Northern District of New York

Richard Hollern Sentenced for Conspiracy to Commit Bank Fraud

GRAND RAPIDS, MICHIGAN – U.S. Attorney Patrick Miles announced today that Richard Hollern, 39, of Grand Ledge, Michigan was sentenced for conspiracy to commit bank fraud. Hollern pled guilty before U.S. District Judge Robert Holmes Bell on August 18, 2014.

Hollern admitted that he conspired with others at CDC, a Lansing real estate and investment company, to process multiple fraudulent mortgage transactions involving real estate in the vicinity of Lansing, Michigan. The scheme enabled the perpetrators to use bank funds to enrich themselves as a result of the sham real estate transaction charged, as well as other similar transactions. Others associated with this organization, including Eric Williams, Aaron Teachout, Isaac Modert, Mario Giannandrea, Rick Artibee, Dennis Sare, Nicole Buda have already been sentenced for their roles in the conspiracy. Another conspirator, Craig DeHaven, has pled guilty and is awaiting sentencing.

Judge Bell imposed a prison sentence of 30 months, to be followed by 24 months of supervision following release from prison. Hollern was also ordered to pay restitution of $1,860,377 to the banks defrauded as a result of the scheme.

Hollern’s prosecution is the result of a continuing investigation by the Mortgage Fraud Task Force, comprised of federal investigators from the FBI, U.S. Secret Service, the U. S. Postal Inspection Service and the HUD Office of Inspector General. The task force also includes the Lansing Police Department, investigators employed by the Michigan Attorney General’s Office and other state agencies. To date, fifteen individuals have been convicted of mortgage fraud as part of this effort, resulting in prison sentences for all of the defendants, and restitution orders exceeding $14,000,000.

U.S. Attorney Miles praised the cooperation between federal, state and local investigators participating in the Mortgage Fraud Task Force. He also stated that the work of the group is not done: “Many of the people prosecuted worked with others who committed, and continue to commit, mortgage fraud. The defendants have told investigators who they are, and what they are doing. Those people who have not yet learned that crime does not pay will learn that lesson very soon.”

Roger Dale Young Lied About His Income and Resources
So That He Would Receive a Larger Disability Check Each Month

GRAND RAPIDS, MICHIGAN – Roger Dale Young, 55, of Albion, Michigan, was sentenced to 12 months in federal prison today for committing Social Security fraud. He was also ordered to pay restitution to the Social Security Administration. U.S. District Judge Janet T. Neff imposed the sentence.
Young, who had been receiving Supplemental Security Income disability benefits, pled guilty in September 2014 to lying about his assets and other financial resources in order to increase the amount of his monthly disability check. Young’s fraud occurred over the course of nearly 11 years and cost taxpayers more than $48,000.

U.S. Attorney Patrick A. Miles, Jr., said, “Protecting taxpayers is one of our primary missions. We will continue to vigorously prosecute those who defraud federal agencies like the Social Security Administration.”

The case was investigated by the Social Security Administration’s Office of Inspector General, the Albion, Michigan Police Department, and the Calhoun County Sheriff’s Department. It was prosecuted by Assistant United States Attorney Clay Stiffler.

MARQUETTE, MICHIGAN – Douglas Emil Kugler, Jr., 34, of Eagle River, Wisconsin, was sentenced to 71 months in federal prison for abusive sexual contact with a child under twelve years old, U.S. Attorney Patrick A. Miles, Jr. announced today. In addition to the prison term, U.S. District Judge R. Allan Edgar ordered Kugler to serve 20 years of supervised release following completion of his prison term, and to pay a $100 special assessment.

The sentencing followed Kugler’s plea of guilty to the charge on August 13, 2014. The charge arose from an incident that occurred at a residence on Keweenaw Bay Indian Community reservation land between September 2004 and May 2006 involving Kugler, a non-Indian, and a boy between the ages of four and five. The incident came to light in December 2011, when the victim first disclosed what had happened to him. In sentencing Kugler, Judge Edgar found that Kugler had engaged in a pattern of prohibited sexual conduct with children.

The Keweenaw Bay Indian Community Tribal Police and the FBI investigated the case. Assistant U.S. Attorney Paul D. Lochner prosecuted the case..

Investigation Yields Seizure of Over 500 Grams of Cocaine

PLATTSBURGH, NEW YORK –United States Attorney Richard S. Hartunian, Drug Enforcement Administration Special Agent in Charge James J. Hunt, and New York State Police Troop B Headquarters Bureau of Criminal Investigations Captain Robert S. LaFountain announced that a grand jury has indicted seven individuals on drug trafficking charges.

“The plague of addictive drugs like cocaine devastates lives and communities,” stated United States Attorney Richard S. Hartunian. “We will continue to work with our law enforcement partners to get these substances off our streets and prosecute distributers to the fullest extent of the law.”

DEA Special Agent in Charge James J. Hunt stated, “This investigation is the essence of DEA’s mission - to identify and dismantle drug trafficking organizations responsible for threatening our communities with drug abuse and the perils associated. By working with our federal, local and state law enforcement partners, DEA not only dismantled a local cocaine distribution organization based in Plattsburgh, but located and arrested the cocaine source in New York City.”

“These arrests underscore the extraordinary results that are achieved by the dedication and perseverance of the state, local and federal law enforcement officers who worked so diligently on this case,” said New York State Police Captain Robert S. LaFountain. “The New York State Police are committed to working with our law enforcement partners to identify, investigate and arrest those involved in the distribution and sale of narcotic drugs."

The indictment charges the following individuals with conspiracy to possess with intent to distribute and to distribute cocaine:

• Thomas Farlekas, 31, of Bronx, New York
• Earl Mudd, 48, of Keeseville, New York
• Michael Moran, 43, of Keeseville, New York
• Kelly Nusbaum-Allen, 43, of Plattsburgh, New York
• Clayton Barber, Jr. aka “Junior,” 34, of Keeseville, New York
• Suzanne Gill, 30, of Keeseville, New York
• Joseph Hathaway, 38, of Keeseville, New York

Farlekas and Mudd face at least ten (10) years and up to life imprisonment, and a fine of up to $10,000,000. Moran faces at least five (5) years imprisonment and up to forty (40) years imprisonment, and a fine of up to $5,000,000. The remaining defendants face up to twenty (20) years imprisonment and up to a $1,000,000 fine.

Farlekas, Mudd, and Moran appeared in United States District Court in Plattsburgh, New York on November 30, 2014. Farlekas and Mudd were detained pending trial and Moran was released on pretrial release supervision. Nusbaum-Allen appeared in United States District Court in Plattsburgh, New York on December 18, 2014, and was released on pretrial release supervision. Barber, Jr., Gill, and Hathaway appeared in United States District Court in Plattsburgh, New York on December 23, 2014. Gill was released on pretrial release supervision. Barber, Jr. and Hathaway were detained pending trial. Trial in this matter is currently scheduled for February 17, 2015 before Senior United States District Court Judge Lawrence E. Kahn in Albany, New York.

The charges contained in the indictment are merely accusations and the defendants are presumed innocent until and unless proven guilty.

The case was investigated by the U.S. Drug Enforcement Administration, the New York State Police, U.S. Border Patrol, and Homeland Security Investigations. Local law enforcement agencies involved include the Plattsburgh Police Department, Essex County Sheriff’s Department, and Malone Village Police Department. The United States is represented in this prosecution by Assistant United States Attorney Katherine Kopita.

Exchanged Hundreds of Thousands of Dollars of Food Stamps for Cash

ALBANY, NEW YORK – A federal jury in Albany returned its verdict following the four-day trial of MOFADDAL M. MURSHED, 37, and AHMED A. ALGAHAIM, 54, announced United States Attorney Richard S. Hartunian, Columbia County Sheriff David Bartlett, U.S. Department of Agriculture, Office of the Inspector General, Northeast Region Special Agent in Charge William G. Squires, Jr., and U.S. Department of Homeland Security, Homeland Security Investigations Assistant Special Agent in Charge Nicholas DiNicola.

The jury found both defendants guilty of one count of conspiracy to commit Supplemental Nutrition Assistance Program (“SNAP”) fraud and one count of SNAP fraud. They face up to 5 years in prison on each count and are scheduled to be sentenced on April 13, 2015, in Albany.

“The Supplemental Nutrition Assistance Program was established to assist low income citizens and their families in getting enough food to eat consistent, nutritious meals. People who defraud the SNAP program not only are defeating the purpose of the program but are manipulating our tax dollars, which pay for the program, for their own gain, which is intolerable,” said United States Attorney Richard S. Hartunian. “Our office will continue to work closely with partner agencies to intervene upon and end such abuse.”

“I’m very pleased to see this case brought to successful conclusion with today’s guilty verdicts,” said Columbia County Sheriff David Bartlett. “I applaud the work of our Welfare Fraud Unit and the other members of the Columbia County Welfare Fraud Taskforce, working hand-in-hand with our local, state and federal law enforcement partners to protect the financial integrity of our social welfare programs and ultimately safeguarding the taxpayers’ dollars from fraud and abuse. We will continue to aggressively investigate and prosecute these cases.”

Coconspirators FAISAL Q. MORSHED, 35, and IBRAHIM Q. MURSHED, 25, pleaded guilty to conspiracy to commit SNAP fraud and SNAP fraud on December 3, 2014. They, too, are scheduled to be sentenced on April 13, 2015, in Albany.

SNAP, formerly known as the Food Stamp Program, uses tax dollars to subsidize food purchases by eligible low-income households. SNAP benefits may only be used to purchase food in approved retail food stores, and may not be exchanged for cash.

MOFADDAL M. MURSHED owned D&D Deli & Grocery, in Hudson, New York, where AHMED A. ALGAHAIM, FAISAL Q. MORSHED, AND IBRAHIM Q. MURSHED worked as employees. The defendants generated hundreds of thousands of dollars in fraudulent proceeds by providing cash to SNAP beneficiaries in exchange for SNAP benefits.

The case was investigated by the Columbia County Sheriff’s Office, the U.S. Department of Agriculture, Office of Inspector General, the U.S. Secret Service, and the Department of Homeland Security, and is being prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

Grant Recipient Admits that it Submitted False Statements to the Federal Government
Relating to New York State’s Medicaid and Children’s Health Insurance Programs

ALBANY, NEW YORK: The Research Foundation for the State University of New York has agreed to pay the United States $3,750,000 to resolve allegations that its Center for Development of Human Services (CDHS) violated the False Claims Act by manipulating audits it performed of federally funded health care programs in New York State, announced United States Attorney Richard S. Hartunian.

The Research Foundation is a nonprofit educational corporation whose mission includes supporting research for the State University of New York. CDHS is a Research Foundation program headquartered at Buffalo State College, with offices in Albany, Buffalo, Syracuse, Rochester, and New York City. In 2007, Research Foundation entered into a contract with the New York State Department of Health to review and report to the federal government information concerning eligibility for New York State’s Medicaid and Children’s Health Insurance Programs (CHIP). These audits – known as the Payment Error Rate Measurement (PERM) and Medicaid Eligibility Quality Control (MEQC) reviews – were designed to measure, among other things, errors in local determinations as to which New York State residents were eligible to receive Medicaid and CHIP benefits during the period of October 1, 2007 through September 30, 2008.

The settlement resolves allegations that CDHS manipulated both the PERM and MEQC audits by prescreening and altering the cases selected for inclusion in what were supposed to be random sample reviews of New York State’s Medicaid and CHIP eligibility determinations. CDHS, which cooperated during the investigation, acknowledged in the settlement agreement that it submitted false statements to the Centers for Medicare & Medicaid Services pertaining to New York State’s eligibility error rates. Based in part on the findings of the investigation, Research Foundation adopted enhanced compliance measures, including appointing a Chief Compliance Officer to oversee the administration of the activities it sponsors.

United States Attorney Hartunian said: “The effort to provide better health care to more people at a lower cost depends on the faithful application of Medicaid eligibility requirements and the reduction of erroneous payments based upon accurate information provided by independent reviewers. In this case, the Center for Development of Human Services failed to fulfill its contractual obligation, as a federal grant recipient, to deliver the accurate and reliable information necessary to maintain the integrity of the Medicaid program. We will continue to pursue vigorously entities that deliver substandard work on taxpayer-funded projects and violate the public trust by falsifying information to receive federal funds.”

“CDHS skewed its audits of New York health care programs for its own gain. We will not tolerate such schemes, which waste scarce federal taxpayer dollars and undercut the integrity of public health care programs,” said Thomas O’Donnell, Special Agent in Charge, United States Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York region.

The government’s investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allows private persons, known as “relators,” to file civil actions on behalf of the United States and share in any recovery. The relators in this case will receive $825,000, which is 22% of the settlement proceeds. The case is docketed with the United States District Court for the Northern District of New York under number 10-cv-385.

The investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York, the Department of Justice’s Civil Division (Fraud Section), and HHS-OIG. Locally, the United States was represented by Assistant United States Attorney Adam J. Katz.

ALBANY, NEW YORK – DAVID M. GAMBUZZA, age 41, of Gloversville, was sentenced on December 12, 2014, by U.S. District Judge Mae A. D’Agostino, to 18 months in prison for manufacturing marijuana, announced United States Attorney Richard S. Hartunian and New York State Police Bureau of Criminal Investigations Captain Scott P. Coburn.

GAMBUZZA, who pleaded guilty in July 2014, admitted to growing marijuana plants inside a two-story building that he owned in Montgomery County. GAMBUZZA had installed grow lights and sophisticated watering and ventilation systems inside the building. In September 2013, investigators searched the building and seized approximately 280 marijuana plants.

This case was investigated by the New York State Police and was prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announced today that ANAS K. WILSON, 32, a former resident of Utica, New York, has pled guilty to one count of theft of government property, in violation of 18 U.S.C. § 641 and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). Mr. Wilson faces up to ten years in prison on the theft of government property count and a two-year mandatory minimum sentence on the aggravated identify theft count. Sentencing is scheduled for April 14, 2015, before Senior District Judge Frederick, J. Scullin, Jr.

At a change of plea hearing on December 4, 2014, Mr. Wilson admitted that he electronically filed fraudulent U.S. Individual Income Tax Returns on behalf of victims who were not entitled to tax refunds, and that he directed the tax refunds received to bank accounts that he had established. Mr. Wilson directed other individuals to withdraw the funds from the accounts and provide him the money, in exchange for a fee. To execute the scheme, Mr. Wilson illegally utilized personal identifying information (including Social Security numbers and names) of the victims. Mr. Wilson was responsible for submitting fraudulent tax returns to the IRS that resulted in the release of more than $400,000 in false tax refunds by the IRS.

United States Attorney Richard S. Hartunian said, “Filing fraudulent tax returns with stolen identities is one of the fastest growing crimes in the country. It is estimated our nation is losing hundreds of millions of dollars a year in bogus refunds – money that is meant to be used to make American lives safer and better. Theft of tax refunds is a crime against the American people. Our office continues to work diligently with the IRS to stop this crime.”

Shantelle P. Kitchen, Acting Special Agent in Charge of the New York Field Office of IRS-Criminal Investigation, stated, “The investigation of tax refund schemes that involve the theft of taxpayers’ identities is a top priority for IRS-Criminal Investigation. We are committed to stopping individuals who seek to use our nation’s tax system for personal profit, especially at the expense of law abiding taxpayers.” Craig W. Rupert, Special Agent in Charge, Defense Criminal Investigative Service (“DCIS”) Northeast Field Office stated, “This guilty plea demonstrates the continued commitment of DCIS and fellow agencies in pro-actively identifying individuals and groups intent on perpetrating schemes which defraud the American taxpayer. The exploitation of government programs by way of identity theft or any other scheme will not be tolerated.”

This case was investigated by the IRS Criminal Investigation Division, the U.S. Treasury Inspector General for Tax Administration, and DCIS, and it is being prosecuted by Assistant United States Attorney Michael F. Perry.

For additional information, contact Executive Assistant U.S. Attorney John G. Duncan at 315-448-0672.

SYRACUSE, NEW YORK - BRIAN DANIEL NORTON, age 59, of Cicero, New York, entered a guilty plea in U.S. District Court in Utica to two federal felony counts of conveying false information and hoaxes in violation of 18 U.S.C. §1038(a) according to United States Attorney Richard S. Hartunian. Norton faces a maximum possible sentence of five years incarceration and a $250,000 fine. He is being detained pending sentencing scheduled in Utica for April 10, 2015 at 11 am.

In court, Norton admitted he mailed more than 20 death threat letters that contained a white powder he claimed to be either anthrax or ricin. The letters were mailed to various addresses in the Syracuse, New York area and elsewhere between 1997 and 2012. Those receiving the letters included LeMoyne College and Bishop Ludden High School in Syracuse, as well as U.S. Senator John McCain, then-Secretary of Defense Robert Gates and former Congresswoman Ann Marie Buerkle. Later analysis of the powder contained in the letters proved that it was harmless.

The case was investigated by the Federal Bureau of Investigation, Syracuse Resident Office and the United States Postal Inspection Service, Syracuse Office, and prosecuted by Assistant United States Attorney Stephen C. Green.

For additional information, contact Executive Assistant U.S. Attorney John G. Duncan at 315- 448-0672.

Brian Daniel Norton, age 59, of Cicero, New York, entered a guilty plea in U.S. District Court in Utica to two federal felony counts of conveying false information and hoaxes, according to United States Attorney Richard S. Hartunian.  Norton faces a maximum possible sentence of five years incarceration and a $250,000 fine.  He is being detained pending sentencing scheduled in Utica for April 10, 2015, at 11 am.

In court, Norton admitted he mailed more than 20 death threat letters that contained a white powder he claimed to be either anthrax or ricin.  The letters were mailed to various addresses in the Syracuse, New York, area and elsewhere between 1997 and 2012.  Those receiving the letters included LeMoyne College and Bishop Ludden High School in Syracuse, as well as U.S. Senator John McCain, then-Secretary of Defense Robert Gates and former Congresswoman Ann Marie Buerkle.  Later analysis of the powder contained in the letters proved that it was harmless.

The case was investigated by the Federal Bureau of Investigation, Syracuse Resident Office and the United States Postal Inspection Service, Syracuse Office, and prosecuted by Assistant United States Attorney Stephen C. Green.

For additional information, contact Executive Assistant U.S. Attorney John G. Duncan at 315- 448-0672.

Had Been Previously Removed Three Times

ALBANY, NEW YORK – Esequiel Perez-Lopez, 34 years old of Mexico, was sentenced today to serve 11 months in prison, followed by two years of supervised release by United States District Court Judge Glenn T. Suddaby announced United States Attorney Richard S. Hartunian and Patrol Agent In Charge Norman Lague, Champlain Border Patrol. In August, Perez-Lopez pled guilty to illegally reentering the United States after he had previously been removed, a felony under federal law. Following the completion of the term of his imprisonment, the Department of Homeland Security will process Perez-Lopez for removal from the United States to Mexico.

In August 2014, Perez-Lopez was arrested by Border Patrol Agents in a restaurant parking lot in Plattsburgh, New York. Perez-Lopez had been previously removed to Mexico three times, most recently in November 2012 after his conviction in the District of New Hampshire for illegally entering the United States after removal.

The case was investigated by the United States Border Patrol, Champlain, NY and prosecuted by Assistant United States Attorney Edward P. Grogan.

Had Been Removed in June 2014

ALBANY, NEW YORK – Elyn Francisco Figuereo-Minyette, 27 years old and a citizen of Spain, was sentenced today to term of “time served” (45 days), by United States District Court Judge Glenn T. Suddaby announced United States Attorney Richard S. Hartunian and Patrol Agent In Charge Wade A. Laughman, Massena Border Patrol. In November, Figuereo-Minyette pled guilty to illegally reentering the United States following removal, a felony under federal law. Judge Suddaby remanded Figuereo-Minyette, following today’s sentencing, to the custody of the Department of Homeland Security for removal proceedings.

In October 2014, Figuereo-Minyette was arrested by Border Patrol Agents on New York State Route 37 in Fort Covington, New York. Figuereo-Minyette had illegally crossed the border at a remote location on the St. Regis Akwesasne reservation and was picked up by a waiting car shortly before he was stopped and arrested by Border Patrol. Figuereo-Minyette had been previously removed to Spain on June 9, 2014.

The case was investigated by the United States Border Patrol, Massena, NY and prosecuted by Assistant United States Attorney Edward P. Grogan

Had Been Removed in 2005

ALBANY, NEW YORK – Alexis Fuentes, 40 years old of the Dominican Republic, was sentenced today to serve 41 months in prison by United States District Court Judge Glenn T. Suddaby announced United States Attorney Richard S. Hartunian and Patrol Agent In Charge Norman Lague, Champlain Border Patrol. In August, Fuentes pled guilty to illegally reentering the United States after he had previously been removed, a felony under federal law. Following the completion of the term of his imprisonment, the Department of Homeland Security will process Fuentes for removal from the United States to the Dominican Republic.

In June 2014, Fuentes was arrested by Border Patrol Agents on New York State Route 11 in Champlain, New York. Fuentes had illegally crossed the border at a remote location and was picked up by a waiting car shortly before he was stopped and arrested by Border Patrol. Fuentes had been previously removed to the Dominican Republic in May 2005. Fuentes was ordered removed after he was convicted in Berks County, Pennsylvania of an aggravated felony, possession with intent to deliver a controlled substance.

The case was investigated by the United States Border Patrol, Champlain, NY and prosecuted by Assistant United States Attorney Edward P. Grogan.

BINGHAMTON, NEW YORK –United States Attorney Richard S. Hartunian and Federal Bureau of Investigation (“FBI”) Albany Special Agent in Charge Andrew W. Vale, announced today the sentencing of RYAN LETCHER, age 39, of Endicott, New York. LETCHER was convicted on August 6, 2014, after a jury trial of one count of knowingly and willfully making a false statement in violation of 18 U.S.C. §1001(a)(3). On December 4, 2014, the Honorable Thomas J. McAvoy sentenced LETCHER to a four year term of probation and ordered LETCHER to pay a $5,000 fine and perform 180 hours of community service. Additionally, LETCHER was ordered to have no contact with his former boss and with BAE Systems.

In March 2012, LETCHER wrote an anonymous letter accusing his former supervisor of being a foreign intelligence officer. The testimony during trial established that the term “foreign intelligence officer” means a spy for another country. LETCHER admitted that he sent the letter and stated that he sent the letter because of his disdain for his former supervisor.

The case was investigated by the FBI and was prosecuted by Assistant United States Attorney Tamara Thomson.

Albany, New York – Elizabeth C. Coombe has been named the Chief of the Criminal Division of the United States Attorney’s Office for the Northern District of New York, announced United States Attorney Richard S. Hartunian. Ms. Coombe succeeds Steven D. Clymer, who is becoming the Appellate Chief for the U.S. Attorney’s Office.

United States Attorney Hartunian said: “Beth Coombe is an outstanding leader and accomplished trial lawyer, with the extensive experience, breadth of perspective, unflinching integrity, and sound judgment needed to address today’s significant law enforcement challenges.”

Ms. Coombe is the seventh Chief of the Criminal Division and the first female to hold the post since it was created about twenty-three years ago. Ms. Coombe has served as the Deputy Chief of the Criminal Division since 2012. She became an Assistant U.S. Attorney in the District of Columbia in 1998, serving in the appellate, general felony, and grand jury sections before being assigned to the fraud and public corruption section. She transferred to the Albany Office of the Northern District of New York in 2003, where she has focused on public corruption and white collar crime. She has also served as a team leader and as a member of the Joint Terrorism Task Force.

Ms. Coombe graduated from the University of Michigan Law School cum laude in 1992 and Hamilton College summa cum laude in 1989. Before becoming an Assistant U.S. Attorney, Ms. Coombe worked as a trial attorney in the Court of Claims and Federal Circuit Section of the Department of Justice. She also worked as a staff attorney for the Enforcement Division of the Securities and Exchange Commission and clerked for the Honorable Diana E. Murphy, then Chief United States District Court Judge for the District of Minnesota.

In the Northern District, Ms. Coombe has tried a number of high profile cases, including an honest services fraud case against the former New York State Senate Majority Leader; a $30 million dollar investment fraud case against the owners of a securities broker-dealer in Albany (McGinn Smith), leading to imprisonment sentences of 15 and 10 years; and United States v. Yassin Aref (a local Imam) and Mohammed Hossain, leading to sentences including imprisonment for 15 years for conspiracy to commit money laundering, conspiracy to provide material support to terrorism, and related offenses. She has also tried extortion, tax fraud, structuring, and embezzlement cases. This year, Ms. Coombe received a Director’s Award for Superior Performance.

Regarding Mr. Clymer, United States Attorney Hartunian said: “Steve Clymer has served the District with great distinction as Criminal Chief. His extraordinary legal mind, attention to detail, and demonstrated excellence as a leader, litigator, and educator will make him a superb Appellate Chief.”

Mr. Clymer has served as the Chief of the Criminal Division since 2010. Mr. Clymer first became an Assistant U.S. Attorney in the Central District of California in 1987, where he worked until 1995 and 2003 - 2005, serving as Chief of the Criminal Division, Senior Litigation Counsel, Chief of the Major Crimes Section, Deputy Chief of the Narcotics Section, and Chief of Training. A graduate of Cornell University (magna cum laude, 1980) and Cornell Law School (magna cum laude, 1983), Mr. Clymer served as Associate Professor of Law at Cornell Law School 1995 – 2000, Assistant Professor of Law 2001 - 2005, and Professor of Law 2005-10, and has served as an Adjunct Professor of Law since 2010. Mr. Clymer was an Assistant U.S. Attorney in the Northern District of New York 1998 - 2000, served as a Special Assistant U.S. Attorney 2001 - 2003 and 2005 - 2007, returned to the Office in 2007, and became Deputy Chief of the Criminal Division in 2008. Before becoming an Assistant U.S. Attorney, Mr. Clymer was an Assistant District Attorney for the Commonwealth of Pennsylvania (Philadelphia County) 1983 - 1986.

Mr. Clymer’s notable cases have included prosecutions of: the LAPD police officers responsible for use of unlawful force when arresting Rodney King; two men who killed two DEA agents and wounded a third; a case arising from Operation Polar-Cap, the largest money-laundering investigation in United States history, resulting in the laundering of over $100 million per year of cocaine proceeds; two cases arising from multi-defendant conspiracy to smuggle in excess of 60 tons of Thai marijuana to the United States by use of large ocean-going vessels; a Syracuse area physician who was defrauding Medicare and private insurers by charging over $10,000 for patient physical examinations; a Syracuse heart surgery practice for filing false claims to Medicare about use of second physician in open heart surgeries; executives at two Central New York insurance companies in a scheme to defraud Medicare; and an Albany area pain management physician who submitted false claims to Medicare and private health insurance companies and had nurses illegally dispense prescriptions for schedule II controlled substances without physician involvement.

United States Attorneys serve as the nation's principal litigators, under the direction of the Attorney General and the U.S. Department of Justice. There is one United States Attorney for each judicial district in the United States and its territories. The primary statutory responsibilities of United States Attorneys are the prosecution of federal criminal cases, the prosecution and defense of civil cases in which the United States is a party, and the collection of debts owed the federal government which are administratively uncollectible. The U.S. Attorney’s Office for the Northern District of New York prosecutes about 500 criminal cases each year.

Richard S. Hartunian took office as United States Attorney on January 3, 2010. The other current leadership of the Office is:

First Assistant U.S. Attorney: Grant C. Jaquith
Chief, Criminal Division: Elizabeth C. Coombe
Chief, Appellate Division: Steven D. Clymer
Chief, Civil Division, and Chief, Albany Office: Thomas Spina, Jr.
Executive Assistant U.S. Attorney for Public and Community Affairs: John G. Duncan
Senior Litigation Counsel: Edward R. Broton
Chief, Syracuse Office and Project Safe Childhood Coordinator: Lisa M. Fletcher
Narcotics Chief and Lead Organized Crime Task Force Attorney: Daniel Hanlon
Deputy Chief, Civil Division: William F. Larkin

The Northern District of New York is comprised of thirty-two counties in upstate New York, covering an area of over 30,000 square miles that is home to about 3.4 million people. The United States Attorney has offices in Syracuse, Albany, Binghamton, and Plattsburgh.

ALBANY, NEW YORK – JEFFREY GUNDEL, age 50, of Gansevoort, New York, pled guilty in Albany yesterday before United States District Judge Mae A. D’Agostino to one count of unlawful distribution of oxycodone, announced United States Attorney Richard S. Hartunian and Special Agent in Charge James J. Hunt, Drug Enforcement Administration.

As part of his guilty plea, GUNDEL admitted that, between May 2011 and April 2014, he distributed at least 248 prescriptions for 240 30-milligram oxycodone tablets outside the course of professional practice and for no legitimate medical purpose. GUNDEL also admitted that he received cash kickbacks in exchange for the prescriptions. Sentencing is scheduled for April 2, 2014 in Albany, New York. GUNDEL faces a maximum term of imprisonment of 20 years, a $1,000,000 fine, and a term of supervised release.

This case was investigated by the Drug Enforcement Administration and is being prosecuted by Assistant United States Attorney Wayne A. Myers.

SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announces that SHAEEM GRADY(A/K/A SHAHEEM GRADY) was found guilty of three felony offenses following a three day jury trial in federal court in Syracuse: Possession with the Intent to Distribute Cocaine Base, in violation of Title 18, United States Code, Section 841(a)(1) and (b)(1)(C); Possession of a Firearm in Furtherance of a Drug Trafficking Crime, in violation of Title 18, United States Code, Section 924(c)(1)(A); and Felon in Possession of a Firearm, in violation of Title 18, United States Code, Section 922(g)(1) and 924(a)(2). GRADY is facing a statutory mandatory minimum sentence of five years for the conviction of Possession of a Firearm in Furtherance of a Drug Trafficking Crime. He is also facing a maximum term of incarceration of twenty years for the Possession with Intent to Distribute Cocaine Base count, and a maximum term of incarceration of ten years for the Felon in Possession of a Firearm count. Grady will be sentenced in April 2015, before the Honorable Judge Frederick J. Scullin, Jr., in Syracuse, New York.

GRADY, 29, of Syracuse, was arrested on March 22, 2013, when police officers observed a baggie of crack cocaine in his lap as he sat in the passenger seat of a car that was illegally parked. Police attempted to place GRADY under arrest when he violently resisted while attempting to gain access to the center console of the vehicle. A Glock, model 19, 9 mm handgun with 7 rounds in the magazine was located in the center console. GRADY continued resisting and reaching for the console while simultaneously yelling to the driver of the vehicle to “pull off” while officers were located halfway inside the passenger doorway. Officers were able to take GRADY into custody and during a search incident to his arrest, recovered an additional baggie with cocaine residue, a steak knife from his front pants pocket, and $90.00. GRADY was prohibited from possessing a firearm due to a 2002 conviction for Criminal Possession of a Weapon in the Second Degree.

This prosecution resulted from an investigation conducted by the Syracuse Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by Assistant United States Attorney Geoffrey Brown. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315) 448-0672.

Broome County Ophthalmologist settles for $75,000.00

ALBANY, NEW YORK – United States Attorney Richard S. Hartunian announced his office reached a civil settlement with Dr. J. Louis Pecora, an Endicott, New York ophthalmologist, for $75,000.00. As part of the settlement, Dr. Pecora also voluntarily surrendered his Drug Enforcement Administration (DEA) numbers, which enables physicians to prescribe controlled substances. The settlement was in connection with violations of the Controlled Substances Act.

In August of 2012, DEA was notified that Dr. Pecora had made suspicious orders of hydrocodone. Thereafter, DEA and New York State Police investigators conducted an inspection of Dr. Pecora’s office and home and subsequently questioned him about controlled substances he purchased between January 18, 2010 and August 8, 2012. According to the complaint filed in connection with the settlement, Dr. Pecora ordered schedule III controlled substances on eighteen (18) occasions for personal use, between January 18, 2010 and August 8, 2012. More specifically, within this time period, Dr. Pecora ordered 3,800 tablets of Hydrocodone and 500 tablets of Vicodin ES, schedule III controlled substances, for personal use, without a medical purpose and outside the usual course of his professional practice. Pursuant to regulations, a prescription for a controlled substance to be effective must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his or her professional practice. When Dr. Pecora ordered these controlled substances for his personal use, he did not meet these requirements. In addition, according to the complaint, Dr. Pecora refused or negligently failed to maintain a biennial inventory of controlled substances from January 18, 2010 to August 8, 2012. A biennial inventory of all controlled substances on hand is required by federal regulations.

The Controlled Substances Act was enacted to ensure that controlled substances are properly regulated and to help prevent drug diversion. Prescription drug abuse is a significant nationwide issue. According to U.S. Attorney Richard S. Hartunian, his office takes drug diversion very seriously and will aggressively pursue those who violate the Controlled Substances Act, especially if they are professionals in the medical field. "It simply is unacceptable for medical professionals to act irresponsibly when handling controlled substances. The potential for these substances to end up in the wrong hands is something we are not willing to risk, and we will take whatever steps are necessary to prevent this from happening."

ALBANY, NEW YORK – A federal jury in Albany convicted VINCENT JACKSON, age 34, of Brooklyn and Albany, New York, today of illegally possessing a Diamondback DB-9 ninemillimeter pistol and 47 rounds of nine-millimeter ammunition after a four-day trial, announced United States Attorney Richard S. Hartunian and Acting Special Agent in Charge James S. Higgins of the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

JACKSON faces a maximum sentence of imprisonment of ten years, a maximum fine of $250,000, and a three-year term of supervised release. JACKSON, who is held without bond, will be sentenced on April 1, 2015 by United States District Judge Mae A. D’Agostino.

The evidence presented at trial showed that JACKSON, a convicted felon, kept the fullyloaded DB-9 pistol and ammunition in his Albany apartment. JACKSON was on supervised release in connection with a prior federal drug felony when federal probation officers discovered the firearm and ammunition in JACKSON’s bedroom on September 11, 2013. Two cellular phones recovered from JACKSON’s bedroom, both used by JACKSON, contained photographs of the DB-9 pistol found in the bedroom, as well as text messages discussing the DB-9 pistol and other firearms.

This prosecution resulted from an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, with the assistance of the Albany Police Department, and the United States Probation Office for the Northern District of New York. The case is being prosecuted by Assistant United States Attorney Wayne A. Myers.

Defendant Used his Computer and the Internet to Download and Save Dozens of Child Pornography Files

ALBANY, NEW YORK – TIMOTHY TEFFT, age 65, of Greenwich, New York was sentenced on November 25, 2014 to 60 months of imprisonment for receiving child pornography by Chief United States District Court Judge Gary L. Sharpe, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge, Federal Bureau of Investigation, Albany Division. TEFFT, who had entered a guilty plea on May 2, 2014, was also ordered to serve a fifteen year term of supervised release, to have no unsupervised contact with minors, and to register with the New York State Sex Offender Registry Program.

Between January 1, 2009 and May 3, 2011, TEFFT used a computer to access the Internet to download and save dozens of files that contained child pornography. TEFFT also transferred some of these child pornography files onto portable storage devices for viewing at a later time.

This case was investigated by the Federal Bureau of Investigation. This case was prosecuted by Assistant United States Attorney Rick Belliss.

ALBANY, NEW YORK – DANIEL J. KEMPROWSKI, age 26, of Troy, New York, was sentenced today to five years in prison for one count of receiving child pornography and three counts of possessing child pornography by Chief United States District Judge Gary L. Sharpe, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation. KEMPROWSKI must also serve a 20 year term of supervised release and register as a sex offender.

As part of his June 9, 2014 guilty plea, KEMPROWSKI admitted that from June 2010 through September 2012, he downloaded still images and videos of child pornography through a file sharing program. On September 6, 2012, an investigator accessed the file sharing network and downloaded four video files depicting child pornography from the defendant’s computer. On January 18, 2013, investigators searched KEMPROWSKI’s residence and recovered approximately 1,300 images and 185 videos depicting child pornography.

This case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

Received Packages of Synthetic Marijuana by Mail

ALBANY, NEW YORK – BAKHT KHAN, age 46, of Troy, New York, was sentenced today to 33 months in prison for conspiring to distribute synthetic marijuana, announced United States Attorney Richard S. Hartunian, Special Agent in Charge James J. Hunt, U.S. Drug Enforcement Administration, New York Field Division, Inspector in Charge Shelly Binkowski, U.S. Postal Inspection Service, Boston Division, and Rensselaer County Sheriff Jack Mahar.

KHAN was arrested in January 2013 after he received two boxes containing synthetic marijuana that were sent to him through the mail. As part of his July 28, 2014 guilty plea, KHAN admitted that he intended to distribute the synthetic marijuana to customers in Troy.

This case was investigated by the U.S. Drug Enforcement Administration, the U.S. Postal Inspection Service, and the Rensselaer County Sheriff’s Office, and was prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

SYRACUSE, NEW YORK - Stanley L. Cohen, an attorney with offices on Avenue D, New York City and Jeffersonville, New York, was sentenced to 18 months imprisonment today by Senior U.S. District Court Judge Norman A. Mordue in United States District Court in Syracuse, according to United States Attorney Richard S. Hartunian. His sentencing followed his earlier guilty pleas to corruptly obstructing and impeding the Internal Revenue Service and failure to file tax returns. The court imposed a12 month term of incarceration for his failure to file federal tax returns, as well, directing that sentence to run concurrently with the 18 month term on his felony plea to corruptly obstructing and impeding the Internal Revenue Service. The court also directed Cohen to serve a one year term of supervised release following completion of his sentence of imprisonment. Cohen was also ordered to pay all federal and state taxes due and owing from the years 2005 through 2010. Cohen was ordered to report to the U.S. Marshal’s Service on January 6, 2015 to begin serving his sentence.

As part of a plea agreement, Cohen previously entered a guilty plea in the Northern District of New York to corruptly obstructing and impeding the Internal Revenue Service. He also pled guilty in the Southern District of New York to charges of failure to file federal tax returns for tax years 2006 and 2007. He has agreed to waive any appeal and collateral attack of his conviction.

This case followed a lengthy investigation by the Internal Revenue Service. It was ascertained that Cohen failed to file federal and state tax returns for the years 2005-2010. He would only file an extension to file his return and make a modest payment toward taxes owed during those years, but never followed through with a final tax return. In court, at the time of his guilty plea, the government revealed that its evidence would show that in the tax year 2004, the last year defendant file a tax return, he had claimed gross receipts of $289,000 when in fact investigators ascertained that he had deposits in excess of $426,000 for that year. In the course of the investigation judicially authorized search warrants were executed at Cohen’s law office on Avenue D in New York City and his home law office at a home he had in Jeffersonville, New York. Investigators found that essentially he kept no financial records regarding receipts of fees from clients. Investigators also found that he failed from 2005 to 2010 to file either a 1099 or W2 for a law office assistant who was paid for performing services for him during those years.

Additionally a search warrant was executed on a safe deposit box that Cohen maintained in a bank in Jeffersonville, New York. A search of that safe deposit box revealed that he had $50,000 in cash within the box. An additional $15,000 in U.S. currency and $1,800 in Canadian currency was recovered from a wall safe in his home. Official bank records revealed that Cohen accessed his safety deposit box 77 times from 2006 through 2008 and had made deposits of cash totaling approximately $504,000 at that bank from 2004 to 2008. Additional investigation revealed that approximately $183,500 of that amount was deposited by Cohen on days when he visited the safety deposit box shortly before or after making the deposit. Bank records also demonstrated that on many occasions, Cohen made multi thousand dollar cash deposits at the small bank in Jeffersonville and exchanged small bills for $100 bills.

Additional evidence developed during the investigation revealed that Cohen made deposits of cash to various financial accounts as follows:

In 2004 he made in excess of $194,000 in cash deposits, in 2005 more than $237,000, in 2006 more than $321,000, in 2007 more than $395,000, in 2008 more than $405,000, in 2009, after the execution of the referenced search warrants, he deposited more than $54,000 and in 2010 more than $147,000 in cash. Many of these deposits were made in amounts under $10,000, thus avoiding the filing of currency transaction reports required under the law.

Investigators also found that Cohen would cause wire transfers of cash to be made from clients, many of whom were on the Akwesasne Reservation to his accounts. These wire transfers made from a Speedway Convenience Store on the reservation through the Money Gram service totaled more than $643,000 between October 2004 and December of 2008.

The case was investigated by the Internal Revenue Service, Syracuse Criminal Investigation Section, Drug Enforcement Administration and the New York State Police. The case was prosecuted by Assistant United States Attorneys Stephen Green and John Duncan.

For further information please contact Assistant U.S. Attorney John Duncan at 315-448-0672.

ALBANY, NEW YORK – Albany, NY - U.S. Attorney Richard S. Hartunian announced today that the U.S. Attorney’s Office for the Northern District of New York collected more than $44 million in civil and criminal penalties this past fiscal year. Of this amount, $17,655,763 was collected from criminal prosecutions and $2,319,703 was collected in civil cases in Fiscal Year 20141. Additionally, the U.S. Attorney’s Office, working in conjunction with other U.S. Attorney’s Offices and agencies in the Department of Justice, collected an additional $2,050,000 in civil cases.

On top of this amount, the U.S. Attorney’s Office worked with partner agencies to make substantial recoveries of money and forfeited assets. These typically represent proceeds of criminal conduct which can be forfeited under federal law. $22,034,435 was collected and deposited into the Department of Justice Assets Forfeiture Fund. These moneys are used to make restitution to crime victims and for a variety of other law enforcement purposes.

Nationally, Attorney General Eric Holder announced this morning that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”

“This year’s collections far exceed last year’s amounts for our office,” said U.S. Attorney Richard S. Hartunian. “We have doubled our criminal, civil and administrative forfeitures over the past year. Additionally, approximately $15 million more was collected this year in criminal cases. These are ill-gotten funds and profits from criminal activities. We take great satisfaction in knowing we’ve taken them back from the hands of lawbreakers.”

Some notable cases in which funds were recovered by the U.S. Attorney’s Office during fiscal year 2014 include the following:

Forfeited bank accounts in illegal gambling business:

Forfeiture of nearly $10 million was ordered for the government in an illegal gambling business, run by multiple co-defendants2, which used internet websites that allowed bettors to place thousands of wagers from the Capital District, Florida, Indiana, California, Texas, and Nevada. The wager money was transferred to offshore accounts in Panama, Andorra, and the Cayman Islands, all of which were forfeited.

Forfeited property in bath salts case:

In February of this year, an RV and cash, together worth nearly $300,000, were among assets forfeited in the U.S. v John Tebbetts case which focused on the illegal distribution of bath salts.

Small Business Administration loan recovery:

A civil complaint was filed against Clifton Park LLC, and 3 individuals (Chetan Patel, Magan Patel, and Dalpat Patel) who were guarantors on an SBA loan for $ 1,367,000. The purpose of the loan was the purchase/rehab of a Comfort Inn in Clifton Park, NY. The complaint was settled for a total amount of $ 609,208.00 spread out over 8 months. To date, $442,104.00 has been collected.

Forfeited and returned artifacts:

Two Italian artifacts, the Attic Red-Figure Skyphos, valued at $35,000, and the Apulian Red-Figure Bell Krater, valued at $20,000, were subject to forfeiture pursuant to federal law which pertains to stolen, smuggled, and clandestinely imported or introduced merchandise. The two artifacts smuggled into the U.S. were forfeited and will be returned to the Italian Ministry of Cultural Heritage and Tourism.

Marketing of prescription drugs for unapproved uses:

The U.S. Attorney’s Office for the Northern District of New York, in conjunction with its colleagues in the Eastern District of Pennsylvania and at the Department of Justice, resolved criminal and civil investigations arising from Endo Pharmaceuticals’ marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration, including payment by Endo of $192.7 million. In a deferred prosecution agreement to resolve the criminal Information filed in the Northern District of New York, Endo admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications, agreed to pay a total of $20.8 million in monetary penalties and forfeiture, and agreed to implement enhanced compliance measures. Endo also agreed to civil false claims settlements with the United States and the states totaling $171.9 million. This settlement emphasized that public health is protected by compliance with FDA’s drug approval process and requirement that product labeling be based on performance, rather than profitability.

Restitution secured through pension benefit:

On May 16, 2001, Paul Ryan was sentenced by U.S. District Judge Lawrence E. Kahn to pay restitution in the amount of $2,881,662.90 to Albany Savings Bank in connection with his securities fraud conviction covering the period of 1993-1998. During the course of the investigation it was discovered that the defendant was entitled to a 401(k) pension benefit distribution from Integra Networks, Inc. in the amount of $65,000. A Writ of Execution was issued on Integra Networks, Inc. on October 29, 2013. As a result, a check in the amount of $54,473.34 was issued to the United States District Court Clerk on November 5, 2013, which was applied to the court-ordered restitution. Efforts to enforce the remaining restitution continue.

Violations of the Recovery Act’s “Buy American” requirement:

The U.S. Attorney’s Office recently resolved, for $500,000, a case involving allegations that Jett Industries, a Colliersville-based general contractor, had falsely certified compliance with the American Recovery and Reinvestment Act’s “Buy American” provision. Jett purchased key project components in France, and then created and submitted paperwork in an effort to mislead the government into believing that the cheaper, French-made products were produced in the United States.

City acknowledges that it mismanaged federal funds:

Another recent case that involved a seven-figure monetary recovery, an admission of wrongdoing, and other forward-looking (non-monetary) components was a settlement reached last month with the City of New York. This settlement resolved allegations, brought to our attention by a whistleblower, that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various managed care organizations to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive benefits through New York State’s Medicaid program. As part of the settlement, HRA accepted responsibility for failing to timely review and close Medicaid cases after being provided information that the beneficiaries moved outside of New York City, and it admitted that its inaction caused one or more MCOs to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it learns that a beneficiary no longer resides within its coverage area.

Unlawful physician compensation arrangements:

A settlement was reached in August 2014 with the New York Heart Center. In that case, a group of upstate New York cardiologists agreed to pay $1.34 million to resolve allegations that its physicians’ compensation was determined using a formula that took into account the volume or value of each physician’s ordering of designated health services from other physicians in the practice, in violation of the Stark Law.

Attached is a chart showing how the Northern District of New York’s FY2014 $44,064,710 collections were distributed to the victims, government agencies serving the public and state and local law enforcement agencies.

All U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

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1 The federal fiscal year runs from October 1st to September 30th.

2 U.S. v. Any and All Funds on Deposit in Bank of America, N.A. in the name of Jay Goldman, et al case 1:13-CV-765, U.S. v. $65,000.00 in U.S. Currency case 1:13-CV-776, and U.S. v. Michelle Lasso case 1:13-CR-413

ALBANY, NEW YORK – ROBERT V. MCLAUGHLIN, age 57, of Mechanicville, New York, pled guilty today in Albany before United States District Judge Mae A. D’Agostino to two counts of production of child pornography, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent in Charge of the Albany Division of the Federal Bureau of Investigation.

McLAUGHLIN faces at least15 years and up to 30 years of imprisonment on each count, as well as term of supervised release of at least 5 years and up to life. He also faces a maximum fine of $250,000 and mandatory registration as a sex offender. McLAUGHLIN will be sentenced in Albany, New York on March 12, 2015.

As part of his guilty plea, McLAUGHLIN admitted that between 2012 and 2014 he engaged in sexually explicit conduct with two young girls for the purpose of producing visual depictions of that abuse, and that he produced such depictions.

This case was investigated by the New York State Police and the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Lisa M. Fletcher and Special Assistant United States Attorney Amanda W. Cox.

ALBANY, NEW YORK – On November 10, 2014, TOMAS BURGOS, age 45, of Newburgh, New York, was sentenced by the Honorable Gary L. Sharpe to 37 months in prison followed by three years of supervised release for filing a false claim with the Internal Revenue Service, announced United States Attorney Richard S. Hartunian and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York Field Office. BURGOS was also ordered to pay restitution of $88,979.71. The sentence follows BURGOS’ July 7, 2014 guilty plea.

In connection with his guilty plea, BURGOS admitted that, on April 21, 2011, he submitted a fraudulent U.S. Income Tax Return for Estates and Trusts to the Internal Revenue Service. The return claimed, falsely, that the Tomas Burgos, Jr. Estate had received $900,000 in income for the 2010 tax year. In the return, BURGOS sought a refund of $300,000 from the Internal Revenue Service, based on the false claim that $300,000 of federal income tax was withheld from the $900,000 income. In fact, $300,000 of federal income tax had not been paid nor had $900,000 been received as income by the Tomas Burgos, Jr. Estate.

Special Agents with the Internal Revenue Service, Criminal Investigation Division investigated the case. The case was prosecuted by Assistant United States Attorneys Geoffrey J.L. Brown and Wayne A. Myers.

ALBANY, NEW YORK – Edward A. Leon and Jennica Duell have been arrested and charged, in separate indictments, with making false declarations before a federal grand jury, announced United States Attorney Richard S. Hartunian and Acting Special Agent in Charge James S. Higgins of the Bureau of Alcohol, Tobacco, Firearms & Explosives. The indictments allege that the false declarations were made in testimony before a grand jury conducting an investigation into the fire on or about May 2, 2013 at 438 Hulett Street in Schenectady, New York that caused the deaths of David Terry and three young children, seriously injured another child, and destroyed the building and the personal property inside.

The indictment charging Duell alleges that she testified under oath before the federal grand jury on or about May 24, 2013 and on or about January 31, 2014 and knowingly made material declarations on each date which were irreconcilably contradictory and inconsistent to the degree that one of them was necessarily false. The indictment alleges that Duell’s testimony in May of 2013 included declarations about how the fire at 438 Hulett Street was started, and by whom, and how: 1) A man said that he could make it so Duell and him could be together forever; 2) She, the man, and others had traveled from Saratoga Springs to Schenectady, talking about how she was tired of being controlled by David Terry, a face to face confrontation was necessary, and she said to do it and get it over with; 3) They stopped to get gas along the way; 4) A man poured gas in the hallway and then lit the stairs by using a lighter and a cloth with gas on it; 5) She spoke about her babies and he said they would get out and not get hurt; 6) Before lighting the fire, he asked Duell if she wanted to be free, and she said she did; 7) She saw the flames and wanted to get in there, but he wouldn’t let her; and 8) He said her story should be that they were in Saratoga the whole night. The indictment further alleges that Duell’s testimony in January of 2014 included declarations that the May 2013 declarations were untrue, and that she and the others had stayed in Saratoga Springs the entire night of the fire, never traveling to Schenectady.

The indictment of Leon charges two counts of making false declarations before the grand jury in sworn testimony on November 22, 2013. Count One alleges that Leon testified falsely regarding his travel on May 2, 2013, alleging that he falsely testified that he had driven straight from the Cumberland Farms in Palatine Bridge to work in Amsterdam, New York, but that he had actually driven first to Schenectady, was there driving on Hamilton Street near its intersection with Hulett Street at about 4:19 a.m, and was in the area of 438 Hulett Street at the time of the fire. Count Two alleges that Leon testified falsely in denying that he had used a particular telephone to send text messages to David Terry, some of which were threatening, from April 25 – 29, 2013.

Leon, 42, of St. Johnsville, New York, and Duell, 26, of Schenectady, New York, both appeared today before U.S. Magistrate Judge Christian F. Hummel in U.S. District Court in Albany, New York. Leon waived a detention hearing and was detained pending trial or a later hearing request. Duell was detained pending a hearing scheduled for Wednesday, November 12, 2014 at 2:00 p.m. The indictments are merely accusations and the defendants are presumed innocent unless and until proven guilty in a court of law. If convicted, Duell faces a maximum sentence of imprisonment for five years, a $250,000 fine, and a term of supervised release of up to three years. Since Leon is charged with two counts, if convicted, he faces an aggregate maximum sentence of imprisonment for ten years, a $500,000 fine, and a term of supervised release up to five years.

United States Attorney Hartunian stated: “The constitutional requirement of indictment by a grand jury depends on the truthful testimony of witnesses. Perjury undermines the integrity of our judicial system and is particularly insidious when the underlying offense is one that resulted in the killing of a father and three young children and horrible injuries to a fourth child. This indictment alleges conduct designed to impede the investigation, but we remain resolute in our commitment to continuing the investigation until justice is done.”

The charges today resulted from an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms & Explosives of the U.S. Department of Justice, the Schenectady Police Department, and the Schenectady Fire Department. The case is being prosecuted by First Assistant U. S. Attorney Grant C. Jaquith and Assistant United States AttorneyWayne A. Myers.

Further questions or inquiries may be directed to First Assistant U.S. Attorney Jaquith at 518-431-0247.

ALBANY, NEW YORK – On November 4, 2014, JAMES J. McGONIGLE, age 42, of Troy, New York, pled guilty in Albany before United States District Judge Mae A. D’Agostino to distribution and possession of child pornography, announced United States Attorney Richard S. Hartunian and Homeland Security Investigations Assistant Special Agent in Charge Nicholas DiNicola. McGONIGLE, who was detained pending his sentencing, faces at least five years of imprisonment and up to 40 years of imprisonment.

As part of his guilty plea, McGONIGLE admitted that he distributed videos of child pornography by e-mail. On March 11, 2014, investigators executed a federal search warrant at McGONIGLE’S residence in Troy, New York, and recovered 364 still images and 50 videos depicting child pornography from his smartphone. Sentencing is scheduled for March 4, 2015 at 12:30 p.m. in Albany, New York.

The case was investigated by the Department of Homeland Security, Homeland Security Investigations, with the assistance of the Colonie Police Department and the Rensselaer County Sheriff’s Office. The case is being prosecuted by Assistant United States Attorney Jeffrey C. Coffman.

Defendants Allegedly Conspired to Manufacture and Distribute Meth in
Clinton County

PLATTSBURGH, NEW YORK – Billy Slick and Danielle Trombly Slick appeared in federal court in Plattsburgh, NY this morning and pleaded not guilty to charges related to the manufacture and distribution of methamphetamine, announced United States Attorney Richard S. Hartunian, Drug Enforcement Administration Special Agent in Charge James J. Hunt, and New York State Police Troop B Headquarters Bureau of Criminal Investigations Captain Robert S. LaFountain. The two-count indictment alleges that they conspired to manufacture, to possess with intent to distribute, and to distribute 50 grams or more of methamphetamine in Clinton County and elsewhere from approximately 2011 through June 2013. The indictment also charges Billy Slick with possession of methamphetamine with intent to distribute it. The defendants were detained pending trial, which is currently scheduled for January 5, 2014, in Syracuse, NY.

United States Attorney Richard Hartunian said, “The scourge of drugs like methamphetamine is devastating to individuals, their families and our neighborhoods. We continue to do everything possible to keep these drugs out of our communities. I commend the collaborative law enforcement efforts in this case.”

“Not only did law enforcement locate, arrest and bring back Mr. and Mrs. Slick to New York to face drug charges, they identified how the couple used the one-pot method to produce and distribute methamphetamine throughout the North Country,” stated DEA Special Agent in Charge James J. Hunt. “Simply put- methamphetamine use and production result in explosions, fires, hazardous waste, addiction and associated crimes. I would like to thank our federal, state and local law enforcement partners whose relentless efforts led to their arrest, extradition and arraignment.”

New York State Police Captain Robert LaFountain said, “The New York State Police extends our sincere gratitude to United States Attorney Richard Hartunian and our law enforcement partners for their efforts in this investigation. The Slicks' criminal manufacturing and distribution of methamphetamine in Clinton County resulted in numerous area residents becoming addicted to this devastating drug. This will hopefully send a clear message to drug dealers that law enforcement will work diligently to investigate and apprehend those that engage in this criminal behavior.” If convicted of Count 1, the conspiracy charge, the maximum penalties the Slicks each face include: a mandatory minimum term of imprisonment of 5 years; a maximum term of imprisonment of 20 years; a fine of $5,000,000; and up to lifetime supervised release. If convicted of Count 2, possession with the intent to distribute, the maximum penalties Billy Slick faces include: a term of imprisonment of 20 years; a $1,000,000 fine, and lifetime supervised release.

The case is being investigated by the Drug Enforcement Administration, New York State Police, the High Intensity Drug Trafficking Areas Program of New York and New Jersey, the Plattsburgh Police Department, the Clinton County District Attorney’s Office, and the Essex County District Attorney’s Office. Assistant United States Attorney Katherine Kopita is prosecuting the case.

All charges are merely accusations and all defendants are presumed innocent unless and until proven guilty in a court of law.

SYRACUSE, NEW YORK - United States Attorney Richard S. Hartunian announced today the sentencing of Walid Osmond Turk.

Turk, 41, formerly of Ft. Lauderdale, Florida, had pled guilty on April 30, 2014 to Conspiracy to Traffic in Counterfeit Goods. From 2003 through 2008, Turk imported millions of dollars worth of counterfeit exercise equipment from China which he sold on the internet representing it as genuine from such manufacturers as Nautilis, BowFlex and Fitness Quest. He had been an international fugitive since his indictment in May 2009. He surrendered to United States authorities in April 2014.

On November 5, 2014, Turk was sentenced to five years imprisonment, to be followed by three years of supervised release. He was ordered to pay a fine of $250,000 and restitution of $8,204,328.49.

The case was investigated by the United States Secret Service, Homeland Security Investigations and the United States Postal Inspection Service.

The case was prosecuted by Assistant United States Attorney Edward R. Broton

Sentenced on methamphetamine and pseudoephedrine charges

SYRACUSE, NEW YORK –Wanda Kingsley, age 49, of Florence, New York, was sentenced today by U.S. District Court judge Glenn T. Suddaby to 70 months imprisonment on jury on three felony counts, including a methamphetamine conspiracy involving the manufacture of 50 grams or more and a conspiracy to possess or distribute pseudoephedrine knowing it was intended to be used to manufacture a controlled substance - announced United States Attorney Richard S. Hartunian.

Following a three day jury trial in February, 2014, Kingsley and co-defendant Terry Ross, age 53, also of Florence, were convicted of a conspiracy to manufacture 50 grams or more of methamphetamine, in violation of Title 21, United States Code, Section 841(a)(1), (b)(1)(B) and 846, a conspiracy to possess or distribute pseudoephedrine knowing it was intended to be used to manufacture methamphetamine, in violation of Title 21, United States Code, Section 841(c)(1) and 846, and one count each of possessing or distributing pseudoephedrine knowing it was intended to be used to manufacture methamphetamine, in violation of Title 21, United States Code, Section 841(c)(1).

The evidence at trial showed that between 2010 and 2012, defendants Ross and Kingsley, individually and together with each other and with others, purchased pseudoephedrine pills from pharmacies in Oneida County, and knowingly provided the pills to other co-conspirators who used them on numerous occasions in the manufacture of methamphetamine. Between November 2010 and January 2012, Ross purchased pseudoephedrine pills on 21 separate occasions from Oneida county pharmacies, and Kingsley, at the time Ross’ live-in girlfriend, purchased pseudoephedrine pills on 49 separate occasions. Ross and Kingsley also assisted in the methamphetamine manufacturing process in various ways, including procuring and assembling some of the necessary ingredients and apparatus for the meth “cook,” and providing assistance during the cooking process, in exchange for a portion of the finished product methamphetamine.

Following her incarceration, Kingsley will be placed on supervised release for a period of 4 years. Previously, on June 17, 2014, Judge Suddaby sentenced Ross to a term of imprisonment of 108 month, followed by a term of supervised release of 4 years.

The prosecution arose from the investigative efforts of the City of Oneida Police Department, the New York State Police, and the Drug Enforcement Administration. The case was prosecuted by Assistant United States Attorney Carl Eurenius. For more information, please contact AUSA Eurenius at (315) 448-0672.

SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announces that MICHAEL OLIVER, 34, of Waterville, New York, has been charged with two counts of obstructing the United States mail, in violation of 18 U.S.C. § 1701. The two-count Information filed by the United States Attorney’s Office charges Mr. Oliver, a former letter carrier, with obstructing and retarding the passage of mail by opening mail addressed to others and retaining the contents of that mail. If convicted, Mr. Oliver faces up to six months in prison.

An investigation by the U.S. Postal Inspection Service and the Office of Inspector General of the U.S. Postal Service is ongoing. The case is being prosecuted by Assistant United States Attorney Michael F. Perry.

For additional information, contact Executive Assistant U.S. Attorney John G. Duncan at 315- 448-0672.

The charges and allegations announced today are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Joseph Borio Admits that he Caused the Submission of Unsubstantiated Claims for
Payment to Medicare and Agrees to Pay Nearly $400,000 to the United States

ALBANY, NEW YORK: Joseph Borio – the owner of Borio Chiropractic Health Center (BCHC), in Cicero, New York – has agreed to pay the United States $376,436.76 to resolve allegations that he violated the False Claims Act by submitting claims to Medicare using higher billing codes than appropriate and falsely certifying that the services billed were medically necessary, announced United States Attorney Richard S. Hartunian. As part of the settlement, Borio admitted that he and others submitted claims to Medicare that are unsupported by his records. He also agreed to implement additional compliance measures as a condition of his continued participation in Medicare and other federal health care programs.

In 2009, federal authorities received information suggesting that Borio had engaged in questionable billing practices. A subsequent investigation revealed that, from May 4, 2006 through April 9, 2008, Borio submitted 10,534 claims for payment to Medicare, which is far more than any other chiropractor in 45 upstate and central New York counties. He also billed for treating as many as 69 Medicare beneficiaries in a given day. Taking into account both Medicare and non-Medicare patients, Borio sometimes billed for personally treating hundreds of individuals in a single day. Of the claims Borio submitted to Medicare during this period, more than 99.9% were billed using the highest-reimbursing billing code (other chiropractors in the region billed that code, on average, just over 13% of the time). During this period, Borio billed that code nearly three times more than the region’s next highest biller. He also treated his Medicare beneficiaries, on average, almost three times more frequently than his peers.

United States Attorney Hartunian said: “The provision of Medicare benefits must be dictated by patient need, not provider greed. Pursuant to federal guidelines, chiropractors are required to submit bills based on the level of treatment required, not the highest rate of payment possible. Today’s settlement demonstrates our commitment to safeguarding the Medicare Trust Fund by holding accountable those providers who inflate their bills to maximize profits.”

“Individuals who defraud health care programs place additional burdens and costs on the health care system, which affects every American citizen. The FBI will continue to work closely with our law enforcement partners to identify individuals who defraud the system for personal gain,” said Special Agent in Charge Andrew W. Vale of the Federal Bureau of Investigation (FBI), Albany Division.

As part of today’s settlement, Borio entered into an integrity agreement with the United States Department of Health and Human Services – Office of Inspector General (HHS-OIG) requiring him and BCHC to engage in strict compliance efforts over the next three years. Under the agreement, Borio is required to retain an independent review organization to review the accuracy of his claims for services furnished to federal health care program beneficiaries.

“When chiropractors try to enrich themselves by misrepresenting the services they bill to taxpayer-funded health care programs, we will work hard to make sure they are held accountable for their deceptive schemes,” said Special Agent in Charge Thomas O’Donnell of HHS-OIG’s New York region.

This investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York, the FBI, HHS-OIG, and SafeGuard Services LLC (a Program Safeguard Contractor responsible for investigating fraud, waste, and abuse to the Medicare Program). The United States was represented by Assistant United States Attorney Adam J. Katz.

ALBANY, NEW YORK – JAMES A. WAGONER, 40, of Schenectady, New York, pled guilty to making a false statement in the acquisition of a firearm before United States District Court Judge Mae A. D’Agostino, on October 14, 2014, announced United States Attorney Richard S. Hartunian and James S. Higgins, Acting Special Agent-in-Charge of the New York Field Division of the United States Bureau of Alcohol, Tobacco, and Firearms. Wagoner faces up to ten years in prison, a fine of up to $250,000, and supervised release of up to three years. Sentencing is scheduled for February 12, 2015 in Albany, New York.

As part of his guilty plea, WAGONER admitted that in October 2009 he made a false statement to a federally licensed firearm dealer when he purchased a rifle in Albany, New York. Specifically, on an ATF 4473 Firearms Transaction Record, in response to a question about whether he was subject to a court order prohibiting him from harassing, stalking, or threatening his child or an intimate partner or the child of an intimate partner, he answered, no. At the time, he was subject to such an order. Federal firearms laws prohibit people subject to such orders from possessing firearms.

The case was investigated by the United States Bureau of Alcohol, Tobacco, and Firearms (ATF), Albany, NY. The case was prosecuted by Assistant United States Attorney Edward P. Grogan.

Charges include possession, distribution and receipt of child pornography

SYRACUSE, NEW YORK – Auburn, NY resident MICHAEL J. MAHANNAH, age 31, was formally charged today in federal court in Syracuse on multiple counts, including attempted coercion and enticement of a minor, according to United States Attorney Richard S. Hartunian. Following an initial appearance before United States Magistrate Judge Andrew T. Baxter, Mahannah is being held without bond.

The twelve-count indictment returned by the federal Grand Jury charged Mahannah with the following crimes: Count 1 – Attempted Coercion and Enticement of an individual the defendant believed to be a twelve year-old male child (who was in fact an undercover police officer); Count 2 – Felony Offense Against a Minor by a Registered Sex Offender; Counts 3-7 – Distribution of Child Pornography; Counts 8-11 – Receipt of Child Pornography; and Count 12 – Possession of Child Pornography.

If found guilty of Counts 1 and 2, Mahannah faces a statutory minimum of at least 20 years in prison and a maximum term of life in prison. On Counts 3-11, the defendant faces a statutory minimum of at least 5 years in prison and a maximum of 20 years in prison. On Count 12, the defendant faces a maximum of 20 years in prison. Mahannah may be fined up to $250,000 on each count of conviction. Upon release from prison, he would be placed on Supervised Release for a mandatory minimum of at least five years and up to life. He would also be required to register as a sex offender.

The charges in the indictment are merely accusations and the defendant is presumed innocent until and unless proven guilty.

This case is being investigated by the United States Secret Service, the New York State Police, the Syracuse Police Department, and the Cayuga County District Attorney’s Office, as part of Project Safe Childhood.

Project Safe Childhood is a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Launched in May 2006 by the Department of Justice, and led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The case is being prosecuted by Assistant United States Attorneys Lisa Fletcher and Nicolas Commandeur.

ALBANY, NEW YORK – WALTER ELICER LUNA CAYSEDA, 49, of Bronx, New York, pled guilty yesterday in Plattsburgh, New York, to making a false statement and aggravated identity theft before United States District Court Judge David N. Hurd announced United States Attorney Richard S. Hartunian, and U.S. Customs Director of Field Operations, Randy Howe, Buffalo, New York. On the false statement count, LUNA CAYSEDA faces up to five years in prison, supervised release of up to 3 years, and a fine of up to $250,000. He faces an additional consecutive sentence of at least two years on the aggravated identity theft count. Sentencing is scheduled for February 20, 2015 in Utica, New York.

“Given our on-going concerns for security on our borders, it is critically important we know the people entering and leaving our country are, indeed, who they say they are,” stated U.S. Attorney Hartunian. “I commend the Department of Homeland Security and the border agents for their continued vigilance.”

As part of his guilty plea, LUNA CAYSEDA admitted that on August 26, 2014, during an immigration inspection at the Champlain Port of Entry, he gave a false name and stated that he was a United States Citizen born in Puerto Rico when he was actually a citizen of Columbia who had been removed from the United States in 1997. LUNA CAYSEDA also admitted that he used a New York State Driver’s license bearing his picture and the true biographical information of the person he was pretending to be as proof of his identity and citizenship.

The case was investigated by the Department of Homeland Security, Customs and Border Protection, Champlain, New York. The case was prosecuted by Assistant United States Attorney Edward P. Grogan.

Man sentenced to federal prison for distributing cocaine in North Country

PLATTSBURGH, NEW YORK – On October 16, 2014, ROBERTO DELGADO, 35, of Ossining, New York was sentenced to 151 months in federal prison by United States District Court Judge Glenn Suddaby in Syracuse, New York announced United States Attorney Richard S. Hartunian and Drug Enforcement Administration Acting Special Agent in Charge James J. Hunt.

United States Attorney Hartunian said, “Keeping the supply of illegal drugs out of our communities is essential. We praise the work of our partner law enforcement agencies.”

“This sentencing is a result of collaboration between law enforcement to identify, investigate and arrest those responsible for supplying cocaine to our communities,” said DEA Acting Special Agent in Charge Hunt.

In March 2013, Delgado pled guilty to conspiracy to possess with intent to distribute and to distribute five kilograms or more of cocaine in the Northern District of New York, specifically in the Lake Placid area.

The sentence also includes a $15,000 fine, an eight year term of supervised release after the defendant completes his 151 month term of imprisonment, and a $100 special assessment.

The case was investigated by the Drug Enforcement Administration, New York State Police, and Lake Placid Police Department, the Saranac Lake Police Department, the Plattsburgh Police Department, the Clinton County Sheriff’s Office, the Franklin County District Attorney’s Office, and the Essex County District Attorney’s Office. Assistant United States Attorney Katherine Kopita prosecuted the case.

Central Massachusetts man sentenced to federal prison for distributing heroin in
North Country

PLATTSBURGH, NEW YORK – On October 14, 2014, ERNESTO MATOS, 33, of Belchertown, Massachusetts, was sentenced to 41 months in federal prison by Senior United States District Court Judge Thomas J. McAvoy in United States District Court in Albany, New York announced United States Attorney Richard S. Hartunian and Drug Enforcement Administration Acting Special Agent in Charge James J. Hunt.

“Heroin addiction and overdoses have been on the rise in our district. Eliminating the supply and making it more difficult to obtain are two essential steps to reducing the tragedies of addiction and overdose,” stated United States Attorney Richard S. Hartunian. “We will continue to work with our federal, state and local law enforcement partners to rid our communities of this horrible scourge.”

DEA Acting Special Agent in Charge Hunt stated, “Heroin has hit our towns hard. Over one hundred people die a day due to opioid overdoses and this sentencing exemplifies law enforcement’s commitment to ridding our streets of heroin and diverted pain medication.”

“With the assistance of the Drug Enforcement Administration agents, we were able to dismantle a drug distribution organization that was responsible for bringing a large amount of heroin to our area,” said Chief Christopher Premo, Malone Village Police Department. “We were also able to trace the heroin back to Holyoke MA, identifying the supplier to local distributers, further interrupting the flow of illegal drugs.”

Matos pled guilty in May 2014 to conspiracy to possess with intent to distribute and to distribute heroin. As part of that plea agreement, Matos admitted to distributing at least 100 grams of heroin. The charges stemmed from Matos’ role as a supplier of heroin to local dealers in the Malone area. The sentence also includes a three-year term of supervised release following Matos’ incarceration and a $100 special assessment.

The case was investigated by the Drug Enforcement Administration, New York State Police, Massachusetts State Police, Belchertown Police Department, Malone Village Police Departmentand the Franklin County District Attorney’s Office. Assistant United States Attorney Katherine Kopita prosecuted the case.

ALBANY, NEW YORK – Rafael Cantin-Echevarria, 36, a citizen of Cuba who had been living in Stafford, Virginia, was sentenced on October 15, 2014 to serve 70 months in prison followed by two years of supervised release for illegally reentering the United States following removal by Senior United States District Court Judge Lawrence E. Kahn announced United States Attorney Richard S. Hartunian and Patrol Agent in Charge Norman Lague of United States Border Patrol, Champlain Station. Cantin-Echevarria had pled guilty in June. Following the completion of the term of imprisonment, the Department of Homeland Security will process Cantin-Echevarria for removal from the United States.

In May 2014, United States Border Patrol agents arrested Cantin-Echevarria after he was found hiding in the woods south of the border near Champlain, New York. In September 2006, an immigration judge had ordered that Cantin-Echevarria be removed from the United States, but he remained in the country until March 2014 when he went to Canada.

The case was investigated by the United States Border Patrol, Champlain, NY, and prosecuted by Assistant United States Attorney Edward Grogan.

ALBANY, NEW YORK – Our Lady of Lourdes Memorial Hospital, Inc. (Lourdes), a 242-bed hospital located in Binghamton, New York, has paid $3,373,898.28 to resolve False Claims Act liability stemming from Medicare billing improprieties that the hospital selfdisclosed to the federal government, announced United States Attorney Richard S. Hartunian.

During the course of an internal review, Lourdes determined that from February 2008 through September 2013, it had improperly billed and was thus overpaid by the Medicare program for hyperbaric oxygen therapy services rendered by a third party in a facility that failed to satisfy the requirements for “provider-based status” set forth in federal regulations. The hospital promptly took corrective steps to remedy the problem and then brought its findings to the government’s attention. Due in large part to Lourdes’s decision to self-disclose these issues and its cooperation throughout the government’s investigation, the hospital was required to pay far less than the treble damages and penalties that the United States is authorized to seek under the False Claims Act. Furthermore, the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) decided that Lourdes would not have to enter into a corporate integrity agreement or adopt other compliance measures.

United States Attorney Hartunian said: “Today’s settlement is an excellent example of how voluntary self-disclosure benefits both the integrity of health care programs and providers who discover and report evidence of improper billing in their organization. Lourdes should be commended for the manner in which it handled the disclosure.”

“In coordination with our law enforcement partners, our agency’s investigators and attorneys will continue to work with health care providers who use the self-disclosure protocol to resolve billing improprieties,” said Special Agent in Charge Thomas O’Donnell of HHS-OIG’s New York region.

The United States encourages all health care providers to self-disclose any known violations that have resulted in the submission of improper claims to federal health care programs. This investigation and settlement were the result of a coordinated effort between the United States Attorney’s Office for the Northern District of New York and HHS-OIG. Locally, the United States was represented by Assistant United States Attorney Adam J. Katz.

ALBANY, NEW YORK – SCOTT J. BORNT, 53, and his wife GERI MONDLIN-BORNT, 50, formerly of Gloversville, New York, each pled guilty yesterday in Albany to one count of social security fraud before Senior United States District Court Judge Thomas J. McAvoy announced United States Attorney Richard S. Hartunian and Special Agent in Charge Edward J. Ryan of the Social Security Administration, Office of Inspector General, Office of Investigations, New York Field Division. They face up to five years in prison and fines of up to $250,000. Sentencing is scheduled on February 9, 2015 in Albany, New York.

As part of their guilty pleas, BORNT and MONDLIN-BORNT admitted that they made false statements to the Social Security Administration to obtain disability insurance benefits payments to which they were not entitled. Specifically, they did not disclose income earned from their trucking business. As a result of their false statements, BORNT received $314,650 of fraudulent payments over six years, and MONDLIN-BORNT received $88,120 of fraudulent payments over seven years.

The case was investigated by the Social Security Administration, Office of Inspector General, with the assistance of the United States Secret Service.

ALBANY, NEW YORK – PAUL SCROM, 63, of Albany, New York, was sentenced today by the Honorable Thomas J. McAvoy to 72 months in federal prison followed by a 10-year term of supervised release, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation. SCROM is also required to register as a sex offender. The sentence follows SCROM’s May 22, 2014 guilty plea to distribution of child pornography.

As part of his guilty plea, SCROM admitted that he distributed images and movies of child pornography through a peer-to-peer file sharing program. On September 12, 2013, investigators searched SCROM’s home and recovered numerous images and videos depicting child pornography.

This case was investigated by the Federal Bureau of Investigation, Albany Division and is being prosecuted by Assistant United States Attorney Wayne A. Myers.

Retired State Worker’s Child Pornography Collection Included
Thousands of Images and Over 800 Movies

ALBANY, NEW YORK – STEPHEN J. KONN, 64, of Clifton Park, New York, was sentenced today by the Honorable Mae A. D’Agostino to 120 months in federal prison followed by a 25- year term of supervised release, announced United States Attorney Richard S. Hartunian and Andrew W. Vale, Special Agent-in-Charge of the Albany Division of the Federal Bureau of Investigation. The sentence follows KONN’s April 30, 2014 conviction, after a three-day federal jury trial, for distribution of child pornography, receipt of child pornography, and possession of child pornography.

The evidence presented at trial showed that KONN, a retired New York State Department of Taxation and Finance employee, used a peer-to-peer file trading program to distribute child pornography to an undercover FBI agent via the Internet. A subsequent search of KONN’s Clifton Park residence uncovered a computer containing over 4,000 images and 800 videos of child pornography, and evidence that KONN had been trading child pornography over the Internet for years.

Noting that “what went on here is not victimless,” Judge D’Agostino described KONN as leading a double life, and the materials he traded as “unspeakable” and “horrific in nature.”

This prosecution resulted from an investigation conducted by the Federal Bureau of Investigation, Albany Division. The case was prosecuted by Assistant United States Attorney Wayne A. Myers.

ALBANY, NEW YORK – ANDRE NADEAU, age 55, of New Haven, Connecticut, was sentenced yesterday by the Honorable Thomas J. McAvoy to 18 months in federal prison followed by 20 years of supervised release for failing to comply with the Sex Offender Registration and Notification Act (“SORNA”). The sentence follows NADEAU’s May 1, 2014 guilty plea.

SORNA, also known as the Adam Walsh Protection and Safety Act, requires that a convicted sex offender register where he or she resides, is employed, or is enrolled as a student, and to keep any registrations current.

NADEAU, who was convicted of sexual assault and designated a sex offender by Connecticut, registered with Connecticut in 2001. In 2005, NADEAU was found in Mississippi and convicted by a Mississippi court for failing to register as a sex offender. In 2012, NADEAU registered as a sex offender in Mississippi and signed documents acknowledging his duty to register. In 2013, NADEAU was found living in Albany, New York, and he had not registered or updated his sex offender registration with New York, Mississippi, or Connecticut.

This case was investigated by the U.S. Marshals Service and prosecuted by Assistant United States Attorney Wayne A. Myers.

Former karate instructor receives maximum penalty

ALBANY, NY – United States Attorney Richard S. Hartunian announced a 90 year sentence imposed upon RYAN STAPLES, 37 years old, of Chateauguay, NY. The sentence was imposed today by U.S. District Court Senior Judge Thomas J. McAvoy.

On May 1, 2014, Staples pled guilty to three counts of production of child pornography involving three different minor victims. He admitted that he videotaped and took photographs of himself engaged in sexually explicit conduct with the victims between July and October 2010.

The Court imposed the maximum sentence of imprisonment for thirty years on each of the three counts and ordered the sentences on each count to run consecutively. The Court also imposed a lifetime term of supervised release and an order of forfeiture. The United States Attorney’s Office dismissed Count 4 of the indictment, Possession of Child Pornography. The defendant was remanded to the custody of the U.S. Marshals.

“Sexual exploitation crimes are among the most heinous, imposing a ‘life-time’ sentence on the minor victims involved,” stated United States Attorney Richard S. Hartunian. “It is fitting this defendant received a life-time of imprisonment as well. The damage done to these children is tragic. The most we can do is make sure this defendant will never be near another child again.”

U.S. Attorney Hartunian praised the collaborative work of law enforcement agencies in the north country of New York. “The cooperative work of the Department of Homeland Security, Homeland Security Investigations, Rouses Point and the Clinton County Sheriff’s Office was vital in this case. They did an outstanding investigative job.”

“These types of crimes are appalling and made worse when their perpetrators have ready access to young people," said HSI Special Agent in Charge James Spero. "However, the significant sentencing handed down today ensures Mr. Staples will never victimize another child. The sentencing should also serve as a stark reminder of the severe penalties that await those who engage in this type of depraved activity. The Clinton County Sheriff provided invaluable assistance in the investigation by conducting all of the forensic examinations."

This case was investigated by Homeland Security Investigations, Rouses Point and the Clinton County Sheriff Office. Prosecuting the case was Assistant United States Attorney Katherine Kopita.

Involved false income tax returns of over $200,000

SYRACUSE, NEW YORK –United States Attorney Richard S. Hartunian and IRS-Criminal Investigations, New York Field Office, Special Agent in Charge Shantelle P. Kitchen announced that Lacey Jane Hollinger, 27, of Massena, New York pled guilty yesterday in federal court in Syracuse, New York to mail fraud and aggravated identity theft in a case involving false federal income tax returns that resulted in the theft of over $200,000.00 from the IRS. Hollinger admitted that in 2011 and 2012 she contacted Massena area residents via Facebook and other electronic media to tell them they were eligible for a tax refund even though they were unemployed and had no income as part of a U.S. Government “stimulus program.” No such program existed. Several dozen responded, giving Hollinger their personal identification information (date of birth, social security number, etc.). Hollinger forwarded this information to others who used it to create false and fraudulent tax returns that generated over $200,000.00 in tax refunds. Hollinger, and others involved in the fraudulent scheme, stole these funds after they were electronically deposited in bank accounts they controlled in Arizona.

The Massena area residents never saw the tax returns, which falsely represented that they were self-employed and entitled to a refund. Some did get pre-paid debit cards that Hollinger and others caused them to receive in the mail. Many got nothing, with Hollinger and the other fraudsters keeping most of the refund money.

“Identify theft and false income tax filings are two crimes that are increasingly affecting the public,” stated United States Attorney Richard S. Hartunian. “The most important thing for citizens to remember is to never give their personal identifying information out to people they don’t know or who shouldn’t need that information.”

At sentencing on February 6, 2015, Lacey Jane Hollinger faces a maximum sentence of up to twenty (20) years for her conviction for mail fraud and a fine of up to $250,000.00 as well as restitution. She faces an additional maximum sentence of up to twenty (20) years for her plea of guilty to aggravated identity theft, with a mandatory minimum term of two (2) years imprisonment to be served consecutively to her mail fraud sentence. She faces up to three (3) years of supervised release following her release from prison.

The case was investigated by Special Agents of the Internal Revenue Service, Criminal Investigations (Syracuse, New York Field Office), under the direction of Special Agent in Charge Shantelle P. Kitchen. It is being prosecuted by Assistant United States Attorney Richard Southwick.

SYRACUSE, NEW YORK – United States Attorney Richard S. Hartunian announced that a federal grand jury in Syracuse has handed down a 21 count superseding indictment against defendants STEPHEN M. HOWELLS II and NICOLE F. VAISEY. The superseding indictment, filed today, accuses HOWELLS with child exploitation offenses in all 21 counts, and charges VAISEY together with HOWELLS in 10 of the counts.

The superseding indictment specifies six different victims of the charged offenses.

HOWELLS, age 39, and VAISEY, age 25, both of Hermon, NY, are charged with one count (Count 1) of conspiracy to sexually exploit children between September 2013 and August 2014. They are also charged together with nine substantive counts (Counts 2 – 10) of exploiting three of the children during that time period. The nine counts represent nine separate dates on which the exploitation occurred.

In addition, HOWELLS is charged alone in six additional substantive counts (Counts 11 – 16), representing six additional dates, for the exploitation of four children.

The final five counts (Counts 17 – 21) of the superseding indictment charge HOWELLS with the possession of child pornography on each of five separate hard drives recovered from his residence. It is alleged that the images and video files possessed on these drives involve images of prepubescent minors and minors under the age of 12. The images and videos charged in these counts are separate and apart from those charged in the first 16 counts of the superseding indictment.*

HOWELLS and VAISEY face imprisonment of at least 15 years imprisonment, and up to 30 years on the conspiracy charge, and on each of the substantive exploitation counts. HOWELLS also faces a maximum sentence of 20 years on each of the possession counts. Conviction on any count requires a term of supervised release of a minimum of 5 years and up to life to follow any term of incarceration. In addition, conviction on any count of the superseding indictment will require HOWELLS and VAISEY to register as sex offenders.

United States Attorney Richard S. Hartunian said, “Sexual exploitation of minors is the most depraved, predatory abuse of our children. We will continue our efforts to make certain that every offense these defendants have committed is prosecuted to the fullest extent of the law. Our goal is that they will never be near children again.” Special Agent in Charge, Andrew W. Vale of the Federal Bureau of Investigation, Albany Division, stated, “This case epitomizes law enforcement's ability to keep our children safe when federal, state, and local agencies work together. The FBI will continue to work with our law-enforcement partners to identify any additional crimes committed by these defendants.”

St. Lawrence County Sheriff Kevin Wells stated, “As the lead County law enforcement agency in this case, we appreciate the teamwork in discovering and identifying these additional victims. The interagency cooperation in this investigation has been invaluable. We will continue our efforts and work with our law enforcement partners to ensure that these defendants are brought to justice for any crimes they have committed.”

St. Lawrence County District Attorney Mary E. Rain stated, “The St. Lawrence County District Attorney’s Office is pleased our Federal partners in prosecution are vigilantly pursuing charges which provide greater penalties than those New York law affords. From the beginning of this case, our Federal partners have bestowed upon our community their expertise, experience, and vast resources for which we are much appreciative. “

This case is being investigated by the St. Lawrence County Sheriff’s Office, the Federal Bureau of Investigation, Albany Division, and the St. Lawrence County District Attorney’s Office, with substantial assistance from the New York State Police.

The case is brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse. Launched in May 2006 by the Department of Justice, Project Safe Childhood is led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.projectsafechildhood.gov.

*The charges are merely allegations; the defendants are presumed innocent until and unless proven guilty.

RICHARD S. HARTUNIAN, United States Attorney, Northern District of New York announces that JAMES BUTCHER (58, of Little Falls, NY), an accountant engaged in the business of preparing tax returns, was sentenced to 12 months and 1 day imprisonment, as well as 1 year supervised release and restitution to the IRS in the amount of $79,771.00 for his felony conviction for aiding and assisting in the preparation of false tax returns, in violation of Title 26, United States Code, Section 7206(2).

During the plea hearing on April 2, 2014, before the Honorable David N. Hurd in Utica, NY, BUTCHER admitted the following: That he was the owner and operator of a tax preparation business named Jim’s Income Tax Service, which he operated out of his residence located in Little Falls, New York. From 2007 through 2010, he prepared forty false Form 1040 returns for fourteen of his clients. All forty of the 1040 forms contained false or inflated “Schedule A” deductions. Specifically, they all contained false or inflated charitable deductions and some also included false or inflated unreimbursed employee expenses. In preparing these forty returns, the defendant created and falsified expenses and deductions relating to charitable contributions and job expenses. He further admitted that he inflated deductions without being directed to do so by his clients. The total tax loss resulting from the forty false and fraudulent returns for tax years 2007-2010 is $140,446.00.

This prosecution resulted from an investigation conducted by the Internal Revenue Service, Criminal Investigations, Syracuse, New York. The case was prosecuted by Assistant United States Attorney Ransom P. Reynolds. Further questions may be directed to Executive Assistant U.S. Attorney John Duncan at (315-448-0672).

Separate State and Federal Indictments Accuse Assemblyman of Stealing Campaign
Funds and Fraudulently Collecting Travel Reimbursements

NEW YORK – Attorney General Eric Schneiderman, Comptroller Thomas P. DiNapoli and United States Attorney for the Northern District Richard S. Hartunian today announced the arrest and indictment of New York State Assemblyman William Scarborough for allegedly stealing campaign funds and falsely collecting travel reimbursements. The 23-count state indictment accuses the Southeast Queens Assemblyman of withdrawing and diverting over $40,000 from the bank account of the “Friends of Bill Scarborough” campaign committee and then using those funds for personal expenses. The 11-count federal indictment charges Scarborough with improperly claiming “per diem” expenses for travel that didn’t take place. If convicted on all charges, he faces up to 37 years in prison.

“The crimes Mr. Scarborough is accused of committing represent a shameful breach of the trust his constituents placed in him,” said Attorney General Schneiderman. “New Yorkers are repeatedly asked to have faith in our leaders, and it appears that faith has been shattered once again. Every time my office arrests a corrupt public official, it sends the message that there must be one set of rules for everyone and no one is above the law, no matter how powerful or well-connected. I also want to thank Comptroller DiNapoli and U.S. Attorney Hartunian – cases like that are made possible only through the great collaboration of our law-enforcement partners.”

"Elected officials cannot use taxpayer money or campaign funds as their personal piggy banks. Assemblyman Scarborough tried to game the system, thinking he could get away with it,” New York State Comptroller Thomas P. DiNapoli said. "Through our joint investigation, we revealed that Assemblyman Scarborough allegedly submitted fraudulent travel vouchers and filed false reports on his use of campaign funds. I will continue to partner with Attorney General Eric Schneiderman, U.S. Attorney Richard Hartunian, the Federal Bureau of Investigation and prosecutors across the state to root out corruption and bring corrupt officials to justice."

U.S. Attorney Richard S. Hartunian said: “Today’s indictments demonstrate the commitment of state and federal authorities to combat the fraud and corruption that has plagued our political system. Our elected officials are expected to safeguard the integrity of their office and follow all the rules. When they fail to do so, law enforcement will respond. I heartily commend Attorney General Schneiderman and Comptroller DiNapoli for their vigorous pursuit of this case. The collaboration between state and federal investigators that has brought about these indictments has proven to be an effective tool in identifying and rooting out corruption in our state government.”

State Indictment
According to documents made public today in connection with the state investigation, part of an ongoing effort between Schneiderman and DiNapoli known as “Operation Integrity” and conducted with the assistance of the FBI, Scarborough engaged in a pattern of illegal activity over the last seven years. Bank records obtained as part of the investigation show that between January 2007 and March 2014, Scarborough made numerous withdrawals and transfers from his campaign committee’s account totaling approximately $38,000. Some of that money was taken out directly as cash withdrawals; some was transferred into his personal account, according to the indictment and court papers. Additionally, Scarborough deposited five checks made payable to “Friends of Bill Scarborough,” totaling $3,450, directly into his personal bank account.

The state indictment, filed in New York State Supreme Court in Albany, accuses Mr. Scarborough of then spending that cash for his own personal use, in violation of New York State Election Law, which says that “[c]ontributions received by a candidate or a political committee … shall not be converted by any person to a personal use.”

Mr. Scarborough also allegedly attempted to conceal his illegal conduct by not reporting the withdrawals to the state Board of Elections, as legally required. Between 2007 and 2014, there were 21 separate filings made with the Board of Elections that did not account for the withdrawals. Additionally, the money has never been accounted for in the campaign committee’s financial records.

The indictment charges Scarborough with two felony counts of Grand Larceny and 21 felony counts of Offering a False Instrument for Filing.

Federal Indictment
The federal investigation, conducted by the United States Attorney’s Office and the Albany Division of the Federal Bureau of Investigation, focused on the alleged improper claiming of “per diem” payments and other travel-related expenses from 2009 to 2012. In a federal indictment, filed today in United States District Court in Albany, Assemblyman Scarborough has been charged with four (4) counts of Theft Concerning a Program Receiving Federal Funds for allegedly submitting 174 false reimbursement vouchers for per diem expenses, mileage and tolls in excess of $40,000 between January 2009 and December 2012. If convicted, Scarborough faces a maximum term of imprisonment of not more than 10 years and a $250,000 fine. Scarborough was also charged with seven (7) counts of Wire Fraud relating to communications directing payment of specific false New York State Travel Vouchers to his bank account. If convicted, these counts carry a maximum term of imprisonment of not more than 20 years and fine up to $250,000.

The Attorney General, Comptroller and U.S. Attorney thank the Albany office of the FBI and Deputy Comptroller Nelson Sheingold and Investigator Rebecca Shanley of the State Comptroller’s Office for their cooperation and assistance in this investigation.

Prosecuting the state case is Senior Counsel Darren Miller of the Attorney General’s Public Integrity Bureau, which is led by Deputy Bureau Chief Stacy Aronowitz and Bureau Chief Daniel Cort. Kelly Donovan is the Executive Deputy Attorney General for Criminal Justice. The state’s investigation was handled by Investigator Mark Spencer and Deputy Bureau Chief Antoine Karam of the Investigation Bureau, which is led by Chief Dominick Zarrella. Forensic auditor Jason Blair and legal analyst Sara Pogorzelski provided additional assistance.

The federal investigation was handled by the FBI, Albany Division. The federal case is being prosecuted by Assistant U.S. Attorney Jeffrey Coffman.

All charges are merely accusations and all defendants are presumed innocent unless and until proven guilty in a court of law.

Discussed Northern District of New York’s Aggressive Civil Frauds Program

ALBANY, NEW YORK – On Wednesday, September 17, 2014, United States Attorney Richard S. Hartunian and other senior Department of Justice officials addressed the membership of Taxpayers Against Fraud, a nonprofit organization dedicated to combating fraud against the government and protecting public resources through public-private partnerships. The Acting Associate Attorney General of the United States spoke about the Department of Justice’s national fraud priorities, while United States Attorney Hartunian addressed his office’s aggressive and innovative efforts to fight fraud in upstate and central New York.

Mr. Hartunian was asked to focus his remarks on the Northern District of New York’s application of the False Claims Act, which is the United States’ strongest civil tool to deter and redress fraud committed against government programs. The Act has unique qui tam provisions, which allow private citizens to file suit alleging fraud on behalf of the government. If the government prevails in the action, the whistleblower (known as a “relator”) receives up to 30 percent of the recovery. The Department of Justice secured $3.8 billion in False Claims Act settlements and judgments last fiscal year alone, of which relators received $345 million. Several million of those dollars were recovered as a result of cases worked by Mr. Hartunian’s staff.

“As a United States Attorney, my responsibilities include protecting the public fisc and our people from harm. I am committed to fulfilling that responsibility aggressively and fairly, and I have instructed my staff to be both aggressive and fair in their interpretation and application of the False Claims Act,” explained United States Attorney Hartunian. Mr. Hartunian highlighted the following fraud cases that his office resolved this past year:

Marketing of prescription drugs for unapproved uses: His office, in conjunction with its colleagues in the Eastern District of Pennsylvania, resolved criminal and civil investigations arising from Endo Pharmaceuticals’ marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration. In total, the company agreed to pay $192.7 million in civil damages, criminal forfeiture, and monetary penalties and to enter into a deferred prosecution agreement with enhanced compliance measures. This settlement emphasized that public health is protected by compliance with FDA’s drug approval process and requirement that product labeling be based on performance, rather than profitability.

Administering drugs outside of the presence of a qualified physician: Thanks to the assistance of a whistleblower, his office reached a $3.57 million settlement to resolve allegations that Imagimed (operating as “Open MRI”), its owners, and chief radiologist, submitted false claims to federal healthcare programs for magnetic resonance imaging services with a contrast dye without the direct supervision of a qualified physician. Since a potential adverse side effect of contrast dye is anaphylactic shock, federal regulations require that a physician supervise the administration of contrast dye when it is used for an MRI. Such a resolution stripped away the profit motive for circumventing the physician supervision requirements that safeguard patients.

Violations of the Recovery Act’s “Buy American” requirement: His office recently resolved, for $500,000, a case involving allegations that Jett Industries, a Colliersville-based general contractor, had falsely certified compliance with the American Recovery and Reinvestment Act’s “Buy American” provision. Jett purchased key project components in France, and then created and submitted paperwork in an effort to mislead the government into believing that the cheaper, French-made products were produced in the United States.

City acknowledges that it mismanaged federal funds: Another recent case that involved a seven-figure monetary recovery, an admission of wrongdoing, and other forward-looking (non-monetary) components was a settlement reached last month with the City of New York. This settlement resolved allegations, brought to our attention by a whistleblower, that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various managed care organizations to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive benefits through New York State’s Medicaid program. As part of the settlement, HRA accepted responsibility for failing to timely review and close Medicaid cases after being provided information that the beneficiaries moved outside of New York City, and it admitted that its inaction caused one or more MCOs to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it learns that a beneficiary no longer resides within its coverage area.

Unlawful physician compensation arrangements: A settlement was also reached last month with the New York Heart Center. In that case, a group of upstate New York cardiologists agreed to pay $1.34 million to resolve allegations that its physicians’ compensation was determined using a formula that took into account the volume or value of each physician’s ordering of designated health services from other physicians in the practice, in violation of the Stark Law. By pursuing such cases, physicians in Northern New York and elsewhere will think twice before entering into financial arrangements where a physician’s medical judgment may be compromised by financial incentives.

Billing the government for no-show jobs: With the assistance of another whistleblower, his office resolved allegations that Ithaca-based defense contractor Agave BioSystems and its president submitted false claims to the Department of Defense, seeking reimbursement for work that was never performed. Mr. Hartunian concluded his remarks at the conference with the following observation: “The Northern District of New York is committed to building a leading qui tam practice because the False Claims Act works. It works because it is an effective tool to fight fraud across the full spectrum of federal programs. It works because it provides powerful incentives for companies and individuals to do business honestly. And it works because it safeguards taxpayer money, protects public safety, and improves confidence in government.”