According to the court, Zanfei and Crouse, with the help of South Dakota accounting firm Wohlenberg, Ritzman & Co. LLC, sold illegal or improper health care expense reimbursement plans -- the HI Plan and the HealthIER Plan -- to hundreds of employer-customers. The court concluded that the defendants knowingly misrepresented the tax benefits to employees and employers in selling these plans. According to the government’s complaint, the IRS estimated that the defendants'schemes cost the U.S. Treasury losses of between $12 million and $63 million and would cause ongoing losses of between $6 million to $24 million per year if the defendants were not stopped.

The court also found that the defendants told employers that they could avoid employment tax by contributing to such plans. Employees purportedly would also avoid employment tax and would receive the amounts back by seeking reimbursement of health care expenditures.

The court found that defendants made numerous false statements in promoting the plans and improperly administered them. For example, materials supplied to employees as part of defendants'plans listed "athletic shoes," "electrolysis," "health club fees," "soaps," and "day care" as reimbursable expenses. The court noted that expenses such as these are reimbursable as health care expenses only in rare circumstances. Moreover, the court found that the defendants often reimbursed medical expenses without substantiating them. The court also found that defendants'HI Plan was illegal because it allowed reimbursement for health insurance premiums as opposed to out-of-pocket health care expenses.

The court described IRS audits of two of defendants'customers -- both California firms, with more than 250 participating employees. These two firms used the scheme to under-report taxable wages by a combined amount exceeding $450,000 in one year, and had to file corrected employment tax returns and issue corrected W-2 forms to their employees. The companies had to advise their employees to file amended income tax returns to correct the errors. When the court issued the injunction order, it noted that the defendants have not accepted responsibility for the high level of processing errors in the plans and concluded that the defendants'history "provides no basis for believing that they have either the knowledge or the willingness to step carefully around any [legal] line."

The court also noted that the Department of Labor filed a suit in an Indiana federal court against Zanfei and Crouse for violating their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by using employees'monthly health insurance premiums to pay for personal expenses. The federal court enjoined them from acting as ERISA fiduciaries.

Since 2001, the Justice Department’s Tax Division has obtained more than 210 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/index.html.

"The jury determined that Merck acted appropriately in the development and marketing of VIOXX and that VIOXX did not substantially contribute to Mr. Dedrick's heart attack," said Phil Beck, of the law firm of Bartlit Beck, Merck's lead trial lawyer in the case, Dedrick v. Merck.

"He had multiple risk factors for a heart attack including a family history of cardiac problems, heavy smoking for many years and he had high blood pressure, high cholesterol and diabetes," Mr. Beck said. "In addition, he had significant atherosclerosis before he began taking VIOXX. Unfortunately, Mr. Dedrick would have suffered a heart attack whether he was taking VIOXX or not."

U.S. District Court Judge Eldon E. Fallon of the Eastern District of Louisiana, who is overseeing all of the federal court litigation, presided over the trial.

Merck faces thousands of lawsuits over the drug, which was pulled from the market in September 2004 after a study showed that it could double the risk of heart attack or stroke if taken for more than 18 months. This is the fifth federal trial to reach a verdict; Merck has won four of those cases, with the fifth decided in favor of the plaintiff. A federal judge, however, threw out the $50 million jury verdict in the Merck loss as "grossly excessive" and ordered a new trial to determine damages.

Merck won the first case, Plunkett v. Merck, in February. The damages portion of the verdict in favor of the plaintiff in the second federal case, Barnett v. Merck, was overturned by Judge Fallon. Merck won the third case, Smith v. Merck, in September and the fourth case, Mason v. Merck, in November. Last month, US District Judge Eldon Fallon, who is responsible for co-ordinating pre-trial procedures in the federal cases, rejected a bid to have all federal lawsuits against Merck brought in connection with Vioxx consolidated in a single national class action against the company.

One day after Florida death row inmate Angel Diaz endured a 34-minute-long - and apparently painful - execution, death penalty critics filed papers with the Florida Supreme Court seeking to once again halt the death penalty in the state. Petitioners, including numerous people currently on Florida’s death row roster, filed an emergency petition Thursday with the court asking it to exercise its All Writs jurisdiction and declare that Florida’s lethal injections procedures violate the Eighth Amendment of the US Constitution.

Angel Diaz was executed Wednesday for the 1979 murder of a Miami strip club manager. Officials had to administer the sodium pentothal, pancuronium bromide, and potassium chloride cocktail twice, during which time witnesses claim he grimaced, contorted, and gasped for breath. Officials claim that Diaz had a liver condition that slowed the absorption of the drugs, but that he was unconscious and experienced no pain. The US Supreme Court reviewed Florida’s lethal injection procedure earlier this year when they stayed the execution of Clarence Hill, who was ultimately executed in September. 

Governor Jeb Bush asked Corrections Secretary James McDonough to undertake a thorough review of the execution, including an autopsy and interviews with those in the death chamber. Diaz' lawyer filed a lawsuit Thursday on behalf of death row inmates, asking the Florida Supreme Court to rule that the state's lethal injection procedure is unconstitutional.

The New Jersey Legislature passed a bill Thursday allowing same-sex civil unions in response to a New Jersey Supreme Court ruling in October that said the state legislature had 180 days to decide whether the state would recognize same-sex marriage or another form of civil partnership.

The measure was approved by the state Assembly 56-19 and passed the Senate 23-12. The bill says:

The Legislature has chosen to establish civil unions by amending the current marriage statute to include same-sex couples. In doing so, the Legislature is continuing its longstanding history of insuring equality under the laws for all New Jersey citizens by providing same-sex couples with the same rights and benefits as heterosexual couples who choose to marry.

Governor Jon Corzine has said he would sign the measure into law. Gay rights advocates welcome the bill as a step forward. But they also say they will continue to push for the right to marry.

William James Victor Garrison, a resident of Culpeper, Va., was today charged by federal grand jury with conspiracy to violate the Lacey Act and with making a false statement to a federal investigative agent during the course of an investigation. The indictment stems from Garrison’s participation in illegal elk hunting on the Valles Caldera National Preserve in New Mexico during 2003. The conspiracy charge involving the Lacey Act, a federal wildlife enforcement statute, carries a maximum penalty of up to one year in prison and a $100,000 fine. The false statement charge carries a maximum penalty of up to five years in prison and a $250,000 fine.

The Valles Caldera National Preserve is an 8,900 acre property situated inside of a collapsed crater northwest of Santa Fe, N.M. The preserve is home to large populations of big game animals including elk, antelope and oryx. Strict regulations govern the hunting of these animals as they are prized among big game sportsman. The indictment alleges Garrison and members of his hunting party shot and killed bull elk, without permits, in violation of state law. At least one of these elk was then transported through interstate commerce in violation of the Lacey Act.

Federal authorities have already convicted six other hunters in Virginia and two additional hunters and guides in New Mexico related to this investigation.

An indictment is merely an accusation, and defendants are presumed innocent unless proven guilty.

The investigation was led by Special Agents of the United States Fish and Wildlife Service. The case is being prosecuted by the U.S. Attorney’s Office for the Western District of Virginia, and the Environmental Crimes Section of the U.S. Department of Justice. Related cases have been prosecuted by the U.S. Attorneys’ Offices in both the Eastern District of Virginia and the District of New Mexico.

WASHINGTON – A man skilled in the operation of commercial wireless Internet networks was sentenced today for intentionally bringing down wireless Internet services across the region of Vernal, Utah, the Justice Department announced today.

Ryan Fisher, 24, of Vernal, was sentenced to 24 months in prison to be followed by 36 months of supervised release for intentionally damaging a protected computer. U.S. District Judge Paul G. Cassell also ordered the defendant to pay $65,000 in restitution.

Fisher was charged on Feb. 15, 2006, in a one-count criminal indictment. The defendant worked for SBT Internet, which provided Internet service to residential and business customers around Vernal using wireless radio signals between SBT’s radio towers and its customers’ wireless access points.

Fisher left SBT over business and financial disputes and went on to work for, and eventually own, another Internet service provider in the area. Fisher admitted that he then used SBT’s computer passwords to take control of SBT’s network and reprogram its customers’ wireless access points to cut off their Internet service, including the service of one customer who was relying on electronic mail for news of an organ donor. He intentionally reprogrammed the access points to complicate SBT’s repair efforts which resulted in jammed wireless Internet airwaves that affected others outside SBT’s network, including another wireless Internet service and its customers. In total, more than 170 customers lost Internet service, some of them for as long as three weeks, and collectively caused more than $65,000 in losses.

The case was investigated by the FBI. The case was prosecuted by Senior Counsel Scott L. Garland and Trial Attorney Josh Goldfoot of the Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Leshia Lee-Dixon and Jonathan Boyd of the District of Utah.

Kenneth Loeffler, a custodial engineer and resident of Valley Stream, N.Y., pleaded guilty in U.S. District Court in Manhattan to participating in a conspiracy to commit mail fraud in connection with a kickback scheme used to defraud NYCDOE. Beginning in approximately July 1997 and continuing until at least June 2003, Loeffler received approximately $6,000 in kickbacks in exchange for allocating contracts for industrial cleaning and maintenance supplies to companies associated with his two unnamed co-conspirators. These kickbacks were paid through cash, dinners and tickets to sporting and theater events. “The Antitrust Division will prosecute anyone who subverts the competitive process, particularly where public monies are involved,” said Thomas O. Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division.

As a NYCDOE custodian, Loeffler was responsible for purchasing goods and services necessary for the maintenance of NYCDOE schools to which he was assigned. In July 1999, NYCDOE began requiring its custodians to engage in competitive bidding before making purchases or awarding contracts worth more than $250 to vendors who were not on NYCDOE’s list of approved vendors and to award contracts to the bidder who provided the “maximum quality for the minimum price.” Also under the competitive bidding policy, employees are required to submit bid summary sheets for each purchase and to get written bids for purchases or contracts worth more than $5,000.

After NYCDOE’s implementation of the competitive bidding policy, Loeffler accepted kickbacks in exchange for ensuring that he would not invite potential competitors who were not co-conspirators to bid on contracts awarded by NYCDOE schools for industrial cleaning and maintenance supplies, the Department said. Also, the Department said that some of the kickbacks Loeffler received were the result of his participation in a phony invoice scheme whereby NYCDOE paid for supplies delivered only in part or never delivered at all.

Today’s case is the second to arise out of an ongoing investigation of fraud and bidding irregularities in the award of contracts for industrial cleaning and maintenance supplies being conducted by the Antitrust Division, the Office of the Special Commissioner of Investigation for the New York City School District and the Federal Bureau of Investigation. In November 2006, a former NYCDOE custodial engineer pleaded guilty to conspiracy charges in connection with participating in a similar kickback scheme.

Loeffler is charged with violating 18 U.S.C. § 371, which carries a maximum penalty of five years of imprisonment and a $250,000 fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim, if either of those amounts exceeds the statutory maximum fine.