athletes to use otherwise prohibited substances.

Using social media accounts and other infrastructure acquired and maintained by GRU Unit 74455 in Russia, the conspiracy thereafter publicly released selected items of stolen information, in many cases in a manner that did not accurately reflect their original form, under the false auspices of a hacktivist group calling itself the “Fancy Bears’ Hack Team.” As part of its influence and disinformation efforts, the Fancy Bears’ Hack Team engaged in a concerted effort to draw media attention to the leaks through a proactive outreach campaign. The conspirators exchanged e-mails and private messages with approximately 186 reporters in an apparent attempt to amplify the exposure and effect of their message.

Each defendant is charged with one count of conspiracy to commit computer fraud and abuse, which carries a maximum sentence of five years in prison, one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering, both of which carry a maximum sentence of 20 years. Defendants Morenets, Serebriakov, Yermakov, Malyshev, and Badin are each also charged with two counts of aggravated identity theft, which carries a consecutive sentence of two years in prison. Defendant Yermakov is also charged with five counts of wire fraud, which carries a maximum sentence of 20 years.

Defendants Yermakov, Malyshev, and Badin are also charged defendants in federal indictment number CR 18-215 in the District of Columbia, and accused of conspiring to gain unauthorized access into the computers of U.S. persons and entities involved in the 2016 U.S. presidential election, steal documents from those computers, and stage releases of the stolen documents to interfere with the 2016 U.S. presidential election.

According to the indictment:

Context of the Hacking and Related Influence and Disinformation Efforts

In July 2016, the World Anti-Doping Agency’s (WADA) Independent Person Report (the “First McLaren Report”) was released, describing Russia’s systematic state-sponsored subversion of the drug testing process prior to, during, and subsequent to the 2014 Sochi Winter Olympics. This investigation had the support of advocates for clean sports, including the United States Anti-Doping Agency (USADA), the Canadian Centre for Ethics in Sport (CCES, Canada’s anti-doping agency). Eventually, in some instances only after arbitration rulings by the International Court of Arbitration for Sport (TAS/CAS), approximately 111 Russian athletes were excluded from the 2016 Summer Olympic Games, in Rio de Janeiro, Brazil, by a number of international athletics federations, including track-and-field’s International Association of Athletics Federations (IAAF). The International Paralympic Committee (IPC) further imposed a blanket ban of Russian athletes from the 2016 Paralympic Games, which were also held in Rio.

Intrusion Activities in Rio de Janeiro, Brazil

Days after the release of the First McLaren Report and the International Olympic Committee’s and IPC’s subsequent decisions regarding the exclusion of Russian athletes, the conspirators prepared to hack into the networks of WADA, the United States Anti-Doping Agency (USADA), and TAS/CAS. The conspirators, including specifically defendants Yermakov and Malyshev, procured spoofed domains (which mimicked legitimate WADA and TAS/CAS domains) and other infrastructure, probed such entities’ networks, and spearphished WADA and USADA employees. Although Yermakov and Malyshev are both alleged to have prepared to send spearphishing e-mails to TAS/CAS, the indictment does not allege that organization was compromised.

Likely as a result of the conspirators’ failure to capture necessary log-in credentials, or because those victim accounts that were successfully compromised did not have the necessary access privileges for the sought-after information, defendants Morenets and Serebriakov, in at least one instance with the remote support of Yermakov, deployed to Rio to conduct hacking operations targeting and maintaining persistent access to Wi-Fi networks used by anti-doping officials. As a result of these efforts, in August 2016, the conspirators captured that IOC official’s credentials and thereafter used them, and another set of credentials belonging to the same official to gain unauthorized access to an account in WADA’s ADAMS database and medical and anti-doping related information contained therein. (The broader ADAMS database was not compromised in the intrusion.)

Also in 2016, a senior USADA anti-doping official traveled to Rio de Janeiro for the Olympics and Paralympic games. While there, the USADA official used Wi-Fi at the hotel and other Wi-Fi access points in Rio to remotely access USADA’s computer systems and conduct official business. While the USADA official was in Rio, conspirators successfully compromised the credentials for his or her USADA email account, which included summaries of athlete test results and prescribed medications.

Intrusion Activities in Lausanne, Switzerland

In mid-September 2016, WADA hosted an anti-doping conference in Lausanne, Switzerland. On September 18, 2016, defendants Morenets and Serebriakov traveled to Lausanne with equipment used in close access Wi-Fi compromises. On or about September 19, 2016, Morenets and Serebriakov compromised the Wi-Fi network of a hotel hosting the conference and leveraged that access to compromise the laptop and credentials of a senior CCES official staying at the hotel. Other conspirators thereafter used the stolen credentials to compromise CCES’s networks in Canada, using a tool used to extract hashed passwords, the metadata of which indicated it was compiled by Badin.

Intrusion Targeting Anti-Doping Officials at Sporting Federations

In December 2016 and January 2017, conspirators successfully compromised the networks of IAAF and the Fédération Internationale de Football Association (“FIFA”) and targeted computers and accounts used by each organization’s top anti-doping official. Among the data stolen from such officials were keylogs, file directories, anti-doping policies and strategies, lab results, medical reports, contracts with doctors and medical testing labs, information about medical testing procedures, and TUEs.

Related GRU Influence and Disinformation Operations

On September 12, 2016, shortly after the compromise of the IOC official’s ADAMS credentials, but before the compromise of USADA’s and CCES’s networks, conspirators claiming to be the hacktivist group Fancy Bears’ Hack Team used online accounts and other infrastructure procured and managed by Unit 74455, as well as the website fancybears.net, to publicly release TUEs, other medical information, and emails stolen from anti-doping officials at WADA, USADA, CCES, IAAF, FIFA, and approximately 35 other anti-doping agencies or sporting organizations. In some instances, the WADA documents were modified from their original form. Ultimately, the Fancy Bears’ Hack Team released stolen information that included private or medical information of approximately 250 athletes from almost 30 countries.

The conspirators’ release of the stolen information was, in some instances, accompanied by posts and other communications that parroted or supported themes that the Russian government had used in its official narrative regarding the anti-doping agencies’ investigative findings. From 2016 through 2018, the conspirators engaged in a proactive outreach campaign, using Twitter and e-mail to communicate with approximately 186 reporters about the stolen information. After articles were published, conspirators used the Fancy Bears’ Hack Team social media accounts to draw attention to the articles in an attempt to amplify the exposure and effect of their message.

Other Targets of the Conspiracy

The conspiracy is also alleged to have targeted other entities in the Western District of Pennsylvania and abroad that were of interest to the Russian government. For example, as early as November 20, 2014, Yermakov performed reconnaissance of Westinghouse Electric Company’s (WEC) networks and personnel. In the following months, Yermakov and conspirators created a fake WEC domain and sent spearphishing emails to WEC employees’ work and personal email accounts, which were designed to harvest the employees’ log-in credentials.

More recently, in April 2018, Morenets, Serebriakov, Sotnikov, and Minin, all using diplomatic passports, traveled to The Hague in the Netherlands in furtherance of another close access operation targeting the Organisation for the Prohibition of Chemical Weapons (OPCW) computer networks through Wi-Fi connections. All four GRU officers intended to travel thereafter to Spiez, Switzerland, to target the Spiez Swiss Chemical Laboratory, an accredited laboratory of the OPCW which was analyzing military chemical agents, including the chemical agent that the United Kingdom authorities connected to the poisoning of a former GRU officer in that country. However, Morenets, Serebriakov, Sotnikov, and Minin were disrupted during their OPCW hacking operation by the Militaire Inlichtingen- en Veiligheidsdienst (MIVD), the Dutch defense intelligence service. As part of this disruption, Morenet’s and Serebriakov’s abandoned the Wi-Fi compromise equipment, which they had placed in the trunk of a rental car parked adjacent to the OPCW property. Data obtained from at least one item of this equipment confirmed its operational use at multiple locations around the world, including connections to the Wi-Fi network of the CCES official’s hotel in Switzerland (the dates the conspirators conducted the Wi-Fi compromise of the senior CCES official’s laptop at the same hotel), and at another hotel in Kuala Lumpur, Malaysia in December 2017.

A federal court has permanently barred Kathleen Sims-Crawford and KSC Business Support Services Inc. from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, entered by Judge John J. Tharp Jr., of the U.S. District Court for the Northern District of Illinois, also prohibits Sims-Crawford from owning and managing a tax return preparation business. Sims-Crawford consented to the order.

According to the government complaint, Sims-Crawford, a Chicago resident who owns and operates KSC Business Support Services, Inc., prepared returns that reported false or inflated claims for the Earned Income Credit, fabricated or inflated business losses, and false rental income and/or expenses. The complaint alleged that these returns fraudulently reduced customers’ reported tax liabilities and helped taxpayers to obtain refunds to which they were not entitled. This conduct allegedly caused the United States hundreds of thousands of dollars in harm.

The IRS has a list of steps on its website that you can take and ten tips for choosing a tax preparer. Each year, the IRS releases the top 12 scams, known as the Dirty Dozen. Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2018, and taxpayers seeking a return preparer should remain vigilant. The IRS has some information on its website for choosing a return preparer and has launched a free directory of federal tax preparers.

In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. 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 at tax.mail@usdoj.gov (link sends e-mail) with details.

On 12 September 2018, on the occasion of his State of the Union Address, the President of the European Commission Jean-Claude Juncker, presented three new and ambitious proposals to ensure full EU solidarity on migration and better protection of Europe’s external borders. Particularly, the amended proposal for the reinforcement of the EU Asylum Agency, aims to ensure that Member States can rely on full EU Operational Support at all times.

The amended Commission’s proposal will further equip the future EU Asylum Agency with the necessary mandate, tools and financial means needed to provide a rapid and full service to Member States throughout the asylum procedure. The proposal includes:

Full operational support on asylum procedures: The Agency’s asylum support teams will be available to provide the full range of support activities, including by carrying out the entire administrative stage of the asylum procedure;
Joint EU migration management teams will support Member States when needed and requested, including in hotspots and controlled centres. Composed of experts from the European Border and Coast Guard, the EU Agency for Asylum and Europol, the teams will be coordinated by the Commission. Under the authority of the host Member State, they will be able to carry out all tasks necessary to receive arrivals, distinguish between persons in need of protection and those not and carry out asylum and return procedures;
Increased financial means: To ensure the Agency can carry out its increased tasks, the Commission proposes a budget of €321 million for the period 2019-2020 and €1.25 billion for the period 2021-2027.
The reinforced Agency will be able to assist not only in times of increased migratory pressure, but at any point Member State may require it, throughout the asylum procedure as well as during procedures under the Dublin Regulation. Under the new proposal, the Agency’s new tasks will include:

Greater technical and operational assistance which the Agency would be able to finance itself;
Administrative support in carrying out the entire, or parts of the, administrative procedure for international protection as well as the procedure under the Dublin system. The Agency will also be able to offer assistance in the appeal stage, by providing legal research and analysis or producing reports at the request of courts or tribunals;
Deployment of Migration Management Support Teams, including in hotspots and controlled centres. The teams will include the Agency experts as well as staff from the European Border and Coast Guard Agency, Europol and other EU Agencies.
In addition, today’s proposal modifies the nomination process for the Deputy Executive Director of the Agency.

The original proposal from May 2016 aims to transform the existing European Asylum Support Office into a fully-fledged European Union Agency for Asylum with an enhanced mandate and considerably expanded tasks. The Agency will be able to offer greater support to Member States in times of increased migratory pressure, including through a rapid deployment of asylum experts.

President Juncker stresses the need for Europe to become more sovereign so as to be able to play a role in shaping global affairs

European Commission President Jean-Claude Juncker today delivered his 2018 State of the Union Address, before the Members of the European Parliament in Strasbourg, presenting his priorities for the year ahead and outlining his vision for how the European Union can continue to build a ‘More United, Stronger and More Democratic Union’, which was the theme of his 2017 Address.

Against the backdrop of an ever more uncertain world, he stressed the need for Europe to become more sovereign so as to be able to play a role in shaping global affairs.

European Commission President Jean-Claude Juncker said today: “The geopolitical situation makes this Europe’s hour: the time for European sovereignty has come. It is time Europe took its destiny into its own hands. This belief that “united we stand taller” is the very essence of what it means to be part of the European Union. Sharing sovereignty – when and where needed – makes each of our nation states stronger.”

President Juncker’s speech in the European Parliament was accompanied by the adoption of 18 concrete initiatives by the European Commission on migration and borders, security, free and secure elections, the European Union’s partnership with Africa and the EU as a global actor, putting words immediately into action. These proposals are intended to help deliver positive results for citizens by the time of the Sibiu Summit in May 2019 and ahead of the 2019 European elections.

Key proposals of the 2018 State of the Union Address
Security: New rules to get terrorist content off the web; measures for securing free and fair European elections; A reinforced European Public Prosecutor’s Office to fight cross-border terrorism; and initiatives to invest in cybersecurity;
Migration and border reform: A reinforced European Union Agency for Asylum; A fully equipped European Border and Coast Guard; Stronger EU rules on return; Legal migration;
Africa and External Investment: A new Africa-Europe Alliance for Sustainable Investment and Jobs; A more efficient financial architecture for investment outside the EU;
Common Foreign and Security Policy: Improving the efficiency of decision-making;
Seasonal clock changes: Commission proposes to put an end to seasonal clock changes;
Anti-Money Laundering: Stronger anti-money laundering supervision for a stable banking and financial sector.

The Justice Department announced today that Wells Fargo Bank, N.A. and several of its affiliates (Wells Fargo) will pay a civil penalty of $2.09 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on the bank’s alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in residential mortgage-backed securities (RMBS) containing loans originated by Wells Fargo.

“This settlement holds Wells Fargo accountable for actions that contributed to the financial crisis,” said Acting Associate Attorney General Jesse Panuccio. “It sends a strong message that the Department is committed to protecting the nation’s economy and financial markets against fraud.”

“Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans,” said Acting U.S. Attorney for the Northern District of California, Alex G. Tse. “Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted. Our office is steadfast in pursuing those who engage in wrongful conduct that hurts the public.”

FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud. The United States alleged that, in 2005, Wells Fargo began an initiative to double its production of subprime and Alt-A loans. As part of that initative, Wells Fargo loosened its requirements for originating stated income loans – loans where a borrower simply states his or her income without providing any supporting income documentation.

To evaluate the integrity of its increasing volume of stated income loans, Wells Fargo subjected a sample of these loans to “4506-T testing.” A 4506-T form is a government document signed by the borrower during the loan approval process that allows the lender to obtain the borrower’s tax transcripts from the Internal Revenue Service (IRS). 4506-T testing involves comparing the tax transcripts of the borrower with the income stated on the loan application. Wells Fargo implemented 4506-T testing on two of its programs. This testing revealed that more than 70% of the loans that Wells Fargo sampled had an “unacceptable” variance (greater than 20% discrepancy between the borrower’s stated income and the income information reflected in the borrower’s most recent tax returns filed with the IRS), and the average variance was approximately 65%. After receiving these results, Wells Fargo conducted further internal testing. This additional testing, performed by quality assurance analysts, was designed to determine if “plausible” explanations existed for the “unacceptable” variances over 20%. This additional step revealed that nearly half of the stated income loans that Wells Fargo tested had both an unacceptable variance and the absence of a plausible explanation for that variance.

The results of Wells Fargo’s 4506-T testing were disclosed in internal monthly reports, which were widely distributed among Wells Fargo employees. One Wells Fargo employee in risk management observed that the “4506-T results are astounding” yet “instead of reacting in a way consistent with what is being reported WF [Wells Fargo] is expanding stated [income loan] programs in all business lines.”

The United States alleged that, despite its knowledge that a substantial portion of its stated income loans contained misstated income, Wells Fargo failed to disclose this information, and instead reported to investors false debt-to-income ratios in connection with the loans it sold. Wells Fargo also allegedly heralded its fraud controls while failing to disclose the income discrepancies its controls had identified. The United States further alleged that Wells Fargo took steps to insulate itself from the risks of its stated income loans, by screening out many of these loans from its own loan portfolio held for investment and by limiting its liability to third parties for the accuracy of its stated income loans. Wells Fargo sold at least 73,539 stated income loans that were included in RMBS between 2005 to 2007, and nearly half of those loans have defaulted, resulting in billions of dollars in losses to investors.

The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with investigative support from the Federal Housing Finance Agency, Office of Inspector General.

The claims resolved by this settlement are allegations only, and there has been no admission of liability.

Information Commissioner Elizabeth Denham has today published a detailed update of her office’s investigation into the use of data analytics in political campaigns.

In March 2017, the ICO began looking into whether personal data had been misused by campaigns on both sides of the referendum on membership of the EU.

In May it launched an investigation that included political parties, data analytics companies and major social media platforms.

Today’s progress report gives details of some of the organisations and individuals under investigation, as well as enforcement actions so far.

This includes the ICO’s intention to fine Facebook a maximum £500,000 for two breaches of the Data Protection Act 1998.

Facebook, with Cambridge Analytica, has been the focus of the investigation since February when evidence emerged that an app had been used to harvest the data of 50 million Facebook users across the world. This is now estimated at 87 million.

The ICO’s investigation concluded that Facebook contravened the law by failing to safeguard people’s information. It also found that the company failed to be transparent about how people’s data was harvested by others.

Facebook has a chance to respond to the Commissioner’s Notice of Intent, after which a final decision will be made.

Other regulatory action set out in the report comprises:

warning letters to 11 political parties and notices compelling them to agree to audits of their data protection practices;
an Enforcement Notice for SCL Elections Ltd to compel it to deal properly with a subject access request from Professor David Carroll;
a criminal prosecution for SCL Elections Ltd for failing to properly deal with the ICO’s Enforcement Notice;
an Enforcement Notice for Aggregate IQ to stop processing retained data belonging to UK citizens;
a Notice of Intent to take regulatory action against data broker Emma’s Diary (Lifecycle Marketing (Mother and Baby) Ltd); and
audits of the main credit reference companies and Cambridge University Psychometric Centre.
Information Commissioner Elizabeth Denham said:

“We are at a crossroads. Trust and confidence in the integrity of our democratic processes risk being disrupted because the average voter has little idea of what is going on behind the scenes.

“New technologies that use data analytics to micro-target people give campaign groups the ability to connect with individual voters. But this cannot be at the expense of transparency, fairness and compliance with the law.

She added:

“Fines and prosecutions punish the bad actors, but my real goal is to effect change and restore trust and confidence in our democratic system.”

A second, partner report, titled Democracy Disrupted? Personal information and political influence, sets out findings and recommendations arising out of the 14-month investigation.

Among the ten recommendations is a call for the Government to introduce a statutory Code of Practice for the use of personal data in political campaigns.

Ms Denham has also called for an ethical pause to allow Government, Parliament, regulators, political parties, online platforms and the public to reflect on their responsibilities in the era of big data before there is a greater expansion in the use of new technologies.

She said:

“People cannot have control over their own data if they don’t know or understand how it is being used. That’s why greater and genuine transparency about the use of data analytics is vital.”

In addition, the ICO commissioned research from the Centre for the Analysis of Social Media at the independent thinktank DEMOS. Its report, also published today, examines current and emerging trends in how data is used in political campaigns, how use of technology is changing and how it may evolve in the next two to five years.

The investigation, one of the largest of its kind by a Data Protection Authority, remains ongoing. The 40-strong investigation team is pursuing active lines of enquiry and reviewing a considerable amount of material retrieved from servers and equipment.

The interim progress report has been produced to inform the work of the DCMS’s Select Committee into Fake News.

The next phase of the ICO’s work is expected to be concluded by the end of October 2018.

Notes to Editors
The Information Commissioner’s Office (ICO) is the UK’s independent regulator for data protection and information rights law, upholding information rights in the public interest, promoting openness by public bodies and data privacy for individuals.
The ICO has specific responsibilities set out in the Data Protection Act 2018 (DPA2018), the General Data Protection Regulation (GDPR), the Freedom of Information Act 2000 (FOIA), Environmental Information Regulations 2004 (EIR) and Privacy and Electronic Communications Regulations 2003 (PECR).
The General Data Protection Regulation (GDPR) is a new data protection law which applies in the UK from 25 May 2018. Its provisions are included in the Data Protection Act 2018. The Act also includes measures related to wider data protection reforms in areas not covered by the GDPR, such as law enforcement and security. The UK’s decision to leave the EU will not affect the commencement of the GDPR.
However, due to the timing of certain incidents in this investigation, civil monetary penalties have to be issued under the previous legislation, the Data Protection Act 1998. The maximum financial penalty in civil cases under former laws is £500,000.
Under past and current law, the ICO can take action to change the behaviour of organisations and individuals that collect, use and keep personal information. This includes criminal prosecution, non-criminal enforcement and audit.
Since 25 May 2018, the ICO has the power to impose a civil monetary penalty (CMP) on a data controller of up to £17million (20m Euro) or 4% of global turnover.
The GDPR and the DPA2018 gave the ICO new strengthened powers, some of which, such as assessment notices can be used for this investigation because certain powers can be used as soon as the GDPR comes into force.
The data protection principles in the GDPR evolved from the original DPA, and set out the main responsibilities for organisations. Article 5 of the GDPR requires that personal data shall be:
Processed lawfully, fairly and in a transparent manner in relation to individuals;
Collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes;
Adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed;
Accurate and, where necessary, kept up to date
Kept in a form which permits identification of data subjects for no longer than is necessary; and
Processed using appropriate technical or organisational measures in a manner that ensures appropriate security of the personal data.”

Article 5(2) requires that “the controller shall be responsible for, and be able to demonstrate, compliance with the principles.”
Civil Monetary Penalties (CMPs) under past and current law are subject to a right of appeal to the (First-tier Tribunal) General Regulatory Chamber against the imposition of the monetary penalty and/or the amount of the penalty specified in the monetary penalty notice.
Any monetary penalty is paid into the Treasury’s Consolidated Fund and is not kept by ICO.
To report a concern to the ICO go to ico.org.uk/concerns.

The United States Department of Justice (DOJ) and Department of Agriculture (USDA) are forming a working group to focus on ways to empower and to support rural and tribal communities to combat elder abuse and financial exploitation. Today on World Elder Abuse Awareness Day, we collaboratively embark on a mission to work with older Americans in this Nation to improve their quality of life as envisioned by the Report to the President from the Task Force on Agriculture and Rural Prosperity.

The Nation’s seniors are treasured and revered members of our communities. Too often, however, seniors are targeted by unscrupulous criminals for fraud or are subjected to abuse. Factors more common in rural and tribal communities–including large geographic areas that elongate response time, fewer services and service providers, and limited access to broadband– create additional challenges to identifying and combatting elder fraud and abuse in rural and tribal communities.

DOJ and USDA resolve to marshal our collective resources and expertise to enable rural and tribal communities to more effectively combat elder abuse and financial exploitation. We are forming a working group to develop recommendations and will jointly present strategic action steps in November 2018 at the Department of Justice’s Rural Elder Justice Summit in Des Moines, Iowa.

WASHINGTON – The Department of Justice announced today that it is requiring Bayer AG to divest businesses and assets collectively worth approximately $9 billion in order to proceed with its proposed $66 billion acquisition of Monsanto Company. The proposed divestiture to BASF, an experienced chemical company with a substantial crop protection business, will fully resolve all horizontal and vertical competition concerns. As a result, American farmers and consumers will continue to benefit from competition in this industry.

“This comprehensive structural solution to significant horizontal and vertical competition concerns—the largest merger divestiture ever required by the United States—preserves competition in the sale of these critical agricultural products and protects American farmers and consumers,” said Assistant Attorney General Makan Delrahim of the Antitrust Division. “We commend the parties for working with the Antitrust Division to resolve our concerns on behalf of American consumers.”

The Department’s Antitrust Division today filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed transaction while simultaneously filing a proposed settlement that, if approved by the court, would resolve the Department’s competitive concerns.

Bayer, based in Leverkusen, Germany, and Monsanto, headquartered in St. Louis, Missouri, are two of the largest agricultural companies in the world. They compete to provide farmers with a broad range of seed and crop protection products. Bayer and Monsanto also have been leaders in developing technologies that have allowed farmers to increase significantly crop yields and improve efficiency. Without the agreed-to divestitures, the proposed merger would likely result in higher prices, lower quality, and fewer choices across a wide array of seed and crop protection products. The merger also threatened to stifle the innovation in agricultural technologies that has delivered significant benefits to American farmers and consumers.

Under the terms of the proposed settlement, Bayer must divest those Bayer businesses that compete with Monsanto today. These include Bayer’s cotton, canola, soybean, and vegetable seed businesses, as well as Bayer’s Liberty herbicide business, a key competitor of Monsanto’s well-known Roundup herbicide.

The settlement also requires structural divestitures to remedy the competitive harm that would result from the vertical integration of certain significant Bayer seed treatment businesses with Monsanto’s leading seed businesses. Additionally, because Bayer and Monsanto currently compete to develop new products and services, the settlement requires the divestiture of certain intellectual property and research capabilities, including “pipeline” R&D projects. Finally, in order to fully prevent competitive harm from the merger, the settlement requires the divestiture of additional complementary assets that are needed to ensure that BASF has the same innovation incentives, capabilities and scale that Bayer would have as an independent competitor including, most notably, Bayer’s nascent “digital agriculture” business.

The settlement also includes, consistent with other settlements in this Administration, several provisions designed to improve the effectiveness of the decree and the Division’s future ability to enforce it.

The Department expressed thanks to its enforcement partners around the world, especially its counterparts at the European Commission, the Canadian Competition Bureau, and the Administrative Council for Economic Defense (CADE) of Brazil, for their close and constructive collaboration on this matter.

As required by the Tunney Act, the proposed settlement, along with the Department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Kathleen S. O’Neill, Chief, Transportation, Energy & Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Today Attorney General Jeff Sessions released the following statement on the passing of former first lady Barbara Bush:

“Barbara Bush was a symbol around the country—and across the world—of dignity, humanity and strength,” Attorney General Sessions said. “She spoke her mind and used her position and her popularity to advocate for causes that benefit all of us, like literacy and civil rights. In many ways, Barbara formed the core of the Bush family, projecting without affectation her own dignity and grace whatever the events around her. It was an honor for me to continue to serve as United States Attorney under President Bush. I join the rest of the country in offering my condolences to the Bush family and in lifting them up in prayer at this difficult time.”

Medical Transport LLC, a Virginia Beach-based provider of ambulance services, agreed to pay $9 million to resolve allegations that it violated the False Claims Act by submitting false claims for ambulance transports, the Justice Department announced today.

“Those who benefit from federal health care programs must play by the rules,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice is committed to ensuring that those whose conduct results in improper payments by the federal government will be held accountable.”

The government alleged that Medical Transport submitted false or fraudulent claims to Medicare, Medicaid, and TRICARE for ambulance transports that were not medically necessary, that did not qualify as Specialty Care Transports, and that were billed improperly to the federal health care programs when they should have been billed to other payers.

As part of the settlement, Medical Transport entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). This CIA is designed to promote compliance with the statutes, regulations, program requirements, and written directives of Medicare and all other federal health care programs.

“Allegations of illegally billing federal health care programs to increase revenue is a serious matter,” said U.S. Attorney Tracy Doherty-McCormick for the Eastern District of Virginia. “This agreement underscores our continued commitment to civil health care fraud enforcement.”

“Besides agreeing to being monitored for five years, Medical Transport is paying $9 million to settle these government charges,” said Maureen R. Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “The message to all providers invoicing government health programs should be clear: Fraudulently billing for services is bad business.”

Today’s settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, The U.S. Attorneys’ Office for the Eastern District of Virginia, HHS-OIG, DCIS, the FBI, and the Commonwealth of Virginia’s Office of the Attorney General.

The former owner and chief executive officer of a Nashville, Tennessee-based telemarketing company pleaded guilty this morning to overseeing a fraudulent scheme in which limited-benefit health plans were sold to consumers as traditional health insurance, and to violating a federal court order that in 2010 froze his assets and shut down the company, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney Don Cochran of the Middle District of Tennessee.

Timothy Thomas, 55, of Brentwood, Tennessee, pleaded guilty to one count of mail fraud and one count of contempt before U.S. District Judge David Lawson, sitting by designation in the Middle District of Tennessee. He is scheduled to be sentenced by Judge Lawson on June 25. Thomas was charged in a 15-count indictment filed in October 2014.

According to admissions made as part of his plea, Thomas operated and controlled United Benefits of America (UBA) LLC, which was known at various times as United States Benefits (USB) and Health Care America. From at least 2007 to 2010, Thomas hired salespeople to sell over the phone so-called “association memberships” created by third-party companies such as International Association of Benefits and Consumer Driven Benefits of America. These memberships included bundled benefits, such as limited benefit health plans, prescription drug discount cards, accidental death and dismemberment benefits and lifestyle benefits, such as rental car discounts. Thomas targeted his sales to customers who had been denied traditional health insurance because of preexisting conditions, he admitted. The sales script used by Thomas attempted to portray the memberships as equal in quality to traditional health insurance, omitting the fact that limited benefit health plans left customers with the vast majority of the financial risk.

Thomas admitted that salespeople working for him made even more flagrant misrepresentations and omissions and used terms such as “deductibles” and “copays” to make customers believe they were buying traditional health insurance. Customer service employees and the Better Business Bureau routinely notified Thomas about customers complaining that they had been deceived into believing the plans were similar to traditional health insurance. Thomas oversaw a lax compliance program that was understaffed, with usually one employee monitoring up to 60 or 70 salespeople, and levied only occasional fines to salespersons who misrepresented or omitted key details of the plans. Despite knowing of the rampant misrepresentations and omissions, Thomas rarely fired salespeople for lying to customers, but routinely fired salespeople for low sales numbers, he admitted. When in 2009 a local news station, WSMV, ran a critical story on UBA featuring undercover footage of salespeople discussing misleading sales tactics, Thomas did not institute any meaningful changes in business practices. He merely changed the name of his company from UBA to USB and instructed a subordinate to sign a letter to the Better Business Bureau falsely claiming that the companies had nothing to do with each other.

When the Federal Trade Commission (FTC) filed a lawsuit against Thomas and his company in August 2010, a federal judge in the Middle District of Tennessee issued an order freezing Thomas’s assets and placing his company into receivership. Immediately after being informed of the court’s order, Thomas violated it by withdrawing more than $100,000 from a brokerage account and convincing a friend to deposit checks totaling $528,647, constituting proceeds of the scheme, into the friend’s bank account, he admitted.

As part of his plea agreement, Thomas agreed to forfeit $1.5 million, representing the amount he personally gained through the fraudulent scheme.

The case was investigated by the FBI, the U.S. Postal Inspection Service, the Department of Labor’s Office of Inspector General and the Department of Labor’s Employee Benefits Security Administration. The FTC and Tennessee Division of Insurance provided substantial assistance. Trial Attorney William E. Johnston of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Cecil VanDevender of the Middle District of Tennessee are prosecuting the case.

Attorney General Jeff Sessions has ordered the creation of the Justice Department’s Cyber-Digital Task Force, which will canvass the many ways that the Department is combatting the global cyber threat, and will also identify how federal law enforcement can more effectively accomplish its mission in this vital and evolving area.

“The Internet has given us amazing new tools that help us work, communicate, and participate in our economy, but these tools can also be exploited by criminals, terrorists, and enemy governments,” Attorney General Sessions said. “At the Department of Justice, we take these threats seriously. That is why today I am ordering the creation of a Cyber-Digital Task Force to advise me on the most effective ways that this Department can confront these threats and keep the American people safe.”

The Task Force will be chaired by a senior Department official appointed by the Deputy Attorney General and will consist of representatives from the Department’s Criminal Division, the National Security Division, the United States Attorney’s Office community, the Office of Legal Policy, the Office of Privacy and Civil Liberties, the Office of the Chief Information Officer, the ATF, FBI, DEA, and the U.S. Marshals Service. The Deputy Attorney General may invite representatives from other Department of Justice components and from other federal agencies to participate in the Task Force. He may also establish subcommittees to focus the Task Force’s efforts.

The Task Force will be responsible for issuing a report to the Attorney General by the end of June.

The Attorney General has asked the Task Force to prioritize its study of efforts to interfere with our elections; efforts to interfere with our critical infrastructure; the use of the Internet to spread violent ideologies and to recruit followers; the mass theft of corporate, governmental, and private information; the use of technology to avoid or frustrate law enforcement; and the mass exploitation of computers and other digital devices to attack American citizens and businesses. The scope of the Task Force’s report is not limited to these categories.

The Federal Bureau of Investigation today released the 2017 Preliminary Semiannual Uniform Crime Report, a part of the FBI’s Uniform Crime Reports (UCR). The report, which covers January-June 2017, suggests that the violent crime increases that occurred in 2015 and 2016 may have begun to level off. The number of violent crimes decreased by 0.8 percent nationwide in the first half of 2017 when compared with the same period in 2016. The nationwide violent crime rate (the number of violent crimes per 100,000 people in the U.S.) increased by a total of nearly 7 percent during 2015 and 2016, (3.3 percent and 3.4 percent, respectively), the largest two increases in a quarter of a century.

“When President Trump took office, he ordered the Department of Justice to prioritize the reduction of violent crime, and that is what we have done every day since,” Attorney General Jeff Sessions said. “Last year, we charged more defendants with violent crime offenses than in any year in decades. We convicted hundreds of human traffickers, arrested thousands of violent gang members, and charged hundreds of people suspected of contributing to our opioid abuse epidemic. Working with our state, local, and tribal law enforcement partners, we are making a difference and protecting our communities. These data are encouraging, because it is essential that drastic increases in violent crime not become the new normal. We are dedicated to ensuring they do not.”

The data released by the FBI today also show that murders increased by 1.5 percent nationwide during the first six months of 2017, compared with the same period in 2016. This suggests a significant leveling off of the previous increase. In the first half of 2016, murders increased by 5.2 percent. Other categories of violent crime, including rape, robbery, and aggravated assault, all decreased in the first half of 2017 (by 2.4 percent, 2.2 percent, and 0.1 percent, respectively). All three categories increased during the same period in 2016. The FBI’s 2017 Preliminary Semiannual Uniform Crime Report is based on information received by the FBI from 13,033 law enforcement agencies nationwide.

A local transportation operator pleaded guilty yesterday to stealing federal funds intended for a foreign exchange program maintained by the U.S. Department of State, announced Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Inspector General Steve A. Linick of the U.S. Department of State.

Denon T. Hopkins, 49, of Germantown, Maryland, pleaded guilty to one count of conspiracy to commit theft of public funds and engage in honest services wire fraud before U.S. Senior District Judge T.S. Ellis III of the Eastern District of Virginia. Sentencing is scheduled for April 6, 2018.

According to admissions made in connection with his plea, Hopkins was the operator and de facto owner of a transportation company that contracted with the State Department to provide bus and limousine services to Sports United Division, a State Department component devoted to sports diplomacy, which sponsored a foreign exchange program for emerging athletes and coaches from various countries. The exchange program was managed by George Mason University in Fairfax, Virginia, through a federal grant and cooperative agreement with the State Department. During a time period when Hopkins received $247,200 in grant funds for legitimate transportation services, he and a State Department official conspired to steal portions of the federal money allocated to the exchange program by, among other things, falsifying vendor-related invoices and making fraudulent checks payable to Hopkins. In total, Hopkins stole approximately $17,335 from the State Department. He also admitted that he used portions of the funds to pay kickbacks to the State Department official to retain his transportation contract.

The Department of State’s Office of Inspector General and the FBI’s Washington Field Office investigated the case. Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Kimberly R. Pedersen of the Eastern District of Virginia are prosecuting the case. Former Special Assistant U.S. Attorney Brian D. Harrison provided assistance on the case.

The Department of Justice and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) announced today that it has begun the process of promulgating a federal regulation interpreting the definition of “machinegun” under federal law to clarify whether certain bump stock devices fall within that definition.

“The Department of Justice has the duty to enforce our laws, protect our rights, and keep the American people safe,” Attorney General Sessions said. “Possessing firearm parts that are used exclusively in converting a weapon into a machine gun is illegal, except for certain limited circumstances. Today we begin the process of determining whether or not bump stocks are covered by this prohibition. We will go through the regulatory process that is required by law and we will be attentive to input from the public. This Department is serious about firearms offenses, as shown by the dramatic increase in firearms prosecutions this year. The regulatory clarification we begin today will help us to continue to protect the American people by carrying out the laws duly enacted by our representatives in Congress.”

ATF has taken the initial step in this regulatory process by drafting an Advanced Notice of Proposed Rulemaking (ANPRM) and submitting it to the Office of Management and Budget. The ANPRM will provide the public and industry the opportunity to submit formal comments to ATF about bump stocks to inform ATF’s decision regarding further steps in the rulemaking process. The federal rulemaking process follows procedures required by the Administrative Procedure Act (APA). ATF and the Department will proceed in accordance with this process as quickly as possible.

The National Firearms Act of 1934 (NFA) and Gun Control Act of 1968 (GCA) strictly regulate the possession and transfer of machineguns, making it unlawful for any person to possess a machinegun that was not lawfully possessed prior to the statute’s effective date. Manufacturers and inventors may voluntarily submit devices to ATF for a “classification,” that is, a determination as to whether the device is considered a firearm or machinegun under federal law. If a device is not classified as a firearm or machinegun, it is deemed to be a part or accessory that is not subject to regulation by ATF.

An indictment was unsealed against Wu Yingzhuo, Dong Hao and Xia Lei, all of whom are Chinese nationals and residents of China, for computer hacking, theft of trade secrets, conspiracy and identity theft directed at U.S. and foreign employees and computers of three corporate victims in the financial, engineering and technology industries between 2011 and May 2017. The three Chinese hackers work for the purported China-based Internet security firm Guangzhou Bo Yu Information Technology Company Limited (a/k/a “Boyusec”).

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Soo C. Song for the Western District of Pennsylvania and Special Agent in Charge Robert Johnson of the FBI’s Pittsburgh Division announced the charges.

The indictment alleges that the defendants conspired to hack into private corporate entities in order to maintain unauthorized access to, and steal sensitive internal documents and communications from, those entities’ computers. For one victim, information that the defendants targeted and stole between December 2015 and March 2016 contained trade secrets.

“Once again, the Justice Department and the FBI have demonstrated that hackers around the world who are seeking to steal our companies’ most sensitive and valuable information can and will be exposed and held accountable,” said Acting Assistant Attorney General Boente. “The Justice Department is committed to pursuing the arrest and prosecution of these hackers, no matter how long it takes, and we have a long memory.”

“Defendants Wu, Dong and Xia launched coordinated and targeted cyber intrusions against businesses operating in the United States, including here in the Western District of Pennsylvania, in order to steal confidential business information,” said Acting U.S. Attorney Song. “These conspirators masked their criminal conspiracy by exploiting unwitting computers, called ‘hop points,’ conducting ‘spearphish’ email campaigns to gain unauthorized access to corporate computers, and deploying malicious code to infiltrate the victim computer networks.”

“In order to effectively address the cyber threat, a threat that respects no boundaries and continues to grow in both its scope and complexity, law enforcement must come together and transcend borders to target criminal actors no matter where they are in the world,” said Special Agent in Charge Johnson.

Gregory McLeod, 44, of Atlanta, Georgia, a former correctional officer with the rank of lieutenant at the U. S. Penitentiary in Atlanta, pleaded guilty to abusing an inmate by punching him in his face without any justification. McLeod also admitted that he intentionally obstructed a federal investigation into the matter by writing a false incident report.

“A correctional officer should never resort to violence or violate an inmate’s constitutional right to protection from unreasonable force, no matter the circumstance,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “The Department of Justice will not tolerate any abuse of an individual’s civil rights under the law, or any effort to obstruct justice.”

“Working in a correctional facility is stressful and often dangerous work,” said U.S. Attorney Byung J. “BJay” Pak. “However, McLeod made an unnecessary and unconstitutional assault on an inmate, and then filed a false report to cover it up. An abuse of the power by any law enforcement officer is unacceptable.”

“No correctional officer is above the law,” said James F. Boyersmith, Assistant Special Agent-in-Charge of the Department of Justice (DOJ) Office of the Inspector General’s (OIG) Miami Field Office. “The DOJ OIG takes allegations of civil rights violations and false statements very seriously. We appreciate the diligent efforts of our fellow law enforcement partners that assisted us in investigating this matter.”

“This guilty plea of former U.S. Bureau of Prisons Lieutenant McLeod was triggered by key and credible allegations of inmate abuse by prison staff,” said David J. LeValley, Special Agent in Charge, FBI Atlanta Field Office. “While the FBI would like to remind the public that the vast majority of those working within our nation’s correctional facilities consistently conduct themselves admirably under often harsh conditions, the FBI does have a duty to investigate and present for prosecution those corrections officers or staff members who abuse their authority and positions.”

According to the charging and court documents, McLeod, who worked as a supervisor at the prison, strip-searched an inmate in the lieutenants’ office in front of three other correctional officers. McLeod admitted that after the inmate complained that the strip-search was taking too long, he punched the inmate in his face without justification. McLeod also admitted that after the assault, he wrote an incident report and a separate memorandum about the encounter in which McLeod falsely claimed that the inmate swung a closed fist at him and attempted to assault other officers before the inmate was restrained.

Sentencing for McLeod will be on February 20, 2018, before U.S. District Court Judge Steve C. Jones.

This case was investigated by the Department of Justice Office of the Inspector General and Atlanta Division of the Federal Bureau of Investigation, and was prosecuted by Assistant United States Attorney Brent Alan Gray and Trial Attorney Mary J. Hahn of the Civil Rights Division.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov (link sends e-mail) or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga