Eastern District of Michigan
Press releases recorded for this federal judicial district.
CWD Holdings to Pay $8 Million to Resolve False Claims Act Allegations Relating to Unpaid Import DutiesRead the Press Release
CWD Holdings LLC has agreed to pay the United States $8 million to resolve allegations that it violated the False Claims Act by knowingly avoiding paying tariffs on certain imported brake parts. The settlement arises out of allegations that CWD falsely claimed that the mounted brake pads it in fact imported, which carried a 2.5% tariff, were unmounted brake pads, which required no tariff. CWD is a Delaware-incorporated company based in California, with additional operating facilities and subsidiaries in California, Kentucky, and Michigan. CWD and its subsidiaries provide aftermarket brake and chassis components for passenger vehicles and trucks.
This settlement resolves allegations that from 2007 to 2017, CWD knowingly imported into the United States mounted brake pad sets subject to a 2.5% tariff under the Harmonized Tariff Schedule and misrepresented the nature of the imported goods to United States Customs and Border Protection (“U.S. Customs”). The allegations claim that CWD falsely represented to U.S. Customs that the mounted disk brake pad sets were unmounted brake pads, requiring the payment of no duty, in order to avoid payment of the 2.5% tariff.
“CWD Holdings avoided millions of dollars in customs duties by misrepresenting the nature of the imported goods to U.S. Customs,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan. “With this lawsuit and the accompanying resolution, CWD Holdings is being held to account for its unlawful evasion of customs duties.”
“U.S. Customs and Border Protection maintains a zero-tolerance policy for trade fraud and other unfair trade practices that undermine the competitiveness of U.S. businesses,” said Director Field Operations Christopher Perry. “We are proud to partner with the U.S. Attorney’s Office to level the playing field for legitimate traders by steadfastly enforcing U.S. trade laws.”
The settlement resolves allegations contained in two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act. Two separate whistleblowers filed the lawsuits: Jeffrey Hawk and Steven Hughes, both former employees of CWD Holdings and/or its subsidiaries. The False Claims Act permits private parties to file suit on behalf of the United States and to share in any recovery. The whistleblowers in this case will receive $1.48 million of the settlement amount.
The matter was handled by Assistant United States Attorneys John Spaccarotella and Caroline Burgunder from the U.S. Attorney’s Office for the Eastern District of Michigan; and Karen Paik and Abraham Meltzer from the U.S. Attorney’s Office for the Central District of California.
The two qui tam cases are docketed as United States ex rel. Jeffrey Hawk v. CWD Holdings, LLC, et al., Case No. 17-12225 (E.D. MI), and United States ex rel. Steven Hughes v. CWD Holdings, LLC, Case No. 19-CV-7089 (C.D. CA). The claims resolved by the settlement are allegations only; there has been no determination of liability.
State Contractor Charged in $2 million Unemployment Fraud SchemeRead the Press Release
A Detroit woman was charged in a criminal complaint for her alleged role in a multi-million dollar unemployment insurance fraud scheme aimed at defrauding the State of Michigan and the U.S. Government of funds earmarked for unemployment assistance during the COVID19 pandemic, announced United States Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General, Special Agent in Charge Douglas J. Zloto, US Secret Service, Richard Sheehan, Acting Postal Inspector in Charge of the Detroit Division, Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation, Special Agent in Charge Sarah Kull, Internal Revenue Service-Criminal Investigation and Jeffrey Frost, Special Fraud Advisor, Michigan Dept. of Labor and Economic Opportunity, Unemployment Insurance Agency.
Charged is Brandi Hawkins, 39.
According to the complaint, Brandi Hawkins was a contract employee for the State of Michigan Unemployment Insurance Agency. Her duties included reviewing, processing and verifying the legitimacy of unemployment insurance claims.
Beginning in April, 2020, it is alleged that Hawkins used her insider access to fraudulently release payment on hundreds of fraudulent claims. Hawkins actions resulted in the fraudulent disbursement of over $2,000,000 of federal and state funds intended for unemployment assistance during the pandemic. Over $200,000 in cash was seized from her residence during a search warrant. Hawkins is alleged to have used proceeds from her crimes to purchase high-end handbags and other luxury goods.
”Brandi Hawkins is charged with exploiting the current pandemic to defraud the State of Michigan and United States for her own personal gain. These are serious allegations, and my office is committed to prosecuting any person who attempts to use the Covid-19 crisis to defraud the people of Michigan,” stated US Attorney Matthew Schneider.
“The U.S. Secret Service is currently focused on criminals attempting to exploit the American people during these unprecedented times of record unemployment due to the pandemic. It is especially egregious when someone in a position of trust, working for an agency created to assist the residents of the State of Michigan, takes advantage of those during their time of need. We will continue to work with our federal and state partners to bring these perpetrators to justice”, said Douglas Zloto, Special Agent in Charge, U.S. Secret Service - Detroit Field Office.
“An important mission of the Office of Inspector General is to investigate allegations of fraud related to unemployment insurance benefit programs. We will continue to work with our law enforcement partners to protect the integrity of unemployment insurance benefit programs,” stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“Brandi Hawkins’ alleged actions are incredibly selfish and without regard for her fellow Michiganders in dire need of financial assistance,” said Sarah Kull, IRS Criminal Investigation Special Agent in Charge, Detroit Field Office. “IRS-CI will not hesitate to thoroughly investigate any COVID19 related fraud and bring those offenders to justice.”
Richard Sheehan, Acting Postal Inspector in Charge of the Detroit Division said, “This investigation was an excellent example of a partnership between federal law enforcement agencies, working together to bring down this fraud conspiracy. I fully commend the hard work and countless hours put forth by all of the agencies involved, which resulted in bringing Brandi Hawkins to justice.”
“We appreciate U.S. Attorney Schneider‘s quick action to bring this case to justice. The Unemployment Insurance Agency will continue to work closely with state and federal partners to identify unemployment fraud that can be quickly turned over to law enforcement for prosecution,” stated Jeffrey Frost, Special Fraud Advisor, Michigan Dept. of Labor and Economic Opportunity, Unemployment Insurance Agency.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
The case is being prosecuted by Assistant United States Attorney Timothy Wyse. The investigation is being conducted jointly by the Department of Labor, Office of Inspector General, United States Secret Service, Internal Revenue Service - Criminal Investigation, Federal Bureau of Investigation, the U.S. Postal Inspection Service and the Unemployment Insurance Agency, Michigan Department of Labor and Economic Opportunity
U.S. Attorney Matthew Schneider and UAW President Rory Gamble Meet to Discuss Reform of the UAWRead the Press Release
U.S. Attorney Matthew Schneider and UAW President Rory Gamble jointly announce that they had a productive and helpful first meeting to begin negotiations to further the cause of reform in the United Auto Workers union. U.S. Attorney Schneider welcomed the opportunity to sit down with the UAW’s President in order to work together toward improving the union for all its members. President Gamble appreciated the chance to meet with the Department of Justice so as to further his efforts at reforming the organization and to ensure integrity in the union’s leadership.
During the meeting, President Gamble and representatives of the UAW set forth in detail the reform measures that President Gamble and the International Executive Board have put in place for the union. President Gamble and U.S. Attorney Schneider also discussed the importance of democracy for the selection of the UAW’s leadership. The parties addressed the concept of an independent monitor who could provide further assurance to the membership of concrete changes to the union so as to reduce the possibility of a reoccurrence of corruption. In addition, they are considering whether third party oversight on any future agreement would be helpful. The parties agreed that there are a number of reform options that are on the table and that will be the subject of further negotiations when the parties meet again to consider them in further detail within the coming weeks.
“The Justice Department seeks genuine and sincere reform of the UAW so as to provide the best possible representation for its members,” said United States Attorney Matthew Schneider. “I look forward to working toward a mutually agreeable resolution that will protect the interests of the UAW’s members and their families.”
“Today’s discussion was productive and both the U.S. Attorney and I have the same goal for the UAW International Union. As we turn the page to a stronger, better and cleaner union, we continue to make critical decisions that will protect the sacred dues money of our members. I look forward to continued discussions in the near future that advance toward closing one dark chapter and opening new brighter chapters for members of the UAW,” stated President Rory Gamble.
Statement from Assistant Attorney General Eric Dreiband and U.S. Attorney Matthew Schneider on New York City’s Reopening PlansRead the Press Release
Assistant Attorney General for Civil Rights Eric Dreiband and U.S. Attorney Matthew Schneider for the Eastern District of Michigan, who are overseeing the Justice Department’s effort to monitor state and local policies relating to the COVID-19 pandemic, issued the following statement:
“Following action by the Department of Justice Civil Rights Division, Mayor de Blasio provided much‑needed relief for New Yorkers by moving New York City to Phase 2 of its reopening plan. Under Phase 2, in addition to the opening of various secular establishments, including outdoor dining and in‑store retail, houses of worship can reopen to 25% of their indoor capacity.
Mayor de Blasio’s recent public statements and enforcement of COVID-19 Orders have demonstrated a troubling preference for certain First Amendment rights over others. The Justice Department is glad Mayor de Blasio will now permit greater religious exercise and will continue to monitor New York City’s reopening to ensure that New York City extends the same respect to the freedom of religion, both in terms of indoor and outdoor gatherings, as it does to the freedoms of speech and assembly.”
Background
Last week, the Justice Department wrote Mayor de Blasio to express the concern that New York City was permitting large gatherings for political protest while not permitting in-person religious gatherings when the Constitution’s First Amendment protects both free speech rights and religious exercise.
New York City had vigorously enforced restrictions on religious gatherings, including by sending police officers to disperse numerous gatherings of the Jewish community, including outdoor funerals. At the same time, Mayor de Blasio marched in large in-person political gatherings concerning the recent tragic death of George Floyd and made statements suggesting — in a manner forbidden by the First Amendment — that religious exercise was less valued and protected by New York City than political exercise.
Nine Pharmacists Charged for Role in $12.1 Million Health Care Fraud SchemeRead the Press Release
Nine pharmacists were charged in three separate indictments unsealed last week for their alleged participation in a $12.1 million health care fraud scheme executed in Detroit and southern Ohio.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) Chicago Region and Special Agent in Charge Steven M. D’Antuono of the FBI’s Detroit Field Office made the announcement.
Auday Maki, 66, of Northville, Michigan, was charged with three counts of health care fraud. Hassan Abdallah, 49, of Sterling Heights, Michigan; Raef Hamaed, 50, of Scottsdale, Arizona; Tarek Fakhuri, 47, of Windsor, Canada; Kindy Ghussin, 45, of Greene County, Ohio; Balhar Singh, 57, of Butler County, Ohio; and Ali Abdelrazzaq, 44, of Sterling Heights, Michigan were each charged with one count of conspiracy to commit health care fraud and wire fraud. In addition, Abdallah and Abdelrazzaq were each charged with three counts of health care fraud and Fakhuri with two counts of health care fraud. Finally, Hassan Khreizat, 40, of Dearborn Heights, Michigan; and Nofal Cholag, 41, of Macomb, Michigan were each charged with one count of conspiracy to commit health care fraud and wire fraud and four counts of health care fraud.
The three indictments were filed in the Eastern District of Michigan. Maki, Hamaed, Ghussin, Singh, Abdelrazzaq, Cholag, and Khreizat appeared Tuesday before U.S. Magistrate Judge Anthony P. Patti in the Eastern District of Michigan. Abdallah appeared today in the Eastern District of Michigan before Judge Patti.
The nine defendants are licensed pharmacists and/or owners of pharmacies in Michigan and Ohio: Eastside Pharmacy Inc. (Eastside), Harper Drugs Inc. (Harper Drugs), Wayne Campus Pharmacy LLC (Wayne Campus), Universal Pharmacy LLC (Universal) and City Drugs Pharmacy Inc. (City Drugs), each located in the Detroit metro area, and Heartland Pharmacy LLC (Heartland) and Heartland Pharmacy 2 LLC (Heartland 2), which are located in Ohio.
The indictments allege that, using the pharmacies, the defendants billed Medicare, Medicaid, and Blue Cross Blue Shield (BCBS) for prescription medications that were neither purchased nor dispensed. The indictments further allege that the defendants billed Medicare and Medicaid for medications that were often medically unnecessary and for some medications that were purportedly dispensed to deceased beneficiaries after their dates of death.
The indictments allege that the defendants received over $12.1 million due to fraudulent claims they submitted to Medicare, Medicaid, and BCBS. In particular, the indictments allege that, from 2010 to 2019, Medicare and Medicaid paid Abdallah, Hamaed, Fakhuri, Ghussin, Singh, and Abdelrazzaq, through Eastside, Harper Drugs, Heartland, Heartland 2, and Wayne Campus, approximately $6.9 million for drugs that the pharmacies did not have sufficient inventory to dispense.
From January 2013 to January 2016, Medicare, Medicaid, and BCBS allegedly paid Cholag and Khreizat, through Universal, approximately $1.5 million for drugs that the pharmacy did not have sufficient inventory to dispense. From January 2011 to February 2018, Medicare and Medicaid allegedly paid Maki, through City Drugs, approximately $3.7 million for drugs that the pharmacy did not have sufficient inventory to dispense. The indictments further allege that the defendants received significant funds from their participation in these schemes.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI and HHS-OIG investigated this case with assistance from the Michigan HHS-OIG. Trial Attorney Howard Locker of the Criminal Division’s Fraud Section investigated the case, and Trial Attorney Claire Sobczak is prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Department of Justice Announces Launch of Civil Rights Reporting PortalRead the Press Release
The Department of Justice announced the launch of the Civil Rights Reporting Portal. This new online tool will make it easier for the public to report a civil rights violation.
“The department is committed to upholding the civil and constitutional rights of all people in the United States,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Civil Rights Reporting Portal will make it easier for the public to connect with us, which in turn makes us more effective at upholding these important rights. I encourage the public to use this portal to report civil rights violations.”
“The need to accurately and completely report civil rights violations is at the front of our duties as citizens of Michigan,” stated United States Attorney Matthew Schneider. “The events of recent weeks show that Michiganders are standing up to be heard, and this new online reporting tool will help people speak out against civil rights violations at any time, day or night.”
The new Civil Rights Reporting Portal – located at civilrights.justice.gov – will consolidate over 30 unique reporting pathways. The portal will dramatically ease the burden on victims of civil rights violations to identify the proper reporting channel. The form is fully accessible to people with disabilities. It is also available in both English and Spanish, with more languages to be added over the next year.
Individuals who believe they may have been a victim of a civil rights violation can learn how to report violations to the Department by visiting civilrights.justice.gov. When appropriate, the Civil Rights Division staff will refer complainants to other agencies that are responsible for handling specific types of complaints.
Individuals can also still report civil rights violations locally to the U.S. Attorney’s Office. In the Eastern District of Michigan, complaints can be submitted via email at [email protected] or by telephone at (313) 226-9151.
Individuals who believe they are a victim of criminal violation of their civil rights, such as misconduct by law enforcement officers, a hate crime, or human trafficking, should contact their local FBI office.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
U.S. Attorney Matthew Schneider and UAW President Rory Gamble Set Meeting for Negotiations over Reform of the UAWRead the Press Release
U.S. Attorney Matthew Schneider and UAW President Rory Gamble jointly announce that they will be meeting on June 30, 2020 in Detroit in order to begin negotiations to further the cause of reform in the United Auto Workers union. Both men seek to work together to restore the trust and confidence of the UAW’s membership in the union’s ability to represent them and their interests. This meeting is the first step in a joint effort by U.S. Attorney Schneider and President Gamble to put into place mechanisms and protections to eliminate corruption and to ensure that it does not return.
U.S. Attorney Schneider commended President Gamble’s efforts towards reform and his willingness to take further efforts to combat corruption.
“I look forward to working with President Gamble to achieve what I hope will be a joint effort to resolve some of the serious issues that the UAW has faced over the past several years,” said United States Attorney Matthew Schneider. “The UAW’s membership deserves our concerted push to bring about significant and important reforms.”
“Today’s joint announcement of our upcoming meeting is another step toward building on the many reforms we have already enacted. I look forward to discussing with U.S. Attorney Schneider the many reforms we have already put in place and furthering our efforts on other ongoing reforms for the UAW and our members. I firmly believe we both have the same goal. As I have said from day one as President, my intent is to hand over to my successor a stronger, more effective and cleaner Union that UAW members will be proud of for generations to come, and I very much look forward to meeting with Mr. Schneider,” stated UAW President Rory Gamble.
Statement of U.S. Attorney Matthew Schneider Regarding Recent Calls to “Defund the Police”Read the Press Release
“All across America, people have rightfully expressed outrage over the senseless murder of George Floyd by marching in protests and demanding change. Some are calling for defunding our police departments. Change is needed, but completely dismantling our law enforcement and criminal justice system will not solve the problems we face, and slashing Michigan law enforcement funds would only harm our communities.
Our problems will only be solved through a spirit of cooperation. Project Ceasefire, for example, is a great illustration of how our community and law enforcement work together to make our streets safer. We need to continue on that track. If Michiganders — especially young people — want to make effective change in police practices, they should strongly consider a career in law enforcement or public service. We want to work alongside you towards a solution.”
Nineteen Individuals Indicted in $41 Million Illegal Opioid Distribution ConspiracyRead the Press Release
An indictment was unsealed today charging nineteen individuals with conspiracy to illegally distribute prescription drugs, U.S. Attorney Matthew Schneider announced today.
U.S. Attorney Schneider was joined in the announcement by Special Agent in Charge Keith Martin, U.S. Drug Enforcement Administration, Detroit Field Division; Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation and Special Agent in Charge Lamont Pugh, the Department of Health and Human Services, Office of Inspector General (HHS-OIG).
The 44-count indictment charges defendants with an alleged drug conspiracy involving prescription drug controlled substances including Oxycodone, Oxymorphone, Oxycodone-Acetaminophen (Percocet), Hydrocodone, Hydrocodone-Acetaminophen, promethazine with codeine cough syrup, and other drugs.
Charged in the indictment are:
John Henry Rankin, III, 46, Detroit,
Dr. Beth Carter, 56, Southfield,
Dr. Robert Kenewell, 52, Auburn Hills,
Dr. Jason Brunt, 50, Clawson,
Dr. John Swan, 30, St. Clair Shores,
Nurse Practitioner, Jean Pinkard, 63, Farmington Hills
Nurse Practitioner Toni Green, 58, St. Clair Shores,
Fitzgerald Hudson, 60, Southfield,
Virendra Gaidhane, 49, Troy
Pharmacist, Maksudali Saiyad, 65, Troy
Pharmacist Adeniyi Adepoju, 61, Warren,
Pharmacist Ali Sabbagh, 36, Dearborn Heights
Robert King, 38, Taylor,
Jermaine Hamblin, 36, Roseville,
Sonya Mitchell, 50, Southfield,
Lavar Carter, 56, Southfield,
Robert Lee Dower, Jr., 49, Eastpointe
Denise Sailes, 51, Detroit, and
Dewayne Bason, 28, Detroit
The indictment alleges that from September 2017 through June 2020, John Henry Rankin, III, owner of New Vision Rehab and Preferred Rehab clinics would provide monetary remuneration and other illegal benefits to Dr. Beth Carter, Dr. Robert Kenewell, Dr. Jason Brunt, Dr. John Swan, Nurse Practitioner Jean Pinkard and Nurse Practitioner Toni Green to induce them to write prescriptions for “fake” patients, who did not have a legitimate medical need for the drugs. Rankin also allegedly provided monetary remuneration to an unlicensed medical professional, who was not legally authorized to prescribe controlled substances or practice as doctor, who would pose as a doctor and issue pre-signed controlled substance prescriptions in the names of other providers.
It is alleged that the medical professionals named in the indictment prescribed more than 1,951,148 dosage units of Schedule II controlled substances. The prescribed Oxycodone and Oxymorphone, alone, carried a conservative street value of more than $41 million. Oxycodone and Oxymorphone are two of the most addictive opioids and they have high street value. Patients were recruited into the conspiracy by patient recruiters or “marketers,” to include Robert King and Jermaine Hamblin.
The indictment further alleges that during this conspiracy, prescriptions were presented to Detroit New Hope Pharmacy (owner Virendra Gaidhane, pharmacist Maksudali Saiyad, pharmacy tech Dewayne Bason), Synergy Pharmacy (pharmacy technician Dewayne Bason), Nottingham Pharmacy (owner Virendra Gaidhane), Crownz Medical Pharmacy (pharmacist Adeniyi Adepoju), Franklin Healthmart (pharmacist Ali Sabbagh). Some of the pharmacists would bill insurers, including Medicare, Medicaid, and private insurers, for dispensing the medications, despite the fact that the medications were medically unnecessary. Other times, the pharmacists accepted cash from the recruiters for filling and dispensing medications.
According to the indictment, the pharmacies dispensed more than 58,725 dosage units of Schedule II controlled substances prescribed by the medical professionals listed in the indictment.
“Prescription drugs are supposed to go to people who truly need them, not to fake patients or people selling drugs on the streets,” United States Attorney Matthew Schneider said. “We are focusing on charging doctors, pharmacists, and the networks that add to the opioid crisis, and this case is unfortunately yet another example of the serious problem facing Michigan.”
Special Agent in Charge Keith Martin, U.S. Drug Enforcement Administration, Detroit Field Division, stated, “These enforcement actions and others like them around the country, demonstrate our commitment to prosecuting licensed professionals who flood communities with addictive legal drugs for their own personal benefit”
“Today’s indictments are the result of healthcare professionals allegedly contributing to the devastating opioid crisis instead of working toward its solution. The public expects and deserves more from them,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Michigan.
“The opioid epidemic continues to have a harmful impact on many people across this country”, said Lamont Pugh III, Special Agent in Charge, U.S. Department of Health & Human Services, Office of Inspector General – Chicago Region. “Medical professionals who choose to participate in schemes as alleged in this indictment only exacerbate the problem. The OIG will continue to dedicate and prioritize resources to the investigation of allegations of this nature in an effort to ensure the health and safety of patients and taxpayer dollars.”
This case is being prosecuted by Assistant United States Attorneys Brandy R. McMillion and Mitra Jafary-Hariri. The Eastern District of Michigan is one of the twelve districts included in the Opioid Fraud Abuse and Detection Unit, a Department of Justice initiative created by Attorney General Sessions, that uses data to target and prosecute individuals that are contributing to the nation’s opioid crisis.
The case was investigated by special agents and task force officers of the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Department of Health and Human Services, Office of Inspector General.
An indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
West Bloomfield Doctor Charged with Illegal Distribution of Prescription Drugs Resulting in Death of PatientRead the Press Release
An indictment was returned today charging a doctor with illegally prescribing controlled substances, resulting in the death of a patient. The doctor was also charged in twenty-two separate counts of illegally prescribing prescription drug controlled substances to several different patients, U.S. Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Special Agent in Charge Keith Martin, U.S. Drug Enforcement Administration (DEA).
Charged in the indictment is Dr. Scott Henry Cooper, 58, of West Bloomfield, Michigan.
The indictment alleges that from March 31, 2014 to December 31, 2018, Dr. Scott Cooper wrote more than 20,000 prescriptions for controlled substances, totaling over 800,000 dosage units. The street value of the pills prescribed by the defendant was in excess of $5.5 million. The defendant is alleged to have knowingly prescribed prescription drug controlled substances outside the course of legitimate medical practice and for no legitimate medical purpose, in furtherance of the scheme, and in combinations that were known to be dangerous and medically unnecessary.
The indictment further alleges that Dr. Cooper often prescribed with cursory examinations, or without bothering to examine the patient at all. As a result of this practice, he allegedly authorized monthly controlled substance prescriptions for one patient while that patient was incarcerated for almost two years. It is not known who actually received and filled that patient’s prescriptions while he was in custody.
The indictment alleges that Dr. Cooper prescribed dangerous combinations of controlled drugs, including multiple central nervous system (CNS) depressants such as oxycodone, Xanax and Soma. This sought-after combination is referred to on the street as the “trinity.” The defendant is alleged to have ignored warning signs that his patients were addicted or selling the drugs, and frequently failed to take commonly accepted steps such as requiring drug screens or checking MAPS before prescribing.
One of Dr. Cooper’s patients did not survive. Dr. Cooper is charged with prescribing this patient a prescription for 478 methadone 10 mg pills on June 17, 2015. The patient died of a methadone overdose in the early morning hours of June 18, 2015.
“Doctors who provide prescription drugs to people for no legitimate medical reason are fueling the opioid epidemic in Michigan,” stated United States Attorney Matthew Schneider. “This case should serve as a message to doctors who choose profit over their pledge to do no harm – we are focusing our law enforcement attention on you and we will do everything we can to bring you to justice.”
“Prescription drug misuse and abuse leads to addiction, suffering, and in too many unfortunate occasions death,” said DEA Special Agent in Charge Keith Martin. “While the vast majority of doctors provide legitimate health care, some choose to violate their oath and the law. DEA and our law enforcement partners will continue to identify and investigate medical professionals who engage in the criminal distribution of prescription drugs.”
An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.
Hearing Aid Salesmen Convicted of Committing Health Care FraudRead the Press Release
A Macomb County hearing aid dealer pleaded guilty yesterday in federal court in Detroit on charges of Conspiracy to Commit Health Care Fraud, United States Attorney Matthew Schneider announced today. This follows the conviction on the same charge on March 18, 2020, of a hearing aid salesman who worked for the dealer.
Schneider was joined in the announcement by Special Agent in Charge Steven M. D’Antuono of the FBI’s Detroit Field Office, Special Agent in Charge Irene Lindlow of the U.S. Department of Labor Office of Inspector General, Chicago Region (DOL-OIG), and Regional Director L. Joe Rivers, U.S. Department of Labor Employee Benefits Security Administration, Cincinnati Regional Office (DOL-EBSA).
Rasko “Ron” Djordjevic, 44, and Milija “Mike” Perkovic, 28, each pleaded guilty to one count charged in an Indictment, involving a conspiracy to commit health care fraud. The evidence revealed that from February 2015 to April 2017, Djordjevic owned and operated Sterling Hearing Care, Inc., which was marketed as a hearing aid business with multiple locations in Southeast Michigan. Perkovic, who is Djordjevic’s brother in law, worked as a salesman conducting hearing evaluations and selling hearing aids under Djordjevic’s direction.
During that time, Djordjevic and Perkovic executed a scheme to defraud Blue Cross Blue Shield into paying fraudulent claims of more than $600,000 for hearing aid products and services.
Blue Cross had certain requirements before it would pay a claim for a hearing aid device. At times, Djordjevic and Perkovic caused Blue Cross to be billed for hearing aids and services that were not provided or were unauthorized, including billing Blue Cross for two hearing aids when only one was provided, or billing Blue Cross for hearing aids that were not ordered or provided to customers who had come in for a “free” hearing test.
At times, Djordjevic and Perkovic sold hearing aids and services to customers that were not medically necessary, including customers who had no or only slight hearing loss.
Also, Djordjevic and Perkovic provided hearing aids and services that were based on fraudulent practices. For example, they: submitted claims to Blue Cross under a spouse’s insurance policy for products not provided to that spouse and used altered medical clearances from former customers to make it look like the new customer had a medical clearance. Perkovic falsely claimed, with Djordjevic’s knowledge, that he was a doctor or audiologist and used fake x-ray photographs from the internet to show customers that they had ear damage.
Moreover, Djordjevic defrauded another health insurance company, American Hearing Benefits, out of more than $132,000. AHB contracts with companies, including AudioNet, which covers active and retired UAW members, to provide discounted hearing aid products and services. AHB required hearing aid dealers such as Sterling Hearing Care to have an AHB-credentialed audiologist on staff, who would certify the customer’s need, to bill for products and services. Djordjevic did not comply with AHB’s requirement, and instead fabricated documents that he submitted for reimbursement, including certifying that a particular audiologist had examined a customer when in fact that audiologist had not done so.
“Our office has no tolerance for health care providers that deliberately mislead customers in order to sell a medical product or service and then bill insurance companies for services and products not delivered,” stated United States Attorney Schneider. “It is especially troublesome when a provider deals with elderly customers that may be particularly vulnerable to scams. Trust your instincts and never be afraid to seek a second opinion.”
“These defendants took advantage of the trust patients have in their health care providers to provide medically unnecessary services and to increase their profits,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Michigan. “That the patients were largely elderly makes the betrayal even greater. The FBI and our partners will vigorously investigate anyone who seeks to take advantage of our elderly population through health care fraud or any other means.”
“Djordjevic and Perkovic defrauded health benefit programs, including union plans, by falsely billing for hearing devices and services that were not provided, unnecessary, or based on fraudulent marketing practices. By defrauding the health plans, Djordjevic and Perkovic put illegal profits above the best interest of patients. We will continue to work with our law enforcement partners to protect the integrity of labor unions and their benefit plans,” said Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“Criminal acts like these directly impact participants in health benefit plans by compromising their benefit coverage and eroding funds needed to pay for necessary medical treatment. The U.S. Department of Labor’s Employee Benefits Security Administration is committed to ensuring the integrity of employee benefit programs and stopping fraud against employee sponsored health benefit programs;” said Employee Benefits Security Administration Regional Director L. Joe Rivers, of the Cincinnati Regional Office.
This case was prosecuted by Assistant United States Attorneys John Engstrom and Andrew Lievense. The case was investigated by special agents of the Federal Bureau of Investigation and the U.S. Department of Labor Office of Inspector General.
Former UAW President Gary Jones Pleads Guilty to Embezzlement, Racketeering, and Tax EvasionRead the Press Release
Gary Jones, the former President of the international United Auto Workers union, pleaded guilty today to conspiring with other high-level UAW officials to embezzle over $1 million of UAW dues money, to further racketeering activity, and to evade taxes announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Steven M. D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
Gary Jones, 63, of Texas, pled guilty to one count of conspiring to embezzle UAW dues money and conspiring to use a facility of interstate commerce to aid racketeering crimes between 2010 and September 2019. He also pled guilty to a separate count of conspiring to defraud the United States by evading the payment of taxes on embezzled funds and causing the UAW to file false tax returns during the same period of time.
Between June 2018 and November 2019, Jones served as the President of the International Union, United Automobile, Aerospace, and Agricultural Workers of America (“UAW”). The UAW represents over 400,000 active members and over 580,000 retired members in more than 600 local unions across the United States. Prior to serving as UAW President, Jones was the Director of UAW Region 5 and a member of the UAW’s International Executive Board from October 2012 through June 2018. The UAW’s Region 5 is headquartered in Hazelwood, Missouri, and covers the tens of thousands of UAW members in Missouri and the sixteen states to the southwest, including California and Texas. Jones was the UAW President during the forty-day strike against the General Motors Company that took place in the fall of 2019.
During the guilty plea hearing, Jones admitted to conspiring with at least six other high-level UAW officials in a multi-year conspiracy to embezzle money from the UAW for the personal benefit of Jones and other senior UAW officials. Jones and other UAW officials concealed personal expenditures in the cost of UAW Region 5 conferences held in Palm Springs, California, Coronado, California, and Lake of the Ozarks, Missouri. Between 2010 and 2018, Jones and other UAW officials submitted fraudulent expense forms seeking reimbursement from the UAW’s Detroit headquarters for expenditures supposedly incurred in connection with Region 5 leadership and training conferences. In truth, however, Jones and his co-conspirators used the conferences to conceal the hundreds of thousands of dollars in UAW funds spent on lavish entertainment and personal spending for the conspirators.
Jones admitted that he and other senior UAW officials used the UAW money to pay for personal expenses, including golf clubs, private villas, cigars, golfing apparel, green fees at golf courses, and high-end liquor and meals costing over $750,000 in UAW funds. For example, in just one of the years of the conspiracy, Jones used UAW money to purchase over $13,000 in cigars for the use of high-level UAW officials.
Besides admitting to using the UAW conferences to conceal the fraudulent use of UAW money for personal expenses, Jones also pled guilty to assisting in a conspiracy to embezzle UAW funds from the UAW’s Midwest CAP. The UAW Midwest CAP is one of the UAW’s many Community Action Programs. Jones admitted to accepting over $60,000 in cash from co-conspirator Edward Robinson who cashed over $500,000 in fraudulent UAW Midwest CAP checks and embezzled money from the UAW Labor Employment Training Corporation.
Besides conspiring with other UAW officials to embezzle UAW funds, Jones pled guilty to conspiring with UAW officials to defraud the United States by impeding the Internal Revenue Service in the collection of taxes from Jones and other UAW officials. The conspirators also caused the UAW to file false tax returns with the IRS.
Based on each of the two counts of conspiracy, Jones faces a maximum of ten years in prison and a fine of up to $250,000.
As part of his guilty plea, Jones has agreed to forfeit his interest in $81,000 in a UAW Region 5 “flower fund,” as well as $38,000 from Jones’ Members in Solidarity account. Ostensibly, the Members in Solidarity account was intended for use in internal UAW political campaigns. Jones also agreed to forfeit a set of Titleist golf clubs seized when federal agents executed a search warrant at Jones’ home in August 2019. Finally, Jones has agreed to pay over to the government the $32,377 in cash that was also seized from his residence in August 2019.
Under the terms of the plea agreement between Jones and the government, Jones is facing an advisory sentencing guideline range of 46 to 57 months in prison.
Jones is the fourteenth defendant to be convicted in connection with the ongoing criminal investigation into corruption within the UAW or relating to illegal payoffs to UAW officials by FCA executives. The following individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison), former UAW Vice President Norwood Jewell (15 months in prison), and former senior UAW official Michael Grimes (28 moths). In addition, the following UAW officials have pleaded guilty and are awaiting sentencing: former UAW Vice President Joseph Ashton, former senior UAW official Jeffrey “Paycheck” Pietrzyk, former UAW Region 5 Director UAW Board member Vance Pearson, and former UAW Midwest CAP President Edward “Nick” Robinson.
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“With UAW President Gary Jones’ guilty plea today, we move into a new phase of the Justice Department’s investigation of the UAW. While our criminal cases and the investigation of criminal conduct by individuals and entities continue, we will shift our focus to reforming the UAW so it serves the working men and women of the union first and foremost. I look forward to meeting with UAW President Rory Gamble as soon as possible to have these important discussions.”
“Jones conspired with senior UAW officials to embezzle more than $1 million in order to personally enrich himself at the expense of the hard-working UAW members. We will continue to work with our law enforcement partners to protect the financial integrity of labor organizations," stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“Today is a public confirmation of what many have long suspected - the UAW’s leadership, at the highest level, has engaged in a pattern of corruption and illegal activity. Mr. Jones’ actions were a betrayal of each hard-working UAW member he was elected to represent,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Michigan. “While this guilty plea is a welcome development, it does not represent the end of this investigation. As I said before, the FBI will continue to work on this case until we are satisfied that everyone who should answer for these crimes is brought to justice.”
“Not only did Gary Jones embezzle funds from the hard working members of the UAW and cause a false tax return to be filed on behalf of the UAW, he also attempted to evade his own tax liability. IRS-Criminal Investigation is dedicated to protecting the integrity of the tax system by ensuring everyone pays the accurate amount of tax," said Sarah Kull, Special Agent in Charge, IRS Criminal Investigation.
“Gary Jones’ guilty plea today shows that the corruption within the UAW International Union extended all the way to the top office. Instead of fulfilling his sacred fiduciary duty to his fellow union members, Jones chose to betray their trust and embezzle over a million dollars from the UAW for himself and other high-ranking UAW officers,” said Thomas Murray, District Director, U.S. Department of Labor, Office of Labor-Management Standards. “OLMS will continue to work with its fellow law enforcement partners and the U.S. Attorney’s Office to remove corrupt union officers and other officials within the UAW International Union.”
The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, Steven Cares, and Adriana Dydell.
Detroit Resident Charged in COVID-19 Wire Fraud SchemeRead the Press Release
A Detroit resident was charged in a criminal complaint for his alleged role in a scheme to obtain $590,900 from the Payroll Protection Program for a non-functioning business, announced United States Attorney Matthew Schneider.
Joining in the announcement was Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation.
Charged is Darrell Baker, 51, of Detroit, Michigan.
As alleged in the complaint, Baker applied for and obtained a $590,000 Payroll Protection Program Loan on behalf of a purported business that he owns, called “Motorcity Solar Energy, Inc.” The Paycheck Protection Program is a program managed by the Small Business Administration (SBA) that provides loans to help businesses keep their workforces employed during the Covid-19 crisis. The SBA will forgive the loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Payroll Protection Act loans are funded from participating banks, in this case Customers Bank in Pennsylvania.
The complaint further alleges that Baker submitted paperwork with his loan application representing that Motorcity Solar Energy Inc. had 68 employees and, in 2019 paid wages, tips, and other compensation totaling $2.8 million. In fact, the state of Michigan had dissolved Motorcity Solar Energy Inc.’s status as a corporation in July 2019. All of Motorcity’s purported business locations were either empty suites or single-family residences, with no evidence of business activity. And Motorcity never established any account with the State of Michigan’s unemployment insurance program, which is a prerequisite for any valid employer in the state.
The complaint further alleges that, in the two days after the loan was funded, Baker purchased four cashiers checks and withdraw an additional $60,000 in cash. None of these cashier’s checks went to payroll or other business expenses. Indeed, Baker used the four cashiers checks to purchase two Cadillac Escalades, a Dodge Charger, and a Hummer. According to the complaint, Baker purchased one of vehicles for his brother-in-law and one for his sister; the remaining two vehicles Baker kept for his own use and enjoyment.
United States Attorney Schneider stated “Defendant Baker is charged with lying to obtain money that was supposed to help small businesses struggling with their payroll and expenses due to the COVID-19 pandemic. Defrauding banks to obtain loans is never acceptable, and doing so during our current national emergency is unconscionable. This prosecution is yet another example of our office’s commitment to holding accountable anyone who would exploit the COVID-19 crisis for their own greedy desires.”
“The Paycheck Protection Program is designed as a lifeline to businesses struggling to survive this current crisis. Instead of using these loans to salvage a legitimate business, the defendant allegedly bought expensive personal items for himself and his family,” said SAC D’Antuono. “These actions harmed hard-working Americans and deserving small businesses. The FBI is committed to investigating anyone who seeks to take advantage of a global pandemic to line their own pockets at the expense of American taxpayers.”
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
The case is being prosecuted by Assistant United States Attorney John K. Neal. The investigation is being conducted by the FBI.
Statement from Assistant Attorney General Eric Dreiband and Michigan U.S. Attorneys on Michigan Governor's Decision to Adjust Reopening PlansRead the Press Release
Assistant Attorney General for Civil Rights Eric Dreiband, U.S. Attorney Matthew Schneider for the Eastern District of Michigan, and U.S. Attorney Andrew Birge for the Western District of Michigan issued the following statement:
“Following action by the Department of Justice Civil Rights Division, Governor Whitmer provided much-needed relief for Michiganders by rescinding her executive orders which had required certain retail business to operate ‘by appointment only,’ prohibited other businesses that sued the governor from having the face-to-face meetings necessary to operate, even while practicing social distancing, and had required Michiganders to stay home.”
“We thank the governor for moving to Stage 4 of the Michigan Safe Start Plan, which better respects the constitutional liberties of Michiganders, especially when it comes to their ability to maintain their economic livelihood. Some Michigan businesses, such as indoor gyms, hair salons, barbershops, indoor theaters and some similar venues remain closed. Additionally, there is ongoing litigation challenging whether state law authorizes the governor’s COVID-19 orders. The Department of Justice will continue to prioritize Attorney General Barr’s Memorandum regarding Balancing Public Safety with the Preservation of Civil Rights and to monitor the legality of the process of reopening in Michigan."
Background
On Friday, May 29, 2020, the Department of Justice filed a statement of interest in a Michigan federal court in support of a lawsuit filed by seven businesses challenging the restrictions imposed by Governor Gretchen Whitmer in response to the COVID-19 pandemic. That statement of interest explained that the governor’s COVID-19 orders, however well-intentioned, raised constitutional concerns by imposing what appeared to be arbitrary and unreasonable limits on how and ultimately whether certain businesses could operate in Michigan relative to other similarly situated businesses. The statement of interest also explained that the federal Constitution provides for a cohesive national economy for all 50 states and all Americans and that the governor’s COVID-19 orders may be unduly interfering with interstate commerce.
Matthew Schneider, U.S. Attorney for the Eastern District of Michigan, and Assistant Attorney General Dreiband, are overseeing the Justice Department’s effort to monitor state and local policies relating to the COVID-19 pandemic.
The federal case is Signature Sotheby’s International Realty, Inc., et al. v. Whitmer, No. 1:20-00360 and additional information about the department’s May 29 statement of interest can be found here: https://www.justice.gov/opa/pr/department-justice-files-statement-interest-support-businesses-suffering-arbitrary-and
Statement from Assistant Attorney General Eric Dreiband and Michigan U.S. Attorneys on Michigan Governor's Decision to Adjust Reopening PlansRead the Press Release
WASHINGTON - Assistant Attorney General for Civil Rights Eric Dreiband, U.S. Attorney Matthew Schneider for the Eastern District of Michigan, and U.S. Attorney Andrew Birge for the Western District of Michigan issued the following statement:
“Following action by the Department of Justice Civil Rights Division, Governor Whitmer provided much-needed relief for Michiganders by rescinding her executive orders which had required certain retail business to operate ‘by appointment only,’ prohibited other businesses that sued the governor from having the face-to-face meetings necessary to operate, even while practicing social distancing, and had required Michiganders to stay home.”
“We thank the governor for moving to Stage 4 of the Michigan Safe Start Plan, which better respects the constitutional liberties of Michiganders, especially when it comes to their ability to maintain their economic livelihood. Some Michigan businesses, such as indoor gyms, hair salons, barbershops, indoor theaters and some similar venues remain closed. Additionally, there is ongoing litigation challenging whether state law authorizes the governor’s COVID-19 orders. The Department of Justice will continue to prioritize Attorney General Barr’s Memorandum regarding Balancing Public Safety with the Preservation of Civil Rights and to monitor the legality of the process of reopening in Michigan."
Background
On Friday, May 29, 2020, the Department of Justice filed a statement of interest in a Michigan federal court in support of a lawsuit filed by seven businesses challenging the restrictions imposed by Governor Gretchen Whitmer in response to the COVID-19 pandemic. That statement of interest explained that the governor’s COVID-19 orders, however well-intentioned, raised constitutional concerns by imposing what appeared to be arbitrary and unreasonable limits on how and ultimately whether certain businesses could operate in Michigan relative to other similarly situated businesses. The statement of interest also explained that the federal Constitution provides for a cohesive national economy for all 50 states and all Americans and that the governor’s COVID-19 orders may be unduly interfering with interstate commerce.
Matthew Schneider, U.S. Attorney for the Eastern District of Michigan, and Assistant Attorney General Dreiband, are overseeing the Justice Department’s effort to monitor state and local policies relating to the COVID-19 pandemic.
The federal case is Signature Sotheby’s International Realty, Inc., et al. v. Whitmer, No. 1:20-00360 and additional information about the department’s May 29 statement of interest can be found here: https://www.justice.gov/opa/pr/department-justice-files-statement-interest-support-businesses-suffering-arbitrary-and
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Department of Justice Files Statement of Interest in Support of Businesses Suffering from Arbitrary and Irrational Restrictons of Michigan Governor’s COVID-19 OrdersRead the Press Release
The Department of Justice today filed a statement of interest in a Michigan federal court in support of a lawsuit filed by seven businesses challenging the restrictions imposed by Governor Gretchen Whitmer in response to the COVID-19 pandemic.
The statement of interest is part of Attorney General William P. Barr’s April 27, 2020 initiative directing Assistant Attorney General Eric Dreiband for the Civil Rights Division, and the U.S. Attorney for the Eastern District of Michigan, Matthew Schneider, to review state and local policies to ensure that civil liberties are protected during the COVID-19 pandemic.
In response to the COVID-19 pandemic, the Governor of Michigan has, over the past two months, issued over 100 executive orders that impose sweeping limitations on nearly all aspects of life for citizens of Michigan, significantly impairing in some instances their ability to maintain their economic livelihoods.
According to the lawsuit, the governor’s orders are arbitrary and discriminate against their businesses by treating them differently than other similarly situated businesses. Although the governor’s actions have required the plaintiffs to close or significantly restrict their businesses for over two months, the orders have allowed similar occupations to operate.
The plaintiffs include a real estate brokerage, a lawn and property maintenance company, an automotive glass exporter, an engine oil and auto parts distributor, a small jewelry store, a dental office, and an association of car washes. The plaintiffs brought their case in the Western District of Michigan.
“Our Constitution is enduring, and it is critically important that government comply fully with the Constitution in times of crisis,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Constitution permits appropriate state and local government restrictions to protect the health and safety of Americans, but it does not permit arbitrary limits that limit the right of all people in our country to be treated equally and fairly by the government.”
“While we appreciate the governor’s serious responsibility to safeguard public health through this pandemic, the Department of Justice has an obligation to call attention to the contours of the rights enshrined in the federal Constitution and to counsel against arbitrary restrictions on liberty,” said Andrew Birge, U.S. Attorney for the Western District of Michigan.
“I have no doubt about the governor’s good intentions, but the Executive Orders arbitrarily discriminate by allowing some businesses to operate while similar businesses must close or limit their operations—and if they refuse, they face fines and possible jail time,” said Matthew Schneider, U.S. Attorney for the Eastern District of Michigan, who, with Assistant Attorney General Dreiband, is overseeing the Justice Department’s effort to monitor state and local polices relating to the COVID-19 pandemic. “Under the Governor’s Orders, it’s ok to go to a hardware store and buy a jacket, but it’s a crime to go inside a clothing store and buy the identical jacket without making an appointment. That’s arbitrary. As important as it is that we stay safe during these challenging times, it is also important to remember that we do not abandon our freedoms and our dedication to the rule of law in times of emergency."
In its statement of interest, the United States explains that the facts alleged by the plaintiffs could amount to violations of the Commerce Clause and the Equal Protection Clause of the Constitution.
The federal case is Signature Sotheby’s International Realty, Inc., et al. v. Whitmer, No. 1:20-00360.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
Former Macomb Township Trustee Pleads Guilty to Extortion and Theft ConspiraciesRead the Press Release
Former Macomb Township Trustee and Macomb County official Dino Bucci, 60, of Macomb Township pleaded guilty today to extortion and theft conspiracies, United States Attorney Matthew Schneider announced.
According to the plea agreement, for over two decades, Bucci, at the direction of his then boss, Macomb County Public Works Commissioner Anthony Marrocco, extorted builders and contractors to purchase hundreds of thousands of dollars’ worth of tickets to Marrocco’s fundraisers. Marrocco directed Bucci to communicate to the builders and contractors that if they did not purchase a sufficient amount of fundraising tickets, they would suffer severe economic consequences. Those consequences included holding up required permits that would financially damage the extortion victims. For over twenty years, Bucci served as Marrocco’s deputy in the Macomb County’s Public Works Department. In addition to his employment as Marrocco’s deputy, Bucci served as an elected Trustee of Macomb Township for over ten years.
The plea agreement also includes Bucci’s admission to a theft scheme by which Bucci, with the help of contractor Chris Sorrentino, stole $96,000 from Macomb Township when Bucci directed Sorrentino to overcharge for paving work at Township properties. Sorrentino then kicked back tens of thousands of dollars in cash to Bucci. The plea agreement requires Bucci to fully reimburse Macomb Township for the money he stole. Under the plea agreement, Bucci faces a sentence of between 108 to 120 months in federal prison on the two conspiracy charges.
Schneider was joined in the announcement by Steven D’Antuono, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation and Sarah L. Kull, Special Agent in Charge of the Detroit Field Office of IRS Criminal Investigations.
United States Attorney Schneider said: “Bucci’s guilty pleas today represent a significant milestone in our sweeping corruption investigation in Macomb County. The lengthy prison sentence he faces should be an unambiguous warning to all public officials who consider committing corrupt acts that they will be caught and punished severely.”
"Bucci’s guilty plea further exposes a decades-long pattern of corruption and illegal activity within Macomb County’s elected government,” said Steven M. D’Antuono, Special Agent in Charge of the FBI in Michigan. “The citizens of Macomb County deserve better, and they should rest assured the FBI stands firm with our law enforcement partners to vigorously pursue any elected official who chooses personal gain over the public good.”
"Today’s plea demonstrates our collective efforts to enforce the law and ensure public trust. The sizeable amount of the kickbacks Bucci received represents the degree to which he was cheating the public," said Sarah Kull, IRS Criminal Investigation Special Agent in Charge. "It is unacceptable to help yourself to public funds, but if you do IRS-Criminal Investigation will be there to seek justice on behalf of the citizens of Macomb County."
The investigation in this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorneys R. Michael Bullotta and Steven Cares.
Former Macomb County Commissioner of Public Works Anthony Marrocco Indicted for ExtortionRead the Press Release
An Indictment unsealed today charges former Macomb County Department of Public Works (DPW) Commissioner Anthony Marrocco, 71, of Ray Township, Michigan, with conspiracy to commit extortion in a scheme spanning over two decades, from 1994 through 2016, United States Attorney Matthew Schneider announced. The Indictment also charges Marrocco with two counts of extortion and one count of attempted extortion. This new Indictment is another key part of federal law enforcement’s effort to root out corruption in suburban Detroit communities.
According to the Indictment, during the course of the conspiracy, it is alleged that Marrocco directed his DPW underling Dino Bucci and others at DPW to pressure builders and contractors in Macomb County to purchase hundreds of thousands of dollars in tickets to Marrocco’s twice-yearly fundraisers. Marrocco allegedly kept lists of those who purchased these expensive tickets and those who did not. Marrocco would allegedly inflict economic punishment on those who did not purchase tickets by holding up permits for builders, delaying payments owed to DPW vendors, and refusing to award DPW contracts to engineering firms, among other punishments. The indictment further alleges that builders and contractors bought thousands of dollars in tickets because they feared that Marrocco would economically punish them. The indictment alleges that Marrocco used some of the monies he extorted from the victims to pay for personal expenses, including air travel, car rentals, dinners at high-end restaurants, condo association charges, spa visits, wedding and holiday gifts, and yacht club charges.
The indictment of Marrocco is a significant development in federal law enforcement’s years-long effort to aggressively investigate and prosecute corruption in suburban Detroit. Thus far in this effort, some twenty-two public officials and bribe-paying businessmen have been charged and convicted, including two defendants convicted after jury trials.
Schneider was joined in the announcement by Steven D’Antuono, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation and Sarah L. Kull, Special Agent in Charge of the Detroit Field Office of IRS Criminal Investigations.
United States Attorney Schneider said: “For far too long, due to Commissioner Marrocco’s unchecked power over builders and contractors in Macomb County, business owners were forced to pay homage to the Commissioner by purchasing expensive fundraising tickets for the sole benefit of the Commissioner. The two decades of alleged extortion by Mr. Marrocco show an obscene abuse of power and a grave betrayal of the trust of the citizens of Macomb County. The fact that he is now facing four 20-year felonies is well-deserved and a consequence that was long overdue. The investigation is a testament to the unwavering dedication of the agents of the FBI and IRS and my office’s resolve to rid the Eastern District of Michigan of pay-to-play government.”
“Public corruption is the FBI’s number one criminal investigative priority because a lack of faith in elected government undermines our institutions," said Steven M. D'Antuono, Special Agent in Charge of the FBI in Michigan. "The FBI and our law enforcement partners will continue to dedicate resources to this issue until the public’s trust in elected officials is restored, and honest and responsible government is the order of the day in Macomb County and throughout the State of Michigan.
IRS-CI Special Agent in Charge Sarah Kull stated, “Identifying and stopping public corruption remains one of the IRS-CI’s highest priorities. Today’s indictment underscores our commitment to work in a collaborative effort with our law enforcement partners to promote honest and ethical government at all levels and to prosecute those who allegedly violated the public’s trust.”
The investigation of this case was conducted by the Federal Bureau of Investigation and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorneys R. Michael Bullotta and Steven Cares.
An indictment is only a charging document and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
For each of the four counts of the Indictment, Marrocco faces up to twenty years in prison and a $250,000 fine.
Wayne County Prosecutor’s Office Receives $1.4 Million and Detroit Police Department Receives $2.4 Million in Awards to Support Efforts to Combat Violent CrimeRead the Press Release
DETROIT – The Justice Department announced that the Office of Community Oriented Policing Services (COPS Office) and the Office of Justice Programs’ Bureau of Justice Assistance have awarded more than $61 million in grant funding to support the Attorney General’s Operation Relentless Pursuit (ORP) initiative. Of that $61 million, the Wayne County Prosecutor’s Office will receive $1.4 million. In addition, the Detroit Police Department will receive $2.4 million.
Launched on Dec. 18, 2019, ORP aims to intensify federal law enforcement resources into seven American cities with violent crime levels several times the national average - Albuquerque, Baltimore, Cleveland, Detroit, Kansas City, Memphis, and Milwaukee.
“While violent crime is down across the country as a whole, some communities remain caught in the grips of violent actors,” said Attorney General William P. Barr. “That’s why I launched Operation Relentless Pursuit last December – an initiative to combat violent crime in seven cities where it remains stubbornly high. Today’s grant awards are critical to our mission. We cannot succeed in eradicating crime without resources – the most vital of which are the brave men and women who serve and protect our communities each day. These funds will boost the forces that need them most.”
To meet the objectives of the program, the Wayne County Prosecutor’s Office (WCPO) will hire 7 attorneys and contract with the 3rd Circuit Court to secure the services of a one-person grand juror. The Assistant Prosecuting Attorneys (APA) will work directly with the ATF, FBI, DEA, and U.S. Marshals to coordinate and vertically prosecute violent crimes, gun crimes, human trafficking, and targeted offenders. They will work collaboratively with the United States Attorney’s Office to determine which path(s) of prosecution will have the greatest impact on violent crime and best advance the goals of the operation.
At least one APA will be dedicated to the one-person grand jury; a specially assigned circuit court judge with broad powers to investigate criminal activity through streamlined and secret proceedings. With a one-person grand jury witnesses can be examined under oath far more quickly than under “traditional” processes and without the fear that important testimony will be shared with other witnesses or targets of the investigation.
The grant funds awarded to the Detroit Police Department will go to fund 15 new police officer positions.
United States Attorney Matthew Schneider stated, “Even during this pandemic, our local law enforcement partners continue to make great progress in keeping our communities safe, and I’m very pleased we can support them by bringing in more federal resources.”
Prosecutor Kym Worthy said, “In order to prosecute violent crime we need the staff and resources to do so. The award of $1.4 million dollars will allow us to hire seven assistant prosecutors to work with other law enforcement agencies to vertically prosecute violent offenders. This type of coordinated response has been shown to be effective and successful. We are thankful that the Department of Justice has awarded the Wayne County Prosecutor’s Office this grant.”
The COPS Office, through its COPS Hiring Program (CHP), awarded a total of $51 million to be used to hire 214 sworn law enforcement officers for state and local law enforcement task forces. The recipients of the funding will deploy existing veteran officers to task force duties and use the CHP funding to hire new recruits to backfill those positions, as practical. Officers deployed to Operation Relentless Pursuit task forces as a result of CHP funding must be sworn, career law enforcement officers of the awarded agency, and their work on the task force must benefit their jurisdiction. In addition, they are required to work with their respective U.S. Attorney’s Office (USAO) and relevant federal agencies to investigate and prosecute suspects involved in gangs, drug trafficking, and other violent crime– related issues.
“Successful strategies to target and reduce violent crime are extremely resource intensive,” said COPS Office Director Phil Keith. “There is no greater resource than additional men and women on the front lines of relentless fight against gangs, drug traffickers and those that mean harm to our nation’s communities. The funding announced today is greatly needed for the Operation Relentless Pursuit jurisdictions and the COPS Office is honored to dedicate resources for this effort.”
For a breakdown of the awards, please see the attached spreadsheet. For more information on the COPS Hiring Program ORP grants, please visit: https://cops.usdoj.gov/pdf/2020AwardDocs/chp/FY20_Relentless_Pursuit_Fact_Sheet.pdf
The Office of Justice Programs’ Bureau of Justice Assistance (BJA) is making $10 million available to support Operation Relentless Pursuit. BJA funds will support efforts such as the hiring of additional prosecutors, overtime expenses for task force members, multi-agency investigations, mobile data terminals and modern technological platforms, and development of strategic plans to address gaps in combating violent crime.
“The responsibility for fighting crime and violence belongs to agencies at every level of government, and winning that fight turns on our ability to deploy our collective resources wisely and effectively,” said Office of Justice Programs Principal Deputy Assistant Attorney General Katharine T. Sullivan. “We are eager to make these funds available so that our federal, state and local partners can continue the vital and noble work of protecting America’s most dangerous communities.”
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
U.S. Attorney Matthew Schneider Recognizes Police WeekRead the Press Release
In honor of National Police Week, U.S. Attorney Matthew Schneider will recognize the service and sacrifice of federal, state, local, and tribal law enforcement. The week will be observed Sunday, May 10 through Saturday, May 16, 2020.
“There is no more noble profession than serving as a police officer,” said Attorney General William P. Barr. “The men and women who protect our communities each day have not just devoted their lives to public service, they’ve taken an oath to give their lives in order to ensure our safety. And they do so not only in the face of hostility from those who reject our nation’s commitment to the rule of law, but also in the face of evolving adversity – such as an unprecedented global health pandemic. This week, I ask all Americans to join me in saying ‘thank you’ to our nation’s federal, state, local, and tribal law enforcement officers. Their devotion and sacrifice to our peace and security will not be taken for granted.”
“Even in today’s national emergency, law enforcement officers continue to go above and beyond the call of duty by staying on the front lines and keeping us all safe,” said United States Attorney Matthew Schneider. “All of us should give thanks for the work of law enforcement officers across Michigan. Please take a moment and show your appreciation for those who wear the badge.”
In 1962, President Kennedy issued the first proclamation for Peace Officers Memorial Day and National Police Week to remember and honor law enforcement officers for their service and sacrifices. Peace Officers Memorial Day, which every year falls on May 15, specifically honors law enforcement officers killed or disabled in the line of duty.
Each year, during National Police Week, our nation celebrates the contributions of law enforcement from around the country, recognizing their hard work, dedication, loyalty and commitment to keeping our communities safe. This year the COVID-19 pandemic has underscored law enforcement officers’ courage and unwavering devotion to the communities they swore to serve.
Based on data collected and analyzed by the FBI’s Law Enforcement Officer Killed and Assaulted (LEOKA) Program, 89 law enforcement officers died nationwide in the line of duty in 2019, including Detroit Police Officer Phillipe Rasheen here in the Eastern District of Michigan.
Comprehensive data tables about these incidents and brief narratives describing most of the fatal attacks are included in the sections of Law Enforcement Officers Killed and Assaulted, 2019.
The names of the fallen officers who have been added in 2020 to the wall at the National Law Enforcement Memorial will be read on Wednesday, May 13, 2020, during a Virtual Annual Candlelight Vigil. Because public events have been suspended as a result of COVID-19, the vigil will be livestreamed to the public at 8:00 PM (EDT). The online event can be viewed at https://www.youtube.com/user/TheNLEOM
# # #
United States Attorney Cautions Against Predatory Practices Related to COVID-19 and HousingRead the Press Release
DETROIT, Michigan - As the country adopts drastic measures to slow the spread of COVID-19, many Americans have lost their jobs and many more have seen their wages curtailed. These losses have forced many to seek abatements or suspensions of their rent, with reports that nearly one third of Americans were unable to pay their April rent at the beginning of the month.
Many landlords have responded to these circumstances with understanding and care, trying to work with their tenants to weather the current crisis. However, there have been reports of other landlords who have responded to requests to defer rent payments with demands for sexual favors and other acts of unwelcome sexual conduct. Such behavior is despicable and it is illegal.
Unfortunately, most victims who experience this type of abuse never report it. They fear retaliation will endanger their ability to provide shelter for themselves and their families.
United States Attorney Mathew Schneider stated, “Predatory practices related to COVID-19 are particularly disturbing as these landlords exploit our current national crisis by sexually harassing people in need of housing.”
The Department of Justice has not hesitated to intervene when clear misconduct occurs. This behavior is not tolerated in normal times, and certainly will not be tolerated now.
To report sexual harassment in housing, contact the Justice Department at (800) 896-7743 or [email protected]. Or, contact the U.S. Attorney’s Office at (313) 226-9151 or [email protected].
Below are two links to DOJ & HUD produced PSAs for your consideration. These powerful PSAs feature personal victim impact stories and a clear call to action.
DOJ PSA: Sexual Harassment in Housing Is Illegal
https://www.youtube.com/watch?v=z76bA-mf7o0&t
runtime: 1:00
Working with DOJ to Stop Sexual Harassment in Housing
https://www.youtube.com/watch?v=vhskfe_7DHc
runtime: 11:00
Fifty-two years after the passage of the Fair Housing Act, we have come a long way. But we still have work to do. Securing fair housing as part of the American way of life can be achieved when victims know it is safe to come forward, and perpetrators know we will be aggressively attacking their despicable conduct.
Macomb County Doctor Charged in Health Care Fraud SchemeRead the Press Release
A Macomb County doctor was charged in a criminal complaint for his alleged role in a health care fraud scheme which involved submitting false claims to Medicare for services that were never rendered and/or were medically unnecessary, announced United States Attorney Matthew Schneider.
Joining in the announcement were Special Agent in Charge Steven M. D’Antuono, Federal Bureau of Investigation and Special Agent in Charge Lamont Pugh, Health and Human Services, Office of Inspector General (HHS-OIG).
Charged is Dr. Charles Mok, 56, of Washington, Michigan.
United States Attorney Schneider stated ”Dr. Mok is charged with exploiting the current pandemic to defraud the Medicare program, and putting the safety and health of his patients at risk in doing so. These are serious allegations, and my office is committed to prosecuting any medical professional who attempts to use the Covid-19 crisis to defraud patients or insurers.”
"Dr. Mok's alleged behavior goes beyond taking advantage of fears surrounding COVID-19 to profit illegally," said SAC D'Antuono. "The FBI has sworn to protect American citizens under any circumstances and we will vigorously investigate anyone who is alleged to put profit over patient safety or who provided questionable treatments as a way to defraud the Medicare system."
“We are committed to investigating those who exploit the ongoing public health crisis for financial gain,” said HHS OIG Special Agent in Charge Lamont Pugh. “Such actions threaten the integrity of federal health and human service programs and the health of Americans who rely on these programs.”
According to the complaint, Dr. Mok operates Allure Medical Spa, PLLC. Its principal place of business is at 8180 26 Mile Road, Shelby Township. MI 48316. Allure operates twenty-six outpatient clinics specializing in varicose vein treatments in eight different states with at least six clinics within the State of Michigan.
The complaint alleges Dr. Mok submitted false and fraudulent claims to Medicare for treatment of varicose veins by submitting claims for injections of Varithena in veins which had previously been ablated. The complaint alleges that once an ablation is done on a patient, there is no need for additional treatments including a Varithena injection. The complaint also alleges that some of the procedures were also medically unnecessary as numerous patients received up to 19 Varithena injections per leg and/or up to 12 ablations per leg, well beyond what is medically necessary to treat their conditions.
The complaint further alleges that Dr. Mok submitted false and fraudulent claims to Medicare for high-dose intravenous vitamin C infusions to patients at risk of contracting COVID-19, especially those working on the frontlines, and to those who tested positive for COVID-19. The infusions were primarily performed at Allure’s Shelby Township location. While the office had standard protocols to isolate patients who were positive for COVID-19, the complaint alleges that those protocols were not strictly followed, and on numerous occasions, COVID-19 positive patients were comingled with healthy patients, including those scheduled for non-essential elective procedures, in Allure’s one waiting room.
In multiple launch videos, Dr. Mok claimed that Allure offered the infusions because vitamin C reduces the severity of symptoms, duration of illness, and therefore the contagiousness of COVID-19 and significantly increases the immunity system of those who have a high risk for contracting the virus. There are currently no known U.S Food and Drug Administration (FDA) approved vaccines or drugs to treat COVID-19.
If any patients or staff have any concerns about their health or exposure to Covid-19, we urge them to consult with a trusted medical professional.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
The case is being prosecuted by Assistant United States Attorneys Regina McCullough, Wayne Pratt and John Neal. The investigation is being conducted jointly by the FBI and HHS-OIG.
Nurse Charged with Importation of Marijuana from CanadaRead the Press Release
A registered nurse from Amherstburg, Ontario, was charged in a criminal complaint with conspiracy, possession with intent to distribute, and importing more than 100 pounds of marijuana into the United States from Canada, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Director of Field Operations Christopher Perry, U.S. Customs and Border Protection.
Terri Leanne Maxwell, age 48, will be making her initial appearance in federal court in Ann Arbor this afternoon.
“At a time when health care professionals are working overtime to keep us safe, it’s really shameful that anyone would exploit their status as a nurse to smuggle any kind of drug into our country,” stated United States Attorney Matthew Schneider. “To stop the spread of the Coronavirus, our Canadian border is open only for essential travel — and smuggling in marijuana simply isn’t essential.”
“Even during this pandemic, CBP remains vigilant in our mission to stop transnational criminal organizations who are attempting to exploit processes and essential personnel crossing the border," said CBP Director of Field Operations Christopher Perry. "This case exemplifies the professionalism, partnership and commitment we share with the U.S. Attorney’s office to protect the American people and our communities in which we live and serve."
According to the criminal complaint, on April 22, 2020, at the Detroit Ambassador Bridge, Maxwell applied for admission into the United States and presented her Canadian passport and work permit under the Trade NAFTA agreement, showing she had valid status to work as a registered nurse. Maxwell also had a placard issued by Canada Border Services Agency showing she is a first responder, as a healthcare worker. The placards were implemented to give inspecting officers awareness of the travelers’ essential reason for crossing the border.
CBP officers had Maxwell open her trunk for an enforcement exam and noticed that the trunk was full and that there was an odor of marijuana emanating from the trunk. Upon further inspection officers found 143 vacuum sealed bags of suspected marijuana with a total weight of approximately 153.69 pounds.
If convicted, Maxwell could face up to 20 years in federal prison.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
Gladwin, Michigan Man Charged with Fraud ViolationRead the Press Release
A Gladwin, Michigan man was charged in a criminal complaint with wire fraud related to his work as a tax return preparer, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Sarah Kull, Internal Revenue Service, Criminal Investigation.
Mark Alan Patterson, age 51,, made his initial appearance in federal court today. Patterson was released on bond.
“Investigating tax refund fraud is a top priority for IRS Criminal Investigation,” said IRS Criminal Investigation Special Agent in Charge, Sarah Kull. “Stealing client tax refunds is a serious crime that hurts innocent taxpayers and IRS-CI works tirelessly to hold those that commit refund fraud accountable for their actions.”
According to the criminal complaint, Patterson worked as a tax return preparer for Schuster Tax Service in Beaverton, Michigan. From 2015 until February 2020, it is alleged that Patterson stole various portions of clients’ tax refunds by directing portions of clients’ tax refunds into bank accounts that Patterson controlled. Patterson did not inform the clients that he was taking the money from their tax refunds and instead deceived them by giving them unfiled versions of returns showing that they had a smaller refund amount.
In late February of 2020, Jennifer Schuster Semer, owner of Schuster Tax Service, informed law enforcement officers that one of her former employees had engaged in a potential fraud scheme. Ms. Semer discovered approximately 120 client tax returns dating back to 2015 that had refunds electronically diverted, in part, to bank accounts under Patterson’s control. Ms. Semer calculated an approximate loss to her clients of over $400,000.00 and immediately contacted local authorities.
United States Attorney Matthew Schneider, in announcing the charges, praised the cooperation of Ms, Semer in bringing this case to the attention of law enforcement.
If convicted, Patterson could face 20 years in federal prison.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
Department of Justice Commemorates National Crime Victims’ Rights WeekRead the Press Release
DETROIT - U.S. Attorney Matthew Schneider joins the Department of Justice and communities nationwide in observing National Crime Victims’ Rights Week, celebrating victims’ rights, protections and services throughout the week. This year’s observance takes place April 19-25 and features the theme, “Seek Justice| Ensure Victims' Rights | Inspire Hope.”
“Every year, millions of Americans suffer the shock and trauma of criminal victimization, affecting their well-being and sense of security and dignity,” said Attorney General William P. Barr. “To these victims, we affirm our unwavering commitment to supporting them in their hour of need. We also commend the thousands of victim advocates and public safety professionals who labor tirelessly to secure victims’ rights and support survivors.”
“We must always support and defend crime victims, and this is especially important now, when criminals across the country are being released from jails and prisons due to the Coronavirus,” said United States Attorney Matthew Schneider. “Even though our annual Crime Victims’ Rights Week event honoring the courage and strength of crime victim survivors and those who help victims of crime has been postponed, our staff of professionals continue to ensure that victims’ rights are protected and that they have access to services in their time of need.”
“While we have made tremendous progress driving down crime and violence across the country, far too many Americans continue to suffer the pain and loss of criminal victimization,” said Katharine T. Sullivan, Principal Deputy Assistant Attorney General of the Office of Justice Programs. “This week, we stand by these survivors and their families, and we pledge our ongoing support to the countless men and women who serve them with such extraordinary skill and compassion.”
Ronald Reagan proclaimed the first Victims’ Rights Week in 1981, putting crime victims' rights, needs, and concerns in a prominent spot on the American agenda. He also established the President's Task Force on Victims of Crime, which laid the groundwork for a national network of services and legal safeguards for crime victims. President Trump and his administration have implemented historic levels of support for victim assistance and victim compensation.
Some 3.3 million Americans age 12 and older were victims of violent crime in 2018, according to the National Crime Victimization Survey. The Office for Victims of Crime (OVC), part of the Justice Department’s Office of Justice Programs, supports more than 7,000 local victim assistance programs and victim compensation programs in every state and U.S. territory. Funds for these programs come from the Crime Victims Fund, which is made up of federal criminal fines, penalties and bond forfeitures.
During National Crime Victims’ Rights Week, victim advocacy organizations, community groups and state, local and tribal agencies traditionally host rallies, candlelight vigils, and other events to raise awareness of victims’ rights and services. This year, many communities are organizing virtual gatherings and online public awareness campaigns.
This year’s commemoration began yesterday, 25 years to the day when a truck bomb exploded in front of the Alfred P. Murrah Federal Building in Oklahoma City, Oklahoma, taking the lives of 168 people, including 19 children, as well as injuring hundreds of others. The mass murder remains the worst act of domestic terrorism in our nation’s history and led to the establishment of the Antiterrorism Emergency Reserve, which is administered by OVC, and has been used to provide direct services to hundreds of victims of mass violence and terrorism.
“Crime victims deserve to know that they have the encouragement and support of the American people,” said OVC Director Jessica E. Hart. “I hope that citizens throughout the nation will take the opportunity this week to remember all victims of crime and their heroic stories of survival. I encourage everyone to also find meaningful ways to express their appreciation to the many committed and compassionate service providers across the country who work tirelessly supporting these survivors.”
This year, the annual National Crime Victims’ Service Awards Ceremony will be postponed until a time when we can honor this year’s award recipients in person. During the ceremony, OVC will present awards recognizing individuals and organizations from across the nation for their outstanding service on behalf of crime victims. The awardees will be selected from public nominations in 11 categories, including federal service, special courage, public policy, and victim services. Visit www.ovc.gov/gallery to learn more about past recipients.
For more information on how to create your own public campaigns to raise awareness about crime victims’ rights online and at events throughout the year, please visit: https://ovc.ncjrs.gov/ncvrw2020/overview.html.
Detroit Man Charged with Carjacking and Firearms Offenses Carjacked a retired police officer and shot up a gas stationRead the Press Release
A Detroit man was charged yesterday with carjacking, using a firearm in relation to a crime of violence and being a felon in possession of a firearm, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Special Agent in Charge Steven M. D'Antuono, Federal Bureau of Investigation.
Ivan Xavier Armstrong, 36, was arrested and is currently in the custody of the Michigan Department of Corrections on a parole hold.
“The Coronavirus might slow some things down, but it won’t slow down law enforcement who continue to pursue violent criminals in the midst of this pandemic,” said United States Attorney Matthew Schneider. “Our FBI and federal agents are working hard every day to keep our streets safe.”
"Armstrong's arrest is proof that - in spite of the pandemic - the FBI's mission to combat violent crime goes on unabated," said Special Agent in Charge D'Antuono. "I am grateful to the agents and prosecutors who worked quickly and decisively to remove Armstrong from our community."
According to the criminal complaint, during the early morning hours of April 3, Armstrong allegedly went on a two hour violent crime spree that included kicking in the front door of his mother’s house located on the eastside of Detroit, preventing her from leaving the home, damaging her phone and firing shots at her house. Armstrong then left the area on foot and approached a man sitting in his car. Armstrong tapped the window with his gun and ordered the victim to get out the car. Armstrong then racked the gun at which time the victim exited his vehicle. The victim was then robbed of his wallet which contained his retired police officer credentials.
The complaint further alleges that at approximately 5:04 am, Detroit Police responded to a call for shots fired at a gas station, located at 14820 East Jefferson Avenue in the city of Detroit. The shooter was gone at the time of their arrival, however a review of high definition video taken by numerous cameras installed at the gas station revealed that Armstrong arrived at the gas station in the Hyundai Sonata he had carjacked from the retired police officer. The video from the gas station shows a physical fight ensued and that Armstrong fired several shots at people inside the store. No one was injured. Later that morning, Armstrong was arrested after having broken in to a residence on Alter Rd, in Detroit.
United States Attorney Matthew Schneider, in announcing the charges, praised the agents of the FBI for their diligent work on this case and getting Armstrong off the streets.
If convicted, Armstrong could face decades in federal prison.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.
Contract Rehab Provider to Pay $4 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy ServicesRead the Press Release
Encore Rehabilitation Services LLC (Encore) has agreed to pay $4.03 million to resolve allegations that Encore violated the False Claims Act by knowingly causing three Michigan skilled nursing facilities to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary or skilled, the Department of Justice announced today. Encore, based in Farmington Hills, Michigan, provides rehabilitation services to patients at over 600 health care facilities, including skilled nursing facilities, in over 30 states.
“Today’s settlement reflects our continuing efforts to protect patients and taxpayers by ensuring that the care provided to beneficiaries of government-funded healthcare programs is dictated by clinical needs, not a provider’s fiscal interests,” said Deputy Assistant Attorney General Michael Granston of the Department of Justice’s Civil Division. “Rehabilitation therapy companies provide important services to our vulnerable elderly population, but they will be held to account if they knowingly provide patients with unnecessary or ineligible services.”
This settlement resolves allegations that Encore’s policies and practices at three Michigan skilled nursing facilities resulted in the provision of unreasonable, unnecessary, or unskilled rehabilitation therapy or the recording of therapy minutes as individual therapy when concurrent or group therapy was actually provided. The settlement relates to Encore’s alleged conduct at the Autumn Woods Healthcare Facility in Warren, Michigan between Sept. 1, 2012, and July 31, 2018, the Bay Shores Senior Care and Rehab Center in Bay City, Michigan, for the period from April 1, 2013, to April 6, 2017, and MediLodge of Yale in Yale, Michigan, for the period from Oct. 1, 2010, to April 6, 2017.
“Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan. “We are committed to working with our federal partners to protect both vulnerable Michiganders and these helpful healthcare programs.”
“The resolution announced today demonstrates my office’s commitment to aggressively pursuing providers who utilize fraudulent practices to knowingly put their own financial self-interest over a duty to patients,” said U.S. Attorney Andrew Byerly Birge for the Western District of Michigan. “It is imperative that providers make healthcare decisions based upon a patient’s need for services rather than a self-serving desire to maximize financial profits.”
Contemporaneous with the civil settlement, Encore entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health & Human Services, Office of Inspector General (HHS-OIG) requiring, among other things, the implementation of a risk assessment and internal review process designed to identify and address evolving compliance risks. The CIA requires training, auditing, and monitoring designed to address the conduct at issue in the case.
“The submission of claims for unreasonable, unnecessary or unskilled rehabilitative services is improper and unacceptable,” said Special Agent in Charge Lamont Pugh III, HHS-OIG – Chicago Region. “The public expects that proper services will be provided and that tax payer dollars will not be wasted. OIG Corporate Integrity Agreements help to ensure that contracted providers, who have caused improper billing practices change their behavior.”
The settlement resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Linda Anderson, Reza Saffarian and Audrey Theile, and Adam LaFerriere, former Encore employees. The False Claims Act permits private parties to file suit on behalf of the United States and to share in any recovery. The amount to be recovered by the private parties in this matter has not been determined.
The matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Western District of Michigan, and the HHS-OIG.
The three qui tam cases are docketed as United States ex rel. Anderson v. Encore Rehabilitation Services, LLC, No. 2:14-cv-13759 (E.D. MI), United States ex rel. Saffarian, et al. v. Encore Rehabilitation Services, LLC, et al., No. 1:16-cv-605 (W.D. MI), and United States, et al., ex rel. LaFerriere v. Encore Rehabilitation Services, LLC, et al., No. 1:17-cv-95 (W.D. MI). The claims resolved by the settlement are allegations only; there has been no determination of liability.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Contract Rehab Provider to Pay $4 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy ServicesRead the Press Release
Encore Rehabilitation Services LLC (Encore) has agreed to pay $4.03 million to resolve allegations that Encore violated the False Claims Act by knowingly causing three Michigan skilled nursing facilities to submit false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary or skilled, the Department of Justice announced today. Encore, based in Farmington Hills, Michigan, provides rehabilitation services to patients at over 600 health care facilities, including skilled nursing facilities, in over thirty states.
“Today’s settlement reflects our continuing efforts to protect patients and taxpayers by ensuring that the care provided to beneficiaries of government-funded healthcare programs is dictated by clinical needs, not a provider’s fiscal interests,” said Deputy Assistant Attorney General Michael Granston of the Department of Justice’s Civil Division. “Rehabilitation therapy companies provide important services to our vulnerable elderly population, but they will be held to account if they knowingly provide patients with unnecessary or ineligible services.”
This settlement resolves allegations that Encore’s policies and practices at three Michigan skilled nursing facilities resulted in the provision of unreasonable, unnecessary, or unskilled rehabilitation therapy or the recording of therapy minutes as individual therapy when concurrent or group therapy was actually provided. The settlement relates to Encore’s alleged conduct at the Autumn Woods Healthcare Facility in Warren, Michigan between Sept. 1, 2012, and July 31, 2018, the Bay Shores Senior Care and Rehab Center in Bay City, Michigan, for the period from April 1, 2013, to April 6, 2017, and MediLodge of Yale in Yale, Michigan, for the period from Oct. 1, 2010, to April 6, 2017.
“Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan. “We are committed to working with our federal partners to protect both vulnerable Michiganders and these helpful healthcare programs.”
“The resolution announced today demonstrates my office’s commitment to aggressively pursuing providers who utilize fraudulent practices to knowingly put their own financial self-interest over a duty to patients,” said U.S. Attorney Andrew Byerly Birge for the Western District of Michigan. “It is imperative that providers make healthcare decisions based upon a patient’s need for services rather than a self-serving desire to maximize financial profits.”
Contemporaneous with the civil settlement, Encore entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Health and Human Services – Office of Inspector General (HHS-OIG) requiring, among other things, the implementation of a risk assessment and internal review process designed to identify and address evolving compliance risks. The CIA requires training, auditing, and monitoring designed to address the conduct at issue in the case.
“The submission of claims for unreasonable, unnecessary or unskilled rehabilitative services is improper and unacceptable,” said Special Agent in Charge Lamont Pugh III, HHS-OIG – Chicago Region. “The public expects that proper services will be provided and that tax payer dollars will not be wasted. OIG Corporate Integrity Agreements help to ensure that contracted providers, who have caused improper billing practices change their behavior.”
The settlement resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Linda Anderson, Reza Saffarian and Audrey Theile, and Adam LaFerriere, former Encore employees. The False Claims Act permits private parties to file suit on behalf of the United States and to share in any recovery. The amount to be recovered by the private parties in this matter has not been determined.
The matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Eastern District of Michigan and the Western District of Michigan, and the HHS-OIG.
The three qui tam cases are docketed as United States ex rel. Anderson v. Encore Rehabilitation Services, LLC, No. 2:14-cv-13759 (E.D. MI), United States ex rel. Saffarian, et al. v. Encore Rehabilitation Services, LLC, et al., No. 1:16-cv-605 (W.D. MI), and United States, et al., ex rel. LaFerriere v. Encore Rehabilitation Services, LLC, et al., No. 1:17-cv-95 (W.D. MI). The claims resolved by the settlement are allegations only; there has been no determination of liability.
###
U.s. Attorney's Office and IRS Warn the Public About Scammers Targeting Economic Relief PaymentsRead the Press Release
Detroit, MI – U.S. Attorney Matthew Schneider and Sarah Kull, Special Agent in Charge of the Internal Revenue Service – Criminal Investigation Division (IRS-CI) in Detroit, warned Michigan residents to watch out for scammers attempting to steal COVID-19 Economic Impact Payments.
”The people of Michigan will soon be receiving coronavirus relief checks and scammers are ready to take advantage of us,” stated United States Attorney Matthew Schneider. ”I urge everyone to protect themselves by hanging up on robocalls, ignoring online offers and fact-checking information before giving out any personal information. If you feel you’ve been the victim of a scam, please contact the federal hotlines listed below.”
“I urge the public not to fall victim to fraudsters attempting to steal Economic Impact Payments being sent out. The IRS will not call, text, email or otherwise contact you to ask for your information. This money is meant for you. Don’t fall victim to scammers,” said IRS Special Agent in Charge Kull.
The Treasury Department and the IRS announced that distribution of Economic Impact Payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. Information from the 2018 or 2019 tax return, if filed, will be used to calculate payment. Most individuals do not need to take any action. Social Security beneficiaries who are not typically required to file tax returns will not need to file to receive a payment. Instead, payments will be automatically deposited into their bank accounts. The IRS will calculate and automatically send payment to those eligible. The IRS will deposit the economic relief check into the direct deposit account previously provided in the tax returns. If banking information was not provided, the IRS will send a check via mail. The IRS will NOT contact anyone to request banking info, will not ask for confirmation of personal information to send or expedite an economic impact payment, or require payment of a fee.
If anyone receives a call claiming to be from the IRS or any entity related to the Economic Impact Payment, the call is a scam and recipients should not engage with the scammer and absolutely should not give out bank account, debit account or PayPal account information-- even if the person claims it is necessary to get the relief check.
It will take a few weeks before the Treasury mails out the Economic Impact Payments. If a person receives a “check” for an odd amount or a check that requires verification of the check online or by calling a number, it is a fraud. U.S. Attorney Schneider and IRS Special Agent in Charge Kull reminded everyone to be vigilant about promptly collecting mail from their mailbox in order to prevent the theft of any economic relief checks delivered there.
Don’t be a victim! Visit www.irs.gov for the latest information on new scams and schemes. The IRS has set-up a “hotline” email address for Michigan residents to report fraud to the IRS: [email protected] To find out more about Department of Justice resources and information, please visit www.justice.gov/coronavirus. Residents can also report Suspected Fraud to the National Center for Disaster Fraud Hotline at 866-720-5721 and [email protected] .
###Federal, State, and Local Law Enforcement Warn Against Teleconferencing Hacking During Coronavirus PandemicRead the Press Release
As our country finds new ways of communicating during the COVID-19 pandemic, Michigan residents have turned to video-teleconferencing (VTC) platforms, such as Zoom, to stay connected. Unfortunately, as the FBI reported this week, there has been a rise in the number of so-called “Zoom-bombing,” or video hacking across the United States. The State of Michigan has seen several instances of such hacking just this week. Hackers are disrupting conferences and online classrooms with pornographic and/or hate images and threatening language.
Michigan’s chief federal, state, and local law enforcement officials are joining together to warn anyone who hacks into a teleconference can be charged with state or federal crimes. Charges may include – to name just a few – disrupting a public meeting, computer intrusion, using a computer to commit a crime, hate crimes, fraud, or transmitting threatening communications. All of these charges are punishable by fines and imprisonment.
“You think Zoom bombing is funny? Let’s see how funny it is after you get arrested,” stated Matthew Schneider, United States Attorney for Eastern Michigan. “If you interfere with a teleconference or public meeting in Michigan, you could have federal, state, or local law enforcement knocking at your door.”
Western District of Michigan U.S. Attorney Andrew Birge advised video conference users: “Whether you run a business, a law enforcement meeting, a classroom or you just want to video chat with family, you need to be aware that your video conference may not be secure and information you share may be compromised. Be careful. If you do get hacked, call us.”
“It is a shame that during a pandemic which is causing fear and anxiety across the globe that there are wrongdoers seeking to disrupt virtual environments which have become essential to communication, teleworking and online learning,” said Special Agent in Charge Steven M. D’Antuono. “While Michiganders are sheltering in place, it is important to practice good cyber hygiene. We encourage our communities to visit fbi.gov or ic3.gov to learn more about tips they can take to keep their devices secure.”
“We were alerted to this problem by a Michigan reporter who participated in a Zoom conference that was hijacked,” stated Michigan Attorney General Dana Nessel. “Since then we have learned of other incidents around the country. There are steps people can take to protect their cybersecurity and we encourage all users to follow the proper procedures to ensure their teleconferences are secure.”
Robert Stevenson, Michigan Association of Chiefs of Police stated, “While the state is practicing social distancing, our law enforcement partners are coming together to help keep the people of Michigan safe during this crisis. Please report any incidents of hacking or any other type of fraud to your local, state or federal law enforcement agency.”
As individuals continue the transition to online lessons and meetings, law enforcement recommends exercising due diligence and caution in your cybersecurity efforts. The following steps can be taken to mitigate teleconferencing threats:
- Do not make the meetings or classroom public. In Zoom, there are two options to make a meeting private: require a meeting password or use the waiting room feature and control the admittance of guest.
- Do not share a link to a teleconference or classroom on an unrestricted publicly available social media post. Provide the link directly to specific people.
- Manage screensharing options in Zoom, change screensharing to “Host Only.”
- Ensure users are using the updated version of remote access/meeting applications. In January, 2020, Zoom updated their software. In their security update, the teleconference software provider added passwords by default for meetings and disabled the ability to randomly scan for meetings to join.
- Lastly, ensure that your organization’s telework policy or guide addresses requirements for physical and information security.
If you were a victim of a teleconference hijacking, or any cyber-crime for that matter, report it to the FBI’s Internet Crime Complaint Center at https://www.ic3.gov/default.aspx. Click here for more information regarding teleconference hijacking: https://www.ic3.gov/media/2020/200401.aspx.
Additionally, if you receive a specific threat during a teleconference, please report it to the FBI at https://tips.fbi.gov/ or call the FBI Detroit Division at (313) 965-2323.
Department of Justice Makes $850 Million Available to Help Public Safety Agencies Address Covid-19 Pandemic - Over $24,000,000 Available to MichiganRead the Press Release
DETROIT, Michigan– The Department of Justice today announced that it is making $850 million available to help public safety agencies respond to the challenges posed by the outbreak of COVID-19. The Coronavirus Emergency Supplemental Funding program, authorized by the recent stimulus legislation signed by President Trump, will allow eligible state, local and tribal governments to apply immediately for these critical funds. The department is moving quickly to make awards, with the goal of having funds available for drawdown within days of the award.
“During this time of crisis, I am very pleased to announce that the Department of Justice is making over $24 million available to our state’s law enforcement agencies,” stated United States Attorney Matthew Schneider. “Our law enforcement officers are on the front-lines every day, working around the clock to take criminals off the street while at the same time battling an invisible enemy. Our local law enforcement partners are the best in the country, and I’m proud to stand shoulder to shoulder with them to protect the citizens of Michigan.”
“This is an unprecedented moment in our nation’s history and an especially dangerous one for our front-line law enforcement officers, corrections officials, and public safety professionals,” said Office of Justice Programs Principal Deputy Assistant Attorney General Katharine T. Sullivan. “We are grateful to the Congress for making these resources available and for the show of support this program represents.”
The solicitation, posted by the Bureau of Justice Assistance in the Justice Department’s Office of Justice Programs (OJP), will remain open for at least 60 days and be extended as necessary. OJP will fund successful applicants as a top priority on a rolling basis as applications are received. Funds may be used to hire personnel, pay overtime costs, cover protective equipment and supplies, address correctional inmates’ medical needs and defray expenses related to the distribution of resources to hard-hit areas, among other activities. Grant funds may be applied retroactively to Jan. 20, 2020, subject to federal supplanting rules.
Agencies that were eligible for the fiscal year 2019 State and Local Edward Byrne Memorial Justice Assistance Grant Program are candidates for this emergency funding. A complete list of eligible jurisdictions and their allocations can be found at https://bja.ojp.gov/program/fy20-cesf-allocations. The Coronavirus Emergency Supplemental Funding (CESF) Program will provide Michigan over $24 million dollars in funding to assist states, local units of government, and tribes in preventing, preparing for, and responding to the coronavirus.
For more information about the Coronavirus Emergency Supplemental Funding program, please visit https://bja.ojp.gov/funding/opportunities/bja-2020-18553. For more information about the Office of Justice Programs, please visit https://www.ojp.gov/.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
###
FBI and United States Attorney to Investigate and Prosecute Hoarding of Needed Medical SuppliesRead the Press Release
In response to the Coronavirus (COVID-19) pandemic, United States Attorney Matthew Schneider and FBI Special Agent in Charge for Michigan Steve D’Antuono have announced an effort to investigate and prosecute hoarders of scarce medical supplies in the Eastern District of Michigan.
The Justice Department is receiving reports of people using the pandemic to hoard vital medical supplies and then sell them at excessive prices, all at the expense of the health and safety of Americans. Hoarding and price gouging make it more difficult to provide necessary medical supplies to our health care providers and first responders.
On March 23, 2020, the President issued an Executive Order pursuant to Section 102 of the Defense Production Act, which prohibits hoarding of designated items. The order authorizes the Secretary of Health and Human Services (“HHS”) to protect scarce healthcare and medical items by designating particular items as protected under the statute. Once an item is designated, the statute makes it a crime for any person to accumulate that item either (1) in excess of his or her reasonable needs or (2) for the purpose of selling it in excess of prevailing market prices. Violators may be punished by up to one year imprisonment and/or up to a $10,000 fine. See 50 U.S.C. §§ 4512, 4513.
“We’re not going after regular people in Michigan who are stocking up in a reasonable manner, or businesses who are making smart storage decisions,” said United States Attorney Matthew Schneider. “But if you’re hoarding goods far above what you need, or if you’re trying to rip off the people of Michigan by profiting from the pandemic, we will be targeting you.”
United States Attorney Schneider and FBI SAC D’Antuono will work cooperatively with HHS, the Justice Department’s Criminal Division, and the Justice Department’s COVID-19 Price Gouging and Hoarding Task Force to identify potential cases. To report Price Gouging and Hoarding, Michigan residents are urged to contact the National Center for Disaster Fraud Hotline at (866) 720-5721 or [email protected] or COVID-19 Fraud Coordinator/ Assistant United States Attorney John Neal, at (313) 226-9644.
The Secretary of HHS has designated the following items as scarce or threatened materials:
1. N-95 Filtering Facepiece Respirators, including devices that are disposable half-face-piece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates
2. Other Filtering Facepiece Respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100), including single-use, disposable half-mask respiratory protective devices that cover the user’s airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level per 42 CFR 84.181
3. Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges
4. Powered Air Purifying Respirators (PAPR)
5. Portable Ventilators, including portable devices intended to mechanically control or assist patient breathing by delivering a predetermined percentage of oxygen in the breathing gas
6. Drug products with active ingredient chloroquine phosphate or hydroxychloroquine HCl
7. Sterilization services for any device as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act and sterilizers as defined in 21 CFR 880.6860, 880.6870, and 880.6880, including devices that already have FDA marketing authorization and those that do not have FDA marketing authorization but are intended for the same uses
8. Disinfecting devices intended to kill pathogens and other kinds of microorganisms by chemical means or physical means, including those defined in 21 CFR 876.1500, 880.6992, and 892.1570 and other sanitizing and disinfecting products suitable for use in a clinical setting
9. Medical gowns or apparel, e.g., surgical gowns or isolation gowns
10. Personal protective equipment (PPE) coveralls, e.g., Tyvek Suits
11. PPE face masks, including any masks that cover the user’s nose and mouth and may or may not meet fluid barrier or filtration efficiency levels
12. PPE surgical masks, including masks that covers the user’s nose and mouth and provides a physical barrier to fluids and particulate materials
13. PPE face shields, including those defined at 21 CFR 878.4040 and those intended for the same purpose
14. PPE gloves or surgical gloves, including those defined at 21 CFR 880.6250 (exam gloves) and 878.4460 (surgical gloves) and such gloves intended for the same purposes
15. Ventilators, anesthesia gas machines modified for use as ventilators, and positive pressure breathing devices modified for use as ventilators (collectively referred to as "ventilators"), ventilator tubing connectors, and ventilator accessories as those terms are described in FDA’s March 2020 Enforcement Policy for Ventilators and Accessories and Other Respiratory Devices During the Coronavirus Disease 2019 (COVID-19) Public Health Emergency located at https://www.fda.gov/media/136318/download
###
United States Attorney Matthew Schneider Provides Coronavirus Prosecution Guide to State and Local Law EnforcementRead the Press Release
In response to the Coronavirus (COVID-19) pandemic, the United States Attorney’s Office for the Eastern District of Michigan is providing this Coronavirus Prosecution Guide to Michigan’s state and local law enforcement. The purpose of the Guide is to help law enforcement identify cases for possible federal civil action or criminal prosecution. The Guide provides a brief description of the type of conduct being seen around the country to take advantage of the opportunity created by the pandemic. Law enforcement officers who believe they may have a case for federal civil enforcement or criminal prosecution should contact the COVID-19 Fraud Coordinator, Assistant United States Attorney John Neal, at 313-226-9644.
This Guide is a supplement to – and not a replacement of – state and local prosecutions. “The Michigan Attorney General and our 83 County Prosecuting Attorneys are on the front lines with us, battling back against criminals who are profiting off of the Coronavirus pandemic,” said United States Attorney Matthew Schneider. “Together with our state and local partners, we use every weapon in our arsenals to fight criminals who use this pandemic to take advantage of the people of Michigan.”
In addition to investigating and prosecuting criminal offenses, the United States Attorney’s Office will utilize the Antifraud Injunction Act (18 U.S.C. § 1345), which allows the United States to commence a civil action to enjoin a violation of the federal mail fraud, wire fraud, health care fraud, or fraud conspiracy statutes.
To date, the U.S. Attorney’s Offices across the country have received reports of individuals and businesses engaging in a wide range of fraudulent and criminal behavior, including:
- Robocalls making fraudulent offers to sell respirator masks with no intent of delivery;
- Fake COVID-19-related apps and websites that install malware or ransomware;
- Phishing emails asking for money or presenting malware;
- Social media scams fraudulently seeking donations or claiming to provide stimulus funds if the recipient enters his or her bank account number;
- Sales of fake testing kits, cures, “immunity” pills, and protective equipment;
- Fraudulent offers for free COVID-19 testing in order to obtain Medicare beneficiary information that is used to submit false medical claims for unrelated, unnecessary, or fictitious testing or services;
- Prescription drug schemes involving the submission of medical claims for unnecessary antiretroviral treatments or other drugs that are marketed as purported cures for COVID- 19;
- Robberies of patients departing from hospitals or doctor offices;
- Threats of violence against mayors and other public officials;
- Threats to intentionally infect other people; and
- Hate crimes against people with Asian heritage.
Conduct
Federal Charge or Cause of Action
Explanation
FRAUD
Offering fraudulent tests, preventatives, cures for the COVID‑19 epidemic.
Sale of Fake drugs/cures
15 U.S.C. § 1263
Distribution of non-conforming consumer goods
15 U.S.C. § 2068
For example, online marketer advertising a supplement as a preventive remedy against the COVID-19 virus
Scam charities such as soliciting donations to provide PPE to those who need it to protect against the COVID-19 epidemic.
Email Fraud
18 U.S.C. § 1037
Mail Fraud
18 U.S.C. § 1341
Wire Fraud
18 U.S.C. § 1343
Such scams are likely to involve the use of the wires, telephone, internet, mail and/or a financial institution.
Providers who bill health care benefits program for excessive testing for COVID-19.
Health Care Fraud
18 U.S.C. § 1347
Medical providers conducting medically unnecessary testing or treatment.
Email phishing for benefit checks issued in response to the COVID-19 epidemic.
Email Fraud
18 U.S.C. § 1037
Criminalizes sending multiple, materially false, commercial emails, such as emails that are sent through an unauthorized computer, sent through a protected computer with the intent of hiding their origin, that contain a false header, or are sent from accounts with false registration information.
Fraudulent COVID-19 information websites that install ransomware when you click on them.
Computer Fraud
18 U.S.C. § 1030
A website that encourages users to click for COVID-19 virus information that then launches malware that infests consumer’s computer.
Securities fraud where the price of a stock is pumped with a false claim of a test, preventative, or cure for the COVID-19 virus.
Securities Fraud
15 U.S.C. § 78j(b)
Securities and Commodities Fraud
18 U.S.C. § 1348
Criminalizes fraud in connection with registered securities.
Fraudulently obtaining benefits issued in response to the COVID-19 epidemic.
Fraud against the United States
18 U.S.C. § 1031
Emergency Benefit Fraud
18 U.S.C. § 1040
Criminalizes fraud in any federal assistance program responsive to the COVID-19 epidemic.
The benefit must be issued in connection with a federally declared disaster. The President has declared the COVID-19 epidemic a Stafford Act disaster.
Disseminating false information about use of the COVID-19 virus as a biological weapon
Hoaxes about the use of biologic weapons
18 U.S.C. § 1038
Criminalizes credible hoaxes about using the COVID-19 virus as a biologic weapon.
Persons lying to obtain medication referenced during the COVID-19 epidemic.
False Statements Relating to Health Care
18 U.S.C. § 1035
For example, a person presenting with fake symptoms to obtain hydroxychloroquine.
Fraud schemes based on the COVID-19 epidemic that make use of an access device, a financial institution, the mail or wires.
Access Device Fraud
18 U.S.C. § 1029
Mail Fraud
18 U.S.C. § 1341
Wire Fraud
18 U.S.C. § 1343
Bank Fraud
18 U.S.C. § 1344
If offender used, produced or trafficked in counterfeit or unauthorized devices (credit cards, passwords, etc.).
If offender used the U.S. Mail or a private/commercial carrier to send anything in furtherance of a fraud scheme.
If offender used a wire communication (phone call, fax, email, etc.) to transmit anything in furtherance of a fraud scheme.
If offender executed a scheme to defraud a financial institution or to fraudulently obtain money from a financial institution.
HOARDING, COUNTERFEIT GOODS, THEFT, AND SCAMS
Hoarding and/or price gouging items designated essential for combatting the COVID-19 epidemic.
Hoarding/Price Gouging of Designated Scarce Materials
50 U.S.C. §§ 4512, 4513
Makes it a crime to accumulate designated essential items in excess of reasonable needs, or for the purpose of selling in excess of prevailing market rates.
Selling stolen health supplies.
Sale/Interstate Transportation of Stolen Goods
18 U.S.C. § 2314/2315
For example, selling protective items that were stolen in another state or country.
Using someone else’s identity to obtain a benefit issued in connection with the COVID-19 epidemic.
Identity Theft
18 U.S.C. § 1028(a)(7)
Aggravated Identity Theft
18 U.S.C. § 1028A
If offender used another person’s identity during a violation of federal law or a state felony.
If offender used another person’s identity during the course of an enumerated felony (18 U.S.C. § 1028A(c)).
Offering counterfeit goods, services or drugs to combat the COVID-19 virus.
Trafficking in counterfeit goods or services
18 U.S.C. § 2320
For example, merchant selling N-95 masks purporting them to be manufactured by 3M when they are not authentic N-95 masks.
Introduction of fake cure/adulterated drug/unsafe dietary supplement to address the COVID-19 epidemic.
Food, Drug, and Cosmetic Act
21 U.S.C. § 331
The Food, Drug, and Cosmetic Act contains numerous restrictions/prohibitions on the sale of misbranded or adulterated food, drugs, or devices, and bans the introduction of unsafe supplements.
VIOLENT CRIME
Acts of violence against persons of Asian descent
Hate Crime Acts
18 U.S.C. § 249
Criminalizes injuring or using a weapon against a person because of their actual or perceived race or national origin.
Purposefully infecting people with the COVID-19 virus
Transfer of a Biological Weapon
18 U.S.C. § 175
Use of Weapons of Mass Destruction
18 U.S.C. § 2332a
Criminalizes the transfer of a biologic agent for use as a weapon.
Includes use of a weapon involving a biological agent.
Threats against public officials on account of their stance regarding the COVID-19 virus.
Threatening or Assaulting a Federal Official
18 U.S.C. § 115
Interstate Threatening Communications
18 U.S.C. § 875
Mailing threatening communications
18 U.S.C. § 876
Applies only to threats against federal officials. For example, a person threatens a federal government employee because they do not like a mandated shelter-in-place order.
Applies to threats made in interstate commerce, i.e., from one state to another. Could apply to internet threats made from one Michigan individual to another, because of how internet traffic is routed.
Applies to threats made using the U.S. mail, even those that are wholly within the State of Michigan.
Threats to infect people with the COVID-19 virus.
Interstate Threatening Communications
18 U.S.C. § 875
Threatening to Use a Weapon of Mass Destruction
18 U.S.C. § 2332a
Applies to threats made in interstate commerce, i.e., from one state to another. Could apply to internet threats made from one Michigan individual to another, because of how internet traffic is routed.
Includes threats to use a weapon involving a biological agent.
U.S. Attorney urges the public to report suspected COVID-19 fraud Assistant U.S. Attorney John Neal Appointed as Coronavirus Fraud CoordinatorRead the Press Release
DETROIT, Michigan – U.S. Attorney Matthew Schneider today urged the public to report suspected fraud schemes related to COVID-19 (the Coronavirus) by calling the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or to the NCDF e-mail address [email protected]. U.S. Attorney Schneider also urged the public to report suspected price gouging to the Michigan Attorney General’s Office by calling 877-765-8388 or reporting online at www.michigan.gov/ag.
Attorney General William Barr has directed U.S. Attorneys to coordinate with the Department of Justice to prioritize the investigation and prosecution of Coronavirus fraud schemes.
“During the pandemic, our office will continue to investigate and prosecute cases, particularly those involving violent and dangerous criminals,” United States Attorney Matthew Schneider stated. “We also plan to prioritize our efforts to go after scammers who exploit the Coronavirus to cheat people. Our job is to protect the public, and we continue to work with our state and local partners to preserve public safety during these challenging times.”
Some examples of these schemes include:
- Individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud.
- Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention.
- Malicious websites and apps that appear to share Coronavirus-related information to gain and lock access to your devices until payment is received.
- Seeking donations fraudulently for illegitimate or non-existent charitable organizations.
- Medical providers obtaining patient information for COVID-19 testing and then using that information to fraudulently bill for other tests and procedures.
In a memorandum to U.S. Attorneys issued March 19, Deputy Attorney General Jeffrey Rosen also directed each U.S. Attorney to appoint a Coronavirus Fraud Coordinator to serve as the legal counsel for the federal judicial district on matters relating to the Coronavirus, direct the prosecution of Coronavirus-related crimes, and to conduct outreach and awareness activities. The Eastern District of Michigan Coronavirus Fraud Coordinator is Assistant United States Attorney John Neal, who serves as Chief of the White Collar Crime Unit in the U.S. Attorney’s Office.
The NCDF can receive and enter complaints into a centralized system that can be accessed by all U.S. Attorneys, as well as Justice Department litigating and law enforcement components to identify, investigate and prosecute fraud schemes. The NCDF coordinates complaints with 16 additional federal law enforcement agencies, as well as state Attorneys General and local authorities.
To find more about Department of Justice resources and information, please visit www.justice.gov/coronavirus.
###
Former International UAW President Charged with Embezzlement, Racketeering, and Tax EvasionRead the Press Release
Gary Jones, the former President of the international United Auto Workers union, was charged today in a Criminal Information with conspiring with other UAW officials to embezzle over $1 million of UAW dues money, to furthering racketeering activity, and to evading taxes announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Steven M. D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
Gary Jones, 62, of Canton, Michigan, is charged with conspiring to embezzle UAW dues money and conspiring to use a facility of interstate commerce to aid racketeering crimes between 2010 and September 2019. He is also charged with conspiring to defraud the United States by evading the payment of taxes on embezzled funds and causing the UAW to file false tax returns during the same period of time.
Between June 2018 and November 2019, Jones served as the President of the International Union, United Automobile, Aerospace, and Agricultural Workers of America (“UAW”). The UAW represents over 400,000 active members and over 580,000 retired members in more than 600 local unions across the United States. Prior to serving as UAW President, Jones was the Director of UAW Region 5 and a member of the UAW’s International Executive Board from October 2012 through June 2018. The UAW’s Region 5 is headquartered in Hazelwood, Missouri, and covers the tens of thousands of UAW members in Missouri and the sixteen states to the southwest, including California and Texas.
The Criminal Information charges that Jones conspired with at least six other senior UAW officials in a multiyear conspiracy to embezzle money from the UAW for the personal benefit of Jones and other senior UAW officials. Jones and other UAW officials concealed personal expenditures in the cost of UAW Region 5 conferences held in Palm Springs, California, Coronado, California, and Missouri. Between 2010 and 2018, Jones and other UAW officials submitted fraudulent expense forms seeking reimbursement from the UAW’s Detroit headquarters for expenditures supposedly incurred in connection with Region 5 leadership and training conferences. In truth, however, Jones and his co-conspirators used the conferences to conceal the hundreds of thousands of dollars in UAW funds spent on lavish entertainment and personal spending for the conspirators.
The Information charges that Jones and other senior UAW officials used UAW money to pay for personal expenses, including golf clubs, private villas, cigars, golfing apparel, green fees at golf courses, and high-end liquor and meals costing over $750,000 in UAW funds. For example, in just one of the years of the conspiracy, Jones is charged with ordering over $13,000 in cigars for the use of high-level UAW officials.
Besides using the UAW conferences to conceal the fraudulent use of UAW money for personal expenses, Jones is charged with assisting in a conspiracy to embezzle UAW funds from the UAW’s Midwest CAP. The UAW Midwest CAP is one of the UAW’s many Community Action Programs. Jones is charged with accepting over $60,000 in cash from co-conspirator Edward Robinson who cashed over $500,000 in fraudulent UAW Midwest CAP checks and embezzled money from the UAW Labor Employment Training Corporation.
Besides conspiring with other UAW officials to embezzle UAW funds, Jones is also charged with conspiring with UAW officials to defraud the United States by impeding the Internal Revenue Service in the collection of taxes from Jones and other UAW officials. The conspirators also caused the UAW to file false tax returns with the IRS.
Based on each of the two counts of conspiracy, Jones faces a maximum of five years in prison and a fine of up to $250,000.
A Criminal Information is only a charge and is not evidence of guilt.
Jones is the fourteenth defendant to be charged in connection with the ongoing criminal investigation into corruption within the UAW or relating to illegal payoffs to UAW officials by FCA executives. The following individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison), former UAW Vice President Norwood Jewell (15 months in prison), and former senior UAW official Michael Grimes (28 moths). In addition, the following UAW officials have pleaded guilty and are awaiting sentencing: former UAW Vice President Joseph Ashton, former senior UAW official Jeffrey “Paycheck” Pietrzyk, former UAW Region 5 Director UAW Board member Vance Pearson, and former UAW Midwest CAP President Edward “Nick” Robinson.
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“The charges today demonstrate our continuing progress towards restoring honest leadership for the over 400,000 men and women of the UAW,” said United States Attorney Matthew Schneider. “The union’s leaders must be dedicated to serving their members and not serving themselves.”
“An important mission of the Office of Inspector General is to investigate allegations of labor racketeering and corruption within labor unions. We will continue to work with our law enforcement partners to investigate these types of allegations,” stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
"While union corruption is not new, each instance slowly undermines the trust members have in their organization. In order for unions to be effective, their members must trust their leadership to do what is best for the entire union and not just for themselves. In this case, that trust has been broken over and over again," said SAC D'Antuono. "While today represents a significant development in this investigation, it does not represent its end. Our work on this case will continue until we are satisfied that everyone who should answer for these crimes is brought to justice."
“Honest and hardworking UAW members are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money," Internal Revenue Service – Criminal Investigation Special Agent in Charge Sarah Kull said. "IRS-CI enforces the nation's tax laws, but also takes particular interest in cases where someone, for their own personal benefit, has taken what belonged to others”.
“Today’s information alleges an outrageous abuse of power and misuse of former President Gary Jones’ position of trust to enrich himself and other officers within the UAW at the expense of the UAW’s hardworking members,” said Thomas Murray, District Director, U.S. Department of Labor, Office of Labor-Management Standards. “This information leaves no question as to the agency’s commitment to seek justice when anyone puts personal financial gain ahead of the best interests of union members.”
The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, Steven Cares, and Adriana Dydell.
Former UAW Midwest CAP President Pleads Guilty to Embezzling UAW Funds and Evading TaxesRead the Press Release
Edward “Nick” Robinson, the former President of the United Auto Workers Midwest CAP and the former Director of the UAW Labor and Employment Training Corporation, pleaded guilty today to conspiring with other UAW officials to embezzle over $1 million of UAW dues money and to defraud the United States by evading the payment of taxes announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Steven M. D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
Edward “Nick” Robinson, 72, of Kirkwood, Missouri, pleaded guilty to conspiring to embezzle UAW dues money between 2010 and September 2019. Between at least 2010 and September 2019, Robinson served as the President of the UAW’s Midwest CAP of Region 5 of the International Union, United Automobile, Aerospace, and Agricultural Workers of America (“UAW”). The UAW Midwest CAP is one of the UAW’s Community Action Program Councils which are supported through UAW dues money. The UAW’s Region 5 is headquartered in Hazelwood, Missouri, and covers the tens of thousands of UAW members in Missouri and the sixteen states to the southwest, including California and Texas. Robinson also served as the Assistant to the President of the UAW Labor and Employment Training Corporation headquartered in Hazelwood, Missouri. The UAW-LETC was supposed to provide workforce training and development programs.
During the plea hearing, Robinson admitted that he conspired with at least six other senior UAW officials in a multiyear conspiracy to embezzle money from the UAW for the personal benefit of Robinson and other senior UAW officials. Robinson and other UAW officials concealed personal expenditures in the cost of UAW Region 5 conferences held in Palm Springs, California, Coronado, California, and Missouri. Between 2010 and 2018, other UAW officials submitted fraudulent expense forms seeking reimbursement from the UAW’s Detroit headquarters for expenditures supposedly incurred in connection with Region 5 leadership and training conferences. In truth, however, Robinson and his co-conspirators used the conferences to conceal the hundreds of thousands of dollars in UAW funds spent on lavish entertainment and personal spending for the conspirators.
For example, Robinson and other senior UAW officials used UAW money to buy sets of golf clubs, individual clubs, and other golf equipment that cost thousands of dollars. They spent over $100,000 to purchase golf clothing, shirts, hats, sunglasses, golf balls, jackets, and fashion shorts from various pro shops at golf courses in California and Missouri. And they spent tens of thousands of dollars in UAW funds at the Indian Canyons golf course in Palm Springs on green fees for golfing outside of the time of the UAW conferences.
As part of the conspiracy, Robinson and his co-conspirators embezzled over $60,000 in UAW funds for the purchase of boxes of cigars, humidors, cigar cutting equipment, and lighters from 2014 to 2018. The costs of the cigars were hidden within the expenses for the Region 5 conferences. Pearson caused the UAW to file false reports with the Department of Labor wherein the various embezzlement activity was concealed.
During search warrants executed by federal law enforcement in August 2019 in connection with the investigation, agents recovered dozens of cigars, humidors, and other tobacco-related items in the personal residences of UAW officials. In addition, agents seized hundreds of high-end bottles of liquor, hundreds of golf shirts, multiple sets of golf clubs, and over thirty thousand dollars in cash. Agents seized sets of golf clubs from the homes and offices of UAW officials which were paid for with embezzled UAW funds.
Besides using the UAW conferences to conceal the fraudulent use of UAW money for personal expenses, Robinson also wrote over $500,000 in fraudulent checks from the UAW Midwest CAP account. Robinson then turned these checks into cash and kept some of the money for himself, shared some with other UAW officials, or spent the money on personal expenses to benefit himself and other high-level UAW officials.
Besides conspiring with other UAW officials to embezzle UAW funds, Robinson also conspired with other UAW officials to defraud the United States by impeding the Internal Revenue Service in the collection of taxes from Robinson and other UAW officials.
Based on each of his embezzlement and tax fraud conspiracy convictions, Robinson faces a maximum of five years in prison and a fine of up to $250,000.
As part of his guilty plea, Robinson agreed to pay $42,000 in restitution to the Internal Revenue Service owed on his own personal taxes. In addition, the court will determine additional restitution at the time of sentencing based on the embezzlement of UAW funds.
Robinson is the thirteenth defendant to plead guilty in connection with the ongoing criminal investigation into illegal payoffs to UAW officials by FCA executives and corruption within the UAW itself. The following individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison), former UAW Vice President Norwood Jewell (15 months in prison), and former senior UAW official Michael Grimes (28 moths). In addition, the following UAW officials have pleaded guilty and are awaiting sentencing: former UAW Vice President Joseph Ashton and former senior UAW official Jeffrey “Paycheck” Pietrzyk.
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“Our office will never tolerate the abuse of union funds for the benefit of corrupt union officials,” said United States Attorney Matthew Schneider. “We will continue our work until the men and women of the UAW have confidence that their union leadership is serving and advancing their interests — instead of the personal interests of union bosses.”
“Robinson conspired with senior UAW officials to embezzle more than $1,000,000 in order to personally enrich himself at the expense of the hard-working men and women of the UAW. We will continue to work with our law enforcement partners to protect the financial integrity of labor organizations," stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“It is hard to discuss the criminal behavior of these UAW executives without acknowledging the damage it has done to the faith union members have in their leadership,” said Steven M. D’Antuono, Special Agent in Charge of the FBI’s Detroit Field Office. “The FBI stands committed to these types of investigations in order to restore the union to its core purpose of negotiating for and protecting the rights of its hard-working members who put their trust in their union officials.”
“Robinson not only defrauded his union members for ten years, he also defrauded the American people by causing false tax returns to be filed and not paying his fair share.” stated Special Agent in Charge, Sarah Kull of the Internal Revenue Service – Criminal Investigation. “Today’s guilty plea shows a tremendous lack of ethical character and greed.”
“Instead of serving the interests of his fellow UAW members, Edward Robinson executed elaborate schemes to embezzle hundreds of thousands of dollars from the UAW, including dues paid by hard working union members, to fund an extravagant lifestyle for him and other high-ranking UAW officers,” said Thomas Murray, District Director, U.S. Department of Labor, Office of Labor-Management Standards. “OLMS will continue to work with its fellow law enforcement partners and the U.S. Attorney’s Office to remove corrupt union officers and other officials within the UAW International Union.”
The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey, Steven Cares, and Adriana Dydell.
Physician Charged for Alleged Role in an over $120 Million Health Care Fraud and Money Laundering Conspiracy Involving Sponsorship of Ultimate Fighting Championship Hall of FamersRead the Press Release
A physician who from 2016 to 2017 was the top prescriber of oxycodone 30 mg in Michigan was charged in a superseding indictment unsealed today with an over $120 million health care fraud and money laundering scheme that involved the alleged medically unnecessary distribution of over 2.2 million dosage units of controlled substances and the administration of medically unnecessary injections that resulted in patient harm.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Steven M. D’Antuono of the FBI’s Detroit Division and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office made the announcement.
Francisco Patino, 65, of Wayne County, Michigan, was charged in the superseding indictment with one count of conspiracy to commit health care fraud and wire fraud, one count of conspiracy to commit money laundering and one count of money laundering. These charges are in addition to the two counts of health care fraud and one count of conspiracy to defraud the United States and pay and receive health care kickbacks that was charged in the initial indictment. The case is pending before U.S. District Judge Denise Page Hood of the Eastern District of Michigan. Trial has been scheduled to begin on April 7 before Judge Hood.
The superseding indictment alleges the laundering of the proceeds of the health care fraud scheme to falsely portray the defendant as a legitimate doctor through the publication of a diet book and plan described as the “next Atkins,” paid-for appearances on a nationally syndicated television show, and the sponsorship of boxers, cagefighters and prominent Ultimate Fighting Championship (UFC) world champions and hall of famers.
The superseding indictment alleges that Patino owned, controlled and operated numerous pain clinics and laboratories in Michigan – including Global Quality Inc., RenAMI, FDRS and Patino Laboratories – and was the top prescriber of Oxycodone 30 mg in Michigan from 2016 to 2017. As alleged in the superseding indictment, from 2008 until his arrest in 2018, Patino induced patients to come to his clinics by offering unnecessary prescriptions for addictive opioids, of which he ultimately prescribed over 2.2 million dosage units of medically unnecessary controlled substances, including fentanyl, oxycodone and oxymorphone. Patino prescribed these opioids to Medicare beneficiaries, some of whom were addicted to narcotics. Some of these opioids were resold on the street, the superseding indictment alleges. Fentanyl is one of the most potent opioids available for human use.
According the superseding indictment, Patino forced patients to submit to unnecessary and sometimes painful back injections and other procedures in exchange for the opioid prescriptions as part of a scheme to defraud Medicare of over $120 million. The superseding indictment alleges that Patino persisted with these unlawful practices even after Medicare informed him that the injections violated Medicare’s rules and after Patino entered into a consent order with the State of Michigan that his prescription of opioids “constitute[d] a violation of the public health code.”
Patino also ordered unnecessary urine drug testing in exchange for illegal kickbacks, the superseding indictment alleges. Patino was aware that his ownership structure and kickbacks were a violation of law and authored emails acknowledging that such ownership constituted a “violation of the Stark and Anti-Kickback laws” and attempted to conceal and disguise the ownership structure and scheme in order to keep himself “out of Federal Prison & having all our assets seized to pay a 15 million dollar fine.”
The superseding indictment alleges that Patino conspired to commit money laundering and committed money laundering in connection with the creation and promotion of the “Patino Diet” plan, which Patino described to others as the “next Atkins diet.” In order to conceal and disguise his illegal health care fraud scheme, Patino allegedly paid for the authorship and publication of a book touting the diet plan, entitled “The Age of Globesity,” and paid hundreds of thousands of dollars in order to promote the diet plan and appear as the exclusive medical expert on a nationally syndicated television show.
In addition to concealing the scheme by paying money to falsely portray himself as a media personality and a legitimate physician, the superseding indictment alleges, that Patino laundered the healthcare fraud and kickback money by entering into sham contracts or employment relationships to pay others on his behalf to sponsor boxers, mixed martial artists and Ultimate Fighting Championship (UFC) combatants, including UFC world champions and hall of famers. The superseding indictment alleges that Patino also withdrew the proceeds derived from the conspiracy to live an extravagant lifestyle and spend money on luxury clothes, real estate and international travel, including multiple trips to the Cayman Islands.
The charges against Patino are related to a broader investigation into the Tri-County Network of pain clinics in Michigan and Ohio, which involves over $300 million in alleged Medicare fraud and the alleged distribution of over 6.6 million dosage units of controlled substances. In connection with the investigation, 22 defendants, including 12 physicians, have previously pleaded guilty or been found guilty at trial.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the FBI and HHS-OIG. Assistant Chief Jacob Foster and Trial Attorney Thomas Tynan of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
U.S. Attorney Matthew Schneider Announces Progress in Making our Communities Safer through Project Safe Neighborhoods Unveils Media Campaign Aimed at Raising AwarenessRead the Press Release
Federal prosecution against felons and violent offenders with guns in the Eastern District of Michigan increased 10% in 2019. The strong partnership we have with our state and local law enforcement agencies, particularly the Detroit Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Wayne County Prosecutor’s Office, and Federal Bureau of Investigation enabled us to identify the most significant violent offenders in our district for federal prosecution.
“Ensuring that guns stay out of the hands of prohibited people is critical to the mission of preventing violent crimes,” stated United States Attorney Matthew Schneider. “We are working hard to identify and target the most violent offenders in our communities in an effort to reduce and prevent further violence.”
“By utilizing ATF’s Crime Gun Intelligence Center and NIBIN technology, investigators are using crime gun intelligence to quickly identify serial shooters, firearms traffickers, and other violent offenders and hold them accountable for the violence their actions cause throughout our community,” said Special Agent in Charge James Deir. “When you add in the great collaboration of our federal, state, and local law enforcement partners, the community benefits with safer streets.”
“Ensuring the safety and security of our residents in the city of Detroit is our number one priority. Project Safe Neighborhood is yet another example of how we can work collaboratively to create safe neighborhoods and will continue our efforts in targeting violent offenders that pose a threat to the quality of life for the residents”, said Chief James Craig.
Through advances in technology, we have been able to identify offenders who are driving violent crime rates in certain areas of Detroit. In 2019, Project Safe Neighborhoods (PSN), the centerpiece of the Department of Justice’s violent crime reduction strategy, began operating in the 9th Precinct of Detroit. During that year, we saw a 28% decrease in the number of non-fatal shootings and a 10% drop in homicides.
In an effort to continue this downward trend, the United States Attorney’s Office, in partnership with the Detroit Police Department and the City of Detroit, have created billboards and public service announcements to spread the message that gun crimes come with tough federal prison sentences.
The billboards, which will go up this week and run through the week of March 9, are located at:
Harper Road east of Park Drive (this week - March 22)
Gratiot Avenue north of Waltham (this week - March 22)
Gratiot Avenue north of Fairport (March 9-April 5)
E. McNichols Road west of Hamburg (March 9-April 5)
The public service announcements can be found at:
https://youtu.be/Dgp8Xg6kfkE
https://youtu.be/KEDvhRVAeu4
https://www.youtube.com/watch?v=i0iQ27wz4wk&feature=youtu.be
This awareness campaign was developed as part of Attorney General William Barr’s signature anti-gun violence initiative, Project Guardian. This initiative is designed to reduce gun violence and enforce federal firearms laws across the country. Specifically, Project Guardian focuses on investigating, prosecuting, and preventing gun crimes and serves as a complementary effort to the success of PSN.
In reaffirming our commitment to PSN, the United States Attorney’s Office’s Major Crimes Unit expanded prosecution guidelines to include domestic violence offenders, straw purchasers, offenders who possess guns with positive NIBIN hits (forensically linking guns to crime scenes), and offenders with gang affiliations. Some of those cases include:
- Derrell Hayes and Mohammad Karkash, both convicted felons who were on federal supervised release, violated their terms of release by committing a domestic violence offense. Hayes received a term of incarceration of 24 months in federal prison and Karkash received a sentence of 21 months in federal prisonn.
- Eight individuals were charged in a firearms straw buyer trafficking ring. It is alleged these individuals made false statements during the purchase of firearms, indicating that they were purchasing the firearms for themselves, when they were purchasing the firearm for a multi-convicted felon. This is otherwise known as a “straw purchase,” which is a violation of federal law. The firearm purchases were made at numerous stores in the metro Detroit area.
- A Detroit man was charged and convicted of illegally possessing a firearm while on probation and fleeing from law enforcement. ATF began investigating the defendant after receiving a NIBIN (National Integrated Ballistic Information Network) lead connecting firearms in the defendants’ possession to two separate shooting incidents in Detroit.
Through our partnership with the Wayne County Prosecutor’s Office we have accepted for federal prosecution nearly 40 percent of all the cases referred by their office. This partnership has allowed us to remove some of the worst repeat offenders from our streets. Those offenders include:
- Tyrone Vannoy, an armed career criminal with seventeen prior convictions on his record. Vannoy was sentenced to 15 years in federal prison following his conviction for possession of a firearm by a convicted felon and using a firearm in relation to a drug trafficking offense.
- Denver Lee, a seven-time convicted felon, was sentenced to 15 years in federal prison following his conviction for possession of a firearm by a convicted felon.
- Danny Woods, a multi-convicted felon and armed career criminal, was arrested for selling drugs in a park in Detroit. He received a 20 year sentence in federal prison.
We realize that we can’t simply prosecute our way out of violent crime and that prevention is an essential part of the equation. Part of the prevention component is Ceasefire Detroit. Ceasefire Detroit is a partnership between law enforcement, church leaders, and community members that speaks directly to those individuals who are driving the violence in our communities. Ceasefire Detroit focuses on a key group of gang members: trigger pullers. Ceasefire Detroit requires gang members who are on probation or parole to report to a “Call In” a meeting with U.S. Attorney Matthew Schneider, Mayor Mike Duggan, Police Chief James Craig, and community partners such as Goodwill Industries and Flip the Script. Gang members in attendance are warned about the harsh prosecutorial and incarceration ramifications they will face if anyone of their members is involved a future shooting. They are warned that all of the state and federal law enforcement partners will pool resources in an effort to prosecute and dismantle the entire gang. At the “Call In,” they are offered an opportunity to sign up for job skills, G.E.D., and other services if they want to get out of the gang lifestyle.
Project Safe Neighborhoods works. It works because of the ongoing cooperation and commitment from our partners. While progress has been made, the fight is not over. We will continue to work together to fight violent crime in our communities.
Former Chief Executive Officer of SEMAC Sentenced for Wire Fraud in Connection with His Theft of over $3.4 Million from SEMACRead the Press Release
Anthony Vespa, 55, was sentenced yesterday to 36 months in prison after having pleaded guilty to charges of Wire Fraud in connection with his employment as CEO of Southeast Michigan Accountable Care (SEMAC) announced United States Attorney Matthew Schneider
Schneider was joined in the announcement by Steven D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation (FBI).
The Honorable David M. Lawson sentenced Anthony Vespa to serve 36 months in federal prison following his conviction for Wire Fraud by stealing $3,445,545.44 of SEMAC’s money. Following his release from prison, Vespa will serve a two year term of supervised release and was also ordered to pay restitution and forfeiture in the amount of $3,445,545.44 for the money he stole from SEMAC.
During the scheme to defraud, Anthony Vespa was employed as the executive director of SEMAC. SEMAC was founded in 2010 as an Accountable Care Organization and was a physician led network of physicians who partnered with Medicare to provide and improve healthcare for patients.
Included in SEMAC’s contract with Medicare was an agreement that SEMAC physicians would participate in Medicare’s shared savings program. This program provided a yearly payment to SEMAC physicians representing a percentage of the total amount SEMAC saved Medicare that year. The payment from Medicare to SEMAC for the calendar year 2016 was $3,947,000 paid on October 23, 2017. The vast majority of the money illegally taken by Vespa came from this payment.
Anthony Vespa’s scheme to defraud was uncovered during the summer of 2017 when an audit of SEMAC’s checking account was conducted and misappropriated funds were discovered. Vespa was terminated in August 2017, but in September 2017, without SEMAC’s knowledge or authority, he opened a new account for SEMAC. The new account information was communicated to Medicare and used by Medicare to transfer the 2016 shared savings bonus to SEMAC. All of this took place without SEMAC’s approval or knowledge. As soon as the Medicare bonus was deposited into his account Vespa wrote checks, wire transferred money out of the account and used most of the funds for his own benefit.
United States Attorney Matthew Schneider commended the outstanding work of the FBI in conducting a comprehensive criminal investigation into this scheme to defraud.
“Medicare’s shared savings program is intended to promote the effective delivery of medical services by rewarding physicians who provide excellent patient care in the most efficient way possible. The public has a right to trust that the tax dollars they pay to support Medicare programs are used for their intended purpose. This prosecution serves as a warning that we will relentlessly pursue anyone who steals Medicare funds for their own personal use.”
“The defendant had a fiduciary responsibility to safeguard the funds of the victims' who trusted him to that task. Even after his scheme to defraud was uncovered, the defendant continued his deceitful scheme to defraud which makes it even more reprehensible,” said FBI Special Agent in Charge D’Antuono. “Today’s sentence should send a clear message that the FBI will vigorously pursue those who seek to lie, cheat, and steal from our hardworking citizens.”
This case was investigated by special agents of the FBI and prosecuted by Assistant United States Attorney Karen Reynolds.
Leader of Deadly Fentanyl Distribution Ring Sentenced to 30 YearsRead the Press Release
Demarco Tempo, the architect of a heroin, crack cocaine, and fentanyl dealing operation that went by the name “Polo” and was described by several former customers as a “McDonald’s for drugs,” was sentenced to 30 years in federal prison for drug distributions resulting in several overdoses and the death of at least one victim, announced United States Attorney Matthew Schneider. Tempo was the last of thirteen convicted defendants in this conspiracy to be sentenced.
Schneider was joined in the announcement by Special Agent in Charge Keith Martin, Drug Enforcement Administration, Detroit Division and Commissioner William Dwyer, Warren Police Department.
“The drug dealers in this case had a complete disregard for life, and the heroin and fentanyl they sold killed a Michigan resident who was struggling with addiction,” said United States Attorney Matthew Schneider. “The life-saving efforts of the local police and first responders prevented numerous other senseless deaths. Now, with the architect of this drug dealing scheme behind bars for the next 30 years, people suffering from addiction will have a better chance at recovery.”
“The success of this investigation is a testament to collaboration between federal and local law enforcement partners in targeting and dismantling heroin distribution rings in Southeastern Michigan, stated Special Agent in Charge Martin. "Communities throughout the state need not worry about Mr. Tempo and his drug business for the next quarter century.”
According to court records, from 2012 through his arrest in June 2016, Tempo led the “Polo” organization, a group of drug traffickers on the east side of Detroit who sold heroin and crack cocaine all day, every day, to hundreds, if not thousands, of customers. The phone numbers used to contact “Polo” were well known and widely used in the surrounding areas: one fifteen-month period showed 416,934 contacts on the two main numbers, an average of more than 900 per day.
Around the beginning of 2016, Tempo and his co-conspirators began selling fentanyl mixed with—and sometimes substituted altogether for—heroin to unsuspecting customers. A rash of near-fatal overdoses in nearby Warren— and one that resulted in the tragic death of a 19-year-old Warren woman—led to an investigation by the Warren Police Department and Drug Enforcement Administration. Using a wide variety of techniques during an intensive three-month investigation, including physical and electronic surveillance, undercover purchases, search warrants, and customer interviews, law enforcement ultimately identified several members of the Polo operation, arresting and charging thirteen—including Tempo, who was caught red-handed with seven cell phones, including the two main “Polo” phones—between June and September 2016.
Most of these defendants faced the most serious charges: conspiracy to distribute and possess with intent to distribute heroin, crack cocaine, fentanyl, and powder cocaine, resulting in death or serious bodily injury; distribution of heroin and fentanyl resulting in death or serious bodily injury; and possession of heroin and crack cocaine with intent to distribute, within 1,000 feet of a school. Three defendants (Randy Stewart, Darreyl Coneal, and Amacio Alexander) were not charged with overdose counts, based on their limited participation in the crimes. Eleven traffickers pleaded guilty, and two—Tempo and his half-brother, Kenneth Sadler—were convicted in March 2019 following a five-week trial. Sadler was also convicted at that trial of possession of a firearm by a convicted felon and with witness intimidation counts, for threats made to multiple witnesses while the original charges were pending.
Altogether, these defendants were sentenced to terms in federal prison totaling more than 130 years. A complete summary of the sentences follows:
Demarco Tempo, a/k/a “Polo”: sentenced on February 14, 2020, to 30 years.
Kenneth Sadler, a/k/a “KO”: sentenced on October 9, 2019, to 25 years.
Darius Gordon, a/k/a “Debo”: sentenced on September 13, 2018, to 11 years.
Haratio Heard, a/k/a “Show”: sentenced on August 28, 2018, to 10 years [(shot and killed on October 23, 2018, while pending surrender to begin serving his sentence)].
Juwan Allen, a/k/a “Juan”: sentenced on June 14, 2018, to 10 years.
Greg Howard, a/k/a “G”: sentenced on August 3, 2018, to 10 years.
Marcus Gilbert: sentenced on September 13, 2018, to 103 months.
Alvin Coates: sentenced on September 13, 2018, to 87 months.
Javon Brown, a/k/a “J”: sentenced on April 25, 2019, to 87 months.
Dennis Jones, a/k/a “Shorty”: sentenced on April 30, 2018, to 7 years.
Randy Stewart, a/k/a “Bookie”: sentenced on July 28, 2017, to 5 years.
Darreyl Coneal: sentenced on May 7, 2018, to 3 years.
Amacio Alexander: sentenced on May 1, 2019, to 1 year.
The case was prosecuted by Assistant United States Attorneys Ben Coats and Brant Cook.
Former Senior UAW Official Sentenced to 28 Months for Taking over $1.5 Million in Bribes and KickbacksRead the Press Release
Michael Grimes, a former high-level official in the UAW’s General Motors Department, was sentenced to 28 months in federal prison today for conspiring with other UAW officials to engage in honest services fraud by taking over $1.5 million in bribes and kickbacks from UAW vendors and contractors and for conspiring to launder the proceeds of the scheme, announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Steven M. D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
In September, Michael Grimes, 66, of Ft. Myers, Florida, who is a native of Grand Blanc, Michigan, pleaded guilty to conspiring with two other high-level UAW officials—Joseph Ashton and Jeffrey Pietrzyk—to take millions of dollars in bribes and kickbacks from vendors doing business with the joint UAW-GM Center for Human Resources (CHR). Ashton, 71, of Ocean View, New Jersey, and Pietrzyk, 78, of Grand Island, New York, have since pleaded guilty. This “pay to play” scheme which began in 2006, and lasted over twelve years, reaped Grimes over $1.5 million which he spent on property, houses, cosmetic surgery for a relative, and a host of other items which never benefited the UAW membership.
The CHR is supposed to be a center for training UAW workers employed by GM. But Grimes, Pietrzyk, and Ahston, each of whom served on the Executive Board for the CHR, abused the power they had to approve contracts with vendors for watches, jackets, backpacks, and UAW stores at GM manufacturing facilities, and demanded kickbacks for their own financial gain. For example, in 2011, Grimes, Ashton and Pietrzyk demanded that a vendor give them a $300,000 kickback on a $6 million contract to purchase 50,000 jackets emblazoned with “Team UAW-GM.” Grimes collected the $300,000 kickback and delivered the proceeds to Ashton and Pietrzyk. Grimes demanded an additional kickback of $525,000 from the same vendor for the same jacket contract.
In another scheme to defraud, Grimes, Ashton and Pietrzyk demanded kickbacks on a $3.9 million contract for the CHR to buy 58,000 watches for all UAW members employed by GM. The UAW officials demanded over $300,000 in kickbacks on the watch contract to be distributed between 2013 through 2016. Some of the kickbacks were distributed in the form of checks disguised as tens of thousands of dollars in payments for “antique furniture.” The majority of the kickbacks were distributed as cash. In 2014, the UAW-GM CHR received the 58,000 watches from the vendor. However, the watches were never distributed to UAW members. Instead, the watches have been sitting in storage in a warehouse for over five years.
Grimes also conspired to launder the proceeds of the kickback scheme by using a series of complicated schemes, including funneling the money through a sham consulting company run by a relative, to conceal and disguise the bribes and kickbacks.
As part of this investigation, the government has forfeited money and real property from Grimes totaling over $1.5 million.
Grimes is one of many to plead guilty and be sentenced in connection with the ongoing criminal investigation into corruption within the UAW. The following individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison), and former UAW Vice President Norwood Jewell (15 months in prison). Most recently, former UAW Region 5 Director Vance Pearson pleaded guilty last week.
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“It is imperative that the UAW leadership continues to be held accountable to their fiduciary duties and responsibilities,” said United States Attorney Matthew Schneider. “Today’s sentence represents another step forward in our efforts to target and prosecute corrupt UAW leaders who place their drive for personal enrichment ahead of the mission of the union.”
“Michael Grimes engaged in a fraudulent scheme to deprive the International United Auto Workers Union of his honest services by demanding and accepting over $1.5 million in bribes and kickbacks from vendors. Grimes' criminal actions were an effort to enrich himself at the expense of dues-paying UAW members. We will continue to work with our law enforcement partners to investigate those who facilitate illegal payments to union officials entrusted to negotiate on behalf of union members,” stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“The trail of money has led to the truth, an ugly truth of bribery, kickbacks and sham corporations, ultimately netting Michael Grimes $1.5 million dollars at the expense of UAW workers. Today’s sentence brings the UAW one step closer to removing the greedy and corrupt leadership that once embodied UAW officials across the country,” said Sarah Kull, Special Agent in Charge of Detroit’s IRS Criminal Investigation.
“Michael Grimes failed his fiduciary duties as a UAW official and betrayed the trust of the UAW membership when he used his union position to demand bribes and kickbacks from vendors in excess of $1.5 million so that he could enrich himself and other UAW officials,” said Thomas Murray, District Director, U.S. Department of Labor, Office of Labor-Management Standards. “Today's conviction leaves no question as to the agency’s commitment to seek justice when anyone puts personal financial gain ahead of the best interests of their fellow union members.”
The case is being prosecuted by Assistant U.S. Attorneys Frances Carlson and Eaton Brown.
Former Detroit Police Officer Pleads Guilty to Taking $15,000 in Cash Bribes from A Drug TraffickerRead the Press Release
Former Detroit Police Officer Michael Mosley, age 48, pleaded guilty today before the Honorable George Caram Steeh to bribery for taking $15,000 in cash bribes from a drug trafficker, announced U.S. Attorney Matthew Schneider.
Joining Schneider in the announcement was Steven M. D’Antuono, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation.
Officer Mosley is a nineteen-year veteran of the Detroit Police Department. As stated during Mosley’s guilty plea, in April 2019, Mosley was a member of the Police Department’s Major Violators Unit. On April 3, 2019, Detroit police officers, including Officer Mosley, searched a drug trafficker’s house pursuant to a search warrant. The search uncovered two kilograms of heroin, one kilogram of cocaine, and six firearms. The drug trafficker confessed to owning the three kilograms of drugs to Officer Mosley, and the trafficker signed a confession. After the April 3 search, Officer Mosley remained in contact with the drug trafficker in an effort to secure the trafficker’s cooperation concerning other criminal activity.
Subsequently, the drug trafficker offered Officer Mosley a cash bribe of $15,000 in exchange for not pursuing criminal charges based on the three kilogram drug seizure. Officer Mosley agreed to the deal. On May 2, 2019, Officer Mosley collected $10,000 in cash that the drug dealer left for Mosley in the backyard of an abandoned house in Detroit. On May 23, 2019, Officer Mosley accepted another $5,000 in cash left for him by the drug trafficker at the abandoned house. In exchange, Officer Mosley gave the drug trafficker the original copy of his confession.
In addition to pleading guilty to one count of bribery, Mosley will be forfeiting the $15,000 he took in bribes.
U.S. Attorney Matthew Schneider commended the outstanding work of the FBI in conducting this criminal investigation of a corrupt police officer.
“It’s rare that a police officer commits a crime, but in this case Officer Mosley betrayed his oath as a police officer, and he betrayed the citizens of Detroit and the vast majority of his fellow officers who seek to protect and serve with integrity,” stated United States Attorney Matthew Schneider. “This prosecution demonstrates that we will not tolerate public officials who abuse their authority and seek to use their power to line their own pockets.”
“The citizens of Detroit deserve better from their public servants. Wrongdoing by police officers undermines the public's trust and confidence in law enforcement officers who are sworn to defend and uphold the law,” said Special Agent in Charge D’Antuono. “The men and women of the Detroit Police Department are dedicated to serving this community and misconduct by one of its officers is not a reflection of the entire force. However, the FBI will do everything in its power to bring corrupt police officers to justice and to restore faith in the integrity of law enforcement throughout the city.”
The investigation of this case was conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Sarah Resnick Cohen, David A. Gardey, and Shankar Ramamurthy.
Westland Resident Indicted in False Return SchemeRead the Press Release
Karar Alfadhili, a resident of Westland, Michigan, was indicted yesterday on three counts of knowingly and willfully making and subscribing, under penalties of perjury, false Forms 1040 U.S. Individual Income Tax Return (Form 1040) for tax years 2013, 2014, and 2015 in violation of the Internal Revenue Code, announced United States Attorney Matthew Schneider.
Schneider was joined in the announcement by Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations.
According to the indictment, Alfadhili reported false earnings and federal income tax withholdings on each of his Forms 1040 filed with the IRS. Alfadhili’s earnings and withholdings from 2013 through 2015 were reported on an accompanying Form W-2 to the Forms 1040 for employer KASP Incorporated.
Between tax years 2013 and 2015 Alfadhili’s reported range of earned income was $468,000 to $882,000 and federal income tax withholding was $184,424 to $349,161. In total the false earnings Alfadhili reported to the IRS were over two million dollars.
Each count of making and subscribing a false return under penalties of perjury in violation of Title 26 U.S.C. § 7206(1) is punishable up to 3 years imprisonment.
The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.
This case was investigated by special agents of the Internal Revenue Service, Detroit Field Office and is being prosecuted by Assistant United States Attorney Carl Gilmer-Hill
Former UAW Regional Director and Board Member Pleads Guilty to Racketeering and Embezzlement ConspiracyRead the Press Release
Vance Pearson, the former Director of the United Auto Worker’s Region 5 and a former member of the UAW’s International Executive Board, pleaded guilty today to conspiring with other UAW officials to embezzle hundreds of thousands of dollars of UAW dues money and to further racketeering activity announced U.S. Attorney Matthew Schneider.
Joining in the announcement were Irene Lindow, Special Agent in Charge of the U.S. Department of Labor – Office of Inspector General, Steven M. D’Antuono, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation, Sarah Kull, Special Agent in Charge of the Detroit, Michigan office of the Internal Revenue Service – Criminal Investigations, and Thomas Murray, District Director, U.S. Department of Labor – Office of Labor-Management Standards.
Vance Pearson, 58, of St. Charles, Missouri, pleaded guilty to conspiring to embezzle UAW dues money and conspiring to use a facility of interstate commerce to aid racketeering crimes between 2010 and September 2019. Between June 2018 and September 2019, Pearson served as the Director of Region 5 of the International Union, United Automobile, Aerospace, and Agricultural Workers of America (“UAW”). The UAW’s Region 5 is headquartered in Hazelwood, Missouri, and covers the tens of thousands of UAW members in Missouri and the sixteen states to the southwest, including California and Texas. As Region 5 Director, Pearson was a member of the UAW’s International Executive Board, which governs the affairs of the union. Between 2016 and June 2018, Pearson served as the Assistant Director of Region 5.
During the plea hearing, Pearson admitted that he conspired with at least six other senior UAW officials in a multiyear conspiracy to embezzle money from the UAW for the personal benefit of Pearson and other senior UAW officials. Pearson and other UAW officials concealed personal expenditures in the cost of UAW Region 5 conferences held in Palm Springs, California, Coronado, California, and Missouri. Between 2010 and 2018, Pearson and other UAW officials submitted fraudulent expense forms seeking reimbursement from the UAW’s Detroit headquarters for expenditures supposedly incurred in connection with Region 5 leadership and training conferences. In truth, however, Pearson and his co-conspirators used the conferences to conceal the hundreds of thousands of dollars in UAW funds spent on lavish entertainment and personal spending for the conspirators.
For example, Pearson and other senior UAW officials used UAW money to buy sets of golf clubs, individual clubs, and other golf equipment that cost thousands of dollars. They spent over $100,000 to purchase golf clothing, shirts, hats, sunglasses, golf balls, jackets, and fashion shorts from various pro shops at golf courses in California and Missouri. And they spent tens of thousands of dollars in UAW funds at the Indian Canyons golf course in Palm Springs on green fees for golfing outside of the time of the UAW conferences.
Pearson and other UAW officials also spent hundreds of thousands of dollars in UAW funds to rent villas in gated communities in Palm Springs for senior UAW officials for long periods of time outside of the dates set for the UAW conferences. In one instance, a high-level UAW official received the use of a Palm Springs villa for four months, all paid for with UAW funds. UAW funds were also used to pay for meals for senior UAW officials at high-end restaurants outside the time periods of the UAW conferences.
As part of the conspiracy, Pearson and his co-conspirators embezzled over $60,000 in UAW funds for the purchase of boxes of cigars, humidors, cigar cutting equipment, and lighters from 2014 to 2018. The costs of the cigars were hidden within the expenses for the Region 5 conferences. Pearson caused the UAW to file false reports with the Department of Labor wherein the various embezzlement activity was concealed.
During search warrants executed by federal law enforcement in August 2019 in connection with the investigation, agents recovered dozens of cigars, humidors, and other tobacco-related items in the personal residences of UAW officials. In addition, agents seized hundreds of high-end bottles of liquor, hundreds of golf shirts, multiple sets of golf clubs, and over thirty thousand dollars in cash. Agents seized sets of golf clubs from Pearson’s UAW office and from the home of another UAW official which were paid for with embezzled UAW funds.
Besides conspiring with other UAW officials to embezzle UAW funds, Pearson also conspired with UAW officials to aid racketeering crimes by using a facility of interstate commerce, in this case, the internet and electronic mail, to aid racketeering activity.
Based on his racketeering and embezzlement conspiracy conviction, Pearson faces a maximum of five years in prison and a fine of up to $250,000.
As part of his guilty plea, Pearson agreed to forfeit $81,000 from his so-called “Flower Fund.” A UAW Regional Director’s Flower Fund was ostensibly to be used for the purchase of flowers for the funerals of UAW members and their families. In practice, however, UAW officials have been forced to pay into the flower funds and the money has been exploited by senior UAW officials for their own personal use. In addition, Pearson agreed to forfeit $38,000 held in a “Members in Solidarity,” which was an account ostensibly to be used for campaign expenses associated with UAW elections. Finally, Pearson agreed to forfeit the set of custom made Titleist golf clubs seized from his office and which was paid for with UAW dues money.
Pearson is the twelfth defendant to plead guilty in connection with the ongoing criminal investigation into illegal payoffs to UAW officials by FCA executives and corruption within the UAW itself. The following individuals have already pleaded guilty to their participation in the scheme and have been sentenced: former FCA Vice President for Employee Relations Alphons Iacobelli (66 months in prison), former FCA Financial Analyst Jerome Durden (15 months in prison), former Director of FCA’s Employee Relations Department Michael Brown (12 months in prison), former senior UAW officials Virdell King (60 days in prison), Keith Mickens (12 months in prison), Nancy A. Johnson (12 months in prison), Monica Morgan, the widow of UAW Vice President General Holiefield (18 months in prison), and former UAW Vice President Norwood Jewell (15 months in prison). In addition, the following UAW officials have pleaded guilty and are awaiting sentencing: former UAW Vice President Joseph Ashton, former senior UAW official Michael Grimes, and former senior UAW official Jeffrey “Paycheck” Pietrzyk. Former UAW Official Edward “Nick” Robinson has been charged in a criminal information, and his case is still pending.
U.S. Attorney Schneider commended the outstanding work of the Internal Revenue Service – Criminal Investigations, the U.S. Department of Labor – Office of Labor-Management Standards and Office of Inspector General, and the Federal Bureau of Investigation in conducting a comprehensive criminal investigation into labor corruption activities involving a vital sector of the local and national economy.
“Today’s guilty plea is one more leap forward in our drive to prosecute corruption at the highest levels of the United Auto Workers union,” said United States Attorney Matthew Schneider. “The UAW needs to be led by men and women of integrity who are dedicated to bettering the lives of the hard-working members of the union, not dedicated to lining their own pockets.”
“Vance Pearson conspired with senior UAW officials to embezzle hundreds of thousands of dollars in union dues to further their racketeering activity. His actions were an effort to personally enrich himself at the expense of dues-paying UAW members. We will continue to work with our law enforcement partners to protect the financial integrity of labor organizations,” stated Irene Lindow, Special Agent-in-Charge, Chicago Region, U.S. Department of Labor Office of Inspector General.
“Mr. Pearson is the twelfth UAW official to plead guilty as a result of a criminal investigation which has made clear that corruption has become systemic within this organization,” said SAC D’Antuono. “The FBI and our law enforcement partners are committed to doing what is necessary to restore this great organization to its original purpose – serving hard-working union families, not enriching the powerful few.”
“As Director of the UAW’s Region 5, Vance Pearson was responsible for serving the interests of tens of thousands of UAW members across 16 states. Instead, Pearson assisted in orchestrating an ongoing criminal enterprise to enjoy a life of absolute luxury, spending hundreds of thousands of dollars with his co-conspirators in union member dues on golf, custom clubs, cigars, booze, vacations and high-end restaurants. IRS-CI is committed to investigating crimes of embezzlement, conspiracy and racketeering,” stated Sarah Kull, Special Agent in Charge of Detroit’s IRS Criminal Investigation.
“Vance Pearson failed his fiduciary duties as a UAW officer when he used his position to embezzle over $100,000 of UAW funds so he and his co-conspirators could live a lavish lifestyle at the expense of the union members he was elected to represent,” said Thomas Murray, District Director, U.S. Department of Labor, Office of Labor-Management Standards. “OLMS will continue to work with the U.S. Attorney’s Office and our fellow law enforcement agencies to eliminate the corruption within the UAW International Union.”
The case is being prosecuted by Assistant U.S. Attorneys David A. Gardey Steven Cares.
Engineering Firm Owner Sentenced for Bribing Washington Township OfficialsRead the Press Release
An owner of an engineering firm, Fazlullah Khan , 58, of Troy, was sentenced yesterday to 132 months as a result of having been convicted by a jury on four counts of bribery, United States Attorney Matthew Schneider announced.
Schneider was joined in the announcement by Steven D’Antuono, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation.
Khan was convicted in July, 2019 after a five day trial that was conducted before United States District Judge Robert H. Cleland in Port Huron, Michigan. The jury deliberated approximately an hour and a half before returning their guilty verdicts.
According to evidence presented at trial, in 2014, Khan bribed one public official of Washington Township with $10,000 in cash in return for a million dollar per year engineering contract, and another public official there with a secret financial interest in a property development deal worth hundreds of thousands of dollars for his assistance with the contract and efforts to get water and sewer lines to Khan’s property. Unbeknownst to Khan, both township officials that he was trying to bribe were working with the FBI.
“Our office is continuing our battle against bribery and corruption every day and this sentence will hopefully serve as a deterrent to others who seek to engage in a pay-to-play scheme,” United States Attorney Matthew Schneider stated.
The sentence in this case should serve as a deterrent to anyone who tries to entice a public official to behave against the public’s interest through offering bribes,” said Special Agent in Charge D’Antuono. “Corruption in any form degrades the integrity of our democracy and will not be tolerated. Our justice system relies upon citizens to report this type of criminal activity and I would encourage anyone who has information about public corruption to contact the FBI."
This case is part of the government’s wide-ranging corruption investigation centered in Macomb County, Michigan. The investigation of this case was conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys R. Michael Bullotta and Steven Cares.
The conviction of Khan brings to 22 the number of individuals convicted in this corruption investigation.
Detroit Area Retail Vendor Sentenced to 24 Months for Food Stamp FraudRead the Press Release
A Detroit-area retail vendor will spend 24 months in prison for defrauding the federal Supplemental Nutrition Assistance Program, also known as the food stamp program, U.S. Attorney Matthew Schneider announced today.
Joining Schneider in the announcement was Anthony V. Mohatt, Special Agent-in-Charge of the U.S. Department of Agriculture Office of the Inspector General (USDA-OIG) Chicago Regional Office.
Ali Youssef Aoun, 52, was sentenced on February 7, 2020, by U.S District Court Judge Robert H. Cleland after pleading guilty to three counts of defrauding the SNAP program.
Aoun, who has owned or operated convenience stores in Detroit for at least 18 years, took advantage of vulnerable SNAP recipients by exchanging benefits for cash, while only paying fifty cents on the dollar. He would disguise the benefits as income into his stores or use them to purchase items for himself. Trading SNAP benefits for cash is a violation of federal law. Over four years, Aoun fraudulently obtained approximately $341,360.41 from the federal SNAP program. In addition to the term of imprisonment, the Court the entered a forfeiture money judgment in the amount of $341,360.41.
In delivering the sentence, the Court stated Mr. Aoun’s crimes were “utterly unacceptable” and that the verdict should “stand as a beacon to others in a similar situation.”
United States Attorney Schneider said of the verdict, “Defendant Aoun committed his fraud on the backs of people who truly need the SNAP program to put food on the dinner table and make ends meet. His crime was motivated solely by greed and today’s sentence should send a message to all SNAP vendors that our office takes fraud seriously and will prosecute offenders to the full extent of the law.”
USDA Special Agent-in-Charge Anthony V. Mohatt said, "The Supplemental Nutrition Assistance Program helps put healthy food on the table of 1.3 million Michigan residents each month. The criminal activities of the store owner targeted during this investigation deprived needy citizens of the Detroit area access to nutritious meals. The USDA Office of Inspector General will continue to target those who prey on federal food assistance programs, and their recipients."
The case was investigated by agents of the U.S. Department of Agriculture, Office of Inspector General, and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Detroit. Assistant United States Attorneys Tim Wyse and Shankar Ramamurthy prosecuted the case.
Patient Recruiter Sentenced to Prison for Role in More than $1 Million Illegal Kickback ConspiracyRead the Press Release
A patient recruiter was sentenced to 60 months in prison yesterday for receiving more than $1 million in illegal kickback payments from numerous home health agencies from around the country in exchange for providing information on Medicare beneficiaries to home health agencies, who then used that information to submit fraudulent claims to Medicare.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Steven M. D'Antuono of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office made the announcement.
Dominic Trumbo, 45, of Lexington, Kentucky, was sentenced by Chief U.S. District Judge Denise Page Hood of the Eastern District of Michigan, who also ordered Trumbo to pay $1,010,552 in restitution and forfeit $203,300. In July 2019, after a four-day trial, a federal jury found Trumbo guilty of one count of conspiracy to pay and receive health care kickbacks and three counts of solicitation or receipt of kickbacks in connection with a federal health care program.
According to the evidence presented at trial, Trumbo, owner of Trumbo Consulting Agency of Stafford, Virginia, recruited, or paid others to recruit, more than 4,000 Medicare beneficiaries for multiple home health companies across the country. The evidence showed that Trumbo instructed his employees to cold call Medicare beneficiaries and offer incentives to induce them to sign up for home health care. Trumbo then sold the Medicare beneficiary information to home health agencies in exchange for illegal kickback payments. The evidence at trial further showed that Trumbo and his co-conspirators created sham contracts and fake invoices in an attempt to conceal their scheme to defraud Medicare.
The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. Trial Attorneys Patrick Suter and Steven Scott of the Fraud Section prosecuted the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Former Airport Official Sentenced to 10 Years in Prison in Record Setting Bribe and Kickback SchemeRead the Press Release
United States District Judge Victoria A. Roberts sentenced convicted former Wayne County airport official, James Warner, 52, of Commerce Township, to 10 years’ imprisonment today. A federal jury convicted Warner last June of ten counts of conspiracy, federal program bribery, federal program theft, money laundering and obstruction of justice, in connection with maintenance and repair contracts for runways and parking structures at Detroit Metropolitan Airport, United States Attorney Matthew Schneider announced today.
Schneider was joined in the announcement by Steven M. D'Antuono, Special Agent-in-Charge of the Detroit Field Office of the Federal Bureau of Investigation, and Andrea M. Kropf, Special Agent-in-Charge of the Midwestern Region of the United States Department of Transportation Office of Inspector General.
According to the evidence provided during the three-week trial, from May of 2010, through August of 2014, while employed as a field inspector at the Wayne County Airport Authority (WCAA), Warner used his position of trust at the airport to direct more than $43 million in airport infrastructure projects to three coconspirators—William Pritula, Douglas Earles and Gary Tenaglia—in exchange for more than $6 million in kickbacks. This amount represents the highest bribe totals in the Eastern District of Michigan’s history, and one of the largest in the country.
On one occasion, Warner falsified the square footage and asphalt depth on an airport roadway project, creating and later approving a $938,000 bill from Pritula’s company for work which Pritula’s subcontractor only invoiced $275,000. Warner and Pritula then split the profits evenly. On another occasion, Earles’s company submitted two separate invoices—one for $13,429.63, and another for $18,055.26—for the replacement of backflow preventers at the airport. However, as the evidence revealed at trial, the backflow preventers listed in these invoices were neither purchased nor installed at the airport. Since Warner was the public official responsible for verifying these falsified invoices, he was able to conceal this fraud from the airport and authorize the airport to pay Earles for work that was never completed—a percentage of which was ultimately kicked back to Warner.
Each of Warner’s coconspirators, Pritula, 69, of Romulus, Earles, 60, of White Lake, and Tenaglia, 65, of Commerce Township have all pleaded guilty to conspiracy to commit bribery and theft.” To date, the government has seized $11 million from Warner and his co-conspirators.
United States Attorney Schneider stated, “This case is yet another example of our office’s commitment to vigorously prosecute corrupt public officials who elevate their own greed over the best interests of the people of Michigan.”
“Through bribery, fraud, and kickbacks, Mr. Warner stole the hard-earned money of the men and women who fund the services provided at Detroit Metropolitan Airport,” said SAC D’Antuono. “I am incredibly proud of the hard work of agents from the FBI and the US Department of Transportation, Office of Inspector General, and attorneys from the United States Attorney’s Office, whose collective efforts helped bring a measure of justice to this defendant."
“With one of the largest bribes prosecuted to date in the Eastern District of Michigan, today’s sentencing reinforces our commitment to rooting out egregious infrastructure fraud,” stated Andrea M. Kropf, DOT-OIG Regional Special Agent-In-Charge. “It sends a message to public officials who may be motivated by greed to abuse their positions that they will be met with the full force of the criminal justice system.”
The investigation of this case was conducted by the Federal Bureau of Investigation and the Department of Transportation Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorneys Eaton P. Brown and Mark Chutkow.
Four Detroit-Area Physicians Found Guilty of Health Care Fraud Charges for Role in over $150 Million Health Care Fraud SchemeRead the Press Release
A federal jury found four Detroit-area physicians guilty today of health care fraud charges for their roles in a scheme to administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids. Patients were required to get the injections in order to get the prescriptions, some of which were resold on the street by drug dealers, the evidence at trial showed.
After a four-week trial, Spilios Pappas, 62, of Lucas County, Ohio, Joseph Betro, 59, of Oakland County, Michigan, Tariq Omar, 62, of Oakland County, Michigan, and Mohammed Zahoor, 53, of Oakland County, Michigan, were each found guilty of one count of conspiracy to commit health care fraud and wire fraud, and one count of health care fraud. Sentencing has been scheduled for July 16 for Pappas, July 17 for Betro, July 24 for Zahoor and July 30 for Omar before Chief U.S. District Judge Denise Page Hood of the Eastern District of Michigan, who presided over the trial. Seventeen other defendants, including eight other doctors, previously pled guilty in connection with the investigation.
“These physicians subjected patients to medically unnecessary injections to reap millions in fraudulent billings. Worse still, they incentivized those treatments by offering opioid prescriptions in sky-high dosages meant for the terminally ill,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today’s verdict shows that the Department will root out physicians who let dollar signs rather than medical need drive their treatment of patients.”
“These doctors sought to enrich themselves by performing unnecessary back injections in exchange for highly addictive opioids, violating their Hippocratic Oath to do no harm,” said U.S. Attorney Matthew Schneider of the Eastern District of Michigan. “Our office will continue to prioritize the prosecution of doctors whose criminal behavior puts patients at risk.”
“Physicians take an oath that obligates them to do no harm to their patients. These four men willingly broke that oath – by providing unnecessary drugs and conducting unnecessary procedures – solely to line their pockets,” said Special Agent in Charge Steven M. D’Antuono of the FBI’s Detroit Field Office. “This guilty verdict sends a message to any doctor or healthcare professional who prioritizes profit or does harm to their patients under the guise of providing health care will be subject to the full investigative resources of the FBI and our law enforcement partners.”
“The public trusts that physicians will put patients’ health and safety first. These defendants violated that trust in pursuit of their own financial gain,” said Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services, Office of Inspector General Chicago Region. “The OIG takes matters of this nature very seriously and will continue to work with our law enforcement and prosecutorial partners to hold individuals who commit these kinds of criminal acts accountable.”
According to evidence presented at trial, from 2008 to 2016, Pappas, Betro, Omar and Zahoor worked at numerous medical clinics in Michigan and Ohio, which were operated under the name of the Tri-County Group (Tri-County) and owned by co-conspirator Mashiyat Rashid. While the defendants worked at Tri-County, they engaged in a scheme to defraud Medicare of over $150 million by billing for medically unnecessary facet joint injections, unnecessary urinary drug screens, home health and a myriad of other unneeded ancillary services. The evidence showed that patients, some of whom were suffering from legitimate pain and others of whom were drug dealers or opioid addicts, were offered prescriptions of oxycodone 30 mg by the defendants, but were forced to submit to unnecessary facet injections in exchange for the prescriptions.
Testimony at trial established that the patients experienced more pain from the shots, in some case, than from the pain they had purportedly come to have treated, and that some patients developed adverse conditions, including open holes in their back. Patients, including patients who were addicted to opioids, who told the doctors that they did not want, need or benefit from the injections, were denied medication by the defendants and their co-conspirators until they agreed to submit to the expensive and unnecessary injections.
The evidence further established that the defendants repeatedly performed these unnecessary injections on patients, as Tri-County was paid more for facet joint injections than any other medical clinic in the United States. The four defendants were all ranked in the top 25 doctors for dollars paid by Medicare for facet joint injections, even though they only worked a few hours a week. The defendants practice was described during trial as an assembly line, where the four defendants earned anywhere from $1,100 to $3,500 an hour for performing the same injections on nearly every patient.
In addition to the unnecessary injections, the defendants signed a standing order for urine tests for each patient and for every visit to be sent to National Laboratories, also owned by Rashid, in exchange for tens of thousands of dollars in illegal kickbacks, the evidence showed. The evidence further established that the physicians performed a quantitative test for 56 different drugs for every patient at every visit, regardless of whether the patients presented any reason for the test.
The evidence further established that the physicians provided prescriptions for narcotics, including opioids and benzodiazepines, as an incentive to patients who received the injections. Moreover, the evidence established that the dosage of opioids being provided to patients was suitable only for terminally ill cancer patients. Evidence from Michigan Automated Prescription System showed that the four defendants were among some of the top prescribers of oxycodone 30mg in the state of Michigan.
In 2015, Pappas was the number seven prescriber of oxycodone 30mg in the state of Michigan; Betro 18; Omar 16; and Zahoor 38 the evidence showed. At trial, oxycodone 30mg was described as the “gold standard” of drugs diverted to illegal purposes on the street. Evidence showed that all four defendants were in the top 40 out of 50,000 Michigan prescribers even though they had conspired with Rashid to “stay under the radar” of the U.S. Drug Enforcement Administration by working only a few hours a week. The doctors would see anywhere from 15-25 patients in a two to four hour shift, and then bill Medicare for office visits and procedure codes suggesting that they spent as much as two hours and 22 minutes with each patient. Every piece of the fraud was consistently implemented and applied to over 94 percent of the patients in the clinic.
The FBI and HHS-OIG investigated this case. Assistant Chief Jacob Foster and Trial Attorneys Tom Tynan and Anthony Burba of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 15 strike forces operating in 24 districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Former Oakland County Lawyer Sentenced in Scheme to Obtain Fraudulent Mortgage Loans from Fifth ThirdRead the Press Release
A former Oakland County lawyer was sentenced yesterday, January 30, 2020, to serve 70 months in federal custody on one count of conspiracy to commit bank fraud, and three counts of bank fraud, United States Attorney Matthew Schneider announced today.
Paul Nicoletti, age 60, received the sentence from the Honorable Victoria A. Roberts, United States District Judge, in Detroit, Michigan. Judge Roberts also ordered that the defendant serve two years on supervised release after his release from federal custody and pay restitution totaling $5,299,751.58. A jury returned guilty verdicts against Mr. Nicoletti on May 5, 2019 after a seven-day trial.
According to the evidence introduced during the trial, Mr. Nicoletti, a lawyer and owner of a title company in Bloomfield Hills, Michigan, became involved in a scheme to obtain large mortgage loans from Fifth Third Mortgage, Michigan, a lending arm of Fifth Third Bank. Although somewhat complicated, the essence of the scheme involved real estate developers, a corrupt loan officer and Mr. Nicoletti working together to obtain large mortgage loans from Fifth Third Mortgage, Michigan, purportedly for the purchase and development of high-end properties in Bloomfield Hills and Birmingham, Michigan, based on numerous false statements both in the application and closing process of the loans, resulting in Fifth Third Mortgage, Michigan releasing over eight million dollars in loan proceeds.
More specifically, one or more of the conspirators would find and recruit “straw buyers” to serve as mortgage loan applicants for the purchase of real property which the conspirators wanted to purchase and develop. The straw buyers, who viewed themselves as “investors,” were paid a fee for the use of their names and credit histories in the loan applications and real estate transactions, and were promised a portion of the expected profit after the property was developed and resold. The straw buyers had no intention of living at or actually exercising ownership and control of the property, despite representations to the contrary in their applications, and in closing documents. Despite their good credit ratings, the straw buyers did not have the assets or income necessary to qualify for mortgages in the substantial amounts sought. Thus, false information pertaining to their income and assets was included in the mortgage loan applications to qualify them. Mr. Nicoletti’s role was to facilitate the fraudulent loans as the title agent by, among other things, falsely verifying that the borrowers made substantial down payments on the properties. To do so, Mr. Nicoletti obtained cashiers checks, issued after the loan proceeds were released to his Continental Title account and which were funded by the loan proceeds themselves, bearing the names of the straw buyers as “remitters,” which he then re-deposited into his Continental Title account, making it appear as though the borrowers funded the substantial down payments. In fact, the borrowers brought no money to the closings. When the fraud was discovered by authorities, Mr. Nicoletti counseled the destruction of evidence of the fraud and also personally destroyed relevant electronic and paper records.
Mr. Nicoletti was the sixth person convicted as a result of this investigation. The loan officer, a mortgage broker, an appraiser and several of the real estate developers have previously been sentenced after entering guilty pleas relating to the scheme. The investigation was conducted by the Federal Bureau of Investigation and prosecuted by Assistant United States Attorneys Craig Weier and John Neal.