District of Massachusetts
Press releases recorded for this federal judicial district.
Lawrence Man Indicted for Drug Conspiracy Involving 32 Kilograms of CocaineRead the Press Release
BOSTON – A Lawrence man was indicted today by a federal grand jury in Boston for his involvement in a conspiracy to distribute cocaine.
Victor Berroa Mercedes, 31, has been charged with one count of conspiracy to distribute and possess with intent to distribute cocaine and one count of possession with intent to distribute cocaine. Berroa Mercedes will appear in federal court in Boston at a later date.
According to the charging document, on May 4, 2024, Berroa Mercedes allegedly met with a cooperating source and accepted delivery of 32 kilograms of suspected cocaine in a Woburn parking lot. During his subsequent arrest, it is alleged that Berroa Mercedes dropped a plastic bag containing $32,800 in cash while attempting to flee from officers. He was immediately apprehended.
The charges of conspiracy to distribute and possess with intent to distribute cocaine and possession with intent to distribute cocaine each provide for a sentence of up to 20 years in prison, at least three years and up to a lifetime of supervised release and a fine of up to $1 million. Sentences are imposed by a federal district court judge based upon on the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division made the announcement today. Valuable assistance was provided by the Boston Police, Massachusetts State Police and Illinois State Police. Assistant U.S. Attorney John Mulcahy is prosecuting the case.
The details contained in the charging document are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Holyoke Man Sentenced to 13 Years in Prison for Armed RobberyRead the Press Release
BOSTON – A Holyoke man was sentenced today in federal court in Springfield in connection with a string of nine armed robberies of convenience stores across Western Massachusetts.
Alfredo Aldeco, 38, was sentenced by U.S. District Court Judge Mark G. Mastroianni to 13 years in prison to be followed by three years of supervised release. Aldeco was also ordered to pay forfeiture and restitution of $7,375. In March 2024, Aldeco pleaded guilty to one count of interference with commerce by robbery, one count of using a firearm in relation to crime of violence and one count of being a felon in possession of a firearm and ammunition.
On Nov. 14, 2018 Aldeco, and co-defendant Emilio Rivera, robbed a clerk in a West Springfield convenience store at gunpoint. After forcibly taking cash and cigarettes from the clerk, Aldeco warned the clerk, “If you call the cops, I will come back and kill you.” The firearm used in the robbery was later found during a search of Rivera’s home – in a bedroom being occupied by Aldeco. At the time, Aldeco was prohibited from possessing a firearm or ammunition due to a prior felony conviction.
The November 2018 robbery was the last in a string of nine robberies that took place in Holyoke, Chicopee, Northampton, West Springfield and Agawam over the two-week period. In each of the robberies, Aldeco held store clerks at gunpoint. In total, Aldeco robbed the stores of almost $8,000 in cash.
On July 6, 2023, Rivera was sentenced to six years in prison followed by three years of supervised release.
Acting United States Attorney Joshua S. Levy and James M. Ferguson, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives made the announcement. Valuable assistance was provided by the Massachusetts State Police and the West Springfield, Holyoke, Agawam, Chicopee, Northampton and Springfield Police Departments. Assistant U.S. Attorney Deepika Bains Shukla, Chief of the Springfield Branch Office, prosecuted the case.
Federal Inmate Indicted for Threatening Federal Court Employee in MassachusettsRead the Press Release
BOSTON – A federal inmate was indicted by a federal grand jury in Boston today for allegedly sending several threatening letters to an employee at the John Joseph Moakley United States Courthouse.
Devin James Melycher, 31, has been indicted on three counts of mailing threatening communications. He will appear in federal court in Boston at a later date.
According to the charging documents, Melycher is a federal inmate who, since 2023, has been in the custody of the Bureau of Prisons. It is alleged that on three separate occasions – Dec. 16, 2022; Jan. 3, 2023; and Jan. 12, 2023 – Melycher sent letters addressed to a U.S. official at the John Joseph Moakley U.S. Courthouse in Boston threatening to injure the victim employee.
The charges of using of mailing threatening communications each provide for a sentence of up to 10 years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Brian Kyes, U.S. Marshal for the District of Massachusetts made the announcement today. Assistant U.S. Attorney Luke A. Goldworm of the Major Crimes Unit is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Fall River Man Sentenced to More Than Three Years in Prison for Oxycodone Pill ConspiracyRead the Press Release
BOSTON – A Fall River man was sentenced today for his role in a drug distribution conspiracy involving thousands of oxycodone pills.
Austin Gonsalves, 37, was sentenced by U.S. District Court Judge Denise J. Casper to 41 months in prison, to be followed by three years of supervised release. Gonsalves was also ordered to forfeit $16,130. In May 2024, Gonsalves pleaded guilty to one count of conspiracy to distribute controlled substances. Gonsalves was arrested and charged along with five others in July 2023 for their alleged involvement in a drug trafficking organization that distributed oxycodone pills across Southeastern Massachusetts. The defendants were subsequently indicted by a federal grand jury in August 2023.
Between at least February 2023 and May 2023, Gonsalves obtained hundreds of pills at a time, allegedly from co-defendant Kenneth Veiga, in exchange for tens of thousands of dollars and redistributed the pills to others. On one occasion alone, Gonsalves paid $22,000 to obtain 800 oxycodone for further distribution. A search of Gonsalves’ Fall River residence in July 2023 resulted in the seizure of approximately $16,000 in cash and approximately 400 oxycodone pills.
Acting United States Attorney Joshua S. Levy; Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; John E. Mawn Jr., Interim Colonel of the Massachusetts State Police; Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office; and Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service’s Boston Division, made the announcement today. Special assistance was provided by the Bureau of Alcohol, Tobacco, Firearms & Explosives; U.S. Coast Guard Investigative Service; Barnstable County Sheriff’s Office; and the Barnstable, Dennis, Bourne, Mashpee, Yarmouth, Sandwich and Falmouth Police Departments. Assistant U.S. Attorney John T. Mulcahy of the Narcotics & Money Laundering Unit is prosecuting the case.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The details contained in the charging document are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Brockton Man Sentenced to 15 Years in Prison for Coercing at Least Three Minors to Engage in Sexually Explicit ConductRead the Press Release
BOSTON – A Brockton man was sentenced today in federal court in Boston for coercing three minors to produce child sexual abuse material (CSAM).
Zaire Aquil Lodge, 46, was sentenced by U.S. District Court Judge Richard G. Stearns to 15 years in federal prison and five years of supervised release. In January 2024, Lodge pleaded guilty to three counts of sexual exploitation of children and one count of receipt of child pornography.
On various dates in 2021, Lodge created a false online persona of a teenage boy which he used to convince at least three minor victims to engage in sexually explicit conduct and send him sexualized images of themselves. Additionally, Lodge knowingly received and attempted to receive CSAM between February and October 2021.
Members of the public who have questions, concerns or information regarding this case should call 617-748-3274.
Acting United States Attorney Joshua S. Levy; Michael J. Krol, Special Agent in Charge of Homeland Security Investigations in New England; and Brockton Police Chief Brenda Perez made the announcement today. Assistant U.S. Attorney David G. Tobin of the Major Crimes Unit prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
Brazilian Man Indicted for Visa Fraud and PerjuryRead the Press Release
BOSTON – A Brazilian man, residing in Malden, was indicted yesterday for using and possessing a fraudulently obtained visa to enter the United States and lying on his asylum application. Upon applying for a U.S. Visa, the defendant allegedly never disclosed to U.S. Immigration authorities his involvement in the murders of 11 people, mostly teenagers, in Brazil in retaliation for the death of a police officer, an incident known as the The Slaughter of Curió.
Antonio Jose De Abreu Vidal Filho, 30, was indicted on two counts of visa fraud, two counts of perjury and one count of falsifying, concealing and covering up a material fact. Following an initial appearance in federal court in Boston yesterday, De Abreu was ordered detained pending a hearing scheduled for June 5, 2024.
According to the indictment, in April 2014, De Abreu joined the Ceara State Military Police – Brazilian state forces who, under the governor, do first line policing on the street. It is alleged that in the early morning hours of Nov. 12, 2015, numerous Brazilian military police officers employed by the government of the Brazilian state of Ceará, including De Abreu, participated in a mass killing event of primarily young people from the impoverished neighborhoods of Barroso, Messejana, Guajeru, Curió and Lagoa Redonda in the capital of Ceará. The killing was in retaliation for the death of another police officer earlier that evening who was shot and killed in the Lagoa Redonda neighborhood, attempting to defend his wife who was being assaulted. In total, 11 people, mostly teenagers, were murdered and many others seriously injured and tortured. This incident has come to be known as A Chacina do Curió or The Slaughter of Curió or The Curió Massacre. A total of 45 individuals, including De Abreu, were charged by the Brazilian authorities and, on Aug. 31, 2016, De Abreu was arrested and detained by the Brazilian police. He was subsequently released pending trial on May 24, 2017.
According to the indictment, two weeks later, on June 9, 2017, while in Recife, Brazil, De Abreu applied for a United States non-immigrant B2 visitor visa. When asked whether he had ever been arrested or convicted for any offense or crime, De Abreu responded “no.” Thereafter, on or about June 21, 2017, the United States Department of State approved De Abreu’s Visa Application and issued him the B2 Visa based upon his alleged false representations in the Visa Application. De Abreu used the B2 Visa and travelled to Miami on May 30, 2018.
Between May 30, 2018 through Aug. 14, 2023, as a result of the approval of his Visa Application, De Abreu obtained various state driver’s licenses, a social security card, travel documents and authorizations for employment.
On Jan. 29, 2020, De Abreu applied for asylum. It is alleged that De Abreau lied when asked whether he had ever been accused, charged, arrested, detained, interrogated and imprisoned in any country other than the United States. He also allegedly failed to disclose his arrest and detention in Brazil when he applied for adjustment of status with United States Citizenship and Immigration Service.
On June 25, 2023, De Abreu was convicted of 11 counts of murder, three counts of attempted murder and four counts of physical and mental torture in the First Court of Fortaleza, Ceará. That same day, De Abreu was sentenced to 275 years and 11 months in prison and an arrest warrant issued.On Feb. 9, 2024, De Abreu testified under oath at an immigration hearing conducted by the Immigration Court. At that hearing, De Abreu falsely claimed that he had never lied to immigration officials and that the only reason he had left off important information on immigration documents filed with the United States government was because he had not yet been arrested.
The charge of misuse of visas, permits and other documents provides for a sentence of up to 10 years in prison, up to three years of supervised release and a fine of up to $250,000. The charge of perjury provides for a sentence of up to five years in prison, up to three years of supervised release and a fine of up to $250,000. The charge of falsifying, concealing, and covering up a material fact provides for a sentence of up to five years in prison, up to three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Assistant Attorney General Matthew G. Olsen for the Justice Department’s National Security Division; Michael J. Krol, Acting Special Agent in Charge of Homeland Security Investigations in New England; Bradley Parker, Special Agent in Charge of the Social Security Administration, Office of Inspector General, Boston Field Office; and Mathew O’Brien, Special Agent in Charge of U.S. Department of State’s Diplomatic Security Service, Boston Field Office; and Denis C. Riordan, District Director of the Fraud Detection and National Security Division of United States Citizenship and Immigration Services, Boston Field Division made the announcement today. This matter was investigated with the assistance of the United States Interagency Human Rights Violators & War Crimes Center. Assistant U.S. Attorney Laura J. Kaplan of the National Security Unit is prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Jamaican Man Who Laundered over $670,000 Sentenced to More Than Three Years in PrisonRead the Press Release
BOSTON – A Jamaican man was sentenced today for his role in the laundering of hundreds of thousands of dollars in drug trafficking proceeds from Colombian cartels through banking systems around the world.
Seivright Donald Afflick, 56, was sentenced by U.S. District Court Judge Richard G. Stearns to 37 months in prison. The defendant will be subject to deportation proceedings upon completion of the imposed sentence. In February 2024, Afflick pleaded guilty to money laundering conspiracy and conducting substantive money laundering transactions.
Beginning in 2016 and continuing until 2022, an investigation into a sophisticated money laundering organization based primarily in Barranquilla, Colombia was conducted. During an extensive five-year investigation, the organization allegedly laundered over $6 million in drug proceeds through intermediary banks in the United States, including banks in Massachusetts, as well as additional proceeds through banks in the Caribbean and Europe by use of the Colombian Black Market Peso Exchange (BMPE) – a common method of trade-based money laundering used to repatriate the proceeds of drug trafficking to Colombia. An undercover agent infiltrated the organization by portraying himself as an international money launderer able to pick up bulk cash throughout the world, launder the proceeds through his United States-based accounts and send the money to Colombia through the BMPE.
Throughout the course of the investigation, members of the money laundering organization would contact the undercover and arrange meetings for the undercover and the undercover’s purported associates to collect bulk cash throughout the world. Individuals, such as Afflick, performed the role of money courier. Afflick delivered bulk cash on two occasions in Jamaica. That cash was then deposited into the undercover bank account in Massachusetts, and then subsequently wired to accounts and repatriated back to drug traffickers in Colombia. Over the course of the conspiracy, Afflick was responsible for the laundering of approximately $670,000 in drug proceeds.
Afflick was charged in a 50-count indictment along with 19 other individuals in March 2022. Afflick is the sixth defendant to be sentenced in the case. Three other defendants have pleaded guilty and are awaiting sentencing. The remaining defendants have pleaded not guilty and are awaiting trial.
Acting United States Attorney Joshua R. Levy and Stephen Belleau, Acting Agent in Charge of the Drug Enforcement Administration, New England Field Division made the announcement today. Assistant U.S. Attorneys Jared C. Dolan and Alathea E. Porter prosecuted the case.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The details contained in the charging document are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former Springfield Golf Professional Sentenced for Tax FraudRead the Press Release
BOSTON – A former golf professional, who worked at two courses owned by the City of Springfield, was sentenced today for tax fraud.
Ryan McDowell, 32, of Springfield, Mass. was sentenced by U.S. District Court Judge Mark G. Mastroianni to 12 months of probation and restitution of $101,050 payable to the City of Springfield and $34,236 payable to the Internal Revenue Service. McDowell pleaded guilty to six counts of tax fraud in September 2018.
Between 2011 and 2016, McDowell worked as an Assistant Golf Professional for a golf management company that contracted with the City of Springfield to manage its two municipal golf courses, Franconia and Veterans Memorial Golf Courses. During that time period, McDowell skimmed approximately $101,050 from golf revenues belonging to the City and then filed false tax returns each year that intentionally omitted the stolen money. McDowell’s filing of the false tax returns resulted in a federal tax loss of $34,236.
Acting United States Attorney Joshua S. Levy and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Boston Field Office made the announcement today. Assistant U.S. Attorneys Steven H. Breslow and Neil Desroches of the Springfield Branch Office prosecuted the case.
Colombian Man Sentenced to More Than Three Years in Prison for Participation in Money Laundering ConspiracyRead the Press Release
BOSTON – A Colombian man was sentenced yesterday for his for his participation in a money laundering conspiracy.
Yimmy Rafael Sanchez-Jimenez, 46, was sentenced by U.S. District Court Judge Richard G. Stearns to 34 months in prison. Sanchez-Jimenez will be subject to deportation proceedings upon completion of the imposed sentence. In January 2024, Sanchez-Jimenez pleaded guilty to money laundering conspiracy and conducting substantive money laundering transactions.
Beginning in 2016 and continuing until 2022, an investigation into a money laundering organization based primarily in Barranquilla, Colombia was conducted. An undercover agent infiltrated the organization by portraying himself as an international money launderer able to pick up bulk cash throughout the world, launder the proceeds through his United States-based accounts and send the money to Colombia through the Black Market Peso Exchange – a common method of trade-based money laundering used to repatriate the proceeds of drug trafficking to Colombia.
Sanchez-Jimenez was a money broker based in Colombia who facilitated drug money pickups throughout the world, including in Los Angeles, California and in Canada. Sanchez-Jimenez also facilitated the transfer of those drug proceeds back to accounts in Colombia by using fake documentation to justify the transfers, in order to repatriate the proceeds of drug trafficking in Colombia. Over the course of the conspiracy, Sanchez-Jimenez was responsible for the laundering of over $550,000 in drug proceeds.
Sanchez-Jimenez was charged in a 50-count indictment along with 19 other individuals in March 2022. Sanchez-Jimenez is the fifth defendant to be sentenced in the case. Three defendants have pleaded guilty and are awaiting sentencing. The remaining defendants have pleaded not guilty and are awaiting trial.
Acting United States Attorney Joshua R. Levy and Stephen Belleau, Acting Agent in Charge of the Drug Enforcement Administration, New England Field Division made the announcement today. Assistant U.S. Attorneys Jared C. Dolan and Alathea E. Porter prosecuted the case.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The details contained in the charging document are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Roslindale Man Pleads Guilty to Illegally Possessing Firearm in Furtherance of Drug TraffickingRead the Press Release
BOSTON – A Heath Street Gang member/associate pleaded guilty today in federal court in Boston to unlawfully possessing a firearm.
Deondre Blanding, 27, of Roslindale, pleaded guilty to one count of possession of a firearm in in furtherance of a drug trafficking crime. U.S. District Court Judge Nathaniel M. Gorton scheduled sentencing for Sept. 6, 2024. Blanding was charged and arrested in February 2024, along with over 40 alleged Heath Street Gang members/associates, who were charged with racketeering conspiracy, drug trafficking, firearms and financial fraud charges.
On Oct. 8, 2023, Blanding arranged to buy three pounds of marijuana from an individual and arrived to the deal armed with a firearm. The arranged drug deal resulted in a shooting in the middle of a Randolph neighborhood involving Blanding and two other individuals. Prior to this shooting, investigators had identified Blanding as being a marijuana dealer for the Heath Street Gang who distributed pound-quantity amounts of marijuana.
The charge of possession of firearm in furtherance of violent or drug trafficking crime provides for a mandatory sentence of five years up to life in prison, five years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Boston Police Commissioner Michael Cox; and James M. Ferguson, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division made the announcement today. Valuable assistance was provided by the Randolph Police Department. Assistant U.S. Attorneys Michael Crowley and Sarah Hoefle of the Organized Crime & Gang Unit are prosecuting the case.
The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Repeat Offender Sentenced to Two Years in Prison for $1 Million Counterfeit Check SchemeRead the Press Release
BOSTON – A Quincy man was sentenced today in federal court in Boston for a million-dollar bank fraud scheme in which he deposited hundreds of counterfeit checks.
Hui Zhang, 42, was sentenced by U.S. District Court Judge Myong J. Joun to two years in prison to be followed by three years of supervised release, with the first year to be served on home confinement. Zhang was also ordered to pay restitution and forfeiture of $1,035,350. In March 2024, Zhang pleaded guilty to one count of bank fraud.
From in or around June 2020 through at least May 2022, Zhang opened fraudulent bank accounts under false identities into which he electronically deposited approximately 114 counterfeit checks – totaling more than $1 million. The counterfeit checks were drawn on the account of a Boston-based retailer. Zhang subsequently withdrew hundreds of thousands of dollars in cash from these accounts via ATMs.
In 2017, Zhang was convicted of forgery of a check and other offenses and was sentenced to probation. In 2018, after being found in possession of various forged credit cards and fraudulent identity cards, Zhang was convicted of identity fraud and sentenced to two years in prison.
Acting United States Attorney Joshua S. Levy and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division made the announcement today. Assistant U.S. Attorney William F. Abely, Chief of the Criminal Division prosecuted the case.Owner of Physical Therapy Clinics Sentenced to More Than Two Years in Prison for Health Care FraudRead the Press Release
BOSTON – The former owner of several physical therapy clinics in Greater Boston was sentenced on May 23, 2024 for health care fraud charges.
Chang Goo Yoon, 62, a South Korean national residing in Queens, N.Y., was sentenced by U.S. District Court Judge Indira Talwani to 27 months in prison and three years of supervised release. Yoon was also ordered to pay restitution in an amount to be determined at a later date. In January 2024, Yoon was convicted following a seven-day jury trial on two counts of health care fraud.
“Mr. Yoon took advantage of his patients and the trust-based health insurance system for years by billing for appointments that never happened. In addition, he pressured his employees to participate in his unethical and illegal activities,” said Acting United States Attorney Joshua S. Levy. “These are not victimless crimes. Health care fraud affects everyone by driving up costs for individuals and employers who pay into the health insurance system with their hard earned money. This sentence should send a strong message to others who seek to defraud the system that they will be identified, prosecuted and held accountable.”
“Today, we see yet another local physician going to prison for providing physical therapy services without a license and fraudulently billing for bogus appointments,” said Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “This long-running scheme appears fueled by sheer greed, and the FBI and our partners are committed to bringing medical professionals like Chang Goo Yoon, who choose to betray their oath and get involved in fraud, to justice.”
“This sentence shows that health care fraud is not tolerated in the Commonwealth of Massachusetts. The Insurance Fraud Bureau of Massachusetts places a high priority on fighting this type of insurance fraud, which affects the citizens of this state. We appreciate the collaboration of our investigative partners in combatting fraud in our healthcare system,” said Anthony DiPaolo, Executive Director of the Insurance Fraud Bureau of Massachusetts.
“Physical therapy patients deserve to receive treatment from a provider that will be honest with them and their health insurance provider” said Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division. “Dr. Chang Yoon lied about providing clinical services on dates he never saw patients and then had insurance payments fraudulently sent directly to him via U.S. Mail. Thanks to postal inspectors and our law enforcement partners, Dr. Yoon was sentenced today for his actions. The U.S. Postal Inspection Service is committed to protecting the integrity of the mail stream and all customers who use it.”
Yoon was the owner and operator of several physical therapy clinics in Allston, Waltham and Brookline between 2014 and 2018. Yoon billed patients for non-existent physical therapy appointments, including approximately $150,000 in claims billed on dates when Yoon was traveling in South Korea, Los Angeles and Toronto. Yoon also billed $50,000 in claims on dates when he was gambling at casinos including the Golden Nugget in Atlantic City, N.J., MGM Springfield in Massachusetts and Twin River Casino in Lincoln, R.I. Additionally, Yoon submitted approximately $30,000 in physical therapy claims for himself after three automobile accidents. Most of those claims falsely listed one of Yoon’s employees as the servicing physical therapist. The remaining claims listed Yoon as both the patient and the servicing physical therapist.
In total, the Court found that the defendant submitted more than $1 million in false insurance claims and reaped more than $300,000 in fraudulent proceeds.
Acting U.S. Attorney Levy, FBI SAC Cohen, IFB Executive Director DiPaolo and USPIS INC Larco-Ward made the announcement. Assistant U.S. Attorneys Elysa Q. Wan and Patrick M. Callahan of the Criminal Division prosecuted the case.
Former Boston Teacher Charged with Child Pornography OffensesRead the Press Release
BOSTON – A Quincy man has been arrested and charged for allegedly possessing and receiving child sexual abuse material (CSAM).
Carter Peaseley, 40, was charged with possession and receipt of child pornography. Peaseley was arrested on May 23, 2024 and released on conditions including a curfew, electronic location monitoring and an order not to have unsupervised contact with children.
According to the charging documents, for approximately one year, Peaseley was involved in an online relationship with a 15-year-old minor, during which he allegedly discussed wanting to teach the minor how to kiss – among other sexually explicit activities – and his plan to visit the minor. Peaseley allegedly instructed the minor not to save his texts and suggested they should use a different platform. It is further alleged that Peaseley and the minor exchanged photographs which included sexually explicit photos of the minor. According to court documents, during a search of Peaseley’s residence, approximately 243 images of CSAM were found on a computer and cellphone which were seized.Peaseley was formerly a teacher at the John D. O’Bryant School of Mathematics and Science and the Match Charter School, both of which are in Boston.
The charge of possession and receipt of child pornography provides for a mandatory minimum of five years in prison and maximum sentence of 20 years in prison, five years and up to a lifetime of supervised release, a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division made the announcement today. Assistant U.S. Attorney David Tobin of the Major Crimes Unit is prosecuting the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Adams Man Arrested and Charged for Allegedly Producing Child PornographyRead the Press Release
BOSTON – An Adams man has been indicted by a federal grand jury in Springfield, Mass. for sexually exploiting a child to produce child sexual abuse material (CSAM).
Brian Warner, 38, was charged with one count of sexual exploitation of a child. Warner was arrested today and, following an initial appearance in federal court in Springfield, was detained pending a detention hearing tomorrow.
According to the indictment, between July 2016 and December 2016, Warner employed, used, persuaded, induced, enticed and coerced a minor to engage in sexually explicit conduct for the purpose of producing CSAM
The charges of sexual exploitation a child and attempted sexual exploitation of a child provide for a mandatory minimum sentence of 15 years and up to 30 years in prison, a lifetime of supervised release and a $250,000 fine. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Michael J. Krol, Special Agent in Charge of Homeland Security Investigations in New England made the announcement today. Assistant U.S. Attorney Catherine G. Curley of the Springfield Branch Office is prosecuting the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
New Bedford Man Charged with Social Security FraudRead the Press Release
BOSTON – A New Bedford man was charged today in federal court in Boston with fraudulently receiving Social Security disability benefits.
Anthony Patterson, 62, was charged with one count of theft of government money. Patterson will make an appearance in federal court in Boston at a later date.
The charging document alleges that, from May 2013 to May 2023, Patterson stole approximately $92,582 in Social Security disability benefits.
The charge of theft of government money provides for a sentence of up to 10 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Bradley Parker, Acting Special Agent in Charge of the Social Security Administration, Office of the Inspector General, Office of Investigations, Boston Field Division made the announcement today. Special Assistant U.S. Attorney James J. Nagelberg of the Major Crimes Unit is prosecuting the case.
The details contained in the charging document are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Man Who Allegedly Used Stolen Identity of Deceased Individual to Work for Local Fire Department Arrested on Federal ChargesRead the Press Release
BOSTON – A man whose true identity is unknown was arrested yesterday for allegedly using the stolen identity of a deceased individual to obtain government-issued identification documents, employment, and professional certifications.
John Doe, age unknown, of Quincy, was charged with one count each of false statement in a passport application and aggravated identity theft. Following an initial appearance in federal court in Boston yesterday, Doe was ordered detained pending a hearing scheduled for May 29, 2024 at 2 p.m.
According to the charging documents, Doe used the name, date of birth and Social Security number the a victim who passed away in 2002 to obtain and use multiple government-issued identification documents in the victim’s name, including Massachusetts driver’s licenses as well as copies of the victim’s birth certificate and Social Security card. Using these documents, it is alleged that Doe posed as the victim to apply for employment as a paramedic, obtain an EMT-Basic Certification, attend and graduate from a Firefighting Academy, and obtain employment with the Melrose Fire Department. It is alleged that, in March 2023, Doe applied for a U.S. passport using the victim’s stolen identity. However, according to the charging documents, a passport application for the victim had already been executed by the victim’s mother in 1989. Therefore, a passport was not issued to Doe.
During the investigation, facial recognition allegedly identified a second Massachusetts driver’s license issued to Doe under the name of Truong Nguyen. According to the charging documents, Nguyen entered the United States from Vietnam in 1979 and was ordered deported in 1991 following a second-degree burglary conviction. According to court documents Nguyen was never physically deported to Vietnam. In 2010, Nguyen was arrested for embezzlement and larceny for allegedly stealing over $46,000 from the Norwell Firefighters Union while working as an officer for the union.
The charge of false statement in a passport application provides for a sentence of up to 10 years in prison, three years of supervised release and a $250,000 fine. The charging statute for aggravated identity theft provides for a mandatory sentence of two years in prison to be served consecutive to any other sentence imposed, up to one year of supervised release, and a fine of $250,000. Sentences are imposed by a federal district court judge based on the United States Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Matthew O’Brien, Special Agent in Charge of the U.S. State Department’s Diplomatic Security Service (DSS) Boston Field Office; Quincy Police Chief Mark Kennedy; Melrose Police Chief Kevin M. Faller; Acting Melrose Fire Department Chief John White; Middlesex County District Attorney Marian Ryan; and Norfolk County District Attorney Michael Morrissey made the announcement today. Assistant U.S. Attorney Suzanne Sullivan Jacobus of the Major Crimes Unit is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Fitchburg Man Pleads Guilty to Firearm OffenseRead the Press Release
BOSTON – A Fitchburg man pleaded guilty today in Worcester federal court for unlawfully possessing a firearm as a convicted felon.
Satron Pridgen, 46, pleaded guilty to being a felon in possession of a firearm and ammunition. U.S. District Court Judge Margaret R. Guzman scheduled sentencing for Aug. 22, 2024. In November 2023, Pridgen was indicted by a federal grand jury.
At approximately 1:30 a.m. on Sept. 16, 2023, Pridgen was outside of Mill City Pub in Fitchburg. An altercation ensued between two men. During the altercation, Pridgen approached a third man from behind, grabbed him and held him around the neck in a chokehold, then pulled out a loaded pistol which he used to beat the man in the head multiple times. When law enforcement intervened, Pridgen ran off and attempted to discard the firearm by a dumpster before being apprehended.
Pridgen is prohibited from possessing firearms and ammunition due to numerous prior convictions out of Worcester Superior Court including: a November 1999 conviction of assault and battery by means of a dangerous weapon for which he was sentenced to 9 to 10 years in state prison; an October 2011 conviction of armed assault with intent to rob, assault and battery by means of a dangerous weapon causing serious bodily injury and possession of a firearm and ammunition as a career criminal for which he was sentenced to 10-12 years in state prison; and an October 2011 conviction of possession with intent to distribute a controlled substance and distribution of cocaine, for which he was sentenced to 9 to 10 years in state prison.
The charge of being a felon in possession of a firearm provides for a sentence of up to 15 years in prison, up to three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; James M. Ferguson, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Boston Division; and Fitchburg Police Chief Ernest F. Martineau made the announcement today. Assistant U.S. Attorney Kristen Noto of the Worcester Branch Office is prosecuting the case.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
Brookline Woman Pleads Guilty to Embezzling More Than $650,000 from Medical PracticeRead the Press Release
BOSTON – A former office manager of a Brookline medical practice pleaded guilty today to embezzling over $650,000 from the practice over several years.
Kathleen Libby, 40, of Brookline, pleaded guilty to one count of wire fraud. U.S. District Court Judge Leo T. Sorokin scheduled sentencing for Sept. 4, 2024.
Libby stole from the medical practice in a variety of ways, including by transferring funds from the practice to a personal PayPal account she established named “Medline Surgical Supplies.” In doing so, Libby created the false impression that transfers from the medical practice to the PayPal account were expenses the medical practice had incurred for supplies.
In addition, Libby used the medical practice’s bank account to make payments toward purchases she had made at a variety of retailers, including Louis Vuitton, Bloomingdales, Best Buy, Target and travel-related websites. Libby also placed two of her relatives on the medical practice’s payroll and used its credit cards for her own personal benefit.
The charge of wire fraud provides for a sentence of up to 20 years in prison, up to three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division made the announcement. Assistant U.S. Attorney Mackenzie A. Queenin of the Securities, Financial & Cyber Fraud Unit is prosecuting the case.
Quincy Man Sentenced to Eight Years in Prison for Drug and Gun OffensesRead the Press Release
BOSTON - A Quincy man was sentenced today for illegally possessing a loaded handgun while trafficking cocaine and fentanyl.
Rey David Fulcar, 38, was sentenced by U.S. District Court Judge Denise J. Casper to eight years in prison and three years of supervised release. Fulcar pleaded guilty in December 2023 to one count of being a felon in possession of a firearm and ammunition and two counts of possessing cocaine and fentanyl with the intent to distribute.
On July 23, 2022 Fulcar was observed conducting a drug deal in his car in Boston. The buyer was stopped by law enforcement and found with three bags of crack cocaine he had just bought from Fulcar. Fulcar was subsequently stopped as he drove away from the drug deal and attempted to flee during his arrest. Thirteen more bags of cocaine and fentanyl were found hidden inside Fulcar’s underwear. Additionally, five large shrink-wrapped packages containing suspected marijuana, as well as $1,141 cash were found inside Fulcar’s vehicle.
During a subsequent search of Fulcar’s Quincy apartment, fentanyl and a stash of cocaine in trafficking quantities were found along with a semi-automatic pistol loaded with seven rounds of ammunition. Also found was a handwritten list Fulcar maintained detailing drug customers, their orders and debts owed, a scale, cutting agent, packaging material and other drug paraphernalia in his kitchen.
Acting United States Attorney Joshua S. Levy; Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, Boston Field Division; James M. Ferguson, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; and Michael Cox, Commissioner of the Boston Police Department made the announcement today. Assistant U.S. Attorneys Fred M. Wyshak, III and John T. Dawley and of the Organized Crime & Gang Unit prosecuted the case.
The investigation was conducted by a multi-agency task force through the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state, and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. More information on the OCDETF program is available here: https://www.justice.gov/ocdetf/about-ocdetf.
Purported Rap Promoter Pleads Guilty to Role in $2.3M Nationwide Fraud ConspiracyRead the Press Release
An Illinois man pleaded guilty today to his role in a nationwide wire fraud conspiracy that victimized businesses and individuals across the United States, and caused a total loss of $2,299,842.
According to court documents, between at least March 2016 and September 2020, Antonio M. Strong, 31, of Lansing, Illinois, conspired with Herbert Wright, Joseph Williams, Demario Sorrells, and others to defraud numerous businesses and individuals by using unauthorized and stolen payment card account information to obtain valuable goods and services from those businesses and individuals, including private jet charters, private yacht charters, luxury car rentals, luxury hotel and vacation rental accommodations, private chef and security guard services, designer puppies, limousine and chauffeur services, commercial airline flights, consumer goods, meals, and other incidentals. The actual cardholders discovered these transactions on their accounts and disputed the charges. The actual cardholders’ payment card companies then reversed their payments and charged back the transactions to the businesses and individuals, which consequently suffered losses in the amounts of the unauthorized transactions.
During this time, Strong presented himself as a rap promoter based in the Chicago area. To conceal his identity and perpetrate the fraud, Strong used various fictitious names and aliases; provided fake driver’s licenses; used email accounts in the names of fictitious and real businesses; and falsely stated that he was from “Universal Music,” “Sony Music,” “Epic Music,” and other real and fictitious companies.
Strong pleaded guilty to one count of conspiracy to commit wire fraud and four counts of wire fraud. He is scheduled to be sentenced on Sept. 19 and faces a maximum penalty of 20 years in prison on each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines
Wright, Williams, and Sorrells have all pleaded guilty to one count of conspiracy to commit wire fraud. Wright was sentenced on Jan. 11 to three years of probation and was ordered to pay $139,968 in both restitution and forfeiture. Williams is scheduled to be sentenced on June 28, and Sorrells is scheduled to be sentenced on Aug. 29. Two other co-conspirators were indicted in October 2020 and their trial is scheduled to begin on Oct. 21.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts; and Special Agent in Charge Andrew Murphy of the U.S. Secret Service Boston Field Office made the announcement.
The U.S. Secret Service is investigating the case.
Trial Attorneys Andrew Tyler and Kyle Crawford of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven H. Breslow for the District of Massachusetts are prosecuting the case.
Chicago-Area Rap Promoter Pleads Guilty to Role in Nationwide Fraud ConspiracyRead the Press Release
BOSTON – A Chicago-area man pleaded guilty today in federal court in Springfield, Mass. to his role in a nationwide wire fraud conspiracy that victimized businesses and individuals across the United States.
Antonio M. Strong, 31, of Lansing, Ill., pleaded guilty to one count of conspiracy to commit wire fraud and four counts of wire fraud. U.S. District Court Judge Mark G. Mastroianni scheduled sentencing for Sept. 19, 2024.
Strong was indicted by a federal grand jury in October 2020 along with five co-defendants, including rap artist Herbert Wright, Joseph Williams and Demario Sorrells.
According to court documents, between at least March 2016 and September 2020, Strong conspired with Wright, Sorrells, Williams and others to defraud numerous businesses and individuals by obtaining, possessing, using and transferring unauthorized and stolen payment card account information to obtain valuable goods and services, including: private jet and yacht charters; luxury car rentals; luxury hotel and vacation rental accommodations; private chef and security guard services; designer puppies; limousine and chauffer services; and commercial airline flights, among other things. During this time, Strong presented himself as a music promoter based in the Chicago area.
The stolen payment card account information included the actual cardholders’ names, addresses, payment card account numbers, security codes and account expiration dates. Because Strong and his alleged co-conspirators provided authentic payment card information, the defrauded businesses and individuals successfully processed their transactions and provided the goods and services. The actual cardholders discovered these transactions on their accounts and disputed the charges, which were reversed by the payment card companies. As a result, the transactions were charged back to the businesses and individuals from whom Strong and his co-conspirators defrauded with the unauthorized transactions.
To conceal his identity and perpetrate the fraud, Strong used various fictitious names and aliases; provided fake driver’s licenses in the names of both fictitious and real people; used email accounts in the names of fictitious and real businesses; and falsely stated that he was from “Universal Music,” “Sony Music,” “Epic Music,” and other real and fictitious companies. Strong caused a total loss of $2,299,842, which he has agreed to repay.
In January 2024, Wright was sentenced to three years’ probation and was ordered to pay restitution and forfeiture of $139,968, as well as a $5,500 fine after previously pleading guilty. Williams and Sorrells have also pleaded guilty to their roles in the conspiracy and are scheduled to be sentenced on June 28, 2024 and Aug. 29, 2024, respectively. The remaining two defendants are pending trial.
The charges of wire fraud conspiracy and wire fraud provide for a sentence of up to 20 years in prison, up to three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; and Andrew Murphy, Special Agent in Charge of the United States Secret Service, Boston Field Office made the announcement. Assistant U.S. Attorney Steven H. Breslow of the Springfield Branch Office and Trial Attorneys Andrew Tyler and Kyle Crawford of the Justice Department’s Criminal Division’s Fraud Section are prosecuting the case.
The details contained in the charging documents are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Two Charged with Conspiring to Commit Murders for HireRead the Press Release
BOSTON – Two men have been charged with allegedly conspiring to murder a witness in a federal trial as well as rivals. One defendant also allegedly discussed the murder of federal prosecutors.
Elijah Melton, 26, of Middleborough, and Kareem Pires, 25, of Wareham, have been charged with one count each of conspiring to commit murder for hire. Pires was arrested this morning and will appear in federal court in Boston at 2 p.m. this afternoon. Melton is currently in federal custody and will appear at a later date.
In December 2023, Melton was arrested and charged in a two-count federal indictment of conspiracy to distribute and possess with the intent to distribute 400 grams or more of fentanyl and the distribution of 400 grams or more of fentanyl. Melton was released by the Court on conditions. In February 2024, Melton was arrested for allegedly violating his pre-trial release conditions. Melton was ordered detained pending trial and has remained in federal custody since.
According to the charging documents, a cooperating witness told federal authorities that Melton had allegedly solicited him to murder a person (Target Witness) that Melton believed to be cooperating in Melton’s federal drug case. Melton allegedly told the cooperating witness that members of his gang had placed a “bounty” on the Target Witness and provided the cooperating witness with information about the Target Witness, including the city in which he resided, the car he drove, and details about distinctive jewelry he wore. Melton allegedly offered to arrange for a juvenile family member to deliver $75,000 to a family member of the cooperating witness. The cooperating witness informed federal authorities that he refused the money at that time.
Melton allegedly further asked the cooperating witness to murder two other individuals that were “beefing” with Melton’s crew (Target Rival #1 and Target Rival #2). Melton allegedly provided the cooperating witness with information to identify the Target Rivals and the Target Witness. Melton also allegedly told the cooperating witness that he wanted two federal prosecutors murdered, provided the cooperating witness with certain information about the prosecutors and indicated that he would provide the money to murder the prosecutors personally.According to the charging documents, Melton told the cooperating witness that Pires, who was not detained, could help identify the targets and locations where the targets might be found. It is alleged that Melton expected the cooperating witness to be released from prison soon thereafter and provided the cooperating witness with both a letter for Pires and the phone number for Melton’s juvenile family member. Federal authorities reviewed the letter Melton provided the cooperating witness, which allegedly included information, among other things, information concerning the plan to murder the Target Rivals. Prior to the cooperating witness’s release from custody, Melton allegedly provided him with a second letter to be delivered to Pires. Federal authorities reviewed the letter, which allegedly referenced the Target Rivals.
According to court documents, upon his release from custody in April 2024, the cooperating witness arranged to meet with Pires. They met in a public location, where the cooperating witness delivered the second letter to Pires, who allegedly agreed to assemble information, including pictures, about the Target Witness and the Target Rivals for the cooperating witness.
The charge of conspiracy to commit murder for hire provides for a sentence of up to 10 years in prison. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes that govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Brian Kyes, U.S. Marshal for the District of Massachusetts; and Warden Michael Nessinger of the Donald W. Wyatt Detention Facility made the announcement today. Assistant U.S. Attorneys Anne Paruti and Mark Grady, Chief and Deputy Chief, respectively, of the Major Crimes Unit are prosecuting the case.
The details contained in the charging document are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Rhode Island Man Sentenced for Role in Southeastern Massachusetts Fentanyl Trafficking ConspiracyRead the Press Release
BOSTON – A Rhode Island man was sentenced today for his involvement in a drug trafficking organization (DTO) that distributed fentanyl throughout Southeastern Massachusetts and Rhode Island.
Alfredo Valdez, 45 of Providence, R.I. was sentenced by U.S. District Court Judge Allison D. Burroughs to 30 months in prison and three years of supervised release. In February 2024, Valdez pleaded guilty to one count of conspiracy to distribute and to possess with intent to distribute fentanyl. Valdez was one of 10 individuals indicted by a federal grand jury in August 2022 in connection with the conspiracy.
In March 2021, an investigation began into a DTO operating in Southeastern Massachusetts and Rhode Island led by Estarlin Ortiz-Alcantara. Intercepted communications on numerous cellphones identified Valdez as a member of the DTO who conspired with Ortiz-Alcantara to regularly distribute multi-kilograms of fentanyl from a base of operations at a stash house in Fall River. During a search of the stash house in July 2022, Valdez was found inside the apartment along with more than 12 kilograms of fentanyl stored in various ceiling panels, blenders, a hydraulic press and baggies.
Valdez is the eighth defendant to plead guilty in the case. Ortiz-Alcantara pleaded guilty in December 2023 and is scheduled to be sentenced on July 9, 2024.
Acting United States Attorney Joshua S. Levy; Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; New Bedford Police Chief Paul Oliveira; and Fairhaven Police Chief Michael J. Myers made the announcement today. Valuable assistance was provided by the Massachusetts State Police; Homeland Security Investigations; Bristol County Sherriff’s Office; and Fall River, Taunton, Attleboro, Scituate, Yarmouth, Providence (R.I.) and West Warwick (R.I.) Police Departments. Assistant U.S. Attorney John T. Mulcahy of the Narcotics & Money Laundering Unit is prosecuting the case.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.The details contained in the charging documents are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Orthopedic Surgeon Sentenced to More Than One Year in Prison for Health Care FraudRead the Press Release
BOSTON – A Canton orthopedic surgeon was sentenced today in federal court in Boston for his role in a health care fraud scheme.
Dr. Olarewaju James Oladipo, 60, of Canton, was sentenced by U.S. District Court Judge Allison D. Burroughs to 16 months in prison, followed by one year of supervised release. In December 2023, Oladipo was convicted by a federal jury of 10 counts of health care fraud.
From approximately January 2016 through December 2019, Oladipo devised and executed a scheme to defraud health care benefit programs by falsely billing for patient visits. Specifically, Oladipo used billing codes for more complex—and thus more expensive—services that were not provided. Oladipo falsified medical records of patient visits to reflect examinations and services that were not performed. During the four-year period, Oladipo frequently billed for more than 60 patients per day and sometimes more than 100 patients per day. The result was that many, if not most, of Oladipo’s patient visits on such days could have only lasted five minutes or less. However, Oladipo used billing codes that typically corresponded to visits of 15, 25, 30, or even 45 minutes.
Additionally, Oladipo ensured this high flow of patients to his practice by prescribing powerful, highly addictive opioids at a rate that made him one of the top prescribers of such drugs in Massachusetts. The evidence presented at trial showed that Oladipo knowingly prescribed oxycodone to patients suffering from opioid addiction.
The U.S. Attorney’s Office for the District of Massachusetts; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Roberto Coviello, Special Agent in Charge, Health and Human Services-Office of Inspector General; and Matthew Modafferi, Special Agent in Charge of the United States Postal Service Office of Inspector General (USPS-OIG), Northeast Area Field Office made the announcement. Valuable assistance was provided by the Massachusetts Attorney General’s Office; National Insurance Crime Bureau; and the Drug Enforcement Administration. Assistant U.S. Attorneys Evan D. Panich and William B. Brady are prosecuting the case.
Magellan Diagnostics Agrees to Plead Guilty and Pay $42 Million to Resolve Criminal ChargesRead the Press Release
BOSTON – Magellan Diagnostics, Inc., a medical device company headquartered in Billerica, Mass., has agreed to resolve criminal charges relating to its concealment of a device malfunction that produced inaccurately low lead test results for potentially tens of thousands of children and other patients.
As part of the criminal resolution, Magellan will plead guilty to violations of the federal Food, Drug and Cosmetics Act and pay a $21.8 million fine, $10.9 million in forfeiture and a minimum of $9.3 million to compensate patient victims. Today’s resolution also includes a deferred prosecution agreement to resolve felony conspiracy fraud charges against the company.
Magellan’s devices – LeadCare Ultra, LeadCare II and LeadCare Plus – detected lead levels and lead poisoning in the blood of children and adults using either venous (i.e., blood draws through the arm) or fingerstick samples. LeadCare II, which was predominantly used to test fingerstick samples, accounted for more than half of all blood lead tests conducted in the United States from 2013 through 2017. LeadCare Plus and LeadCare Ultra were predominantly used to test venous samples.
Magellan has admitted that it misled its customers and the FDA about a serious malfunction that affected Magellan’s LeadCare devices when they were used to test venous blood samples. By hiding the malfunction and later deceiving customers and the FDA about when the company discovered the malfunction, the nature, extent and frequency of the malfunction, and the risks associated with the malfunction, Magellan caused an estimated tens of thousands of children and other patients to receive inaccurately low lead test results.
Magellan first learned that a malfunction in its LeadCare Ultra device could cause inaccurate lead test results – specifically, lead test results that were falsely low – during the FDA clearance process in June 2013. Magellan, however, released LeadCare Ultra to the market in December 2013 without informing customers or the FDA of the malfunction. Several months after the release, LeadCare Ultra customers independently discovered the malfunction and complained about inaccurate results. In response, Magellan told its customers that it had only recently identified the malfunction and had not observed the malfunction in its clinical trials prior to product release. Magellan, in fact, had known about the malfunction for over a year, including before the product release.
Magellan’s testing in 2013 also indicated that the same malfunction affected the LeadCare II device, which was by far Magellan’s highest-revenue product. Magellan, however, did not notify its customers and the FDA about the LeadCare II malfunction until November 2016.
In 2017, the FDA contacted Magellan and asked when the company first discovered the malfunction. Magellan’s representative falsely told the FDA that Magellan first discovered the problem after receiving customer complaints in late 2014 and shortly before Magellan notified the FDA in 2015 – even though Magellan had discovered the malfunction in 2013. Magellan then sent a false timeline to the FDA, which omitted the company’s internal 2013 studies about the malfunction.
The FDA ultimately found that the LeadCare Devices could not accurately test venous samples, leading to a recall of all LeadCare Devices using venous samples and a warning to the public not to use LeadCare Ultra, LeadCare II and LeadCare Plus for venous blood samples because of the malfunction.
According to the Centers for Disease Control and Prevention, there is no safe level of lead in the blood. Lead exposure may cause irreversible lifelong physical and mental health problems. Young children and pregnant women are most vulnerable to lead exposure, especially those from low-income households and those who live in housing built before 1978 because those homes are more likely to contain lead-based paint and have fixtures containing lead.
As part of today’s criminal resolution, Magellan has agreed to compensate all patients who were demonstrably harmed for the pecuniary damages they suffered as a result of the malfunction in Magellan’s blood lead testing devices. If you or a family member believe you received an inaccurate blood lead test result from a LeadCare device between 2013–2017, please complete the questionnaire located on the FBI’s website at www.fbi.gov/MagellanCaseInquiry. Information about the status of the case is located on the U.S. Attorney’s Office website: https://www.justice.gov/usao-ma/victim-and-witness-assistance-program/magellan-diagnostics-inc.
Acting U.S. Attorney Joshua S. Levy; Fernando McMillan, Special Agent in Charge of the Food and Drug Administration, Office of Criminal Investigations, New York Field Office; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; and Roberto Coviello, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of Inspector General made the announcement today. Assistant U.S. Attorneys Jamie Herbert, Kelly Lawrence, Elysa Wan and Leslie Wright of the Criminal Division are prosecuting the case.
Florida Man Arrested for Embezzling from EmployerRead the Press Release
BOSTON – A Florida man has been arrested and charged for allegedly embezzling approximately $4 million from his employer, a Florida-based portfolio company owned by a Massachusetts investment firm.
Paul Schnitzer, 51, of Clermont, Fla., was charged with one count of wire fraud. Schnitzer was arrested this morning and will make an initial appearance in the Middle District of Florida tomorrow. He will appear in federal court in Boston at a later date.
According to the charging document, Schnitzer worked as the finance director for the portfolio company. It is alleged that between January 2023 and May 2024, Schnitzer made over 90 transfers, each of tens of thousands of dollars disguised as “equity distributions,” from the company’s operating account into his personal account. To hide these transfers, Schnitzer allegedly provided falsified financial reports with inflated cash balances for the company to the investment firm. It is also alleged that Schnitzer secretly used a line of credit to replenish the company’s operating account after he had stolen from it.
The charge of wire fraud provides a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division made the announcement today. Assistant U.S. Attorney David M. Holcomb of the Securities, Financial & Cyber Fraud Unit is prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Brooklyn Man Sentenced to Nearly Six Years in Prison for Role in Drug Trafficking Conspiracy Involving over 50 Kilograms of CocaineRead the Press Release
BOSTON – A Brooklyn man was sentenced today in federal court in Boston for his role in a drug trafficking organization (DTO) wherein he transported kilograms of cocaine from New York to Boston in August 2020.
Dinelson Hernandez-Rodriguez, 30, was sentenced by U.S. District Court Judge Patti B. Saris to 68 months incarceration and three years of supervised release. In February 2024, a jury found Hernandez-Rodriguez guilty of conspiracy to distribute and to possess with intent to distribute cocaine.
In October 2019, an investigation began into a DTO trafficking cocaine and fentanyl in Boston and Taunton. Intercepted communications established that the DTO was supplied in part by individuals in New York. In August 2020, Hernandez-Rodriguez drove from New York to Hyde Park with kilograms of cocaine hidden in a trap compartment inside a Honda Pilot automobile. One day prior, a co-conspirator also transported kilograms of cocaine from New York to Hyde Park. In total, Hernandez-Rodriguez and his co-conspirator transported more than 50 kilograms of cocaine intended for distribution in Boston.
After cocaine was distributed in the Boston area, Hernandez-Rodriguez attempted to transport $240,240 in drug proceeds – again, hidden in the trap inside his car – back to New York but was intercepted by law enforcement.
Hernandez-Rodriguez is the ninth defendant to be convicted in this case, either by guilty plea or following a jury trial.
Acting United States Attorney Joshua S. Levy and Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division, made the announcement today. Valuable assistance was provided by the Connecticut State Police and the Boston, Taunton and Stratford (Conn.) Police Departments. Assistant U.S. Attorneys Samuel R. Feldman and K. Nathaniel Yeager of the Narcotics & Money Laundering Unit are prosecuting the case.
This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) Strike Force Initiative, which provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The details contained in the charging documents are allegations. The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Lowell Man Sentenced to Prison for Gun TraffickingRead the Press Release
BOSTON – A Lowell man was sentenced today in federal court in Boston for firearms trafficking charges.
Isael Rodriguez, 29, was sentenced by U.S. District Court Judge Nathaniel M. Gorton to 18 months in prison and three years of supervised release. In January 2024, Rodriguez pleaded guilty to one count of dealing in firearms without a license and one count of making false statements to acquire firearms from a licensed dealer.
In January 2021 and June 2021, Rodriguez purchased a dozen Glock pistols from a licensed dealer for $500 each, falsely claiming that he was purchasing them for himself. Rodriguez then resold the firearms for profit to individuals in Massachusetts. Rodriguez is not a licensed importer, manufacturer, or dealer and Glock firearms are only allowed to be sold to active law enforcement officers.
Acting United States Attorney Joshua S. Levy; James Ferguson, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; Boston Police Commissioner Michael Cox; Lowell Superintendent of Police Gregory C. Hudon; Brookline Police Chief Jennifer M. Paster; and Brockton Police Chief Brenda I. Perez made the announcement today. Assistant U.S. Attorney John Dawley of the Organized Crime & Gang Unit prosecuted the case.
This case is part of Project Safe Neighborhoods (PSN), the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
Justice Department Secures Award Against Owner of Massachusetts Sober Homes for Sexual HarassmentRead the Press Release
Peter McCarthy, 51, of Lynn, Massachusetts, the owner of Steps to Solutions Inc., a group of residential sober homes, was found liable following a five-day jury trial. In August 2021, the U.S. Attorney’s Office for the District of Massachusetts and the Justice Department’s Civil Rights Division filed a lawsuit alleging that McCarthy subjected female tenants to sexual harassment in violation of the Fair Housing Act.
“Sexual harassment of tenants is abhorrent, and the department stands committed to holding housing providers accountable,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “We commend the survivors who came forward to testify about the heinous conduct that they experienced. This verdict sends a message that there is no place in our society for landlords who abuse their position of power to prey on vulnerable people.”
“This defendant preyed on vulnerable women in recovery from addiction and forced them to choose between his sexual demands and keeping a roof over their heads. Housing is a fundamental need and every person has the right to feel safe and secure in their own home. No one should be denied housing because of their refusal to submit to unwanted sexual harassment and intimidation,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “This case should send a powerful message to all landlords that there are severe consequences to sexually exploiting tenants”
Since at least 2012 through 2021, McCarthy — the registered agent and sole officer of Steps to Solutions Inc. — sexually harassed residents of his sober homes by offering to reduce or forgive rent, granting extra house privileges or waiving security deposits in exchange for engaging in sex acts or sexually explicit photographs; and making unwanted sexual comments.
The Justice Department’s Sexual Harassment in Housing Initiative is led by the Civil Rights Division, in coordination with U.S. Attorneys’ Offices across the country. The goal of the initiative is to address and raise awareness about sexual harassment by landlords, property managers, maintenance workers, loan officers or other people who have control over housing. Since launching the initiative in October 2017, the department has filed 40 lawsuits alleging sexual harassment in housing and recovered over $16.4 million for victims of such harassment.
Individuals who have information about this case can contact the U.S. Attorney’s Office for the District of Massachusetts by calling 617-748-3274, emailing [email protected] or visiting the case webpage.
Assistant U.S. Attorneys Gregory Dorchak, Michelle Leung and Eve Piemonte for the District of Massachusetts handled the matter, along with the Justice Department’s Civil Rights Division’s Housing Section.
Justice Department Secures $3.8 Million Award Against Owner and Operator of Massachusetts Sober Homes for Sexual HarassmentRead the Press Release
BOSTON – The owner and operator of Steps to Solutions, Inc., a group of residential sober homes, has been found liable by a federal jury in Boston for sexual harassment of tenants.
Peter McCarthy, 51, of Lynn was found liable on May 17, 2024 for sexual harassment and retaliation in violation of the Fair Housing Act. Following a five-day trial, a federal jury awarded $3.8 million in damages to seven identified victims who rented from McCarthy. In August 2021, the U.S. Attorney’s Office and the Justice Department’s Civil Rights Division filed a lawsuit alleging that McCarthy subjected tenants to sexual harassment in violation of the Fair Housing Act. The jury award includes compensatory damages for the emotional harms the victims suffered as a result of McCarthy’s conduct as well as punitive damages to punish the defendant. The Justice Department also intends to seek a civil penalty against McCarthy to vindicate the public interest and a court order for injunctive relief to prevent McCarthy from, among other things, managing Steps to Solutions sober homes or having contact with residents or prospective tenants.
“This defendant preyed on vulnerable women in recovery from addiction and forced them to choose between his sexual demands and keeping a roof over their heads. Housing is a fundamental need and every person has the right to feel safe and secure in their own home. No one should be subjected to unwanted demands for sex acts from their landlord,” said Acting United States Attorney Joshua S. Levy. “This case should send a powerful message to all landlords that there are severe consequences to sexually exploiting tenants.”
“Sexual harassment of tenants is abhorrent, and the department stands committed to holding housing providers accountable,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “We commend the survivors who came forward to testify about the heinous conduct that they experienced. This verdict sends a message that there is no place in our society for landlords who abuse their position of power to prey on vulnerable people.”
Since at least 2009 through 2021, McCarthy — the registered agent and sole officer of Steps to Solutions, Inc. — sexually harassed residents of his sober homes by offering to reduce or forgive rent, granting extra house privileges, or waiving security deposits in exchange for engaging in sex acts or sexually explicit photographs; and making unwanted sexual comments.
The Justice Department’s Sexual Harassment in Housing Initiative is led by the Civil Rights Division, in coordination with U.S. Attorneys’ Offices across the country. The goal of the initiative is to address and raise awareness about sexual harassment by landlords, property managers, maintenance workers, loan officers or other people who have control over housing. Since launching the initiative in October 2017, the department has filed 40 lawsuits alleging sexual harassment in housing and recovered over $16.4 million for victims of such harassment.
Individuals who have information about this case can contact the U.S. Attorney’s Office by calling 617-748-3274, by e-mailing [email protected] or by visiting the case webpage.
Acting U.S. Attorney Levy and AAG Clarke made the announcement today. Assistant U.S. Attorneys Gregory Dorchak, Michelle Leung and Eve Piemonte of the Civil Division handled the matter along with the Housing Section of the Justice Department’s Civil Rights Division.
The Civil Rights Unit of the U.S. Attorney’s Office was established in 2016 with the mission of enhancing federal civil rights enforcement. For more information on the Office’s civil rights efforts, please visit www.justice.gov/usao-ma/civil-rights.
West Roxbury Man Pleads Guilty to Fraudulently Obtaining COVID-Relief FundsRead the Press Release
BOSTON – A West Roxbury man pleaded guilty on May 15, 2024 in federal court in Boston to a fraud charge in connection with a scheme to fraudulently obtain pandemic-related relief funds from the Paycheck Protection Program (PPP).
Donovan Scarlett, 25, pleaded guilty to one count of wire fraud. U.S. District Court Judge Denise J. Casper scheduled sentencing for Sept. 5, 2024.
Scarlett was charged and arrested in February 2024 along with over 40 alleged Heath Street Gang members/associates, who were charged with racketeering conspiracy; drug trafficking; firearms charges; and financial frauds, including COVID-related fraud.
In March 2021, Scarlett submitted a fraudulent PPP loan application on behalf of his purported business. The fraudulent PPP loan application contained multiple false statements, including false representations regarding the purported business’s total gross income in 2020 and Scarlett’s criminal history. Scarlett also submitted false tax records in support of his loan application. Based on the fraudulent application, Scarlett received approximately $13,600 which he spent on non-business-related expenses.
The CARES Act created a temporary loan program directed at small businesses called the PPP. PPP loans were processed by private financial institutions and fully guaranteed by the U.S. Small Business Administration. If the small business used the loan funds for approved purposes, such as payroll, the loan could be forgiven by the financial institution and paid for by the U.S. Small Business Administration.
The charge of wire fraud provides for a sentence of up to 20 years in prison, up to three years of supervised release and a fine of up to $250,000 or twice the gross gain or loss from the offense. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Boston Police Commissioner Michael Cox; Jonathan Mellone, Special Agent in Charge of Department of Labor, Office of Inspector General; and Harry T. Chavis Jr, Special Agent in Charge of the Internal Revenue Service Criminal Investigations made the announcement today. Assistant U.S. Attorneys Sarah Hoefle and Lucy Sun of the Organized Crime & Gang Unit are prosecuting the case.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Owner of Construction Companies Pleads Guilty to Tax and Mail FraudRead the Press Release
BOSTON – A Hopkinton man pleaded guilty this week to defrauding the Internal Revenue Service (IRS) and Travelers Insurance Company in relation to wages he paid to employees of his two construction companies.
Dariusz Pietron, 51, pleaded guilty on May 15, 2024 to three counts of failure to collect and pay over employment taxes to the IRS and one count of mail fraud relating to underpaid workers’ compensation insurance premiums. U.S. District Judge Indira Talwani scheduled sentencing for Aug. 28, 2024.
Between 2012 and October 2018, Pietron owned and operated TJM Construction, Inc. (TJM) and Point Construction, Inc. (Point). Pietron failed to report his employees’ wages to the IRS, failed to withhold required employment taxes and failed to pay employment taxes to the IRS. Pietron also failed to disclose to Travelers Insurance Company the actual wages he paid to employees, which resulted in him paying less in workers’ compensation insurance premiums than what he would have otherwise owed. As part of the scheme, Pietron recruited and paid two employees to establish three shell companies – companies that would make it appear as if TJM and Point’s employees were subcontractors to whom Pietron had no tax obligations. Pietron thereby failed to pay more than $1.1 million in employment taxes and defrauded Travelers of approximately $244,000.
The charge of failure to pay over taxes provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. The charge of mail fraud provides for a sentence of up to 20 years in prison, at least three years of supervised release and a fine of $250,000 or twice the gross gain or loss, whichever is greater. Pietron has also agreed to pay restitution to the IRS and Travelers Insurance and to forfeit $244,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office; and Katherine Mulligan, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts made the announcement today. Assistant United States Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit is prosecuting the case.
Michigan Man Charged in 29-Count Indictment for Allegedly Defrauding Northampton Company of Nearly $1 MillionRead the Press Release
BOSTON – A Michigan man has been indicted by a federal grand jury in Springfield, Mass. in connection with an alleged scheme to defraud a Northampton construction company of nearly $1 million.
Jonathan McCormack, 39, of Lapeer, Mich., was indicted on 17 counts of wire fraud and 12 counts of engaging in monetary transactions in criminally derived property of a value greater than $10,000. He will appear in federal court in Springfield at a later date.
According to the indictment, McCormack was employed as a project supervisor for BluRoc, LLC., a construction company based in Northampton, Mass. McCormack also owned and operated JDM Site Services, LLC (JDM), a Michigan-based company that heavy rented equipment to BluRoc.
It is alleged that between January 2019 through January 2021, McCormack devised a scheme to defraud BluRoc by various means, including submitting materially false JDM invoices for purported equipment usage and by diverting BluRoc labor, equipment and materials for his own personal use and benefit.
To further this scheme, McCormack allegedly entered fraudulent employee time and JDM equipment usage data in BluRoc’s tracking system that overstated both the number of hours the employees, including himself, were working on BluRoc projects as well as the number of hours JDM equipment was actually used. McCormack also allegedly emailed false JDM invoices to BluRoc personnel for inflated amounts that substantially overstated the number of hours the equipment was actually used. It is further alleged that McCormack deposited payments received for these false invoices into a JDM bank account and used the proceeds for his own personal use and benefit – including to purchase and renovate a luxury hunting lodge; make improvements to his personal residence; purchase recreational vehicles including snowmobiles; and repay a loan to his uncle.
Lastly, McCormack allegedly directed BluRoc workers to conduct work at the luxury hunting lodge he purchased, including clearing an area between the lodge and an adjacent property owned by his uncle; laying timber mats that McCormack had stolen from a BluRoc worksite; and haying and seeding the area with material that he had also stolen from a BluRoc worksite. McCormack then allegedly electronically approved the workers’ time and equipment usage in BluRoc’s tracking system – so that BluRoc, rather than McCormack, paid for their work.
In addition to the charges, the indictment seeks forfeiture of $920,716, the hunting lodge and six Polaris recreational vehicles.
The charge of wire fraud provides for a sentence of up to 20 years in prison, up to three years of supervised release and a fine of $250,000. The charge of engaging in monetary transactions in criminally derived property of a value greater than $10,000 provides for a sentence of up to 10 years in prison, up to three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston made the announcement today. Assistant U.S. Attorneys Neil Desroches and Steven H. Breslow of the Springfield Branch Office are prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Former Luxury Homebuilder Pleads Guilty to Fraud ConspiracyRead the Press Release
BOSTON – The former owner of a now-defunct luxury home building business in West Springfield pleaded guilty yesterday to conspiring to defraud the United States and creating false documents to help one of his clients obtain a mortgage.
Kent Pecoy, 66, of San Marco, Fla., previously of Wilbraham, pleaded guilty to two counts of conspiracy to defraud the United States and one count of making a false statement to a federally insured financial institution. U.S. District Court Judge Mark G. Mastroianni scheduled sentencing for Aug. 20, 2024.
Kent Pecoy was previously indicted in December 2019 along with his son, Jason Pecoy, and Kevin M. Kennedy, the former owner of a golf management company, for allegedly conspiring to defraud the United States by concealing cash payments for the construction of Kennedy’s two homes in East Longmeadow and West Dennis. The defendants were later charged in a superseding indictment in January 2020. On April 24, 2024, Kennedy was sentenced to 13 months in prison after being convicted by a federal jury for conspiracy to defraud the United States and making a false statement to a federally insured financial institution. Jason Pecoy had pleaded not guilty and is pending trial.
Kent Pecoy owned and operated Kent Pecoy & Sons, Construction Inc. (KPSC) – a West Springfield-based commercial and luxury home construction company – as well as Sturbridge Development, LLC (Sturbridge) and Legacy General Contractors, LLC (Legacy). KPSCI constructed two homes for Kennedy in East Longmeadow and West Dennis – for which Kennedy paid Kent Pecoy in cash.
From 2009 through 2016, Pecoy conspired with others to conceal income from the IRS by dealing in cash. Specifically, Pecoy received $1,116,900 in cash payments from Kennedy for the purchase and construction of custom-built homes in East Longmeadow and on Cape Cod. Kent Pecoy failed to deposit most of the cash into business bank accounts, and instead distributed the cash directly to vendors and subcontractors. For the payments Kent Pecoy did deposit, he deposited the cash in amounts less than $10,000 to avoid the filing of currency transaction reports.
Kent Pecoy also created and maintained separate ledgers documenting Kennedy’s cash payments, created and maintained false contracts and cover sheets and created false entries in KPSC’s accounting system to conceal the cash payments.
Additionally, in January 2010, Kent Pecoy and Kennedy made false statements to Charles Schwab Bank on a loan to Kennedy and his wife for the construction of a residence in East Longmeadow in an attempt to conceal $160,000 cash down payment. These false statements included understating the sale price of the residence lot, the price of the construction and the deposit and earnest money paid by Kennedy.
The charge of making a false statement to a federally insured financial institution provides for a sentence of up to 30 years in prison, five years of supervised release and a fine of $1 million. Sentences are imposed based upon the U.S. Sentencing Guidelines and other statutory factors. The conspiracy charges provide for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office made the announcement today. Assistant U.S. Attorneys Steven H. Breslow and Neil L. Desroches of the Springfield Branch Office are prosecuting the case along with Trial Attorney Eric B. Powers of the Justice Department’s Tax Division.
The details contained in the charging documents are allegations. The remaining defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Driving School Owner Charged with Conspiracy to Defraud RMVRead the Press Release
BOSTON – A Brockton man was arrested today on charges that he bribed a road test examiner to issue driver’s licenses to individuals who did not pass or even take road tests at the Registry of Motor Vehicles (RMV) in Brockton.
Carlos Cardoso, 70, was indicted by a federal grand jury sitting in Boston on five counts of honest services mail fraud and one count of conspiracy to commit honest services mail fraud. He will appear in federal court in Boston at 2 p.m. this afternoon.
According to the indictment, Cardoso, the owner of a driving school, paid cash bribes totaling $20,000 - $30,000 to a road test examiner at the Brockton RMV service center to misrepresent to the RMV that certain driver’s license applicants had passed their road test when, in fact, they had not. It is alleged that some of the applicants did not even show up to take the test. As a result of the fraud, the RMV mailed driver’s licenses to unqualified applicants.
The charge of honest services mail fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000. The charge of conspiracy to commit honest services mail fraud provides for a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Michael J. Krol, Special Agent in Charge of Homeland Security Investigations in New England; and Christopher A. Scharf, Special Agent in Charge, U.S. Department of Transportation Office of Inspector General, Northeast Region made the announcement today. Assistant U.S. Attorneys Christine Wichers and Adam Deitch of the Public Corruption & Special Prosecutions Unit are prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
California Man Charged with Selling Illegal Depressant Etizolam over the InternetRead the Press Release
BOSTON – A California man has been charged for allegedly conspiring to sell the illegal depressant Etizolam over the internet.
Paul Z. Lamberty, 52, of Folsom, Calif., was charged in a two-count information with one count of conspiracy to defraud the United States and one count of the introduction of misbranded drugs with the intent to defraud and mislead. He will appear in federal court in Boston at a later date.
According to the charging documents, Lamberty operated websites encern.com and ohmod.com to sell the drug Etizolam to customers throughout the United States, including customers in Massachusetts. The Food and Drug Administration (FDA) has not approved Etizolam for use as a drug, and thus it cannot be sold or prescribed in the United States. Despite this, Lamberty allegedly purchased drugs from suppliers in China, imported those drugs into the United States and sold the drugs with false labelling stating that the products were sold “For Research Purposes Only,” and “Not for Human Consumption.”
According to the charging documents, Etizolam is a drug known as a thienodiazepine – a class of drugs chemically related to benzodiazepines, which produce central nervous system depression. Physicians may prescribe FDA-approved benzodiazepines to treat insomnia and anxiety, but benzodiazepines and thienodiazepines also carry risks of dependency, toxicity and even fatal overdose, particularly when combined with other central nervous system depressants.
The charge of conspiracy to defraud the United States provides for a sentence of up to five years in prison, three years of supervised release and a fine of $250,000. The charge of introduction of misbranded drugs with the intent to defraud and mislead provides for a sentence up to three years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes that govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Fernando P. McMillan, Special Agent in Charge of the New York Field Office of the U.S. Food and Drug Administration, Office of Criminal Investigations; and Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division made the announcement today. Assistant U.S. Attorneys Jared C. Dolan and Lauren A. Graber of the Criminal Division are prosecuting the case.
The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Brockton Man Pleads Guilty to Role in Fentanyl and Cocaine Trafficking ConspiracyRead the Press Release
BOSTON – A Brockton man pleaded guilty yesterday to his role in a large-scale drug trafficking conspiracy in and around the Quincy and Weymouth areas.
Neylton Fontes, 36, pleaded guilty to possession with intent to distribute controlled substances, including cocaine, fentanyl and fentanyl analogue; and conspiracy to distribute and possess with intent to distribute cocaine, fentanyl and fentanyl analogue. U.S. Senior District Court Judge William G. Young scheduled sentencing for Sept. 16, 2024. Fontes was indicted along with three others in October 2023.
Around January 2021, Fontes possessed with intent to distribute cocaine, fentanyl and fentanyl analogue and participated in a conspiracy to distribute cocaine, fentanyl and fentanyl analogue in Quincy and Weymouth.
The charges of possession with intent to distribute cocaine, fentanyl, and fentanyl analogue and conspiracy to distribute and possession with intent to distribute each provide for a sentence of up to 20 years in prison, at least three years and up to a lifetime of supervised release and a fine of up to $1 million. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division made the announcement today. Valuable assistance was provided by the Plymouth County Sheriff’s Department; Suffolk County Sheriff’s Department; Massachusetts State Police; and the Brockton, Quincy, Weymouth, Braintree, Boston, Bridgewater, East Bridgewater and Barnstable Police Departments. Assistant U.S. Attorneys Kaitlin R. O’Donnell and Philip A. Mallard of the Organized Crime & Gang Unit are prosecuting the case.
This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The details contained in the charging documents are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Massachusetts Business Owner Arrested for over $18 Million PPP FraudRead the Press Release
BOSTON – A Carlisle man has been arrested and charged for allegedly submitting fraudulent Paycheck Protection Program (PPP) loan applications on behalf of multiple companies he owns and controls.
Durgaprasad Rao, 65, was charged with two counts of wire fraud. Rao was arrested yesterday and will make an initial appearance in federal court in Boston at 2 p.m. this afternoon. He remains in custody pending a detention hearing scheduled for May 17, 2024.
According to the charging documents, Rao is the owner and operator of Accelerated Engineering, LLC., a product engineering service provider, and Upstream Global Services, Inc., a software company that provides software consulting services and temporary staffing needs.
It is alleged that, between April 2020 and May 2021, Rao submitted numerous fraudulent applications seeking over $18 million in PPP funds for various companies in multiple states including companies in Massachusetts, Wisconsin and Georgia. Nine of the fraudulent PPP loan applications Rao allegedly submitted were for companies he owned and controlled. For Rao’s Massachusetts-based companies, he received nearly $7 million in PPP loans – of which, $1.5 million was approved for forgiveness.
Rao’s PPP loan applications allegedly contained false statements regarding payroll and the number of employees that worked for his companies and included fraudulent supporting documents, including false tax return documents and false payroll records. It is further alleged that Rao misused the funds he received by, among other things, transferring the funds to foreign businesses he owned and purchasing a luxury condominium in New York City.
The charges of wire fraud each provide for a sentence of up to 20 years in prison, three years of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation Division, Boston Field Office; Ketty Larco Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; and Carlisle Police Chief Andrew Amendola made the announcement today. Assistant U.S. Attorneys Brian Sullivan and David Tobin of the Major Crimes Unit are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus and https://www.justice.gov/coronavirus/combatingfraud.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form.The details contained in the charging documents are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
East Boston Man Pleads Guilty to Child Pornography OffensesRead the Press Release
BOSTON – An East Boston man pleaded guilty yesterday to possessing and distributing child sexual abuse material (CSAM).
Cristopher Vladimir Pineda Martinez, 25, pleaded guilty to one count of possession of child pornography and one count of distribution of child pornography. U.S. District Judge Richard G. Stearns scheduled sentencing for Aug. 14, 2024. Pineda was arrested and charged by criminal complaint in January 2023 and has remained in federal custody since.
Law enforcement identified Pineda as member of several private large-scale group chats involved in the distribution of CSAM on an online chat platform. On Dec. 12, 2022, Pineda distributed eight videos depicting CSAM in three online chat groups. An additional 54 videos of CSAM, involving children as young as six years old, were found within an application on Pineda’s personal cell phone.
The charge of possession of child pornography provides for a sentence of up to 20 years in prison, at least five years and up to a lifetime of supervised release and a fine of up to $250,000. The charge of distribution of child pornography provides for a mandatory minimum sentence of five years and up to 20 years in prison, a mandatory minimum of five years and up to a lifetime of supervised release and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Michael J. Krol, Special Agent in Charge of Homeland Security Investigations in New England made the announcement today. Valuable assistance was provided by the United States Postal Inspection Service and Immigration and Customs Enforcement, Enforcement and Removal Operations. Assistant U.S. Attorney Elianna J. Nuzum of the Major Crimes Unit is prosecuting the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
Cape Cod Hospital to Pay $24.3 Million to Resolve False Claims Act Allegations Concerning Its Failure to Comply with Medicare Rules for Cardiac ProceduresRead the Press Release
Cape Cod Hospital, based in Hyannis, Massachusetts, has agreed to pay $24.3 million to resolve False Claims Act allegations that it knowingly submitted claims to Medicare for transcatheter aortic valve replacement (TAVR) procedures that failed to comply with Medicare rules specifying the way in which hospitals were required to evaluate patient suitability for the procedures.
Beginning in 2015, Cape Cod Hospital began offering TAVR procedures for patients suffering from aortic stenosis, a serious heart condition that restricts blood flow from the heart to rest of the body. A TAVR procedure involves replacing a patient’s damaged heart valve with an artificial one. Medicare rules at the time required that, prior to performing a TAVR procedure, hospitals engage specified clinical personnel to conduct an independent examination of prospective patients to evaluate their suitability for TAVR, document the rationale for their clinical judgment and make the rationale available to the medical team performing the TAVR procedure. The settlement resolves allegations that from Nov. 1, 2015, through Dec. 31, 2022, Cape Cod Hospital knowingly submitted hundreds of claims to Medicare for TAVR procedures that did not comply with the applicable Medicare requirements. In some instances, not enough physicians examined a patient’s suitability for the procedure, while in other instances the physicians failed to document and share their clinical judgment with the medical team responsible for the TAVR procedure.
“Hospitals that participate in the Medicare program must abide by applicable coverage and reimbursement rules,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department will hold healthcare providers accountable when they knowingly fail to comply with Medicare reimbursement requirements.”
“Medicare permitted coverage for this newly developed cardiac procedure only under certain conditions to ensure patient safety. Cape Cod Hospital ignored those rules and received millions of dollars from Medicare to which it was not entitled. This conduct persisted for years despite internal warnings,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “This investigation and settlement ensures that patient safety is prioritized over a hospital’s bottom line.”
In connection with the settlement, Cape Cod Hospital has entered into a five-year corporate integrity agreement with the Department of Health and Human Services, Office of Inspector General (HHS-OIG), which provides for an annual review of its paid Medicare claims by an Independent Review Organization.
“Health care providers are expected to follow Medicare rules and bill properly,” said Special Agent in Charge Roberto Coviello of HHS-OIG. “We are committed to pursuing allegations of False Claims Act violations as we work to protect the integrity of the taxpayer-funded Medicare program, and we encourage the public to come forward with information about such conduct.”
Cape Cod Hospital received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases. Among other actions, Cape Cod Hospital voluntarily produced materials, identified the relevant medical records, admitted that it failed to adhere to the applicable Medicare requirements and implemented appropriate remedial measures.
The claims resolved by the resolution announced today include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act by Richard Zelman, a physician formerly employed by Cape Cod Hospital. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Zelman v. Cape Cod Hospital, No. 1:22-cv-11204 (D. Mass.). As part of today’s resolution, Dr. Zelman will receive approximately $4.36 million.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from HHS-OIG and the FBI.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).
Trial Attorney Kimya Saied of the Fraud Section and Assistant U.S. Attorney Andrew A. Caffrey, III for the District of Massachusetts handled the matter.
Except for the facts admitted by Cape Cod Hospital, the claims in the complaint are allegations only, and there has been no determination of liability.
SettlementCape Cod Hospital to Pay $24.3 Million to Resolve Allegations That It Failed to Comply with Medicare Cardiac Procedure RulesRead the Press Release
BOSTON – Cape Cod Hospital has agreed to pay $24.3 million to resolve allegations that it knowingly submitted claims to Medicare for transcatheter aortic valve replacement (TAVR) procedures that failed to comply with Medicare rules specifying the way in which hospitals were required to evaluate patient suitability for the procedures.
Beginning in 2015, Cape Cod Hospital began offering TAVR procedures for patients suffering from aortic stenosis, a serious heart condition that restricts blood flow from the heart to the rest of the body. A TAVR procedure involves replacing a patient’s damaged heart valve with an artificial one. Medicare rules at the time required that, prior to performing a TAVR procedure, hospitals engage specified clinical personnel to conduct an independent examination of prospective patients to evaluate their suitability for TAVR; document the rationale for their clinical judgment; and make the rationale available to the medical team performing the TAVR procedure.
The settlement resolves allegations that from November 2015 through December 2022, Cape Cod Hospital knowingly submitted hundreds of claims to Medicare for TAVR procedures that did not comply with the applicable Medicare requirements. In some instances, not enough physicians examined a patient’s suitability for the procedure, while in other instances the physicians failed to document and share their clinical judgment with the medical team responsible for the TAVR procedure.
“Medicare permitted coverage for this newly developed cardiac procedure only under certain conditions, to ensure patient safety. Cape Cod Hospital ignored those rules and received millions of dollars from Medicare to which it was not entitled. This conduct persisted for years despite internal warnings,” said Acting United States Attorney Joshua S. Levy for the District of Massachusetts. “This investigation and settlement ensure that patient safety is prioritized over a hospital’s bottom line.”
“Hospitals that participate in the Medicare program must abide by applicable coverage and reimbursement rules,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department will hold healthcare providers accountable when they knowingly fail to comply with Medicare reimbursement requirements.”
“Health care providers are expected to follow Medicare rules and bill properly,” said Roberto Coviello, Special Agent in Charge with the U.S. Department of Health and Human Services, Office of Inspector General. “We are committed to pursuing allegations of False Claims Act violations as we work to protect the integrity of the taxpayer-funded Medicare program, and we encourage the public to come forward with information about such conduct.”
In connection with the settlement, Cape Cod Hospital has entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), which provides for an annual review of its paid Medicare claims by an Independent Review Organization.
Cape Cod Hospital received credit under the Department’s guidelines for taking disclosure, cooperation, and remediation into account in False Claims Act cases. Among other actions, Cape Cod Hospital voluntarily produced materials, identified the relevant medical records, admitted that it failed to adhere to the applicable Medicare requirements and implemented appropriate remedial measures.
The claims resolved by the resolution announced today include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of today’s resolution, the whistleblower will receive approximately $4.36 million.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to HHS at 800-HHS-TIPS (800-447-8477).
Acting U.S. Attorney Levy; Principal Deputy AAG Boynton; and HHS-OIG SAC Coviello made the announcement today. Assistant U.S. Attorney Andrew A. Caffrey, III of the Affirmative Civil Enforcement Unit handled the matter along with Trial Attorney Kimya Saied of the Department of Justice’s Fraud Section.
Providence Man Who Sold Oxycodone to Undercover Officer Sentenced to Six Years in PrisonRead the Press Release
BOSTON – A Providence man was sentenced today in federal court in Worcester for selling oxycodone pills on multiple occasions to an undercover officer.
Brandon Jones, 35, was sentenced by U.S. District Court Judge Margaret R. Guzman to six years in prison, to be followed by three years of supervised release. In October 2023, Jones pleaded guilty to one count of possession with intent to distribute oxycodone and two counts of distribution of oxycodone.
In July 2022, Jones was identified as an oxycodone distributor in the Worcester area. Specifically, Jones traveled to Worcester in rental vehicles on a daily basis to sell drugs throughout the area before returning to Providence. On at least four occasions between October 2022 and January 2023, Jones met with undercover law enforcement to distribute oxycodone pills in controlled purchases. In February 2023, the rental cars Jones had been using were tracked to his supply source in New Jersey and New York. At the time of his arrest in March 2023, Jones was found in possession of approximately 1,500 oxycodone pills.
Acting United States Attorney Joshua S. Levy; Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; and Southbridge Police Chief Shane D. Woodson made the announcement today. Valuable assistance in the investigation was provided by the U.S. Attorney’s Office for the District of Rhode Island and the Rhode Island State Police. Assistant U.S. Attorney Kristen M. Noto of the Worcester Branch Office prosecuted the case.
Member of Violent Gang Sentenced to More Than Seven Years in Prison for Racketeering, Drug and Firearm OffensesRead the Press Release
BOSTON – A Boston-area man was sentenced yesterday for his role in a violent Boston street gang as well as gun and drug trafficking charges.
Kenny Romero, a/k/a “KG,” 29, was sentenced by U.S. Senior District Court Judge William G. Young to 63 months in prison and three years of supervised release after pleading guilty in November 2023 to one count of conspiracy to participate in a racketeering enterprise (more commonly referred to as RICO or racketeering conspiracy); three counts of distribution and possession with intent to distribute cocaine; and three counts of being a felon in possession of a firearm and ammunition. Romero was also sentenced to 24 months in prison, to be served consecutively, for committing the offenses while on federal supervised release.
According to court documents, Cameron Street is a violent gang based largely in Dorchester that uses violence and threats of violence to preserve, protect and expand its territory, promote a climate of fear and enhance its reputation. Cameron Street members also allegedly distribute narcotics and firearms, commit armed robberies and engage in human trafficking. Additionally, members allegedly post videos or use social media applications to promote Cameron Street, celebrate murders and other violent crimes committed by the gang and denigrate rivals – in particular the NOB gang – an abbreviation for the Norton/Olney/Barry Streets in Dorchester.
Romero had a “3113” tattoo, which referred to the third, first and 13th letters of the alphabet (“C,” “A,” “M”):
During a two-year investigation, Romero was recorded selling eight firearms, as well as ammunition, cocaine base and cocaine to a cooperating witness who Romero believed was a member of Cameron Street:
Data from Romero’s cell phone and Snapchat accounts determined that Romero generated income for Cameron Street through gun and drug sales as well as human trafficking.
At the time of Romero’s conduct, he was on supervised release for a 2019 federal conviction for interstate transportation of a firearm, for which he was sentenced to 21 months in prison.
Acting United States Attorney Joshua S. Levy; James M. Ferguson, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division; Stephen Belleau, Acting Special Agent in Charge of the Drug Enforcement Administration, New England Field Division; and Boston Police Commissioner Michael Cox made the announcement today. Valuable assistance was provided by the Massachusetts State Police; Suffolk County Sheriff’s Office; Suffolk, Plymouth, Norfolk and Bristol County District Attorney’s Offices; and the Canton, Quincy, Randolph, Somerville, Brockton, Malden, Stoughton, Rehoboth and Pawtucket (R.I.) Police Departments. Assistant U.S. Attorneys Christopher Pohl and Charles Dell’Anno of the Criminal Division prosecuted the case.
This operation is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) Strike Force Initiative, which provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The details contained in the charging document are allegations. The remaining defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Former Milford Second Grade Teacher Sentenced to More Than Three Years in Prison for Possessing Child PornographyRead the Press Release
BOSTON – A former Milford teacher was sentenced today in federal court in Worcester for possessing child sexual abuse material (CSAM).
Vincent Kiejzo, 36, was sentenced by U.S. District Court Judge Margaret R. Guzman to 42 months in prison, to be followed by five years of supervised release. Kiejzo was also ordered to pay $43,500 in restitution to victims. In December 2024, Kiejzo pleaded guilty to one count of possession of child pornography.
In or around May 2019, an IP address registered to Kiejzo was linked to two websites known to host videos, photos and discussions of content depicting the sexual exploitation of minor victims. During a search of Kiejzo’s Milford home in September 2020, a USB drive plugged into a television in his bedroom was located and found to contain links to websites dedicated to child sexual exploitation. The USB drive also contained well as over 6,000 images of CSAM – including images that involved infants.
At the time of his arrest, Kiejzo was a second-grade teacher in Milford. Upon his release from prison, Kiejzo will be required to register as a sex offender and will be prohibited from contact with children.
Acting United States Attorney Joshua S. Levy and Michael J. Krol, Special Agent in Charge of the Homeland Security Investigations in New England made the announcement. The Milford Police Department also assisted with the investigation. Assistant U.S. Attorney Kristen Noto of the Worcester Office prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.
Chelsea Woman Pleads Guilty to Using Counterfeit Identifications as Part of Account Takeover SchemeRead the Press Release
BOSTON – A Chelsea woman pleaded guilty yesterday in federal court in Boston to conspiring to possess and use false identifications as part of an identity theft scheme to target a wireless company.
Perla Soto, 24, pleaded guilty to an Information charging conspiracy to possess and use more than five false identifications. U.S. District Court Judge Julie E. Kobick scheduled sentencing for Aug. 9, 2024. Soto was originally charged by criminal complaint in March 2024.
From January 2022 through November 2023, Soto was captured on surveillance video conducting 20 transactions where she posed as customers of a wireless company. These transactions took place in retail stores throughout the United States.
Soto used counterfeit driver’s licenses and identification bearing her photograph and the personal identifying information of customers of the wireless company in order to conduct transactions at these retail stores. While posing as the customer, Soto would purchase new phones and accessories on the customer’s account. Working as part of a larger group, Soto provided these fraudulently obtained phones and accessories to other coconspirators who would sell them on the black market.
In total, over 120 customers of the wireless company had their personal information utilized in transactions totaling over $290,000 in fraudulently obtained phones and accessories.
The charge of conspiring to possess of five or more identification documents with intent to use them unlawfully provides for a sentence of up to five years in prison, three years of supervised release a fine of up to $250,000 and restitution. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy; Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; and John E. Mawn Jr., Interim Colonel of the Massachusetts State Police made the announcement. Assistant U.S. Attorney Philip A. Mallard of the Organized Crime & Gang Unit is prosecuting the case.
California Businessman Sentenced for Securities Fraud Involving Penny Stock CompanyRead the Press Release
BOSTON – A California businessman was sentenced yesterday in federal court in Boston for engaging in a fraudulent scheme to obtain and profit from the sale of penny-stock shares that were later sold for millions of dollars during a sophisticated market manipulation scheme.
Kevin C. Dills, 67, of Carlsbad, Calif., was sentenced by U.S. District Court Judge Richard G. Stearns to time served (approximately five days in prison) and 30 months of home detention. He was also ordered to forfeit $6.12 million. In January 2024, Dills pleaded guilty to one count of securities fraud. Dills was charged in March 2023 along with co-defendant Joseph A. Padilla, who was sentenced in November 2023 to 66 months in prison and one year of supervised release after previously pleading guilty to securities fraud and other charges.
Between October 2020 and July 2021, Dills engaged in a fraudulent scheme to obtain and profit from the sale of unrestricted free-trading shares in the company Oncology Pharma, Inc., a thinly traded company that traded on the over-the-counter securities market under the ticker symbol ONPH.
Dills fraudulently induced Oncology Pharma’s transfer agent to issue three million unrestricted free-trading ONPH shares to two entities under Dills’ control by, among other means, secretly controlling one of the entities through his girlfriend and not disclosing that control to Oncology Pharma’s transfer agent. Dills then sold the three million shares to two individuals who deposited the shares with the Cayman Islands broker Valor Capital, with which Padilla had a close, unofficial association. Padilla then engaged in manipulative trading in ONPH designed, at least in part, to artificially drive up the company’s stock price, after which Padilla began dumping the ONPH shares—which were under common control—to unsuspecting investors in Massachusetts and throughout the United States during a promotional campaign, generating tens of millions of dollars in illicit profits. Over $6 million from those illicit profits was then transferred to Dills via his two entities between March and June 2021.
Acting United States Attorney Joshua S. Levy and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division made the announcement today. Assistant United States Attorneys James R. Drabick and Ian J. Stearns of the Securities, Financial & Cyber Fraud Unit prosecuted the case.
Mexican Man Pleads Guilty to Illegal ReentryRead the Press Release
BOSTON – A Mexican man pleaded guilty today to illegally reentering the United States after deportation.
Ramon Alfaro-Orona, 39, pleaded guilty to one count of unlawful reentry of a deported alien. U.S. District Court Judge Margaret R. Guzman scheduled sentencing for Aug. 5, 2024. In September 2023, Alfaro-Orona was charged by criminal complaint.
Alfaro-Orona was deported from the United States on eight prior occasions, with the most recent being Sept. 30, 2014. Sometime after his September 2014 removal, Alfaro-Orona unlawfully reentered the United States. On Aug. 23, 2023, Alfaro-Orona was taken into custody by immigration authorities following his arraignment in Leominster District Court for three counts of larceny by check over $1,200.
Alfaro-Orona was convicted for unlawful reentry on two prior occasions in November 2013 and March 2014.
The charge of unlawful reentry of a deported alien provides for a sentence of up to 10 years in prison, three years of supervised release, and a fine of up to $250,000. The defendant will be subject to deportation proceedings upon completion of an imposed sentence. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Todd M. Lyons, Field Office Director, Boston, U.S. Immigration and Customs Enforcement’s Enforcement and Removal Operations made the announcement today. Assistant U.S. Attorney Brian Sullivan of the Major Crimes Unit is prosecuting the case.
Kabbage Inc. Agrees to Resolve Allegations That the Company Defrauded the Paycheck Protection ProgramRead the Press Release
The Justice Department announced today that now-bankrupt financial technology company Kabbage Inc., doing business as KServicing, has agreed to resolve allegations that it violated the False Claims Act (FCA) by knowingly submitting thousands of false claims for loan forgiveness, loan guarantees, and processing fees to the U.S. Small Business Administration (SBA) in connection with its participation in the Paycheck Protection Program (PPP). Kabbage is now winding down its operations as KServicing Wind Down Corp. after filing for Chapter 11 bankruptcy in the District of Delaware in October 2022. As part of the resolution announced today, the United States will receive a general unsecured claim in the bankruptcy proceeding.
Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, to provide federally guaranteed loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The PPP is administered by the SBA. The CARES Act authorized private lenders to approve PPP loans for eligible borrowers who could later seek forgiveness of the loans so long as they used loan funds on employee payroll and other eligible expenses. Among other things, participating PPP lenders were required to confirm borrowers’ average monthly payroll costs by reviewing the payroll documentation submitted with the borrower’s application. Lenders were also required to follow applicable Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements. Any unforgiven or defaulted PPP loans were guaranteed by the SBA so long as the lender adhered to PPP requirements. Lenders who originated PPP loans were paid a fixed fee calculated as a percentage of the loan amount by the SBA.
“The PPP was intended to provide critical assistance to businesses to alleviate the economic challenges imposed by the pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to holding accountable lenders that knowingly contributed to the misuse of such funds by approving PPP loans for ineligible borrowers or otherwise failing to comply with applicable program requirements.”
“When the nation was facing a pandemic-induced crisis, Kabbage received tens of millions of dollars through the PPP to help lend taxpayer funds to businesses in need. Instead of safeguarding those funds, Kabbage doled out inflated and fraudulent loans, in an effort to maximize its profits,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “Then, Kabbage sold its assets and left the remaining company so low on cash that it ultimately went bankrupt, leaving taxpayers to take the loss for Kabbage’s conduct. This office will continue pursuing any company or individual, like Kabbage, that took advantage of the PPP.”
“Lenders who participated in PPP were trusted on their word that they would comply with PPP requirements and do their part in safeguarding taxpayer funds from fraudsters,” said U.S. Attorney Damien M. Diggs for the Eastern District of Texas. “PPP lenders and lender service providers who broke that trust should be held accountable, as they ignored signs of fraud, and chose profit at the expense of taxpayers and struggling small businesses badly hit by the COVID-19 pandemic. This settlement with Kabbage demonstrates our office’s firm commitment to pursuing all parties who played a part in committing PPP fraud.”
“The PPP Program provided those small businesses affected by the COVID-19 pandemic with forgivable loans for eligible payroll and non-payroll costs,” said General Counsel Therese R. Meers of the SBA. “SBA has made it a top priority to pursue participants in the PPP Program who committed fraud or otherwise abused the program.”
“Today we are sending a clear message that compliance with program rules is non-negotiable, especially when supporting the nation’s small businesses during the pandemic,” said Assistant Inspector General for Investigations Shafee Carnegie of the SBA Office of Inspector General. “This settlement highlights our dedication to preserving the integrity of the PPP and holding entities accountable for misusing taxpayer-funded programs. I want to thank the Justice Department and our law enforcement partners for their support and commitment to pursuing justice in this case."
“It is imperative that entities like Kabbage, which cause harm to federal programs for their own profit, face the consequences of their actions,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response and Services Branch. “The FBI and our partners will continue to relentlessly pursue companies that are unwilling to comply with requirements in accordance with the law.”
The resolution announced today addresses two different violations allegedly committed by Kabbage that resulted in the submission and payment of false claims. First, the United States alleged that Kabbage systemically inflated tens of thousands of PPP loans, causing the SBA to guarantee and forgive loans in amounts that exceeded what borrowers were eligible to receive under program rules. As part of the settlement, KServicing Wind Down Corp. admitted and acknowledged that Kabbage: (1) double-counted state and local taxes paid by employees in the calculation of gross wages; (2) failed to exclude annual compensation in excess of $100,000 per employee and (3) improperly calculated payments made by employers for leave and severance. The United States alleged that Kabbage was aware of these errors as early as April 2020, yet Kabbage failed to remedy all incorrect loans that had already been disbursed and continued to approve additional loans with miscalculations.
Second, United States alleged that Kabbage knowingly failed to implement appropriate fraud controls to comply with its PPP and BSA/AML obligations. In particular, the United States alleged that Kabbage removed underwriting steps from its pre-PPP procedures to process a greater number of PPP loan applications and maximize processing fees. The government further alleged that Kabbage knowingly set substandard fraud check thresholds despite knowledge of SBA’s concerns that fraudulent borrowers might seek to benefit from the PPP, relied on automated tools that were inadequate in identifying fraud, devoted insufficient personnel to conduct fraud reviews, discouraged its fraud reviewers from requesting information from borrowers to substantiate their loan requests and submitted to the SBA thousands of PPP loan applications that were fraudulent or highly suspicious for fraud.
As part of the government’s resolution of these claims, the government will receive a total allowed, unsubordinated, general unsecured claim in the bankruptcy proceeding of up to $120 million. The amount the government will recover on this claim will depend on the ultimate amount of assets available to the bankruptcy estate for distribution to unsecured creditors. The resolution also provides for Kabbage Inc. to receive a $12.5 million credit for payments previously returned to the SBA during the department’s investigation of the alleged misconduct.
The claims resolved by the resolution announced today include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act in two actions: one by an accountant who submitted PPP loan applications to Kabbage and other lenders and the other by a former analyst in Kabbage’s collections department. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam cases are captioned U.S. ex rel. Berteletti v. Kabbage, Inc., et al., No. 1:20-cv-12114 (D. Mass.), and U.S. ex rel. Pietschner v. Kabbage, Inc., et al., No. 4:21-cv-110-SDJ (E.D. Tex.).
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across the federal government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.
Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The government’s investigation of Kabbage was a coordinated effort among the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the District of Massachusetts and the U.S. Attorney’s Office for the Eastern District of Texas, with valuable assistance provided by the FBI; Federal Reserve Board, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General and SBA’s Office of General Counsel and Office of the Inspector General. The United States is represented in the bankruptcy proceeding by the Justice Department’s Civil Division, Commercial Litigation Branch, Corporate/ Financial Litigation Section
Fraud Section Trial Attorney Sarah E. Loucks; Assistant U.S. Attorneys Brian M. LaMacchia and Diane Seol for the District of Massachusetts and Assistant U.S. Attorney Betty Young for the Eastern District of Texas handled the matter. Corporate/ Financial Litigation Section Trial Attorneys Alastair Gesmundo, Stanton McManus and Shane Huang represent the United States in the bankruptcy proceeding.
The claims asserted in the settlements are allegations only, and there has been no determination of liability.
DMA Settlement EDTX SettlementKabbage Agrees to Pay up to $120 Million to Resolve Allegations that it Defrauded the Paycheck Protection ProgramRead the Press Release
BOSTON – Bankrupt lender Kabbage, Inc. d/b/a KServicing, has agreed to resolve allegations that it knowingly submitted thousands of false claims for loan forgiveness, loan guarantees, and processing fees to the U.S. Small Business Administration (SBA) as part of the Paycheck Protection Program (PPP), in violation of the False Claims Act (FCA).
Kabbage is now winding down its operations as KServicing Wind Down Corp. after filing for Chapter 11 bankruptcy in the District of Delaware in October 2022. The resolution consists of two separate settlements with KServicing Wind Down Corp., that together provide the United States with an allowed, unsubordinated, general unsecured bankruptcy claim for recovery of up to $120 million. The amount the government will recover on this claim will depend on the ultimate amount of assets available to the bankruptcy estate for distribution to unsecured creditors.
“When the nation was facing a pandemic-induced crisis, Kabbage received tens of millions of dollars through the PPP to help lend taxpayer funds to businesses in need. Instead of safeguarding those funds, Kabbage doled out inflated and fraudulent loans, in an effort to maximize its profits,” said Acting United States Attorney Joshua S. Levy for the District of Massachusetts. “Then, Kabbage sold its assets and left the remaining company so low on cash that it ultimately went bankrupt, leaving taxpayers exposed to the risk of loss caused by Kabbage’s conduct. This office will continue pursuing any company or individual, like Kabbage, that took advantage of the PPP.”
“The PPP was intended to provide critical assistance to businesses to alleviate the economic challenges imposed by the pandemic,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to holding accountable lenders that knowingly contributed to the misuse of such funds by approving PPP loans for ineligible borrowers or otherwise failing to comply with applicable program requirements.”
“Lenders who participated in PPP were trusted on their word that they would comply with PPP requirements and do their part in safeguarding taxpayer funds from fraudsters,” said United States Attorney Damien M. Diggs for the Eastern District of Texas. “PPP lenders who broke that trust should be held accountable, as they ignored signs of fraud, and chose profit at the expense of taxpayers and struggling small businesses badly hit by the COVID-19 pandemic. This settlement with Kabbage demonstrates our office’s firm commitment to pursuing all parties who played a part in committing PPP fraud.”
“The PPP Program provided those small businesses affected by the COVID-19 pandemic with forgivable loans for eligible payroll and non-payroll costs,” said SBA General Counsel Therese R. Meers. “SBA has made it a top priority to pursue participants in the PPP Program who committed fraud or otherwise abused the program.”
“Today we are sending a clear message that compliance with program rules is non-negotiable, especially when supporting the nation’s small businesses during the pandemic,” said SBA OIG’s Assistant Inspector General for Investigations Shafee Carnegie. “This settlement highlights our dedication to preserving the integrity of the Paycheck Protection Program and holding entities accountable for misusing taxpayer-funded programs. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their support and commitment to pursuing justice in this case.”
“Today’s settlement resolves allegations that this financial services company sought to cash in on a public health crisis by inflating the loan applications of small business owners as well as intentionally profiting off of fraudulent loan applications,” said Jodi Cohen, Special Agent in Charge of the FBI Boston Division. “Anyone who tries to defraud the government and taxpayers like this will be held accountable by the FBI and our partners because every dollar diverted for fraudulent reasons is a dollar not available for legitimate applicants in need.”
The first settlement, which provides the United States with a claim for recovery of up to $63.2 million, resolves allegations that Kabbage systemically inflated tens of thousands of PPP loans, causing the SBA to guarantee and forgive loans in amounts that exceeded what borrowers were eligible to receive under program rules. As part of the settlement, KServicing Wind Down Corp. admitted and acknowledged that Kabbage double-counted state and local taxes paid by employees in the calculation of gross wages; failed to exclude annual compensation in excess of $100,000 per employee; and improperly calculated payments made by employers for leave and severance. The United States alleged that Kabbage was aware of its errors as early as April 2020, yet Kabbage failed to remedy all incorrect loans that had already been disbursed and continued to approve additional loans with miscalculations. The resolution also provides for Kabbage to receive a $12.5 million credit for payments it previously returned to the SBA during the Department’s investigation of this alleged misconduct.
The second settlement, which provides the United States with a claim for recovery of up to $56.7 million, resolves allegations that Kabbage knowingly failed to implement appropriate fraud controls to comply with its PPP and BSA/AML obligations. In particular, the United States allege that Kabbage removed underwriting steps from its pre-PPP procedures in order to process a greater number of PPP loan applications and maximize processing fees. The government further alleged that Kabbage knowingly set substandard fraud check thresholds despite knowledge of SBA’s concerns that fraudulent borrowers might seek to benefit from the PPP; relied on automated tools that were inadequate in identifying fraud; devoted insufficient personnel to conduct fraud reviews; discouraged its fraud reviewers from requesting information from borrowers to substantiate their loan requests; and submitted to the SBA thousands of PPP loan applications that were fraudulent or highly suspicious for fraud.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act in two actions, one by an accountant who submitted PPP loan applications to Kabbage and other lenders; and the other by a former legal analyst in Kabbage’s collections department. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam cases are captioned United States ex rel. Berteletti v. Kabbage, Inc., et al., No. 1:20-cv-12114-GAO (D. Mass.) and United States ex rel. Pietschner v. Kabbage, Inc., et al., No. 4:21-cv-110-SDJ (E.D. Tex.).
Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, to provide federally guaranteed loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The SBA administers the PPP. The CARES Act authorized private lenders to approve PPP loans for eligible borrowers who could later seek forgiveness of the loans, so long as they used loan funds on employee payroll and other eligible expenses. Among other things, the Cares Act/SBA required participating PPP lenders to confirm borrowers’ average monthly payroll costs by reviewing the payroll documentation submitted with the borrower’s application. The Cares Act/SBA also required lenders to follow applicable Bank Secrecy Act/Anti-Money Laundering (BSA/AML) requirements. So long as the lender adhered to PPP requirements, the SBA guaranteed any unforgiven or defaulted PPP loans. The SBA paid a fixed fee calculated as a percentage of the loan to lenders who originated PPP loans.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Acting U.S. Attorney Levy; Principal Deputy AAG Boynton; U.S. Attorney Featherston; GC Meers; Assistant IG Carnegie and FBI SAC Cohen made the announcement today. Valuable assistance was provided by the Federal Reserve Board, Office of Inspector General; the Federal Deposit Insurance Corporation, Office of Inspector General; and SBA’s Office of General Counsel and Office of the Inspector General. This matter was handled by Assistant U.S. Attorney Brian M. LaMacchia, Chief of the Affirmative Civil Enforcement Unit and Assistant U.S. Attorney Diane Seol for the U.S. Attorney’s Office for the District of Massachusetts; Fraud Section Trial Attorney Sarah E. Loucks; and Assistant U.S. Attorney Betty Young for the U.S. Attorney’s Office for the Eastern District of Texas. Corporate/ Financial Litigation Section Trial Attorneys Alastair Gesmundo, Stanton McManus and Shane Huang represented the United States in the bankruptcy proceeding.
Boston Man Arrested for Aiming High-Powered Laser Pointer at Coast Guard HelicopterRead the Press Release
BOSTON – A Boston man was arrested today for allegedly aiming a high-powered laser pointer at a Coast Guard helicopter that was attempting to land at Massachusetts General Hospital during a training mission.
Philip Gagnon, 59, was arrested and indicted on one count of aiming a laser pointer at a Coast Guard helicopter. He was released on conditions following an initial appearance in federal court in Boston earlier today.
According to the indictment, on the evening of Sept. 21, 2023, Coast Guard helicopter 6039 was attempting to land at the Massachusetts General Hospital (MGH) as part of a routine training mission with four crew members on board. It is alleged that, as the helicopter descended towards MGH, Gagnon knowingly aimed a high-powered green laser beam at the helicopter from inside his apartment. The laser beam allegedly illuminated the side of the helicopter and shone through the helicopter’s windows. In response, the pilot aborted the MGH landing and flew north for several miles, eventually landing at another Boston area hospital.
The charge of aiming a laser pointer at an aircraft provides for a sentence of up to five years in prison, three years of supervised release and a $250,000 fine. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.
Acting United States Attorney Joshua S. Levy and Steven Firth, Acting Special Agent in Charge of the United States Coast Guard Investigative Service Northeast Field Office made the announcement today. Assistance U.S. Attorney Jason A. Casey of the National Security Unit is prosecuting the case.
The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.