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2 October 2023
Nigerian Man Sentenced to 66 Months in Prison for Business Email Compromise ScamsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, announced that CHIBUNDU JOSEPH ANUEBUNWA was sentenced today in Manhattan federal court to 66 months in prison for his role in fraudulent business email compromise scams that targeted thousands of victims around the world, including in the United States. Collectively, the scams attempted to defraud victims of over $3.5 million, resulting in over $2.5 million in actual losses to victims. On June 29, 2023, ANUEBUNWA pled guilty to participating in a wire fraud conspiracy before U.S. District Judge Paul A. Crotty, who imposed today’s sentence. In connection with the same conspiracy as ANUEBUNWA, co-defendant DAVID CHUKWUNEKE ADINDU was previously sentenced to 41 months in prison, and co-defendant ONYEKACHI EMMANUEL OPARA was previously extradited from South Africa and sentenced to five years in prison.
U.S. Attorney Damian Williams said: “From halfway around the world, Chibundu Joseph Anuebunwa tried to victimize thousands of people by stealing millions of dollars using fraudulent and deceptive emails that were sent to company employees in the United States and elsewhere. He will now spend time in prison for these serious crimes. Today’s sentence should deter scammers outside of the United States who may be tempted to steal money from American victims with cyberattacks and email scams.”
According to publicly filed court documents and statements made at public court proceedings:
Between 2014 and 2016, ANUEBUNWA, OPARA, and ADINDU participated in business email compromise scams (“BEC scams”) targeting thousands of victims around the world, including in the United States. ANUEBUNWA sent bogus emails to employees of various companies directing that funds be transferred to specified bank accounts. The emails purported to be from supervisors at those companies or third-party vendors that did business with those companies. The emails, however, were not legitimate. Rather, they were either from email accounts with a domain name that was very similar to a legitimate domain name, or the metadata in the emails had been modified so that the emails appeared as if they were from legitimate email addresses. After victims complied with the fraudulent wiring instructions, the transferred funds were quickly withdrawn or moved into different bank accounts. In total, the BEC scams attempted to defraud the victims of over $3.5 million, resulting in over $2.5 million in actual losses to victims.
ANUEBUNWA was arrested on March 16, 2021, in the United Kingdom and was extradited to the Southern District of New York on May 20, 2022.
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In addition to the prison term, ANUEBUNWA, 30, of Lagos, Nigeria, was ordered to pay $2.5 million in restitution.
Mr. Williams praised the investigative work of the Federal Bureau of Investigation. Mr. Williams also thanked United Kingdom authorities and the Yahoo E-Crime Investigations Team for their assistance in the investigation. The U.S. Department of Justice’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from the United Kingdom.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Andrew K. Chan is in charge of the prosecution.
N.Y. Man Traveling from the Dominican Republic Arrested at T.F. Green International Airport After More Than Thirteen Kilos of Cocaine is Seized from a Carry-on BagRead the Press Release
PROVIDENCE, RI – A New York man has been ordered detained in Rhode Island on federal drug trafficking charges after Customs and Border Protection (CBP) agents at T.F. Green International Airport located more than thirteen kilograms of cocaine inside a carry-on bag alleged to have been in the man’s possession when he disembarked in a wheelchair from a direct flight from the Dominican Republic on September 28, 2023, announced United States Attorney Zachary A. Cunha.
It is alleged in charging documents, Richard Pineda Novas, 46, of Bronx, N.Y., was among passengers on a flight from Santo Domingo. After initial screening upon his arrival in Rhode Island, Pineda was referred for secondary inspection.
According to the charging documents, a carry-on bag located near Pineda after his arrival at T.F. Green International Airport was found to contain twelve rectangular brick-like packages wrapped in plastic and tape, consistent with the manner in which cocaine is packaged. One of the packages was more closely inspected by CBP agents and was alleged to have been found to contain cocaine. The total weight of the twelve packages was approximately 13.28 kilograms. Also located inside the bag was a bible that contained a paycheck from a New Jersey company in Pineda’s name and a voided check/direct deposit slip from a New York bank that listed Pineda as the payee.
It is alleged that Pineda initially denied that the carry-on bag belonged to him; he later claimed to CBP agents that he had been given the bag by someone whose name he did not know and that he did not know who was going to pick up the package in the United States.
Pineda is charged by way of a federal criminal complaint with a charge of conspiracy to distribute and conspiracy to possess with intent to distribute a controlled substance; as well as a charge of distribution of, and possession with intent to distribute, a controlled substance. A federal criminal complaint is merely an accusation. A defendant is presumed innocent unless and until proven guilty.
The case is being prosecuted by Assistant United States Attorney Denise M. Barton.
The matter is being investigated by Homeland Security Investigations and Customs and Border Protection, Port of Providence.
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Muskogee Resident Sentenced for Threatening Communications and Cyberstalking ChargesRead the Press Release
MUSKOGEE, OKLAHOMA – The United States Attorney’s Office for the Eastern District of Oklahoma announced that Parker Ryan Little, age 26, of Muskogee, Oklahoma, was sentenced to 51 months imprisonment for posting threats online against Wagoner Police Officers and a Fort Gibson Police Officer, and for stalking and harassing two additional victims.
The charges arose from investigations by the Federal Bureau of Investigation, the California-based Regional Enforcement Allied Computer Team (REACT) Task Force, the Wagoner Police Department, and the Fort Gibson Police Department.
On June 22, 2022, Little pleaded guilty to two counts of Threatening Interstate Communications and two counts of Stalking.
On May 4, 2020, Little used one acquaintance’s identity to send an anonymous tip to the Fort Gibson Police Department threatening a mass shooting. On May 8, 2020, Little, assuming the same victim’s identity, posted a public message on a gaming forum threatening to shoot several Fort Gibson police officers, and posted personal identifiable information (PII) doxing the officers. The threatening messages were observed and reported to law enforcement by individuals located outside of Oklahoma.
On June 11, 2020, Little discussed the harassment of a second acquaintance in a group internet conversation. In the group conversation, Little admitted to harassing that second victim, including swatting the victim’s house. On the same day, Little posed as the second victim and posted a public message on a gaming forum threatening to shoot six Wagoner Police Department Officers, including the Chief of Police, the Deputy Chief, and four others. At the same time, Little posted personally identifiable information in the same public message, doxing the threatened Wagoner police officers. The threatening messages involving the second victim were also observed and reported to law enforcement by individuals located outside of Oklahoma.
“The defendant’s relentless campaign of online threats, harassment, and stalking intended to instill fear and divert critical law enforcement resources from where they are truly needed,” said FBI Oklahoma City Special Agent in Charge Edward J. Gray. “Our hope is that today’s sentence brings some relief to the private citizens and members of the law enforcement community that were affected by this reprehensible behavior.”
“We live in an increasingly interconnected society, which can be either a blessing or a curse,” said United States Attorney Christopher J. Wilson. “In this case, the defendant chose the latter, utilizing various electronic platforms to spew threats and stalk innocent victims, including members of law enforcement. The sentence imposed sends a clear message this type conduct is criminal and will be punished accordingly.”
The Honorable John F. Heil, U.S. District Judge in the United States District Court for the Eastern District of Oklahoma, presided over the hearings in Muskogee, Oklahoma. Little will remain in the custody of the U.S. Marshal pending transportation to a designated United States Bureau of Prisons facility to serve a non-paroleable sentence of incarceration.
Assistant United States Attorney Benjamin D. Traster represented the United States.
Maryland Man Found Guilty on All Counts for Sexual Exploitation of Children to Produce Child Pornography and Related ChargesRead the Press Release
Baltimore, Maryland – A federal jury convicted Gary Rocky Jones, age 42, of Baltimore, on charges of sexual exploitation of a child, use of interstate commerce facility to entice a minor to engage in sexual activity, commission of a felony crime involving a minor by a registered sex offender and possession and distribution of child pornography. The guilty verdict was returned on September 27, 2023, after a three-week trial.
The verdict was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation (FBI), Baltimore Field Office; and Acting Commissioner Richard Worley of the Baltimore Police Department.
Previously convicted sex offender Gary Rocky Jones, was found guilty of 27 counts of sexual exploitation of a child to produce child pornography, 15 counts of use of an interstate commerce facility, specifically, the internet, to entice a minor to engage in illegal sexual activity—relating to 15 minor victims from around the country, and commission of a felony crime involving a minor by a registered sex offender, as well as distribution and possession of child pornography.
According to the evidence presented at trial, between 2014 and August 2015, Jones twice produced images and videos of a minor male engaged in sexually explicit conduct. The victim was age 14 to 15 years old during the exploitation. Additionally, as detailed during the trial, from September 2018 through August 2020, Jones used social media accounts to persuade, entice, and coerce another 15 minor males from several states and ranging in age from eight to 17 years old, to engage in sexually explicit conduct. During these internet-based communications, Jones caused the victims to both produce live-streamed and recorded visual depictions of themselves engaged in sexually explicit conduct, both alone and with others, and send Jones the sexually explicit images and video via the internet. On April 2, 2018, Jones used a social media account to distribute child pornography. Further, Jones possessed child pornography from December 2, 2014 through January 31, 2020, and from May 29, 2017 through July 14, 2020, respectively, in connection with two separate email addresses and related storage accounts. Finally, the jury found that, based on the evidence presented at trial, between 2015 and September 2020, Jones committed felony offenses involving minors while he was required to register as a sex offender under Maryland law.
Jones faces a mandatory minimum sentence of 25 years and a maximum sentence of 50 years in federal prison for each count of sexual exploitation of a child; a mandatory minimum sentence of 10 years and a maximum of life imprisonment for each count of coercion and enticement of a child; a mandatory minimum sentence of 15 years and a maximum of 40 years in federal prison for distribution of child pornography; and a mandatory minimum sentence of 10 years and a maximum of 20 years in federal prison for possession of child pornography. Jones also faces a mandatory consecutive sentence of 10 years in federal prison for commission of a felony crime involving a minor by a registered sex offender. U.S. District Judge George L. Russell, III has not yet scheduled sentencing.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorney’s Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc. For more information about Internet safety education, please visit www.justice.gov/psc and click on the “Resources” tab on the left of the page.
United States Attorney Erek L. Barron commended the FBI and the Baltimore Police Department for their work in the Jones case, which is being prosecuted by Assistant U.S. Attorneys Paul E. Budlow and Colleen E. McGuinn.
For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md/project-safe-childhood and https://www.justice.gov/usao-md/community-outreach.
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Man Sentenced for Role in $55M Investment Fraud SchemeRead the Press Release
A Florida man was sentenced today to six years in prison for orchestrating an investment scheme that defrauded more than 10,000 victims of over $55 million.
According to court documents, Michael Glaspie, 72, of Palm City, marketed an investment opportunity under the name “CoinDeal” or “Coin Deal.” Glaspie claimed that CoinDeal would yield extremely high returns on the premise that a consortium of wealthy buyers was about to acquire one or more technology companies that Neil Suresh Chandran, 51, of Las Vegas, allegedly owned and operated under the banner of “ViRSE.” To entice investors to put money into CoinDeal, Glaspie falsely promised that in the event the returns from CoinDeal failed to materialize, he would repay investors their money with seven percent annual interest over three years. In fact, Glaspie knew he had no means of making such repayments.
According to court documents, to support his false repayment promise, Glaspie deceptively claimed that he had an exclusive and lucrative contract with AT&T to distribute government‑funded phones. He also claimed that the Better Business Bureau was distributing an app that he developed, and it would yield over $400 million in revenue. In reality, Glaspie had no such contract or distribution agreement. Furthermore, when the promised sale of Chandran’s companies did not close, Glaspie transmitted investor funds to Chandran after falsely representing to CoinDeal investors that he would not do so. Glaspie also falsely claimed that he never paid himself with CoinDeal investor funds, when in truth, he misappropriated nearly $2.5 million of victim investments for personal purposes, including trading cryptocurrency, paying his employees’ salaries, and buying a life insurance policy for a family member.
Chandran was arrested on June 29, 2022, for allegedly defrauding more than 10,000 victims of over $45 million.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Susan T. Lehr for the District of Nebraska, and Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division made the announcement.
The FBI Washington Field Office investigated the case, with assistance from the Omaha, Las Vegas, and Los Angeles Field Offices.
Assistant Chief William E. Johnston and Trial Attorney Tian Huang of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Donald J. Kleine for the District of Nebraska prosecuted the case.
All potential investor victims of this fraud are encouraged to visit the webpage www.justice.gov/criminal-vns/united-states-v-chandran to identify themselves and obtain more information on their rights, including the opportunity to submit a victim impact statement.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Man Sentenced for Lying to Federal Grand Jury and Violating Federal Gun Control ActRead the Press Release
NEW ORLEANS, LOUISIANA – JAMES HEIGLE, age 41, of St. Tammany Parish, was sentenced on September 28, 2023, after previously pleading guilty to Counts 4, 5, and 6 of the superseding indictment handed down by a federal grand jury, charging him with violations of Title 18, United States Code, Sections 1623, 922(g)(1), 924(a)(2), 931, and 924(a)(7), respectively. As to the charges for false declarations before a grand jury and felon in possession of a firearm, HEIGLE was sentenced to 27 months imprisonment, three years of supervised release, and a $200 mandatory special assessment fee. As to the charge of violent felon in possession of body armor, HEIGLE was sentenced to 27 months imprisonment, 1 year of supervised release, and a $100 mandatory special assessment fee. All sentences are to run concurrently with each other.
Between May 8 – 29, 2019, HEIGLE possessed multiple firearms and a bullet-proof vest. Prior to May 2019, HEIGLE had been convicted of a violent felony in Jefferson Parish, that precluded him from possessing firearms and a bullet-proof vest.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
The case was investigated by the Federal Bureau of Investigation and the New Orleans Police Department. The prosecution was handled by Assistant United States Attorney Lynn E. Schiffman of the Narcotics Unit.
Lincoln Man Sentenced to 24 Months for Possession of a FirearmRead the Press Release
Acting United States Attorney Susan Lehr announced that Davonte Brown, 24, of Lincoln, Nebraska, was sentenced today by Senior United States District Court Judge John M. Gerrard to 24 months’ imprisonment. Brown’s sentence follows his conviction for being an unlawful user of controlled substances who possessed a firearm. Brown was also sentenced to a two-year term of supervised release to be served after he completes his prison sentence. There is no parole in the federal system. Brown pleaded guilty to his offense on June 23, 2023.
The indictment against Brown was filed on June 17, 2020. Brown was allowed to be released from custody while his case was pending. One of the conditions of his release required that he stay in contact with the United States Probation Office. At some point after he was allowed to be on pretrial release, Brown absconded, and a warrant was issued for his arrest. Brown was located and arrested on January 5, 2023. At today’s sentencing hearing, Senior Judge Gerrard remarked that Brown’s offense would typically receive an 18-month term of imprisonment. However, because Brown absconded, Judge Gerrard added an additional six months to Brown’s sentence.
On April 17, 2020, a person in Lincoln purchased a KelTec rifle from a gun store. Brown later posted a video on Snapchat which depicted him in possession of that rifle. Police executed a search warrant at the home of the person who purchased the firearm. The KelTec rifle was recovered, and it was examined for fingerprints. Two sets of fingerprints were found on the rifle, one of which matched Brown’s fingerprints.
At the time when Brown possessed the rifle, he was an unlawful user of marijuana. Between contacts with law enforcement, and postings on social media, evidence was obtained showing Brown in possession of marijuana between July 2018 and May 2020.
The investigation was conducted by the Lincoln Police Department’s Gang Unit, which works with the Federal Bureau of Investigation in referring some cases for federal prosecution. The Bureau of Alcohol, Tobacco, Firearms, and Explosives also assisted by helping to trace the origins of the firearm. This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.
Las Vegas Man Sentenced to 23 Years in Prison for Committing Two Armed Carjackings, Shooting at Police During Car Pursuit, and Assaulting A Federal Corrections OfficerRead the Press Release
LAS VEGAS – A Las Vegas man was sentenced today by United States District Judge Gloria M. Navarro to 23 years in prison followed by three years of supervised release for two carjackings during which he brandished a firearm and shot at one victim, shooting at police officers during the vehicle pursuit, and for assaulting a federal officer while in custody.
Justin Venegas (41) pleaded guilty to two counts of carjacking, one count of brandishing a firearm during and in relation to a crime of violence, one count of felon in possession of a firearm, and one count of assault on a federal officer which inflicts bodily injury.
According to court documents, on August 11, 2022, Las Vegas Metropolitan Police Department (“LVMPD”) was pursuing Venegas for a robbery/carjacking that occurred on May 20, 2022. While at an intersection, Venegas pointed a firearm at the driver of another vehicle and to into the vehicle. He then put the firearm into the victim’s stomach and forcibly removed the victim from their vehicle. Venegas drove away in the victim’s vehicle. During the pursuit, Venegas reached out the driver’s window and fired several rounds at the front windshield of the pursuing officers’ patrol vehicle. Later, Venegas attempted to carjack a second victim. He shot at and struck the second carjacking victim using a firearm. While the pursuit continued, Venegas collided head on with a K9 police vehicle. He was placed under arrest. A search of the vehicle revealed a Smith and Wesson M&P Shield with an obliterated serial number. A National Integrated Ballistic Information Network (NIBIN) analysis showed that the firearm was the same gun that was discharged during the pursuit and at a police officer. Venegas is a convicted felon, and he is prohibited by law from possessing a firearm.
Later, on October 1, 2022, at the Nevada Southern Detention Center, Venegas punched a detention officer in the face causing the officer to fall to the ground. The detention officer suffered facial fractures, lacerations, and a dislocated thumb.
“The defendant will spend the next 23 years in prison for putting the public and police officers in danger with his senseless, violent actions in his attempt to evade apprehension, and for assaulting a detention officer while in custody,” said United States Attorney Jason M. Frierson for the District of Nevada. “In this case, NIBIN crime gun tracing connected the gun used in the first and second carjackings by the defendant. Together with our law enforcement partners, we will continue to combine resources to protect our communities and to bring violent offenders to justice.”
“The defendants’ sentence should serve as a deterrent to anyone who is considering terrorizing the safety and security of our community by committing armed carjackings,” said Special Agent in Charge Spencer L. Evans for the FBI. “The sentence also reflects the severity of the crime and the commitment of the FBI, along with our federal, state, and local partners, to reduce the potential of future carjacking offenses, a major driver of violent crimes.”
This case was investigated by the FBI and Las Vegas Metropolitan Police Department. Assistant United States Attorney Allison Reese prosecuted the case.
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Justice Department Secures Compensation for Servicemembers After Property Management Company Illegally Charged Lease Termination Fees at New Jersey Apartment ComplexRead the Press Release
The Justice Department announced today that JAG Management Company LLC (JAG), which manages large apartment properties in several states, agreed on Friday to pay $61,581 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA). The Justice Department’s complaint alleges that JAG imposed illegal fees on at least nine servicemembers who had exercised their right under the SCRA to terminate their leases after receiving qualifying military orders. The servicemembers were residents of the Jefferson Mount Laurel apartment complex in Mount Laurel, New Jersey. The termination fees ran as high as $2,750 per servicemember.
“Servicemembers should not have to pay any fees – much less exorbitant fees – to landlords when they are simply complying with their military orders and protecting our country,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This resolution reaffirms the Justice Department’s unwavering commitment to protecting the rights of servicemembers, veterans and their families.”
“Our office is committed to protecting the rights of servicemembers who make tremendous sacrifices on behalf of our nation,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “Landlords and property managers may not unlawfully penalize members of our armed forces who are simply carrying out their duty. Through this consent order, we protect the rights of servicemembers and provide compensation to those who suffered harm when they were allegedly unlawfully charged early lease termination fees upon receiving military orders.”
The complaint filed today in the U.S. District Court for the District of New Jersey alleges that Coast Guard Lieutenant Daniel Pereira sought to terminate his lease with JAG Management after he received permanent change of station orders transferring him from Philadelphia to New London, Connecticut. Lt. Pereira provided JAG with timely written notice of his lease termination and a copy of his transfer orders before vacating his apartment. However, two months after moving, Lt. Pereira was notified – for the first time – that JAG was demanding that he repay a $2,100 rent concession he received when he signed his lease. Despite Lt. Pereira’s efforts to resolve the matter, including providing JAG with the relevant provisions of the SCRA and prior Justice Department cases on this issue, JAG reported the debt to credit reporting agencies and Lt. Pereira’s credit score was downgraded. The complaint also alleges that JAG charged illegal fees to at least eight other servicemembers, representing the U.S. Air Force, Army, Coast Guard and Air National Guard, who had exercised their right to terminate their residential leases upon receipt of qualifying military orders.
Under the terms of the proposed consent order, which was filed with the complaint and is subject to court approval, JAG Management must pay a total of $41,581 in damages to the nine servicemembers. JAG must also pay a civil penalty of $20,000 to the federal government. In addition, JAG must implement policies to ensure it complies with the SCRA, trains employees on the protections afforded by the SCRA and reports future SCRA-related complaints to the federal government.
The U.S. Attorney’s Office for the District of New Jersey and the Civil Rights Division’s Housing and Civil Enforcement Section investigated JAG Management’s leasing practices after receiving a referral from the Justice Department’s Servicemembers and Veterans Initiative.
The purpose of the SCRA is to allow servicemembers to devote their entire energy to the national defense. The SCRA provides protections to servicemembers in areas such as evictions, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. The SCRA also allows servicemembers to terminate their residential leases after entering military service or receiving military orders for a permanent change of station, deployment or retirement without paying a penalty or an early termination charge.
Since 2011, the department has obtained over $481 million in monetary relief for over 146,000 servicemembers through its enforcement of the SCRA. For more information about the department’s SCRA enforcement efforts, please visit www.servicemembers.gov.
Servicemembers and their dependents who believe their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at legalassistance.law.af.mil.
Individuals who believe their civil rights have been violated may also file a complaint with the U.S. Attorney’s Office for the District of New Jersey at www.justice.gov/usao-nj/civil-rights-enforcement/complaint or may call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.
jag_management_complaint.pdf jag_management_consent_decree.pdfJustice Department Awards over $4.4 Billion to Support Community SafetyRead the Press Release
WASHINGTON – The Justice Department announced that it is awarding more than $4.4 billion to support state, local, and Tribal public safety and community justice activities. The grants, from the Department’s Office of Justice Programs (OJP), will help build community capacity to curb violence, serve victims and youth, and achieve fair outcomes through evidence-based criminal and juvenile justice strategies.
Colorado will receive $70,830,033 in grants in 71 awards from the Department of Justice.
“Everyone in this country deserves to be safe in their communities,” said Attorney General Merrick B. Garland. “That is why, in addition to continuing our efforts to identify and prosecute the most violent criminals, the Justice Department is putting every available resource to work to support the efforts of our law enforcement and community partners nationwide. This significant investment will go directly to state and local programs that support the victims of crime, support officer safety and wellness, build the public trust in law enforcement essential to public safety, and help make all of our communities safer.”
“This funding is good news for communities throughout Colorado,” said U.S. Attorney Cole Finegan. “I am pleased to announce that Colorado will receive nearly $71 million in grant funding and applaud these efforts to make Colorado a safer place to live.”
The more than 3,700 OJP grants being awarded this fiscal year will support state, local, and community-based efforts and evidence-based interventions that reduce violence, crime, and recidivism while delivering treatment and services to those at-risk of justice system involvement. Funding will expand partnerships between criminal justice professionals and behavioral health experts, help people safely and successfully transition from confinement back to their communities, reach crime victims in underserved areas, steer young people away from justice system contact, improve the management of sex offenders, and support a wide range of research and statistical activities that will help justice system professionals meet community safety challenges.
“Across the country, the Justice Department is working side-by-side with our partners in state and local law enforcement to combat violent crime by using our federal resources to amplify their work on the front lines,” said Deputy Attorney General Lisa O. Monaco. “The billions of dollars in grants announced today will augment those efforts and the tools law enforcement is using to curb violence, counter deadly drug abuse, and promote safety and public trust. Together with our state and local partners, the Department will continue to do everything we can to protect the communities we all serve.”
“The Department of Justice is investing in community-based approaches to violence prevention, law enforcement health and wellness, Tribal courts, improved services for victims, research and data collection efforts, reentry programs, and much more,” said Associate Attorney General Vanita Gupta. “The grants announced today further our commitment to working with our state, Tribal, and local partners to increase public safety, build police-community trust, and ensure safe, healthy, and just communities for all.”
“Every sector of our society — not only the justice system, but nonprofit and faith-based groups, local leaders, and advocates, and people with lived experience who serve as credible messengers — plays a critical role in ensuring public safety and public health,” said OJP Assistant Attorney General Amy L. Solomon. “The Office of Justice Programs is proud to make these substantial investments in building community infrastructure and supporting communities as co-producers of safety and justice.”
Grants will support five major community safety and justice priorities:
- Awards totaling more than $1 billion will promote safety and strengthen trust, helping communities tackle the proliferation of gun violence in America and restore bonds of trust between community residents and the justice system. Grants will support innovative and evidence-based strategies designed to prevent and reduce violent crime, support the health and safety of law enforcement and public safety professionals, promote rehabilitation and reentry success, and address the rise in hate crimes across the country.
- More than $437 million in grant awards will accelerate justice system reforms designed to achieve equal justice and fair treatment for all. Grants will expand access to services among historically underserved and marginalized communities, reduce counterproductive involvement in the justice system, increase opportunities for diversion, and build pathways to treatment for people with substance use and mental health disorders.
- Over $192 million will improve the fairness and effectiveness of the juvenile justice system by supporting developmentally appropriate and culturally responsive interventions for youth. Funding will ensure that young people are served at home in their communities whenever possible, are equipped to transition to a healthy adulthood free of crime, and are protected from violence and abuse.
- More than $1.7 billion will expand access to victim services by investing in programs that provide trauma-informed and culturally responsive services to victims. Funding will support thousands of local victim assistance programs across the country and victim compensation programs in every state and U.S. territory, while helping these programs build their capacity to reach those disproportionately affected by crime and victimization.
- Over $418 million in awards will advance science and innovation to strengthen the base of knowledge that policymakers and practitioners can use to design and deploy effective community safety strategies. Awards will support research and data collection on a wide range of public safety issues, help maintain timely and accurate criminal history records, and improve the capacity of crime labs and forensic analysts to solve crimes, absolve the innocent, and deliver justice to victims.
In addition, OJP will award more than $611 million to continue its support of other previously funded programs and congressionally directed spending. More information about the awards announced today can be found by visiting www.ojp.gov/funding/fy23awards.
Justice Department Awards More Than $36 Million to Support Community Safety in the Middle District of FloridaRead the Press Release
Tampa, FL – The Justice Department announced that it has awarded more than $4.4 billion to support state, local, and Tribal public safety, and community justice activities. Of that amount, more than $36.6 million has been awarded to entities in the Middle District of Florida. The grants, from the Department’s Office of Justice Programs (OJP), will help build community capacity to curb violence, serve victims and youth, and achieve fair outcomes through evidence-based criminal and juvenile justice strategies.
“Everyone in this country deserves to be safe in their communities,” said Attorney General Merrick B. Garland. “That is why, in addition to continuing our efforts to identify and prosecute the most violent criminals, the Justice Department is putting every available resource to work to support the efforts of our law enforcement and community partners nationwide. This significant investment will go directly to state and local programs that support the victims of crime, support officer safety and wellness, build the public trust in law enforcement essential to public safety, and help make all of our communities safer.”
“Improving the safety of our communities requires a comprehensive approach and commitment by those working on the front lines,” said U.S. Attorney Roger B. Handberg. “The funding announced today will greatly support those working tirelessly to help keep our citizens safe every day.”
The more than $36.6 million in grant funding being awarded this fiscal year in the Middle District of Florida will support state, local, and community-based efforts and evidence-based interventions that reduce violence, crime, and recidivism while delivering treatment and services to those at-risk of justice system involvement. Funding will expand partnerships between criminal justice professionals and behavioral health experts, help people safely and successfully transition from confinement back to their communities, reach crime victims in underserved areas, steer young people away from justice system contact, improve the management of sex offenders, and support a wide range of research and statistical activities that will help justice system professionals meet community safety challenges.
“Across the country, the Justice Department is working side-by-side with our partners in state and local law enforcement to combat violent crime by using our federal resources to amplify their work on the front lines,” said Deputy Attorney General Lisa O. Monaco. “The billions of dollars in grants announced today will augment those efforts and the tools law enforcement is using to curb violence, counter deadly drug abuse, and promote safety and public trust. Together with our state and local partners, the Department will continue to do everything we can to protect the communities we all serve.”
“The Department of Justice is investing in community-based approaches to violence prevention, law enforcement health and wellness, Tribal courts, improved services for victims, research and data collection efforts, reentry programs, and much more,” said Associate Attorney General Vanita Gupta. “The grants announced today further our commitment to working with our state, Tribal, and local partners to increase public safety, build police-community trust, and ensure safe, healthy, and just communities for all.”
“Every sector of our society — not only the justice system, but nonprofit and faith-based groups, local leaders, and advocates, and people with lived experience who serve as credible messengers — plays a critical role in ensuring public safety and public health,” said OJP Assistant Attorney General Amy L. Solomon. “The Office of Justice Programs is proud to make these substantial investments in building community infrastructure and supporting communities as co-producers of safety and justice.”
More information about the awards announced today, including those within the Middle District of Florida, can be found by visiting www.ojp.gov/funding/fy23awards.
Jonestown Man Pleads Guilty to Possession of an Unregistered Destructive DeviceRead the Press Release
AUSTIN, Texas– A Jonestown man pleaded guilty in a federal court in Austin today to possessing an unregistered destructive device, namely a pipe bomb, that detonated in a hospital parking garage.
According to court documents, on Aug. 9, Raymond Luke Garner, 38, parked his pickup truck in a parking garage at St. David’s Hospital in Austin. A short time later, there was an explosion in the back of Garner’s truck. Investigators found the remains of a pipe bomb near the truck. They also found a quantity of a homemade high explosive, circuit boards/timers, electric matches, and other items.
While he was detained by police, Garner contacted another individual to ask that person to move a box out of Garner’s home. That box was later found to contain, among other things, a quantity of the high explosive, precursor chemicals, and electric matches. Searches at other locations revealed a recipe for the high explosive, remote control devices, and other components for destructive devices. Garner has admitted that he was in possession of an unregistered destructive device on Aug. 9.
Garner pleaded guilty to one count of possession of an unregistered destructive device and faces a maximum sentence of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Jaime Esparza of the Western District of Texas; FBI Special Agent in Charge Oliver E. Rich Jr., San Antonio Division; and ATF Special Agent in Charge Fred J. Milanowski, Houston Division, made the announcement.
The ATF and FBI’s Joint Terrorism Task Force were the lead federal agencies investigating the case. Valuable assistance was provided by the Travis County Sheriff’s Office, Austin Police Department, Austin Fire Department, and Cedar Park Police Department.
Assistant U.S. Attorney G. Karthik Srinivasan is prosecuting the case.
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Joint Investigation Leads to Federal Indictment for Fentanyl and Methamphetamine TraffickingRead the Press Release
Paducah, KY – A federal grand jury returned an indictment on September 19, 2023, charging several Hopkinsville, Kentucky residents with conspiring to distribute fentanyl and methamphetamine.
U.S. Attorney Michael A. Bennett of the Western District of Kentucky, Special Agent in Charge J. Todd Scott of the DEA Louisville Field Division, Special Agent in Charge R. Shawn Morrow of the ATF Louisville Field Division, Special Agent in Charge Rana Saoud of Homeland Security Investigations (HSI) Nashville, U.S. Postal Inspector in Charge Lesley Allison of the Pittsburgh Division, and Chief Jason Newby of the Hopkinsville Police Department made the announcement.
According to the indictment, Jay Brown, 54, Joseph Brown, 34, Vanchaize Brown, 39, Deerrica Finch, 34, Jane Majors, 43, and Tapaulda Hancock, 41, all of Hopkinsville, Kentucky, were charged with conspiring to possess with the intent to distribute and distributing 400 grams or more of fentanyl and 50 grams or more of methamphetamine.
The defendants recently made their initial court appearances before a U.S. Magistrate Judge of the U.S. District Court for the Western District of Kentucky. If convicted, the defendants each face a mandatory minimum sentence of 10 years and a maximum sentence of life in prison. A federal district court judge will determine any sentence after considering the sentencing guidelines and other statutory factors. There is no parole in the federal system.
This case is being investigated by the DEA Paducah Post of Duty and the Hopkinsville Police Department Special Investigations Unit, with assistance from the ATF Bowling Green Field Office, HSI, USPIS, the Kentucky State Police, the Calloway County Sheriff’s Office, and the Madisonville Police Department.
Assistant U.S. Attorney Leigh Ann Dycus, of the U.S. Attorney’s Paducah Branch Office, is prosecuting this case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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Internal Revenue Service Information Technology Supervisor Facing Federal Charges for Extortion and Attempted Witness TamperingRead the Press Release
Greenbelt, Maryland – A federal grand jury has returned an indictment charging Satbir Thukral, age 61, of Germantown, Maryland, for interference with commerce by extortion, and attempted witness tampering.
The defendant had an initial appearance on September 29, 2023, in U.S. District Court in Greenbelt before U.S. Magistrate Judge Ajmel A. Quereshi.
The indictment was announced by United States Attorney for the District of Maryland Erek L. Barron; Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; Special Agent in Charge Wayne A. Jacobs of the Federal Bureau of Investigation (FBI) – Washington Field Office; and Special Agent in Charge Andrew McKay of the Treasury Inspector General for Tax Administration (TIGTA).
“A top criminal priority for the FBI is to investigate public corruption perpetrated against the government and American taxpayers,” said Wayne A. Jacobs, Special Agent in Charge of the FBI Washington Field Office. “Today’s indictment is an example of an important partnership with TIGTA and the work we do every day towards our common goal. The FBI will not relent in our mission to root out corruption and fraud within the government, and to hold those accountable who put greed above their trusted positions.”
TIGTA Special Agent in Charge Andrew McKay said, “Internal Revenue Service employees are placed in a position of trust, and when an employee tries to sell that trust for personal gain, the faith of the American taxpayer falters. The Treasury Inspector General for Tax Administration takes allegations of public corruption very seriously and will ensure that any employees involved in such acts are held accountable. I want to thank our law enforcement partners at the FBI, the U.S. Attorney’s Office, and the Department of Justice Fraud Section for their efforts.”
According to the indictment, Thukral was employed as an information technology manager for the Internal Revenue Service (“IRS”), assigned to an office in Lanham, Maryland. He had a supervisory role in connection with contracts between the IRS and various businesses. Victim 1 was the President of Business 1, which was a professional services firm based outside of Maryland, that conducted business in Maryland. Businesses 2 and 3 had prime contracts with the IRS for the performance of IT services. At various times from approximately September 2018 through February 2021, Business 1 subcontracted with Businesses 2 and 3 to assist in executing the contracts with the IRS.
According to the indictment, in March 2018, Victim 1 provided their resume to Thukral who passed Victim 1’s resume within the IRS, to Business 2, and elsewhere for purposes of facilitating the hiring of Business 1 as a subcontractor on a prime contract with the IRS. The indictment alleges that, beginning in September 2018, Business 1 was hired as a subcontractor by Business 2 to perform services in support of Business 2’s contract with the IRS; at a later point, Business 1 was hired to assist Business 3. Beginning in October 2018, Thukral allegedly demanded that Victim 1 pay him a portion of the earnings on Business 1’s subcontracts, claiming that Thukral enabled Business 1’s employment and telling Victim 1 that there would be consequences if Victim 1 did not pay. From approximately October 2018 through December 2020, Victim 1 allegedly provided such payments to Thukral, totaling at least approximately $120,000. The indictment alleges that Victim 1 made these payments out of fear that Thukral would cause Victim 1 economic and reputational harm if Victim 1 did not pay.
Further, the indictment alleges that, in February 2023, Victim 1 informed Thukral that they had been approached by federal investigators inquiring about cash withdrawals that Victim 1 made from their bank accounts. Thukral allegedly attempted to persuade Victim 1 to deceive the federal investigators about the reason for Victim’s 1 cash withdrawals and about the extortion scheme.
If convicted, Thukral faces a maximum sentence of 20 years’ imprisonment on each count in the indictment. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Members of the public who suspect misconduct such as that described above, or believe they have been the victim of such misconduct, should contact the TIGTA telephone line at 800-366-4484 or visit https://www.tigta.gov/reportcrime-misconduct.
United States Attorney Erek L. Barron and Acting Assistant Attorney General Nicole M. Argentieri commended the FBI and TIGTA for their work in the investigation. Mr. Barron and Ms. Argentieri thanked Assistant U.S. Attorneys Elizabeth Wright and Christopher Sarma and Trial Attorney Matt Kahn from the U.S. Department of Justice, Criminal Division, Fraud Section, who are prosecuting the federal case.
For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.
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Ian Freeman Sentenced to 8 Years in Prison for Operating a Bitcoin Money Laundering SchemeRead the Press Release
CONCORD – Ian Freeman was sentenced today in federal court for laundering over ten million dollars in proceeds from romance scams and other internet fraud, U.S. Attorney Jane E. Young announces.
Ian Freeman, 43, of Keene was sentenced by U.S. District Court Judge Joseph Laplante to 96 months in prison, 2 years of supervised release, and a fine of $40,000. Freeman was ordered to pay restitution to victims in an amount to be determined on a later date. Freeman was convicted by a federal jury on December 22, 2022.
“The defendant’s criminal conduct devastated many vulnerable people,” said U.S. Attorney Jane E. Young. “Dozens of victims were identified during the investigation. Many of them lost their life’s savings by way of Freeman’s bitcoin money laundering scheme. The Court recognized that an important part of this sentence was for the defendant to provide restitution to the victims. In financial crimes cases such as this, providing restitution to victims is one of the highest priorities of the U.S. Department of Justice and this Office.”
“Ian Freeman catered to fraudsters. He played a shell game with other people’s hard-earned money, turned a blind eye to the scam artists who were ripping them off, and walked away with millions, depriving their victims of their life’s savings. Today’s sentence is a significant step toward justice for the dozens of victims all over the country who have suffered significant financial losses and heartbreak as a result of this man’s criminal conduct,” said Jodi Cohen, Special Agent in Charge of the FBI Boston Division. “In addition to our efforts to disrupt outrageous schemes like this one, we must also work to raise public awareness to prevent them. Last year, New Hampshire residents reported losing almost $33 million due to internet-related crimes. So we caution everyone to be wary of people you meet online - especially when it comes to cryptocurrency.”
“Ian Freeman’s sentencing shows that IRS Criminal Investigation is working vigorously to stop internet fraudsters like Ian Freeman,” said Harry T. Chavis Jr, Special Agent in Charge of IRS Criminal Investigation’s Boston Field Office. “Not only did Freeman launder millions of dollars, but he also provided a conduit for other scammers to leave countless victims destitute in their wake. The role of IRS Criminal Investigation becomes even more important in internet fraud cases due to the complex financial transactions that can take time to unravel so that fraudsters like Ian Freeman can be brought to justice.”
Freeman laundered over ten million dollars in proceeds of romance scams and other internet frauds by exchanging U.S. dollars for bitcoin. By failing to register his business with the Financial Crimes Enforcement Network as required by law, disabling “know your customer” features on his bitcoin kiosks, and ensuring that bitcoin customers did not tell him what they did with their bitcoin, among other things, Freeman created a business that catered to fraudsters. By charging exorbitant fees, Freeman made more than a million dollars.
Records and exhibits in the 10-day trial proved that as part of the conspiracy, Freeman and his co-conspirators opened and operated accounts at financial institutions in the names of various churches including the Shire Free Church, the Church of the Invisible Hand, the Crypto Church of New Hampshire, and the NH Peace Church. Freeman instructed bitcoin customers, who were often victims of scams, to lie to the financial institutions and describe their deposits as church donations. From 2016 to 2019, he paid no taxes, and concealed his income from the Internal Revenue Service.
The Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigations, and the United States Postal Inspection Service led the investigation. The National Cryptocurrency Enforcement Team and the Department of Justice, Tax Division, provided valuable assistance in the case. The case was prosecuted by Assistant U.S. Attorneys Georgiana L. MacDonald, John Kennedy, and Seth R. Aframe.
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Huntington Man Sentenced to Prison for Federal Drug CrimeRead the Press Release
HUNTINGTON, W.Va. – Rodney Lee Browne Jr., 31, of Huntington, was sentenced today to four years and four months in prison, to be followed by three years of supervised release, for possession with intent to distribute quantities of heroin, methamphetamine and fentanyl.
According to court documents and statements made in court, on March 19, 2020, law enforcement officers executed a search warrant at a Fourth Avenue residence in Huntington and seized approximately 1.5 grams of heroin, 68 grams of methamphetamine, 245 grams of marijuana, and 328 grams of fentanyl. Officers also found an AK-47 semiautomatic rifle, drug distribution paraphernalia and $2,075. Browne admitted that he possessed the heroin, methamphetamine, fentanyl and marijuana and intended to sell the controlled substances.
United States Attorney Will Thompson made the announcement and commended the investigative work of the Huntington Violent Crime and Drug Task Force and the Huntington Police Department.
United States District Judge Robert C. Chambers imposed the sentence. Assistant United States Attorney Courtney L. Finney prosecuted the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 3:23-cr-64.
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Houston airport trespasser sent to prisonRead the Press Release
HOUSTON – A 36-year-old man has been ordered to prison for illegally entering an aircraft area in violation of security requirements to commit a felony therein, announced U.S. Attorney Alamdar S. Hamdani.
Allan Leon Goins III pleaded guilty May 24.
U.S. District Judge Lee Rosenthal has now ordered Goins to serve 12 months and a day in federal prison to be immediately followed by three years of supervised release. The court also ordered him to pay $2,276.48 in restitution.
Goins admitted he willfully breached and entered the restricted airport operations area at Houston Bush Intercontinental airport on Nov. 2, 2021. The restricted area services domestic and foreign air carriers. He evaded posted security procedures, fencing and restricted areas.
Additionally, Goins stole an Atlantic Aviation Inc. uniform, utility cart and caused damage to the cart. He evaded security and authorized personnel efforts to apprehend him causing a pursuit to ensue for over an hour in dark and foggy conditions. Authorities had to shut down airport runways, taxiways and the West complex operations for approximately two hours.
Ultimately, law enforcement located and arrested Goins, at which time he said they, “should have shot him.” On Nov. 5, 2021, authorities conducted a search on articles of clothing found in the area Goins was apprehended which revealed a loaded A Walther PPS 9mm caliber pistol.
Goins will remain in custody pending transfer to a U.S. Bureau of Prison facility to be determined in the near future.
The FBI conducted the investigation with the assistance of Houston Airport System, Houston Police Department and Houston Fire Department. Assistant U.S. Attorney Joe Porto prosecuted the case.
Genomic Health Inc. to Pay $32.5 Million to Resolve Allegations Relating to the Submission of False Claims for Genomic Diagnostic TestsRead the Press Release
Breon Peace, United States Attorney for the Eastern District of New York, and Naomi D. Gruchacz, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of the Inspector General, New York Region (HHS-OIG) announced that the United States has reached a settlement with Genomic Health, Inc. (GHI) to resolve allegations that it violated the False Claims Act in an alleged nationwide scheme to improperly bill Medicare for laboratory tests known as “Oncotype DX®.” Under the terms of the settlement, GHI will pay $32.5 million for losses caused by GHI’s submission of false claims to the Medicare Program.
“This settlement rightly requires the payment of double damages caused by delayed tests for cancer patients for no reason other than to circumvent a Medicare requirement and allow improper payment to GHI,” stated United States Attorney Peace. “We will continue to enforce Medicare rules to protect the program and its vital role in our health care system, especially for those suffering from the ravages of cancer.”
Mr. Peace expressed his gratitude for the support of the United States Department of Health and Human Services for their assistance in investigating these important claims.
“Health care providers that unnecessarily delay services to evade Medicare requirements put their own profits over the well-being of vulnerable patients,” stated HHS-OIG Special Agent-in-Charge Gruchacz. “With our law enforcement partners, HHS-OIG is committed to investigating potentially fraudulent billing that can compromise patient well-being and the integrity of our federal health care programs.”
GHI is a Delaware corporation headquartered in Redwood City, California. GHI is a provider of genomic-based clinical diagnostic tests. Its principal test, Oncotype DX®, has been used for patients diagnosed with breast, colon and prostate cancer. GHI was acquired by Exact Sciences Corporation (“Exact”) in November 2019 and is a wholly-owned subsidiary of Exact.
The United States contends that GHI perpetrated a scheme to evade Medicare regulations when submitting claims to the Medicare Program for its test to circumvent Medicare’s 14-Day Rule (which establishes which entity may bill Medicare for certain laboratory services). During the time period covered by the settlement, Medicare’s 14-Day Rule prohibited laboratories from separately billing Medicare for certain tests if a physician ordered the test within 14 days of the patient’s discharge from a hospital stay either in an outpatient or inpatient setting. Such claims were required to be submitted by the hospital. However, if the test was performed more than 14 days after discharge, then Medicare’s 14-Day Rule permitted laboratories to bill Medicare directly for the test. The United States contends that GHI perpetrated its scheme in four ways:
- GHI sought direct reimbursement from the Medicare Program for claims on behalf of Medicare beneficiaries, when Oncotype DX® tests were ordered and submitted for testing within 14 days after an inpatient discharge. This caused the Medicare Program to incur additional costs beyond what it would have otherwise paid.
- GHI sought direct reimbursement from the Medicare Program for Oncotype DX® tests ordered within 14 days of a beneficiary’s out-patient procedure.
- GHI conspired with and encouraged hospitals and physicians to cancel and reorder Oncotype DX® tests and failed to discourage providers who ordered tests within 14 days from canceling and reordering the tests after the 14-day time period had elapsed.
- GHI failed to send timely invoices to hospitals for laboratory services that fell under the 14-Day Rule and instead wrote off the unpaid fees for laboratory services, thereby violating the Anti-Kickback Statute.
The civil settlement includes the resolution of two actions brought under the qui tam or whistleblower provisions of the False Claims Act against GHI. Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant. The relator share from the proceeds of the federal settlement in this case will be $5,687,500. The qui tam cases are captioned United States ex rel. Caughron v. Genomic Health, Inc., Civil Action No. 16-CV-4038 (E.D.N.Y) and United States ex rel. Doe v. Genomic Health, Inc., et al., Civil Action No. 17-CV-4460 (E.D.N.Y.).
The claims resolved by the settlement are allegations only and there has been no determination of liability.
The government’s case was handled by former Assistant U.S. Attorney Deborah B. Zwany and Assistant U.S. Attorney Anjna Kapoor with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell, Paralegal Specialist Loan Ngyuen, and Sanjay Bhambhani, Senior Trial Counsel, Fraud Section, Commercial Litigation Branch. The Office of Inspector General at the Department of Health and Human Services assisted in the investigation of these cases.
Genomic Health Inc. Agrees to Pay $32.5 Million to Resolve Allegations Relating to the Submission of False Claims for Genomic Diagnostic TestsRead the Press Release
Genomic Health, Inc. (GHI), a Delaware corporation headquartered in Redwood City, California, has agreed to pay $32.5 million to resolve allegations that it violated the False Claims Act by engaging in a nationwide scheme to improperly bill Medicare for certain laboratory tests used to diagnose and treat cancer patients. GHI is a wholly owned subsidiary of Exact Sciences Corporation, which acquired GHI in November 2019.
GHI provides genomic-based clinical diagnostic tests. Its principal test, Oncotype DX®, is used for patients diagnosed with breast, colon and prostate cancer. The United States alleged that GHI perpetrated a scheme to evade Medicare’s 14-Day Rule, which governs the billing of genomic laboratory tests like Oncotype DX®.
During some or all of the time period covered by the settlement, Medicare’s 14-Day Rule prohibited laboratories from separately billing Medicare for covered tests if a physician ordered the test within 14 days of the patient’s discharge from a hospital stay in an inpatient or outpatient setting. For inpatient beneficiaries, such tests were covered under a lump-sum payment hospitals receive from the Medicare Program called the Diagnosis-Related Group (DRG) payment. For outpatient beneficiaries, Medicare’s 14-day Rule required (for most of the relevant time) tests ordered within 14 days of the patient’s discharge to be billed to the hospital but the hospital could then seek reimbursement from Medicare. However, if the test was performed more than 14 days after discharge from a hospital stay either in an inpatient or outpatient setting, then Medicare’s 14-Day Rule permitted laboratories to bill Medicare directly for the test. The United States contends that GHI improperly manipulated the 14-Day Rule in four ways:
- GHI sought direct reimbursement from the Medicare Program for claims on behalf of Medicare beneficiaries, when Oncotype DX® tests were ordered and submitted for testing within 14 days after an inpatient discharge. By submitting separate claims for these tests, GHI received direct payment for tests that should have been covered as part of the DRG payment to the hospital.
- GHI sought direct reimbursement from the Medicare Program for Oncotype DX® tests ordered within 14 days of a beneficiary’s outpatient procedure. By submitting separate claims for these tests, GHI received direct payment from Medicare for tests that should have been billed to the hospital.
- GHI conspired with and encouraged hospitals and physicians to cancel and reorder Oncotype DX® tests and failed to discourage providers who ordered tests within 14 days from canceling and reordering the tests after the 14-day time period had elapsed.
- GHI failed to send timely invoices to hospitals for laboratory services that fell under the 14 Day Rule and instead wrote off the unpaid fees for laboratory services, thereby violating the Anti-Kickback Statute.
“Participants in federal health care programs must comply with applicable rules when providing and billing for their services,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department will use the tools at its disposal to prevent companies from manipulating these programs for their own monetary benefit.”
“This settlement rightly requires the payment of double damages caused by delayed tests for cancer patients for no reason other than to circumvent a Medicare requirement and allow improper payment to GHI,” said U.S. Attorney Breon Peace for the Eastern District of New York. “We will continue to enforce Medicare rules to protect the program and its vital role in our health care system, especially for those suffering from the ravages of cancer.”
“Health care providers that unnecessarily delay services to evade Medicare requirements put their own profits over the well-being of vulnerable patients,” said Special Agent in Charge Naomi D. Gruchacz of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “With our law enforcement partners, HHS-OIG is committed to investigating potentially fraudulent billing that can compromise patient well-being and the integrity of our federal health care programs.”
The civil settlement includes the resolution of allegations brought in two separate actions filed against GHI under the qui tam or whistleblower provisions of the False Claims Act. Under those provisions, private parties can file an action on behalf of the United States and receive a portion of any recovery. The relator’s share from the proceeds of the settlement in this case will be $5,687,500. The qui tam cases are captioned United States ex rel. Caughron v. Genomic Health, Inc., Civil Action No. 16-CV-4038 (EDNY) and United States ex rel. Doe v. Genomic Health, Inc., et al., Civil Action No. 17-CV-4460 (EDNY).
The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).
The cases were handled by former Assistant U.S. Attorney Deborah B. Zwany and Assistant U.S. Attorney Anjna Kapoor for the Eastern District of New York and monitored by Senior Trial Counsel Sanjay M. Bhambhani of the Civil Division’s Commercial Litigation Branch. The HHS-OIG and the FBI assisted in the investigation of these cases.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
SettlementFort Walton Beach Man Sentenced to 25 Years in Federal Prison for Drug ConspiracyRead the Press Release
PENSACOLA, FLORIDA – Maurice Pearce Head, 38, of Fort Walton Beach, Florida, was sentenced to 25 years in federal prison after previously pleading guilty to conspiracy to distribute and possess with intent to distribute methamphetamine, fentanyl, and heroin. The sentence was announced by Jason R. Coody, U.S. Attorney for the Northern District of Florida.
“Hundreds of individuals are killed every day in communities throughout our country due to the distribution of fentanyl,” said U.S. Attorney Coody. “Each of these deaths is a tragedy, robbing individuals of their promise and crippling families left behind with unimaginable grief. We remain committed to working with our law enforcement partners to identify and aggressively prosecute those who distribute these addictive, controlled substances. This sentence serves as a significant deterrent to drug traffickers and demonstrates our resolve to hold them accountable.”
Evidence introduced at the sentencing hearing established that Head conspired with others to distribute over 50 kilograms of methamphetamine and thousands of pills containing fentanyl in the Northern District of Florida and elsewhere. On June 8, 2021, Head was found in possession of over a kilogram of a mixture of drugs containing methamphetamine, fentanyl, and heroin, during a federal search warrant at a warehouse in Fort Walton Beach, Florida. Evidence introduced at the sentencing hearing also established that, while Head’s case was pending, he obstructed justice by attempting to offer to pay a witness $10,000 if that witness would agree not to testify against Head.
“Fentanyl remains the deadliest drug threat facing our communities. Last year, over 110,000 American lives were lost to drug poisonings, with a majority of these deaths due to a synthetic opioid like illicit fentanyl,” said DEA Miami Field Division Special Agent in Charge Deanne L. Reuter. “The DEA Miami Field Division remains committed to working with our law enforcement partners to aggressively pursue those who bring this poison into our Florida communities and to hold drug traffickers accountable for their crimes.”
“We all know fentanyl alone, and/or laced with other drugs, is deadly. People dealing these drugs simply don’t care. We must continue to work to educate the public, but law enforcement agencies and their partners like the U.S. Attorney’s Office know putting dealers behind bars and out of business is a critical component of the multi-pronged attempt to hold dealers accountable for their crimes and try to save lives,” said Okaloosa County Sheriff Eric Aden.
FDLE Pensacola Special Agent in Charge Chris Williams said, “Our agents proactively investigate drug dealers and trafficking organizations to intercept these dangerous drugs. Still, fentanyl and methamphetamines kill thousands of Floridians each year. There is no doubt that investigating and arresting Maurice Head helped stop the flow of these dangerous drugs into our Northwest Florida communities.”
“The Florida Highway Patrol is committed to enforcing the laws of Florida with an intentional effort to interdict and remove illicit controlled substances along Florida roadways that poison our communities,” said Colonel Gary Howze, Director of the Florida Highway Patrol. “The collaborative relationships between our partner federal, state, and local law enforcement agencies are key in the successful arrest and prosecutions of criminals.”
Head’s prison sentence will be followed by 5 years of supervised release.
This prosecution resulted from a combined investigation conducted by the Okaloosa County Sheriff’s Office, the Drug Enforcement Administration, the Florida Department of Law Enforcement, and the Florida Highway Patrol. Assistant United States Attorneys J. Ryan Love and Alicia H. Forbes prosecuted the case.
This effort is part of an Organized Crime Drug Enforcement Task Force (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.
The United States Attorney’s Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General. To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website. For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.
Former Illinois Police Officer Indicted, Accused of Assaulting Handcuffed ManRead the Press Release
ST. LOUIS – A former police officer from Venice, Ill. appeared in court Monday to answer a federal civil rights charge accusing him of assaulting a handcuffed man.
Justin Gaither, 33, was indicted September 27 on one count of deprivation of rights under color of law, namely the right to be free from the use of unreasonable force. The indictment accuses Gaither of assaulting someone on Nov. 20, 2022. The victim was handcuffed and was not posing a threat to anyone, the indictment says.
Gaither pleaded not guilty Monday in U.S. District Court in St. Louis.
Charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
The FBI investigated the case. Assistant U.S. Attorney Christine Krug is prosecuting the case.
Former First NBC Bank Officers and Former Borrower Sentenced for Bank Fraud ConspiracyRead the Press Release
NEW ORLEANS – On September 28, 2023, United States District Judge Eldon E. Fallon sentenced WILLIAM J. BURNELL, age 73, of Kenner, ROBERT B. “BRAD” CALLOWAY, age 63, of Metairie, and FRANK J. ADOLPH, age 63, of New Orleans, announced U.S. Attorney Duane A. Evans. All three defendants previously pleaded guilty to bank fraud conspiracy for their role in the fraudulent scheme that led to the collapse and failure of New Orleans-based, First NBC Bank (Bank), in April 2017.
BURNELL was sentenced to 48 months in prison, three years of supervised release, and a $100 mandatory special assessment fee. Judge Fallon ordered a restitution hearing to be held at a later date. According to court documents, from 2006 through April 2017, BURNELL was the Bank’s Chief Credit Officer. He was responsible for the overall quality of the Bank’s lending function; the Bank’s credit policies and administration; the Bank’s loan recovery and collection efforts; and the Bank’s monitoring and managing of past due loans, including the approval of the Bank’s internal list of past-due loans. BURNELL was also responsible for compiling month-end reports, including lists of overdrawn borrowers and past-due loans. Nevertheless, BURNELL conspired with Bank President, Ashton J. Ryan, Jr., and others, to conceal material information and defraud the Bank. Among other things, BURNELL fraudulently risk rated loans to past due borrowers so new loans could be issued to them to conceal the borrowers’ past due status from the Board.
CALLOWAY was sentenced to 30 months in prison, two years of supervised release, and a $100 mandatory special assessment fee. Judge Fallon likewise ordered a restitution hearing to be held at a later date. According to court documents, CALLOWAY was the Bank’s Executive Vice President and specialized in tax credits. CALLOWAY and other bank officers, including Ryan and BURNELL, conspired to conceal the financial condition of bank borrower, Gary R. Gibbs, from Bank’s Board of Directors, auditors, and examiners. Among other things, they falsely stated in loan documents that Gibbs was able to pay his loans with cash generated by his businesses. They concealed from the Bank’s Board of Directors, auditors, and examiners that Gibbs was only making his existing loan payments by getting new loans from the Bank.
ADOLPH was sentenced to 20 months in prison, two years of supervised release, and a $100 mandatory special assessment fee. Judge Fallon ordered restitution in the amount of $5,706,279.62. According to court documents, ADOLPH was a borrower at the Bank, both individually and through various companies. One of these companies, Metro Rediscount, was a factoring company that purchased other companies’ accounts receivable. ADOLPH was habitually unable to pay his Bank loans. With Ryan’s knowledge, ADOLPH lied about Metro Rediscount’s assets on loan applications. As a result, Ryan was able to ensure ADOLPH received loans that kept him and his companies off the past due list.
U.S. Attorney Evans said, “These sentences demonstrate our office’s commitment to prosecuting white collar crime. They also show that employees cannot use the defense that they were merely ‘following orders.’ Each citizen has an individual responsibility to follow the law.”
U.S. Attorney Evans praised the work of the agencies that conducted this years-long investigation: the Federal Bureau of Investigation New Orleans Field Office; the Federal Deposit Insurance Corporation, Office of Inspector General, Dallas Regional Office; and the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Office of Inspector General, Miami Field Office. Assistant U.S. Attorneys Matthew R. Payne and Nicholas D. Moses of the Financial Crimes Unit, J. Ryan McLaren of the Appellate Unit, and Rachal Cassagne of the Narcotics Unit, are in charge of the prosecution.
Five more guilty for roles multi-million dollar COVID-19 relief fraud conspiracyRead the Press Release
HOUSTON - Five Texas men have pleaded guilty to their participation in a scheme to fraudulently obtain and launder millions of dollars in forgivable Paycheck Protection Program (PPP) loans that the guaranteed by the Small Business Administration (SBA) guaranteed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
According to court documents, Muhammad Anis, 55, Nishant Patel, 41, Harjeet Singh, 49, all of Houston, and Arham Uddin, 27, and Ammas Uddin, 30, both of Richmond, engaged in a conspiracy to defraud the SBA and certain SBA-approved PPP lenders by submitting false and fraudulent PPP loan applications. All five also assisted in laundering the fraudulently obtained PPP loan funds by supplying co-conspirators with blank, endorsed checks, which were made payable to people posing as employees of the companies that received the PPP loan, but who were in fact not employees. These fake paychecks were then cashed at check cashing stores that other members of the conspiracy or others controlled.
As part of the scheme, Anis obtained a false and fraudulent PPP loan in the amount of approximately $483,333; Patel obtained a false and fraudulent PPP loan in the amount of approximately $474,993; Singh obtained two false and fraudulent PPP loans for a total of approximately $937,379; Arham Uddin obtained a false and fraudulent PPP loan in the amount of approximately $491,664; and Ammas Uddin obtained a false and fraudulent PPP loan in the amount of approximately $498,415.
Anis, Patel, Singh, Arham Uddin and Ammas Uddin each pleaded guilty to one count of conspiracy to commit wire fraud. They are scheduled to be sentenced Jan. 4, 2024. At that time, each face up to five years in prison.
In addition to these five, one other individual was convicted at trial for his involvement in the scheme and 15 other individuals have pleaded guilty to their involvement in the loan fraud scheme.
The SBA Office of Inspector General (OIG), Federal Housing Finance Agency OIG, Homeland Security Investigations, Federal Deposit Insurance Corporation – OIG and Treasury Inspector General for Tax Administration conducted the investigation.
Assistant U.S. Attorneys Rodolfo Ramirez and Kristine Rollinson are prosecuting the cases along with Trial Attorneys Louis Manzo, Della Sentilles, Kate McCarthy and Spencer Ryan of the Criminal Division’s Fraud Section.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Five Men Plead Guilty to Roles in Multimillion-Dollar COVID-19 Relief Fraud ConspiracyRead the Press Release
Five Texas men pleaded guilty today to their participation in a scheme to fraudulently obtain and launder millions of dollars in forgivable Paycheck Protection Program (PPP) loans that the Small Business Administration (SBA) guaranteed under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
According to court documents, Muhammad Anis, 55, Nishant Patel, 41, Harjeet Singh, 49, all of Houston, and Arham Uddin, 27, and Ammas Uddin, 30, both of Richmond, engaged in a conspiracy to defraud the SBA and certain SBA-approved PPP lenders by submitting false and fraudulent PPP loan applications. All five defendants also assisted in laundering the fraudulently obtained PPP loan funds by supplying co-conspirators with blank, endorsed checks, which were made payable to people posing as employees of the companies that received the PPP loan, but who were in fact not employees. These fake paychecks were then cashed at check cashing stores that other members of the conspiracy controlled.
As part of the scheme, Anis obtained a false and fraudulent PPP loan in the amount of approximately $483,333; Patel obtained a false and fraudulent PPP loan in the amount of approximately $474,993; Singh obtained two false and fraudulent PPP loans for a total of approximately $937,379; Arham Uddin obtained a false and fraudulent PPP loan in the amount of approximately $491,664; and Ammas Uddin obtained a false and fraudulent PPP loan in the amount of approximately $498,415.
Anis, Patel, Singh, Arham Uddin, and Ammas Uddin each pleaded guilty to one count of conspiracy to commit wire fraud. They are scheduled to be sentenced on Jan. 4, 2024, and each face a total maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
In addition to these five defendants, one other individual was convicted at trial for his involvement in the scheme, and 15 other individuals have pleaded guilty to their involvement in the loan fraud scheme.
Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas, Special Agent in Charge Brady Ipock of the SBA Office of Inspector General (SBA-OIG) Central Region, Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), Special Agent in Charge Mark B. Dawson of Homeland Security Investigations (HSI) Houston, Special Agent in Charge Anand Ramlall of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) Dallas Region, and Special Agent in Charge Gary Smith of the Treasury Inspector General for Tax Administration (TIGTA) made the announcement.
The SBA-OIG, FHFA-OIG, HSI, FDIC-OIG, and TIGTA are investigating the case.
Trial Attorneys Louis Manzo, Della Sentilles, Kate McCarthy, and Spencer Ryan of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Rodolfo Ramirez and Kristine Rollinson for the Southern District of Texas are prosecuting the cases.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Dental Provider and Associated Individuals Agree to Resolve Allegations of Improper Billing of TennCareRead the Press Release
KNOXVILLE, Tenn. – The United States Attorney’s Office announced today that Dr. Michael Sawaf and his affiliated company Premier Dental Group PLLC of Knoxville, f/k/a Orthodontic Designs by Michael Sawaf, PLLC (“PDG”), have agreed to pay $985,541 to resolve allegations that they knowingly and improperly submitted false claims for dental services to TennCare in violation of the False Claims Act (“FCA”) and the Tennessee Medicaid False Claims Act (“TMFCA”). Erin Ferdowsi and Reja Ferdowsi, both of whom were affiliated with PDG, also agreed to resolve similar allegations against them.
TennCare prohibits billing for services that are not provided, upcoding claims to receive higher reimbursements to which a provider is not entitled, and billing for unnecessary services. TennCare also requires that dentists apply for and receive approval to participate in the TennCare program before billing for services rendered to beneficiaries. The credentialing process is intended to ensure that beneficiaries receive the highest quality of care from competent providers who have been vetted prior to rendering services.
Dr. Sawaf owns and sees patients at PDG, a dental and orthodontics clinic located at 303 S. Concord Street, Suite 323, in Knoxville, TN. Erin and Reja Ferdowsi operated, managed, and/or worked at PDG. The settlement resolves allegations that, from January 1, 2016, through December 31, 2020, PDG knowingly submitted, or caused the submission of, false claims to TennCare for payment relating to various dental procedures. The settlement also resolves allegations that, between August 14, 2019, and September 11, 2019, PDG knowingly submitted, or caused the submission of, claims for payment to TennCare that falsely identified credentialed dentists as the rendering provider for services that were actually rendered by uncredentialed dentists who were ineligible to bill TennCare.
This settlement is the result of a collaborative effort between the U.S. Attorney’s Office for the Eastern District of Tennessee, the Federal Bureau of Investigation, the Tennessee Attorney General’s Office, and the Tennessee Bureau of Investigation. The investigation that preceded the settlement was prompted by a lawsuit filed in 2020 under the qui tam or “whistleblower” provisions of the FCA and TMFCA, which permit a private individual (known as a “relator”) to sue on behalf of the government for false claims and to share in any recovery. The relators’ share of the recovery in this case is $182,325.
Assistant U.S. Attorney Joseph C. Rodriguez represented the United States.
The claims settled by this agreement are allegations only, and there has been no determination of liability.
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Convicted COVID-19 fraudster sentenced to federal prison, ordered to repay stolen fundsRead the Press Release
BRUNSWICK, GA: A Georgia man has been sentenced to federal prison and ordered to pay substantial restitution for leading a conspiracy that stole nearly $2 million in COVID-19 small business relief funding.
Bernard Okojie, 41, of McDonough, Ga., was sentenced to 64 months in prison after being convicted at trial in March of Conspiracy to Commit Wire Fraud, Wire Fraud, and Money Laundering Conspiracy, said Jill E. Steinberg, U.S. Attorney for the Southern District of Georgia. U.S. District Court Judge Lisa Godbey Wood also ordered Okojie to pay $1,946,283 in restitution, and to serve three years of supervised release upon completion of his prison term. There is no parole in the federal system.
“Bernard Okojie devised a complex and far-reaching scheme to steal federal funding intended to provide relief to small businesses struggling from the COVID-19 pandemic,” said U.S. Attorney Steinberg. “This sentence imposes a strong measure of accountability for these blatant acts of fraud.”
As described at trial and in court documents, Okojie used information for non-existent companies to file at least 46 fraudulent applications for Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program loans for himself and others from April 2020 through May of 2021, seeking more than $4.2 million in COVID-19 relief funds. Okojie received nearly $2 million in funding directly, or was paid by other recipients of the fraudulently obtained funding for his work in submitting the EIDL applications on their behalf. Okojie then conspired to launder the fraudulent proceeds to hide the source of the funds.
Funds from the nearly $2 million Okojie and others received through the schemes were used to purchase a home, vehicles, shopping trips to Versace, for personal investments, and a toy poodle. Okojie also was intercepted as he attempted to leave the United States with nearly $40,000 in cash.
“Mr. Okojie chose greed over compassion by fraudulently obtaining funds from the PPP and EIDL programs. He will now spend more than five years in prison and must pay all the money back,” said FBI Savannah’s Senior Supervisory Special Agent Will Clarke. “Theft of government funds will not be tolerated, and prosecuting PPP fraud remains a priority for law enforcement.”
“Lying to gain access to economic stimulus funds will be met with justice,” said SBA OIG’s Eastern Region Special Agent-in-Charge Amaleka McCall-Brathwaite. “This sentence showcases that SBA OIG will continue to aggressively pursue evidence of fraud against SBA’s programs to expose wrongdoers’ actions. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and commitment to seeing justice served.”
The case was investigated by the FBI and the Small Business Administration Office of Inspector General, and prosecuted for the United States by Assistant U.S. Attorneys Jennifer A. Stanley and Matthew A. Josephson.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Clearfield Man Pleads Guilty to Conspiring to Distribute Methamphetamine and Possessing a Firearm in Furtherance of Drug TraffickingRead the Press Release
JOHNSTOWN, Pa. – A resident of Clearfield, PA pleaded guilty in federal court to charges of violating federal narcotics and firearms laws, United States Attorney Eric G. Olshan announced today.
Dennis James Rauch, age 38, of Clearfield, PA, pleaded guilty to Counts Two and Seven of the Superseding Indictment before Senior United States District Judge Kim R. Gibson.
In connection with the guilty plea, from July 2019 to June 2020, Rauch did conspire to distribute 5 grams or more of actual methamphetamine. Further, in and around March 2020, Rauch did possess a firearm in furtherance of a drug trafficking crime.
Judge Gibson scheduled sentencing for February 7, 2024. The law provides for a minimum sentence of 5 years in prison and a maximum of 40 years in prison, a fine of up to $5,000,000 or both at Count Two, and a minimum sentence of 5 years in prison, a maximum of life in prison, a fine of up to $250,000, or both, at Count Seven. Under the Federal Sentencing Guidelines, the actual sentence imposed would be based upon the seriousness of the offenses and the prior criminal history, if any, of the defendant.
Assistant United States Attorney Maureen Sheehan-Balchon is prosecuting this case on behalf of the government.
The Drug Enforcement Administration and the Pennsylvania State Police conducted the investigation that led to the prosecution of Rauch. Additional agencies participating in this investigation include the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service – Criminal Investigation, the United States Postal Inspection Service, Homeland Security Investigations, Pennsylvania Office of the Attorney General, Clearfield County District Attorney’s Office, Erie County District Attorney’s Office, Millcreek Police Department, Erie Bureau of Police, and other local law enforcement agencies.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
Brevard County Man Sentenced to Six Years in Federal Prison for Drug TraffickingRead the Press Release
Orlando, Florida – U.S. District Judge Gregory A. Presnell has sentenced Leslie Duppins, Jr. (40, Brevard County) to five years in federal prison for possession with the intent to distribute fentanyl. The court also ordered Duppins to an additional 12 months’ imprisonment, to run consecutively, for violating his supervised release conditions by committing the drug offense and driving recklessly. Duppins had pleaded guilty on June 13, 2023.
According to court documents, a deputy from the Brevard County Sheriff’s Office observed Duppins driving his vehicle recklessly. The deputy followed Duppins and was assisted by fellow deputies and a task force officer from the Bureau of Alcohol, Tobacco, Firearms and Explosives. The officers tracked the vehicle to a gas station on Palm Bay Road in Melbourne. As the officers surveilled the vehicle, Duppins remained in the driver’s seat and did not exit the vehicle, but other individuals exited and entered the vehicle. Law enforcement officers subsequently conducted a traffic stop due to the reckless driving. While officers were approaching the vehicle, Duppins appeared to reach down towards his waist. Duppins was given several loud verbal commands to place his hands up. Duppins failed to comply, appeared to remove something near his waist, and reached into the rear passenger side of the vehicle.
Upon contact at the driver’s door, Duppins was asked to step out of the vehicle and was placed under arrest for reckless driving. During a search of the vehicle, the officers located a clear bag containing a blue powdery substance on the rear passenger floorboard. The substance, later tested and weighed by a Drug Enforcement Administration laboratory, weighed approximately 114 grams and tested positive for fentanyl.
This case was investigated by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Brevard County Sheriff’s Office. It was prosecuted by Assistant United States Attorneys John M. Gardella and Michael Sartoian.
Boston Man Sentenced for Defrauding Victims of More Than $1 Million Using Various Online ScamsRead the Press Release
BOSTON – A Boston man was sentenced today in connection with his role in expansive online fraud schemes targeting individuals in the United States, including romance and advance fee schemes. In total, approximately 30 victims lost more than $1.3 million as a result of the schemes.
Kelechi Collins Umeh, 40, of Boston and formerly of Quincy, was sentenced by U.S. Senior District Judge William G. Young to 40 months in prison and two years of supervised release. Umeh was also ordered to pay restitution of $878,652. In January 2023, Umeh pleaded guilty to one count of bank fraud conspiracy.
Umeh participated in a series of online scams – including romance and advance fee schemes – designed to defraud victims into sending money to accounts controlled by him and his co-conspirators. Romance scams occur when a criminal adopts a fake online identity to gain a victim’s affection and trust. The scammer then uses the illusion of a romantic or close relationship to manipulate and/or steal from the victim. Advance fee scams occur when a criminal asks a victim to pay a fee up front – usually described as a fee, tax, or commission – in order to obtain a bigger payout later, but that payout never occurs.
Umeh used fake passports in the names of numerous aliases to open bank accounts in and around Boston to collect and launder the proceeds of the online scams. Umeh and co-conspirators then rapidly executed large cash withdrawals from those accounts, often within days of the deposit and generally structured in amounts less than $10,000, in an effort to evade detection and currency transaction reporting requirements.Acting United States Attorney Joshua S. Levy; Michael J. Krol, Special Agent in Charge of Homeland Security Investigations in Boston; Ketty Larco-Ward, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division; and Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. Valuable assistance was provided by the U.S. Treasury Inspector General for Tax Administration and the U.S. Department of State’s Diplomatic Security Service. Assistant U.S. Attorney Kristen A. Kearney of the Securities, Financial & Cyber Fraud Unit prosecuted the case.
Bluefield Man Pleads Guilty to Federal Fraud CrimeRead the Press Release
BLUEFIELD, W.Va. – Matthew Huffman, 37, of Bluefield, pleaded guilty today to theft or embezzlement in connection to healthcare services. Huffman admitted to stealing more than $45,000 from the Southern Highlands Community Mental Health Center while employed as its chief substance use disorder officer.
According to court documents and statements made in court, between October 2022 and January 2023, Huffman embezzled money from Southern Highlands including more than $5,000 it received from the Comprehensive Opioid, Stimulant, and Substance Use Program (COSSUP). Southern Highlands is a non-profit medical treatment center that offers a variety of services including addiction treatment. COSSUP grants are distributed, in part, to treat and support those impacted by illicit substance use and misuse.
Huffman admitted that he forged signatures required to approve the use of COSSUP grants and other funds, and also used the names of patients and consumers no longer receiving services from Southern Highlands on the necessary forms. Huffman further admitted that he embezzled these funds for his personal gain, using the money to pay his utility bills, vehicle loan payments and to purchase gift cards and prepaid debit cards.
Huffman is scheduled to be sentenced on February 5, 2024, and faces a maximum penalty of 10 years in prison, three years of supervised release, and a $250,000 fine. Huffman also owes $45,258.51 in restitution.
United States Attorney Will Thompson made the announcement and commended the investigative work of the Mercer County Sheriff’s Department.
Senior United States District Judge David A. Faber presided over the hearing. Assistant United States Attorneys Owen Reynolds and Andrew D. Isabell are prosecuting the case.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Southern District of West Virginia. Related court documents and information can be found on PACER by searching for Case No. 1:23-cr-137.
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Armed Career Criminal Sentenced to More than 15 Years in Prison for Illegal Gun PossessionRead the Press Release
NEW BERN, N.C. – A Raleigh man with two prior federal convictions was sentenced as an armed career criminal offender today for possession of a firearm by a felon. Donald Melvin, age 52, was sentenced to 188 months in prison followed by five years of supervised release. On March 9, 2023, Melvin pled guilty to the charge. Melvin’s previous convictions for drug trafficking and breaking and entering qualified him as an armed career criminal.
According to court documents and other information presented in court, Melvin, 52, was living at an apartment in Raleigh on January 6, 2022, when Raleigh Police Department (RPD) attempted to serve an outstanding arrest warrant. Melvin initially lied about his identity. However, RPD officers were able to confirm his identity and took him into custody after Melvin attempted to flee. Melvin was carrying a loaded 9mm gun, and a search of his apartment revealed four additional firearms, ammunition and a variety of narcotics including heroin, cocaine, fentanyl, and Phencyclidine. Firearms recovered at the apartment included a 9mm with an extended magazine, two 12-gauge shotguns and .243 caliber rifle,
Michael Easley, U.S. Attorney for the Eastern District of North Carolina made the announcement after sentencing by U.S. District Judge Louise W. Flanagan. The Bureau of Alcohol, Tobacco, Firearms and Explosives and Raleigh Police Department investigated the case and Assistant U.S. Attorney Ashley Foxx prosecuted the case.
Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No.22-CR-00143-FL.
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30 September 2023
United States Settles Kickback Allegations with Specialty Pharmacy BioTek reMEDys, Inc., its Owner Chaitanya Gadde, and Dr. David TabbyRead the Press Release
PHILADELPHIA – United States Attorney Jacqueline C. Romero announced today that BioTek reMEDys, Inc. (“BioTek”), located in New Castle, Delaware, and its Chief Executive Officer, Chaitanya Gadde, have agreed to pay $20 million based on BioTek’s ability to pay to resolve allegations that they violated the False Claims Act and the Anti-Kickback Statute by paying kickbacks to patients in the form of routinely waived copayments and to physicians in exchange for providing patient referrals to BioTek.
The government alleged that, from at least August 2015 through May 2020, BioTek, a specialty pharmacy that offers drugs and infusion services, routinely waived the copayments of Medicare and TRICARE patients to induce those patients to purchase its drugs and services. Many of the specialty drugs offered by BioTek were expensive and required patients to pay large copays. Understanding that these copays could deter patients from purchasing its drugs and services, the government alleged that BioTek engaged in a scheme, orchestrated and implemented by Gadde and others, to routinely waive these copays – without regard for whether the patients were experiencing financial hardship – to ensure a steady revenue stream for BioTek.
Today’s settlement also resolves allegations that BioTek provided remuneration in the form of gifts, dinners, and free administrative and clinical support services, to physicians – in particular, Dr. David Tabby, who operated a neurology practice in Bala Cynwyd, Pennsylvania – to induce those physicians to refer patients to BioTek. The government also alleged that Dr. Tabby knowingly solicited and accepted this remuneration in exchange for referring numerous patients to BioTek. Dr. Tabby has paid $480,000 to settle these allegations, based on his ability to pay.
When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copay requirements in the Medicare program in part to serve as a check on health care costs. The Federal Anti-Kickback Statute prohibits the offering, paying, soliciting, or accepting, directly or indirectly, any remuneration – which includes money or any other thing of value – to refer or arrange for the referral of items or services payable by any federal health care program. This prohibition extends to companies that routinely waive the copays of Medicare patients without determination of financial need. The Anti-Kickback Statute also extends to the payment of remuneration to physicians in exchange for patient referrals.
“BioTek allegedly provided improper physician inducements and covered up kickbacks for patient referrals by waiving co-pays,” said United States Attorney Jacqueline C. Romero. “These improper and corrupt business practices will not be tolerated in this District. Biotek’s alleged scheme, orchestrated and implemented by Gadde, Dr. Tabby, and others, to routinely waive these copays – without regard for whether the patients were experiencing financial hardship – ensured a steady revenue stream for BioTek and undermined patient care to citizens of this District. This Office will continue to invest itself in the pursuit of health care providers who violate the law for personal gain.”
“Kickbacks impose hidden costs on the health care system and compromise medical decision-making,” said Maureen R. Dixon, Special Agent in Charge with the U.S. Department of Health and Human Services Office of the Inspector General. “Alongside our law enforcement partners, HHS-OIG is committed to safeguarding the integrity of federal health care programs by, in part, holding individuals who unlawfully bill the programs accountable for their actions."
“The settlement agreement announced today demonstrates our ongoing commitment to work with our law enforcement partners to investigate healthcare fraud and protect TRICARE, the healthcare system for military members and their dependents,” stated Special Agent in Charge Patrick J. Hegarty of the Defense Criminal Investigative Service Northeast Field Office. “When health care companies pay physicians and submit false claims for improper referrals, they undermine the integrity of TRICARE and place an unnecessary financial burden on the program.”
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Shantae M. Wyatt and Latoya Sparrow, former BioTek employees. Under those provisions, a private party may file an action on behalf of the United States and receive a portion of any recovery. Wyatt and Sparrow will receive $4 million as their share of the settlement with BioTek and Gadde, and $91,200 as their share of the settlement with Dr. Tabby. The qui tam case is captioned United States of America ex rel. Wyatt et al. v. BioTek reMEDys, Inc., No. 19-6069 (E.D. Pa.). The relators are represented by David Bocian, Esq. and Asher Alavi, Esq. of Kessler Topaz Meltzer & Check, LLP.
The resolutions obtained in this matter were the result of a coordinated effort among the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the United States Attorney’s Office for the Eastern District of Pennsylvania, the United States Attorney’s Office for the District of Delaware, the U.S. Department of Health and Human Services Office of the Inspector General, the Office of Inspector General for the Office of Personnel Management, and the Department of Defense Office of Inspector General, Defense Criminal Investigative Service.
The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).
The matter was handled in the U.S. Attorney’s Office for the Eastern District of Pennsylvania by United States Attorney Jacqueline C. Romero, Deputy Chief Charlene Keller Fullmer, Assistant United States Attorney Judith Amorosa, and Auditor George Niedzwicki .
The claims asserted by the United States are allegations only and there has been no determination of liability.
United States Reaches $37 Million Settlement of Fraud Lawsuit Against Cigna for Submitting False and Invalid Diagnosis Codes to Artificially Inflate Its Medicare Advantage PaymentsRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, Henry C. Leventis, the United States Attorney for the Middle District of Tennessee, and Naomi Gruchacz, the Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today that the United States has settled a civil healthcare fraud lawsuit against THE CIGNA GROUP and its subsidiary Medicare Advantage Organizations (collectively, “CIGNA”). The $37 million settlement resolves claims that CIGNA submitted to the Government false and invalid patient diagnosis codes to artificially inflate the payments CIGNA received for providing insurance coverage to its Medicare Advantage plan members. The lawsuit was originally filed by a whistleblower in the U.S. District Court for the Southern District of New York and later transferred to the Middle District of Tennessee.
The Government’s Complaint alleged that the invalid diagnosis codes were based solely on forms completed by vendors retained and paid by CIGNA to conduct in-home assessments of plan members. The healthcare providers (typically nurse practitioners) who conducted these home visits did not perform or order the diagnostic testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported and were in many cases prohibited by CIGNA from providing any treatment during the home visits for the medical conditions they purportedly found. The diagnoses at issue were not supported by the information documented on the forms completed by the vendors and were not reported to CIGNA by any other healthcare provider who saw the patient during the year in which the home visits occurred. Nevertheless, CIGNA submitted these diagnoses to the Government to claim increased payments and falsely certified each year that the diagnosis data it submitted was “accurate, complete, and truthful.”
As part of the settlement approved by U.S. District Judge Eli Richardson, CIGNA will pay the United States a total of $37 million. CIGNA also made extensive factual admissions in the settlement regarding the conduct alleged in the Government’s Complaint. In connection with this settlement, CIGNA entered into a five-year Corporate Integrity Agreement (“CIA”) with HHS-OIG. The CIA requires CIGNA to implement numerous accountability and auditing measures. In particular, CIGNA must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits focused on risk adjustment data.
U.S. Attorney Damian Williams said: “For years, Cigna submitted to the Government false and invalid diagnosis information for its Medicare Advantage plan members. The reported diagnoses of serious and complex conditions were based solely on cursory in-home assessments by providers who did not perform necessary diagnostic testing and imaging. Cigna knew that these diagnoses would increase its Medicare Advantage payments by making its plan members appear sicker. This Office is committed to holding insurers accountable if they seek to manipulate the Medicare Advantage Program and boost their profits by submitting false information to the Government.”
U.S. Attorney for the Middle District of Tennessee Henry C. Leventis said: “Medicare Advantage relies on the integrity of its insurers and the accuracy of the diagnosis code information they provide, since it has an outsize effect on Medicare payments. We will continue to vigorously pursue fraud in this increasingly important program.”
HHS-OIG Special Agent in Charge Naomi Gruchacz said: “Managed care plans’ primary responsibility is to ensure the health coordination and appropriate benefits for the beneficiaries they have enrolled, not focus on profits. HHS-OIG will work with our partners at the U.S. Attorney’s Office to ensure the integrity of federal healthcare program funds and the provision of appropriate, quality services to patients.”
Medicare Advantage, also known as the Medicare Part C program, provides health insurance coverage for tens of millions of Americans who opt out of traditional Medicare. Under Medicare Part C, Medicare Advantage Organizations (“MAOs”), typically operated by private insurers like CIGNA, provide coverage for Medicare Advantage plan members. In return, MAOs receive monthly payments from the Centers for Medicare and Medicaid Services (“CMS”) that vary based on each member’s demographic information and medical diagnoses. MAOs submit diagnoses for their plan members, usually provided by the plan members’ healthcare providers, to CMS. CMS then uses those diagnoses, along with demographic factors, to calculate a “risk score” for each member and, in turn, the amount of the monthly payment it will pay the MAO for covering that member. The Medicare Advantage payment model is intended to pay MAOs more to cover healthcare expenses for sicker plan members (who are expected to incur higher healthcare costs) and less for healthier plan members (who are expected to incur lower costs).
As alleged in the Government’s Complaint:
CIGNA, through its subsidiaries and affiliates, owns and operates numerous MAOs that administer Medicare Advantage Plans. CIGNA contracted with several vendors to conduct home visits of Medicare Advantage plan members across the country as part of its broader so-called “360 comprehensive assessment” program. The home visits were typically conducted by nurse practitioners and, on occasion, by other non-physician healthcare providers such as registered nurses and physician assistants (the “Vendor HCPs”). Based on the visit, the Vendor HCPs completed a CIGNA-created form (“360 form”) that included a check-the-box multi-page list of a wide range of medical conditions. CIGNA had its coding teams identify diagnosis codes that corresponded to the recorded medical conditions and then submitted those to CMS for risk adjustment payment purposes.
CIGNA structured the 360 home visits for the primary purpose of capturing and recording lucrative diagnosis codes that would significantly increase the monthly capitated payments it received from CMS. The purpose of the visits was not to treat patients’ medical conditions, and CIGNA explicitly prohibited the Vendor HCPs from providing actual patient treatment or care. As CIGNA acknowledged in an internal document discussing the program, “[t]the primary goal of a 360 visit is administrative code capture and not chronic care or acute care management.” But this was not disclosed to CIGNA’s plan members when the home visit was scheduled or during the actual visit. When identifying plan members to receive home visits, CIGNA targeted individuals who were likely to yield the greatest risk score increases and thus the greatest increased payment.
The Vendor HCPs spent limited time with the patients and did not conduct a comprehensive physical examination. When completing the assessments and recording the diagnoses, the Vendor HCPs relied largely on the patient’s own self-assessment and their responses to various basic screening questions. Vendor HCPs did not have access to the patient’s full medical history and typically did not obtain or review relevant records from the patient’s primary care physician in advance of the visit.
CIGNA’s 360 home visit program regularly generated false and invalid diagnosis codes for certain serious, complex conditions that cannot be reliably diagnosed in a home setting and without extensive diagnostic testing or imaging. In tens of thousands of instances, CIGNA submitted diagnosis codes that represent serious, complex medical conditions that (i) were based only on the home visits conducted by the Vendor HCPs; (ii) required specific testing or imaging to be reliably diagnosed, which was not performed; (iii) were not supported by the information documented on the 360 form completed by the Vendor HCPs; and (iv) were not reported by any other healthcare provider who saw the plan member during the year in which the home visit occurred (the “Invalid Diagnoses”). The Invalid Diagnoses included, but are not limited to, diagnoses for complex medical conditions such as chronic kidney disease, congestive heart failure, rheumatoid arthritis, and diabetes with renal complications. According to CIGNA’s own clinical guidelines, accurately diagnosing these conditions requires specialized testing.
CIGNA exerted pressure on Vendor HCPs to record high-value diagnoses that significantly increased risk adjustment payments. CIGNA management identified at least 12 classes of generic chronic diagnoses that they thought were “often underdiagnosed” among its Plan members and, through trainings and seminars, encouraged the Vendor HCPs to make these diagnoses during the home visits. CIGNA also closely tracked the volume and nature of the diagnoses generated by each vendor’s home visits, as well as how the diagnoses affected risk-adjusted payments. CIGNA provided trainings to vendors to improve their “performance” when they failed to deliver the expected level of high-value diagnosis codes.
The Invalid Diagnoses generated by the 360 home visits also did not conform with the International Classification of Diseases (“ICD”) Official Guidelines for Coding and Reporting (the “ICD Guidelines”), as required by applicable federal regulations. The Invalid Diagnoses did not affect patient care, treatment, or management during the home visit, as required under the ICD Guidelines, and thus were ineligible for risk adjustment. In addition, the Invalid Diagnoses were not supported by the minimal information recorded on the 360 forms, in violation of the ICD Guidelines’ medical record documentation requirement. In fact, in some cases, the 360 forms include clinical exam findings that contradict the supposed diagnosis. For example, one patient received a congestive heart failure diagnosis from a home visit even though the 360 form explicitly noted that physical exam results found her heart to be “regular” and “normal,” and stated, “cardiac reviewed and unremarkable.”
As part of the settlement, CIGNA admitted and accepted responsibility for certain conduct alleged by the Government including the following:
- As part of the 360 Program, CIGNA contracted with vendors who employed nurse practitioners or other licensed healthcare providers to conduct assessments of Part C members in their homes. The vendor healthcare providers, among other things, performed physical exams and documented diagnostic information on standardized forms provided or approved by CIGNA but in many cases were not permitted to provide treatment or prescriptions for medications.
- CIGNA’s medical coding team reviewed the completed “360” forms and, based on that review, identified diagnosis codes that corresponded to the medical conditions checked off on the forms, which were then submitted to CMS as part of CIGNA’s risk adjustment data. The forms utilized by CIGNA’s vendors listed a wide range of diagnoses, including complex medical conditions.
- CIGNA tracked the volume and nature of the diagnoses generated by vendors’ home visits. CIGNA also tracked how the diagnoses affected risk-adjusted payments.
- According to diagnostic criteria disseminated by CIGNA to the vendors, the clinical assessment of some of these diagnoses relies on laboratory evaluation, diagnostic imaging, or other diagnostic testing when making a particular diagnosis for the first time. In many cases, CIGNA did not require 360 Program vendors conducting in-home assessments to have the equipment available to conduct such laboratory testing, imaging, or other diagnostic testing when diagnosing these conditions.
- In thousands of instances, the in-home assessments conducted by 360 Program vendors resulted in diagnoses of CIGNA members and the submission to CMS of resulting risk-adjusting diagnosis codes that had not been previously reported to CMS by CIGNA from any other encounter with a healthcare provider during the year in which the home visit occurred.
- Based on the in-home assessments of members completed by vendors pursuant to the 360 Program, in many instances, CIGNA reported to CMS diagnoses for Medicare Advantage Plan members where the 360 forms did not include clinical information that corroborated the diagnoses and did not reflect that the diagnostic testing necessary to make the diagnosis for the first time had been performed.
In separate settlements announced today by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, CIGNA is also agreeing to resolve separate allegations that CIGNA submitted invalid beneficiary diagnoses to inflate Medicare Advantage payments that did not arise from CIGNA’s home visit program.
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Mr. Williams thanked HHS-OIG and the U.S. Attorney’s Office for the Middle District of Tennessee for their assistance with this case.
This case is being handled by the Civil Frauds Unit within the U.S. Attorney’s Office for the Southern District of New York. Assistant U.S. Attorneys Jeffrey Powell, Peter Aronoff, Jean-David Barnea, and Samuel Dolinger are in charge of the case, with the assistance of Assistant U.S. Attorney Ellen Bowden McIntyre of the Middle District of Tennessee.
United States Reaches $37 Million Settlement of Fraud Lawsuit Against Cigna for Submitting False and Invalid Diagnosis Codes to Artificially Inflate Its Medicare Advantage PaymentsRead the Press Release
NASHVILLE – Henry C. Leventis, the United States Attorney for the Middle District of Tennessee, Damian Williams, the United States Attorney for the Southern District of New York, and Naomi Gruchacz, the Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today that the United States has settled a civil healthcare fraud lawsuit against THE CIGNA GROUP and its subsidiary Medicare Advantage Organizations (collectively, “CIGNA”). The $37 million settlement resolves claims that CIGNA submitted to the Government false and invalid patient diagnosis codes to artificially inflate the payments CIGNA received for providing insurance coverage to its Medicare Advantage plan members. The lawsuit was originally filed by a whistleblower in the U.S. District Court for the Southern District of New York and later transferred to the Middle District of Tennessee.
The Government’s Complaint alleged that the invalid diagnosis codes were based solely on forms completed by vendors retained and paid by CIGNA to conduct in-home assessments of plan members. The healthcare providers (typically nurse practitioners) who conducted these home visits did not perform or order the diagnostic testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported and were in many cases prohibited by CIGNA from providing any treatment during the home visits for the medical conditions they purportedly found. The diagnoses at issue were not supported by the information documented on the forms completed by the vendors and were not reported to CIGNA by any other healthcare provider who saw the patient during the year in which the home visits occurred. Nevertheless, CIGNA submitted these diagnoses to the Government to claim increased payments, and falsely certified each year that the diagnosis data it submitted was “accurate, complete, and truthful.”
As part of the settlement approved yesterday by U.S. District Judge Eli Richardson CIGNA will pay the United States a total of $37 million. CIGNA also made extensive factual admissions in the settlement regarding the conduct alleged in the Government’s Complaint. In connection with this settlement, CIGNA entered into a five-year Corporate Integrity Agreement (“CIA”) with HHS-OIG. The CIA requires CIGNA to implement numerous accountability and auditing measures. In particular, CIGNA must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits focused on risk adjustment data. In separate settlements announced today by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, CIGNA is also agreeing to resolve separate allegations that CIGNA submitted invalid beneficiary diagnoses to inflate Medicare Advantage payments.
“Medicare Advantage relies on the integrity of its insurers and the accuracy of the diagnosis code information they provide, since it has an outsize effect on Medicare payments,” said Henry C. Leventis, United States Attorney for the Middle District of Tennessee. “We will continue to vigorously pursue fraud in this increasingly important program.”
U.S. Attorney Damian Williams for the Southern District of New York said: “For years, Cigna submitted to the Government false and invalid diagnosis information for its Medicare Advantage plan members. The reported diagnoses of serious and complex conditions were based solely on cursory in-home assessments by providers who did not perform necessary diagnostic testing and imaging. Cigna knew that these diagnoses would increase its Medicare Advantage payments by making its plan members appear sicker. This Office is committed to holding insurers accountable if they seek to manipulate the Medicare Advantage Program and boost their profits by submitting false information to the Government.”
“Managed care plans’ primary responsibility is to ensure the health coordination and appropriate benefits for the beneficiaries they have enrolled, not focus on profits,” stated Special Agent in Charge Naomi Gruchacz with the U.S. Department of Health and Human Services Office of Inspector General. “HHS-OIG will work with our partners at the U.S. Attorney’s Office to ensure the integrity of federal healthcare program funds and the provision of appropriate, quality services to patients.”
Medicare Advantage, also known as the Medicare Part C program, provides health insurance coverage for tens of millions of Americans who opt out of traditional Medicare. Under Medicare Part C, Medicare Advantage Organizations (“MAOs”), typically operated by private insurers like CIGNA, provide coverage for Medicare Advantage plan members. In return, MAOs receive monthly payments from the Centers for Medicare and Medicaid Services (“CMS”) that vary based on each member’s demographic information and medical diagnoses. MAOs submit diagnoses for their plan members, usually provided by the plan members’ healthcare providers, to CMS. CMS then uses those diagnoses, along with demographic factors, to calculate a “risk score” for each member and, in turn, the amount of the monthly payment it will pay the MAO for covering that member. The Medicare Advantage payment model is intended to pay MAOs more to cover healthcare expenses for sicker plan members (who are expected to incur higher healthcare costs) and less for healthier plan members (who are expected to incur lower costs).
As alleged in the Government’s Complaint:
CIGNA, through its subsidiaries and affiliates, owns and operates numerous MAOs that administer Medicare Advantage Plans. CIGNA contracted with several vendors to conduct home visits of Medicare Advantage plan members across the country as part of its broader so-called “360 comprehensive assessment” program. The home visits were typically conducted by nurse practitioners and, on occasion, by other non-physician healthcare providers such as registered nurses and physician assistants (the “Vendor HCPs”). Based on the visit, the Vendor HCPs completed a CIGNA-created form (“360 form”) that included a check-the-box multi-page list of a wide range of medical conditions. CIGNA had its coding teams identify diagnosis codes that corresponded to the recorded medical conditions and then submitted those to CMS for risk adjustment payment purposes.
CIGNA structured the 360 home visits for the primary purpose of capturing and recording lucrative diagnosis codes that would significantly increase the monthly capitated payments it received from CMS. The purpose of the visits was not to treat patients’ medical conditions, and CIGNA explicitly prohibited the Vendor HCPs from providing actual patient treatment or care. As CIGNA acknowledged in an internal document discussing the program, “[t]the primary goal of a 360 visit is administrative code capture and not chronic care or acute care management.” But this was not disclosed to CIGNA’s plan members when the home visit was scheduled or during the actual visit. When identifying plan members to receive home visits, CIGNA targeted individuals who were likely to yield the greatest risk score increases and thus the greatest increased payment.
The Vendor HCPs spent limited time with the patients and did not conduct a comprehensive physical examination. When completing the assessments and recording the diagnoses, the Vendor HCPs relied largely on the patient’s own self-assessment and their responses to various basic screening questions. Vendor HCPs did not have access to the patient’s full medical history and typically did not obtain or review relevant records from the patient’s primary care physician in advance of the visit.
CIGNA’s 360 home visit program regularly generated false and invalid diagnosis codes for certain serious, complex conditions that cannot be reliably diagnosed in a home setting and without extensive diagnostic testing or imaging. In tens of thousands of instances, CIGNA submitted diagnosis codes that represent serious, complex medical conditions that (i) were based only on the home visits conducted by the Vendor HCPs; (ii) require specific testing or imaging to be reliably diagnosed, which was not performed; (iii) were not supported by the information documented on the 360 form completed by the Vendor HCPs; and (iv) were not reported by any other healthcare provider who saw the plan member during the year in which the home visit occurred (the "Invalid Diagnoses"). The Invalid Diagnoses included, but are not limited to, diagnoses for complex medical conditions such as chronic kidney disease, congestive heart failure, rheumatoid arthritis, and diabetes with renal complications. According to CIGNA’s own clinical guidelines, accurately diagnosing these conditions requires specialized testing.
CIGNA exerted pressure on Vendor HCPs to record high-value diagnoses that significantly increased risk adjustment payments. CIGNA management identified at least 12 classes of generic chronic diagnoses that they thought were “often underdiagnosed” among its Plan members and, through trainings and seminars, encouraged the Vendor HCPs to make these diagnoses during the home visits. CIGNA also closely tracked the volume and nature of the diagnoses generated by each vendor’s home visits, as well as how the diagnoses affected risk-adjusted payments. CIGNA provided trainings to vendors to improve their “performance” when they failed to deliver the expected level of high-value diagnosis codes.
Indeed, CIGNA tracked the return on investment of the 360 home visit program by comparing the costs of the in-home visits (i.e., payments to vendors) against the additional Part C payments generated by increased risk scores. For example, according to an internal report, CIGNA determined that, during the first nine months of 2014, one vendor’s 6,658 in-home visits resulted in more than an additional $14 million in Medicare payments, which dwarfed the approximately $2.13 million that CIGNA paid to the vendor. When specific providers were found to have captured fewer diagnoses than expected, CIGNA asked the vendor to prepare a “performance improvement plan” for the provider.
The Invalid Diagnoses generated by the 360 home visits also did not conform with the International Classification of Diseases (“ICD”) Office Guidelines for Coding and Reporting (the “ICD Guidelines”), as required by applicable federal regulations. The Invalid Diagnoses did not affect patient care, treatment, or management during the home visit, as required under the ICD Guidelines, and thus were ineligible for risk adjustment. In addition, the Invalid Diagnoses were not supported by the minimal information recorded on the 360 forms, in violation of the ICD Guidelines’ medical record documentation requirement. In fact, in some cases, the 360 forms include clinical exam findings that contradict the supposed diagnosis. For example, one patient received a congestive heart failure diagnosis from a home visit even though the 360 form explicitly noted that physical exam results found her heart to be “regular” and “normal,” and stated, “cardiac reviewed and unremarkable.”
As part of the settlement, CIGNA admitted and accepted responsibility for certain conduct alleged by the Government including the following:
- As part of the 360 Program, CIGNA contracted with vendors who employed nurse practitioners or other licensed healthcare providers to conduct assessments of Part C members in their homes. The vendor healthcare providers, among other things, performed physical exams and documented diagnostic information on standardized forms provided or approved by CIGNA but in many cases were not permitted to provide treatment or prescriptions for medications.
- CIGNA’s medical coding team reviewed the completed “360” forms and, based on that review, identified diagnosis codes that corresponded to the medical conditions checked off on the forms, which were then submitted to CMS as part of CIGNA’s risk adjustment data. The forms utilized by CIGNA’s vendors listed a wide range of diagnoses, including complex medical conditions.
- CIGNA tracked the volume and nature of the diagnoses generated by vendors’ home visits. CIGNA also tracked how the diagnoses affected risk-adjusted payments.
- According to diagnostic criteria disseminated by CIGNA to the vendors, the clinical assessment of some of these diagnoses relies on laboratory evaluation, diagnostic imaging, or other diagnostic testing when making a particular diagnosis for the first time. In many cases, CIGNA did not require 360 Program vendors conducting in-home assessments to have the equipment available to conduct such laboratory testing, imaging, or other diagnostic testing when diagnosing these conditions.
- In thousands of instances, the in-home assessments conducted by 360 Program vendors resulted in diagnoses of CIGNA members and the submission to CMS of resulting risk-adjusting diagnosis codes that had not been previously reported to CMS by CIGNA from any other encounter with a healthcare provider during the year in which the home visit occurred.
- Based on the in-home assessments of members completed by vendors pursuant to the 360 Program, in many instances, CIGNA reported to CMS diagnoses for Medicare Advantage Plan members where the 360 forms did not include clinical information that corroborated the diagnoses and did not reflect that the diagnostic testing necessary to make the diagnosis for the first time had been performed.
This case is being handled by Assistant U.S. Attorney Ellen Bowden McIntyre of the Middle District of Tennessee and Assistant U.S. Attorneys Jeffrey Powell, Peter Aronoff, Jean-David Barnea, and Samuel Dolinger of the Civil Frauds Unit within the U.S. Attorney’s Office for the Southern District of New York.
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U.S. Attorney’s Office Joined with Federal Bar Association and Law Schools to Hold Second Annual Sacramento Region Diversity Career FairRead the Press Release
SACRAMENTO, Calif. — The second annual Sacramento Region Diversity Career Fair, held on Sept. 30, 2023, connected employers with diverse legal candidates for future and current job openings. The U.S. Attorney’s Office for the Eastern District of California, the University of the Pacific McGeorge School of Law, the UC Davis School of Law, and the Federal Bar Association Sacramento Chapter made the announcement following today’s event.
The Diversity Career Fair is the first legal career fair in the Sacramento region with an online platform where employers can post legal jobs and law students and attorneys can submit applications. The Diversity Career Fair grew significantly this year to include 70 participating employers and was expanded to include an interview component. The Diversity Career Fair also provided employers, law students, and attorneys with the opportunity to connect in person, and included a panel discussion featuring federal and state court judges and the Circuit Executive for the U.S. Courts for the Ninth Circuit. A wide variety of employers, bar associations, law students, attorneys, and judges attended the Diversity Career Fair held at McGeorge School of Law campus.
“The Sacramento Region Diversity Career Fair has been groundbreaking, and its successful expansion has strengthened our legal community and commitment to diversity,” said U.S. Attorney Phillip A. Talbert. “We are committed to making the Sacramento Region Diversity Career Fair an annual program to continue this important work with our law schools, bar associations, and the larger legal community.”
“McGeorge is pleased and honored to be hosting the second annual Sacramento Region Diversity Career Fair, and we cannot thank the participating employers enough,” said Michael Hunter Schwartz, Dean of McGeorge School of Law. “A majority of our students at McGeorge are members of marginalized racial and ethnic identities, making the Diversity Career Fair not only a vital step towards fostering a better legal profession but also providing our student body with invaluable opportunities to connect with employers who share our commitment to our students and the needs of California’s diverse communities.”
“The Sacramento Region Diversity Career Fair provided a wonderful opportunity for our students to connect with employers who prioritize diversity in the legal profession,” UC Davis School of Law Dean Kevin R. Johnson said. “We were so pleased to participate and continue to advance the principles of diversity, equity and inclusion that are the foundation of our school. Many thanks to the outstanding employers who participated and to our partner organizations for allowing us to take part in this important event for our region.”
The panel discussion featured Sacramento Superior Court Judge Bunmi Awoniyi, U.S. District Judge Daniel Calabretta (E.D. Cal.), California Court of Appeal Associate Justice Elena Duarte (3DCA), and U.S. Courts for the Ninth Circuit, Circuit Executive Susan Soong.
The Sacramento Region Diversity Career Fair was co-sponsored by all of the affinity bar associations in Sacramento, including the Asian/Pacific Bar Association of Sacramento (ABAS), Cruz Reynoso Bar Association, Leonard M. Friedman Bar Association, Sacramento Filipino American Lawyers Association (SacFALA), South Asian Bar Association (SABA), SacLegal Sacramento’s LGBTQ+ Bar Association, Wiley Manuel Bar Association (WMBA), and Women Lawyers of Sacramento (WLS), the Yolo Unity Bar, and by the Sacramento County Bar Association.
For more information: https://www.sacramentodiversitycareerfair.org/.
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U.S. Attorney's Office for the Eastern District of Tennessee Announces over $4 Million in Department of Justice Programs Grant FundingRead the Press Release
KNOXVLLE, Tenn. On September 28, 2023, the United States Attorney’s Office for the Eastern District of Tennessee announced $4,684,929 in Department of Justice, Office of Justice Programs (OJP) funding.
- City of Chattanooga - $500.000.
- City of Knoxville - $2,000,000.
- City of Sevierville - $299,600.
- Hamilton County Board of Education - $994,679.
- Knoxville Leadership Foundation - $750,000.
- Metro Moore County Emergency Management Agency - $140,650.
The Office of Justice Programs is a federal agency that provides federal leadership, grants, training, technical assistance, and other resources to improve the nation’s capacity to prevent and reduce crime, assist victims and uphold the rule of law by strengthening the criminal and juvenile justice systems. OJP’s six program offices support state, local, and tribal community safety efforts; crime victim assistance and compensation programs; juvenile justice and child protection activities; sex offender management; a wide range of training and technical assistance opportunities; ground-breaking criminal justice research; and statistical collections covering a host of justice system topics.
The awards announced above are being made as part of the regular end-of-fiscal year cycle. Additional information about FY23 awards can be found on OJP’s website here: www.ojp.gov/funding/explore/ojp-award-data. For more information, please contact [email protected].
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Tax Cheat Sentenced to Prison for Failing to Pay Employee TaxesRead the Press Release
PHOENIX, Ariz. – James Philip Piccolo, 65, of Scottsdale, Arizona was sentenced on Wednesday to 18 months in prison, followed by three years of supervised release. He also was ordered to pay $651,478 in restitution to the IRS and a $10,000 fine. Piccolo pleaded guilty in January 2023 to one count of failing to pay the IRS federal income taxes withheld from employees.
Piccolo co-founded Tecademics, LLC in 2016 and founded IQUP, Inc. in 2017. Both Tecademics and IQUP instructed clients in how to manage online businesses and conduct marketing efforts on the internet. In his plea agreement, Piccolo admitted that he was responsible for submitting any tax payments to the IRS for both companies. Between 2017 and 2018, Piccolo received business tax returns prepared by Tecademics’s and IQUP’s bookkeeper. Those returns reported employees’ wages for each quarter, as well as the portion of the wages withheld by the employer for state and federal taxes. Piccolo admitted that he knew that he was required to pay those taxes to the IRS. For the tax periods between January 2017 and April 2018, however, Piccolo did not pay the taxes owed by Tecademics and IQUP. In total, Piccolo failed to pay $651,478 in taxes to the IRS.
“The conviction and sentencing of the defendant are the results of an effort by the Internal Revenue Service to vindicate the rights of honest business owners by holding scofflaws to account,” said U.S. Attorney Gary Restaino. “Instead of following the law, Piccolo breached his employees’ trust by failing to pay the taxes withheld on their behalf.”
This case was investigated by the Internal Revenue Service Criminal Investigation. Assistant U.S. Attorney Aron Ketchel, District of Arizona, Phoenix, handled the prosecution.
CASE NUMBER: CR-23-0037-JAT
RELEASE NUMBER: 2023-145_Piccolo# # #
For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.Cigna Group to Pay $172 Million to Resolve False Claims Act AllegationsRead the Press Release
The Cigna Group, headquartered in Connecticut, has agreed to pay $172,294,350 to resolve allegations that it violated the False Claims Act by submitting and failing to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees in order to increase its payments from Medicare.
Under the Medicare Advantage (MA) Program, also known as Medicare Part C, Medicare beneficiaries have the option of obtaining their Medicare-covered benefits through private insurance plans called MA Plans. The Centers for Medicare and Medicaid Services (CMS) pays the MA Plans a fixed monthly amount for each beneficiary who enrolls. CMS adjusts these monthly payments to account for various “risk” factors that affect expected health expenditures for the beneficiary, to ensure that MA Plans are paid more for those beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. To make these adjustments, CMS collects “risk adjustment” data, including medical diagnosis codes, from the MA Plans.
Cigna owns and operates MA Organizations that offer MA Plans to beneficiaries across the country. The United States alleged that Cigna submitted inaccurate and untruthful patient diagnosis data to CMS in order to inflate the payments it received from CMS, failed to withdraw the inaccurate and untruthful diagnosis data and repay CMS, and falsely certified in writing to CMS that the data was accurate and truthful. The settlement announced today resolves these allegations.
“Over half of our nation’s Medicare beneficiaries are now enrolled in Medicare Advantage plans, and the government pays private insurers over $450 billion each year to provide for their care,” said Deputy Assistant Attorney General Michael D. Granston of the Justice Department's Civil Division. “We will hold accountable those insurers who knowingly seek inflated Medicare payments by manipulating beneficiary diagnoses or any other applicable requirements.”
The United States alleged that, for payment years 2014 to 2019, Cigna operated a “chart review” program, pursuant to which it retrieved medical records (also known as “charts”) from healthcare providers documenting services they had previously rendered to Medicare beneficiaries enrolled in Cigna’s plans. Cigna retained diagnosis coders to review those charts to identify all medical conditions that the charts supported and to assign the beneficiaries diagnosis codes for those conditions. Cigna relied on the results of those chart reviews to submit additional diagnosis codes to CMS that the healthcare providers had not reported for the beneficiaries to obtain additional payments from CMS. However, Cigna’s chart reviews also did not substantiate some diagnosis codes that were reported by providers and previously submitted by Cigna to CMS. Cigna did not delete or withdraw these inaccurate and untruthful diagnosis codes, however, which would have required Cigna to reimburse CMS. Thus, the United States alleged that Cigna used the results of its chart reviews to identify instances where Cigna could seek additional payments from CMS, while improperly failing to use those same results when they provided information about instances where Cigna was overpaid.
“Given the growth of Medicare Advantage plans, investigating fraud involving Medicare Part C is more important than ever. My office has prioritized combatting Medicare Advantage fraud, including applying data-driven investigative methods and working extensively with our law enforcement partners across the country,” said U.S. Attorney Jacqueline C. Romero of the Eastern District of Pennsylvania. “We will hold accountable those who report unsupported diagnoses to inflate Medicare Advantage payment, such as unsupported diagnosis codes for morbid obesity.”
The United States further alleged that Cigna reported diagnosis codes to CMS that were based solely on forms completed by vendors retained and paid by Cigna to conduct in-home assessments of plan members. The healthcare providers (typically nurse practitioners) who conducted these home visits did not perform or order the diagnostic testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported, and were in many cases prohibited by Cigna from providing any treatment during the home visits for the medical conditions they purportedly found. The diagnoses at issue were not supported by the information documented on the forms completed by the vendors and were not reported to Cigna by any other healthcare provider who saw the patient during the year in which the home visit occurred. Nevertheless, Cigna submitted these diagnoses to CMS to claim increased payments, and falsely certified each year that the diagnosis data it submitted was “accurate, complete, and truthful.”
“For years, Cigna submitted to the Government false and invalid diagnosis information for its Medicare Advantage plan members. The reported diagnoses of serious and complex conditions were based solely on cursory in-home assessments by providers who did not perform necessary diagnostic testing and imaging. Cigna knew that these diagnoses would increase its Medicare Advantage payments by making its plan members appear sicker,” said Damian Williams, United States Attorney for the Southern District of New York. “This Office is committed to holding insurers accountable if they seek to manipulate the Medicare Advantage Program and boost their profits by submitting false information to the Government.”
“Medicare Advantage relies on the integrity of its insurers and the accuracy of the diagnosis code information they provide, since it has an outsize effect on Medicare payments,” said Henry C. Leventis, United States Attorney for the Middle District of Tennessee. “We will continue to vigorously pursue fraud in this increasingly important program.”
The United States further alleged that, for payment years 2016 to 2021, Cigna knowingly submitted and/or failed to delete or withdraw inaccurate and untruthful diagnosis codes for morbid obesity to increase the payments it received from CMS for numerous beneficiaries enrolled in its MA plans. The medical records for individuals diagnosed as morbidly obese typically include one or more Body Mass Index (BMI) recordings. Individuals with a BMI below 35 cannot properly be diagnosed as morbidly obese. However, Cigna submitted or failed to delete inaccurate and untruthful diagnosis codes for morbid obesity for individuals lacking a BMI of 35 or above, and these codes increased the payments made by CMS.
In connection with the settlement, Cigna entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires that Cigna implement numerous accountability and auditing provisions. On an annual basis, top executives and members of the Board of Directors must make certifications about Cigna’s compliance measures, Cigna must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits focused on risk adjustment data.
“Medicare Advantage plans that submit false information to increase payments from CMS show blatant disregard for the integrity of these vital federal health care funds,” stated Christian J. Schrank, Deputy Inspector General for Investigations with HHS-OIG. “Such actions are an affront to the Medicare program and the millions of patients who rely on its services. Working with our law enforcement partners, our agency will continue to prioritize investigating alleged fraud that targets the Medicare Advantage program.”
The civil settlement of the home visit allegations includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Robert A. Cutler, a former part-owner of a vendor retained by Cigna to conduct home visits. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Cutler v. Cigna Corp., et al., No. 3:21-cv-00748 (M.D. Tenn.). As part of today’s resolution, Mr. Cutler will receive $8,140,000 from the settlement of the home visit allegations.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the United States Attorneys’ Offices for the Eastern District of Pennsylvania, the Southern District of New York and the Middle District of Tennessee, with assistance from HHS-OIG.
The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to the Department of Health and Human Services at www.oig.hhs.gov/fraud/report-fraud/ or 800-HHS-TIPS (800-447-8477).
The matter was handled by Fraud Section Attorneys Carol Wallack and Edward Crooke and Assistant U.S. Attorneys Deborah Frey, Matthew Howatt and Gregory David from the Eastern District of Pennsylvania, Jeffrey Powell, Peter Aronoff, Jean-David Barnea, and Samuel Dolinger from the Southern District of New York, and Ellen Bowden McIntyre from the Middle District of Tennessee.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
EDPA Agreement SDNY SettlementCigna Group to Pay $172 Million to Resolve False Claims Act AllegationsRead the Press Release
PHILADELPHIA– United States Attorney Jacqueline C. Romero announced that the Cigna Group (“Cigna”), a national insurer with corporate offices in Philadelphia, has agreed to pay $172,294,350 to resolve allegations that it violated the civil False Claims Act by submitting and failing to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees in order to increase its payments from Medicare. Of this amount, Cigna will pay $135,294,350 to resolve allegations arising from an investigation based out of the Eastern District of Pennsylvania.
“Given the growth of Medicare Advantage plans, investigating fraud involving Medicare Part C is more important than ever. My office has prioritized combatting Medicare Advantage fraud, including applying data-driven investigative methods and working extensively with our law enforcement partners across the country,” said U.S. Attorney Jacqueline C. Romero of the Eastern District of Pennsylvania. “We will hold accountable those who report unsupported diagnoses to inflate Medicare Advantage payment, such as unsupported diagnosis codes for morbid obesity.” Indeed, earlier this year, this office announced another Medicare Advantage settlement in a different case: https://www.justice.gov/usao-edpa/pr/primary-care-physicians-pay-15-million-resolve-false-claims-act-liability-submitting.
Under the Medicare Advantage (“MA”) Program, also known as Medicare Part C, Medicare beneficiaries have the option of obtaining their Medicare-covered benefits through private insurance plans called MA Plans. Over half of our nation’s Medicare beneficiaries are now enrolled in MA Plans, and the government pays private insurers over $450 billion each year to provide for their care. The Centers for Medicare and Medicaid Services (“CMS”) pays the MA Plans a fixed monthly amount for each beneficiary who enrolls. CMS adjusts these monthly payments to account for various “risk” factors that affect expected health expenditures for the beneficiary, to ensure that MA Plans are paid more for those beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. To make these adjustments, CMS collects “risk adjustment” data, including medical diagnosis codes, from the MA Plans.
Cigna owns and operates MA Organizations that offer MA Plans to beneficiaries across the country. The United States alleges that Cigna submitted inaccurate and untruthful patient diagnosis data to CMS in order to inflate the payments it received from CMS, failed to withdraw the inaccurate and untruthful diagnosis data and repay CMS, and falsely certified in writing to CMS that the data was accurate and truthful. The settlement announced today resolves these allegations.
The United States contends that, for payment years 2014 to 2019, Cigna operated a “chart review” program, pursuant to which it retrieved medical records (also known as “charts”) from healthcare providers documenting services they had previously rendered to Medicare beneficiaries enrolled in Cigna’s plans. Cigna retained diagnosis coders to review those charts to identify all medical conditions that the charts supported and to assign the beneficiaries diagnosis codes for those conditions. Cigna relied on the results of those chart reviews to submit additional diagnosis codes to CMS that the healthcare providers had not reported for the beneficiaries to obtain additional payments from CMS. However, Cigna’s chart reviews also did not substantiate some diagnosis codes that were reported by providers and previously submitted by Cigna to CMS. Cigna did not delete or withdraw these inaccurate and untruthful diagnosis codes, however, which would have required Cigna to reimburse CMS. Thus, the United States alleges that Cigna used the results of its chart reviews to identify instances where Cigna could seek additional payments from CMS, while improperly failing to use those same results when they provided information about instances where Cigna was overpaid.
The United States further contends that, for payment years 2016 to 2021, Cigna knowingly submitted and/or failed to delete or withdraw inaccurate and untruthful diagnosis codes for morbid obesity to increase the payments it received from CMS for numerous beneficiaries enrolled in its MA plans. The medical records for individuals diagnosed as morbidly obese typically include one or more Body Mass Index (“BMI”) recordings. Individuals with a BMI below 35 cannot properly be diagnosed as morbidly obese. However, Cigna submitted or failed to delete inaccurate and untruthful diagnosis codes for morbid obesity for individuals lacking a BMI of 35 or above, and these codes increased the payments made by CMS.
In connection with the settlement, Cigna entered into a five-year Corporate Integrity Agreement (“CIA”) with the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”). The CIA requires that Cigna implement numerous accountability and auditing provisions. On an annual basis, top executives and members of the Board of Directors must make certifications about Cigna’s compliance measures, Cigna must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits focused on risk adjustment data.
“Today’s settlement shows our attention to and commitment in investigating all potential allegations of fraud against the Medicare Part C Program, no matter the complexity of the scheme,” said Maureen R. Dixon, Special Agent in Charge for HHS-OIG, Region III. “We will continue to partner with the United States Attorney’s Office to evaluate allegations brought under the False Claims Act to ensure the integrity of federal healthcare programs.”
The matter was handled in the Eastern District of Pennsylvania by Assistant U.S. Attorneys Deborah W. Frey and Matthew E. K. Howatt, Civil Chief Gregory B. David, auditor George Niedzwicki, and litigative consultants Lauren M. Cordrey and Priscilla Brandon, along with Civil Fraud Section attorney Carol L. Wallack and Assistant Director, Edward C. Crooke. HHS-OIG supported the investigation.
The remaining $37 million of the aggregate settlement amount above resolves allegations related to unsupported diagnoses for MA beneficiaries arising from Cigna’s home visit program. That separate settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act. That case is captioned United States ex rel. Cutler v. Cigna Corp., et al., No. 3:21-cv-00748 (M.D. Tenn.), which case was transferred from the Southern District of New York.
The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at https://oig.hhs.gov/fraud/report-fraud/ or 800-HHS-TIPS (800-447-8477).
The claims resolved by the settlement are allegations only and there has been no determination of liability.
29 September 2023
미 법무부, 코리아타운 부동산 관리인 및 아파트 소유주를 상대로 한 성희롱 소송에서 합의 확보Read the Press Release
로스앤젤레스 – 미 법무부는 오늘 코리아타운의 한 아파트 건물에서 성희롱 혐의가 제기된 연방 소송을 해결하기 위한 합의문을 발표했습니다. 그 아파트 부동산 관리인은 수년에 걸쳐 여러 여성 주민을 성희롱하여 공정 주택법을 위반한 혐의로 기소되었습니다.
오늘 미국 지방 법원에 제출된 합의 명령에 따라, South Western Avenue의 아파트 건물 소유주인 M&F Development, LLC는 부동산 관리인 Abraham Kesary의 괴롭힘으로 피해를 입은 개인에게 보상금으로 미화 12만 달러를 지급하기로 합의했습니다. 보상금 지급 외에도 M&F Development는 미국에 미화 1만 달러의 민사 벌금을 납부하기로 합의했습니다. 합의 명령은 Kesary의 부동산 관리를 영구적으로 금지하며, 코리아타운 임대 부동산에 대해 법무부가 승인한 독립적인 부동산 관리자를 고용하도록 요구합니다. 또한 합의 명령은 향후 차별 및 보복을 금지하고, 공정 주택법 교육을 의무화하며, 부동산 관리 활동 및 합의 명령 조건 준수에 관한 광범위한 모니터링 및 보고를 요구합니다.
법무부의 전국적인 주택 내 성희롱 이니셔티브의 일환인 본 소송은 최소 2012년부터 2020년까지 Kesary가 아파트 단지의 여성 주민들에게 원치 않는 괴롭힘을 가했다고 주장했습니다. 고소장에 따르면 Kesary는 성행위를 대가로 주거 관련 혜택을 제안했고, 원치 않는 성적 발언과 접근을 했으며, 여성 주민들의 가정에 허락 없이 들어갔고, 해당 주민들에게 원치 않는 성적 행위를 가했다는 혐의가 제기되었습니다.
미국 변호사인 Martin Estrada는 "저희 사무실은 어떤 유형의 불법적인 차별도 용납하지 않을 것입니다. 이 사건에서 제기된 여성 주민들을 상대로 한 장기간의 성희롱은 충격적이고 용납할 수 없는 일입니다. 저희는 임대인과 부동산 관리자가 차별과 괴롭힘에 대해 책임을 지도록 계속 주의를 기울일 것이며, 공정 주택법은 저희가 피해자를 위한 정의를 추구할 수 있도록 강력한 도구를 제공합니다."라고 말했습니다.
법무부 민권국의 Kristen Clarke 법무부 차관보는 “임차인은 임대인의 성희롱으로부터 자유로운 자기 집에서 살 권리가 있으며, 법무부는 취약한 거주자를 괴롭히는 임대인을 상대로 공정 주택법을 계속 강력하게 집행할 것입니다.”라고 말했습니다.
성희롱 또는 기타 유형의 주거 차별을 당했다고 생각하는 개인은 주거 차별 팁 라인(1-833-591-0291)으로 문의하실 수 있습니다. 개인은 법무부에 이메일([email protected])을 보내거나 온라인으로 보고서를 제출할 수도 있습니다. 또한 1-800-669-9777번으로 미국 주택도시개발부에 연락하거나 온라인으로 불만 사항을 제기하여 신고할 수 있습니다.
캘리포니아 중부 지구의 7개 카운티에 거주하는 개인은 본 양식(영어)(스페인어)을 작성하여 [email protected]로 이메일을 보내 미국 연방 검찰청 민사부 민권국에 주거 차별 또는 기타 민권 침해에 대한 불만 사항을 제기할 수 있습니다.
미국 법무부 민권국 민권과 Margaret Chen 연방검사와 미국 법무부 민권국의 주택 및 민법 시행과 변호사들이 이 사안을 소송했습니다.
Youth & cops basketball tournament provides high-flying action and bonding moments between officers and teensRead the Press Release
MIAMI – Student athletes from area high schools and local law enforcement agencies recently gathered at Betty T. Ferguson Sports Complex in Miami Gardens for the Fifth Annual Fall Classic Youth & Cops Basketball Tournament.
This tournament gives youth, police officers and agents the opportunity to spend quality time with one another through competition on the court. Each team consisted of six teens and six adults. Many were area high school basketball standouts, which made for some high-energy aerial assaults on the rim.
“This is the first time I’ve had the pleasure of being involved with this tournament,” said Community Outreach Specialist Jorge Lorente, Law Enforcement Coordination and Community Outreach Section (LEC/COS) of the U.S. Attorney’s Office. “It was nice to see positive interaction between the youth and law enforcement.”
Participating agencies included the North Miami Police Department; Miramar Police Department; Miami-Dade Police Department—YOUTH; Miami Gardens Police Department; U.S. Customs & Border Protection; Miami-Dade Police Department—Intracoastal; U.S. Attorney’s Office for the Southern District of Florida; and Miami-Dade Police Department Community Affairs.
The championship game was a showdown between the Miami-Dade Police Department—Intracoastal and Miami Gardens Police Department. The Miami-Dade PD—Intracoastal took the crown by one point in a back-and-forth battle.
“I thought the games were exciting and fun to watch,” said Tournament Director and LEC/COS Chief J.D. Smith. “But the thing I enjoyed most was seeing the sportsmanship displayed by the players. There were a few times when things got pretty intense on the court but everyone was friendly again and shook hands after each game.”
This tournament—organized by the U.S. Attorney’s Office and held twice annually—is just one example of how LEC/COS staff members try to make a positive impact on the lives of area youth.
“We interact with youth of all ages in a multitude of ways, but what I like about the basketball tournament is that it shows law enforcement in a new light,” said Smith, a former police supervisor himself. “It humanizes them to the teenagers. They’re regular people with similar interests just like the teens. That’s what we want the teens to see. If we can improve relationships between youth and cops then it’s worth it.”
The Miami Beach Police Department provided refreshments and supplied the tournament referees while the Miami Gardens Parks & Recreation Department provided the venue.
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Wilber Man Sentenced to 13 Years for Possession of Child PornographyRead the Press Release
Acting United States Attorney Susan Lehr announced that Kenneth Brinton, 65, formerly of Wilber, Nebraska, was sentenced today in Lincoln, Nebraska, by Senior United States District Judge John M. Gerrard for one count of possession of child pornography. Brinton was sentenced to 156 months in prison and will serve 13 years on supervised release. There is no parole in the federal system.
The investigation of this case began when Saline County Sheriff’s Office (SCSO) was informed that Brinton was arrested by the Beatrice Police Department for sexual assault of a child, child enticement, and additional charges regarding a minor. SCSO officers applied for a search of Brinton’s residence to further that investigation. During the execution of the search warrant, numerous videos of child pornography were located on Brinton’s computer. Overall, there were 57 videos and 8 images that contained child pornography located on Brinton’s electronic storage devices. Some of the files depicted minor females in the bathroom of Brinton’s residence. Brinton appeared in many of the videos as he turned on and off the camera before the minor would enter to use the bathroom. During the investigation he admitted to recording and saving these videos.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and 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.justice.gov/psc.
This case was investigated by the Federal Bureau of Investigation and the Saline County Sheriff’s Office.
Wausau Man Sentenced to 7 Years for Possessing Methamphetamine for DistributionRead the Press Release
MADISON, WIS. – Timothy M. O’Shea, United States Attorney for the Western District of Wisconsin, announced that Trenton McCorkle, 27, Wausau, Wisconsin was sentenced today by Chief U.S. District Judge James D. Peterson to 7 years in federal prison for possessing 50 grams or more of methamphetamine with the intent to distribute. This prison term will be followed by a 5-year term of supervised release. McCorkle pleaded guilty to this charge on May 23, 2023.
On December 14, 2021, officers attempted to stop McCorkle for reckless driving after a trooper with the Wisconsin State Patrol observed him weaving and speeding through heavy traffic during poor winter weather conditions. McCorkle lost control of his car and crashed into a traffic pole, which fell over. McCorkle then unsuccessfully tried to flee from the crash site. Prior to the crash, a witness observed McCorkle’s passenger throw a black bag from the car. Officers located the bag, which contained approximately half a pound of methamphetamine, a .45 caliber handgun, three loaded magazines, and several rounds of ammunition. McCorkle later admitted to officers that he had been dealing a significant amount of methamphetamine in the Wausau area over the previous year.
McCorkle is prohibited from legally possessing a firearm as a result of several felony convictions, including a 2019 conviction for possession of methamphetamine. McCorkle was on state supervision for that conviction at the time of the conduct in this case. He also had been charged in three separate state court cases, including one related to methamphetamine distribution.
At sentencing, Judge Peterson noted that McCorkle’s conduct posed a real danger to the public. Judge Peterson also stated that McCorkle’s continued methamphetamine dealing not only impacted the people to whom he dealt, but also contributed to the continued criminality of those above him in the world of drug trafficking.
The charge against McCorkle was the result of an investigation conducted by the Central Wisconsin Narcotics Task Force, Wisconsin State Patrol, Rothschild Police Department, Marathon County Sheriff’s Office, Wisconsin Department of Justice Division of Criminal Investigation, and Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney Taylor L. Kraus handled the prosecution.
Waco Oil and Gas Reaches Agreement with U.S. and State of West Virginia to pay $825,000 Fine and Restore Creeks and WetlandsRead the Press Release
The Justice Department, working with the U.S. Environmental Protection Agency (EPA) and the State of West Virginia, reached a proposed consent decree yesterday with Waco Oil and Gas Co. Inc. to resolve alleged violations of the Clean Water Act and West Virginia state law for unauthorized discharges of dredged or fill material into waters of the United States in Braxton County, West Virginia.
Under a proposed consent decree filed in U.S. District Court for the Northern District of West Virginia, Waco Oil and Gas agreed to pay a $825,000 penalty, restore the vast majority of the impacted waters and provide compensatory mitigation for waters that cannot be restored. Additionally, the company will place a deed restriction on its property to protect the restored waters in perpetuity.
A filed complaint alleged that beginning in approximately 2017, Waco Oil and Gas discharged dredged or fill material into tributaries of Bear Run and adjacent wetlands as well as tributaries of Cunningham Fork without the required federal or state permits.
“Clean water is vital for our communities and the environment,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division (ENRD). “Today’s action demonstrates that the Justice Department, together with its state and federal partners, is fully committed to upholding the Clean Water Act and protecting this critical resource.”
“EPA remains committed to vigorous enforcement of wetlands protections,” said Assistant Administrator David M. Uhlmann of EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlement makes clear that companies will not be allowed to profit from illegally filling wetlands and imperiling the health of the Nation’s rivers and streams.”
“EPA is serious about enforcing regulations to protect the shared resources upon which we all rely." said Mid-Atlantic Regional Administrator Adam Ortiz for EPA. "Outcomes like this remind land developers across West Virginia that the health of their business and the health of the environment are totally connected."
ENRD’s Environmental Defense Section and the U.S. Attorney’s Office for the Northern District of West Virginia are handling the case.
The consent decree is available for public viewing at www.justice.gov/enrd/consent-decrees. The United States will publish a notice of the consent decree’s lodging with the U.S. District Court for the Northern District of West Virginia in the Federal Register and will accept public comment for 30 days after the notice is published. The Federal Register notice will also include instructions for submitting public comment.
Veterans Affairs Police Officer Indicted on Federal Civil Rights and Assault Charges for Beating Man Approximately 45 Times with BatonRead the Press Release
LOS ANGELES – An officer with the Veterans Affairs Police Department (VAPD) has been indicted on civil rights and assault charges that allege he used a department-issued baton to illegally strike a man approximately 45 times in 41 seconds at the West Los Angeles VA Medical Center, the Justice Department announced today.
Juan Anthony Carrillo, 45, was named in a two-count indictment returned Thursday by a federal grand jury. Carrillo will receive a summons directing him to appear in the coming weeks for an arraignment in United States District Court in downtown Los Angeles.
At approximately 4:00 a.m. on January 16, 2022, the 34-year-old victim identified in the indictment as “R.V.” was detained by another VAPD officer on the grounds of the Medical Center. Carrillo arrived to assist the other officer and proceeded to strike R.V. with a VAPD-issued baton up to 45 times in approximately 41 seconds, according to the indictment that notes most, if not all, of the baton strikes were delivered while the other officer was on top of the victim.
The indictment notes that Carrillo was about 60 pounds heavier than R.V and the second officer was about 8 inches taller and about 85 pounds heavier than the victim.
As a result of the alleged beating, the victim sustained injuries that included bleeding and lacerations on both legs.
“Our Constitution protects all of us from excessive force inflicted by law enforcement officers, and when that standard is violated the Justice Department will take action to vindicate the rights enjoyed by all Americans,” said United States Attorney Martin Estrada. “We deeply appreciate the difficult jobs faced every day by law enforcement officers, the vast majority of whom act with professionalism and integrity. But when an officer acts in a manner that violates the civil rights of another person, we will respond to uphold the rule of law and maintain public trust in our system of justice.”
“The excessive use of force alleged in the indictment is disturbing and not representative of the high standards and restraint practiced by the overwhelming majority of police officers,” said Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI is committed to protecting individual civil rights in the United States and will continue to work with our law enforcement partners, including the Veterans Affairs Police Department, to identify and investigate alleged civil rights abuses.”
“The VA Office of Inspector General is committed to ensuring that all VA law enforcement officials discharge their police powers appropriately,” said Special Agent in Charge Rebeccalynn Staples of the U.S. Department of Veterans Affairs, Office of Inspector General, Western Field Office. “We will continue to work with our law enforcement partners to hold accountable any VA police officers who violate the constitutional rights of another through excessive force.”
In addition to the use of excessive force, the indictment alleges that Carrillo, on the day after the incident, prepared a misleading VAPD incident report to justify his use of force. “Carrillo’s report misleadingly and falsely claimed that victim R.V. was violently kicking his legs and refusing to show his hands, while also omitting the number of strikes defendant Carrillo used,” according to the indictment.
Carrillo is charged with deprivation of rights under color of law resulting in bodily injury and assault with a dangerous weapon with the intent to do bodily harm. Both offenses as alleged carry statutory maximum penalties of 10 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI, the VA’s Office of Inspector General, and the VA’s Office of Security and Law Enforcement are conducting the investigation in this matter.
Assistant United States Attorney Susan Har of the Public Corruption and Civil Rights Section is prosecuting this case.
U.S. Settles Lawsuit Alleging That Investment Firm Fraudulently Obtained Payments from the Madoff Victim FundRead the Press Release
Damian Williams, the United States Attorney for the Southern District of New York, and Richard C. Breeden, Special Master of the Madoff Victim Fund (“MVF”), announced today that the United States has filed and settled a civil fraud lawsuit against FULCRUM CAPITAL PARTNERS LLC (“FULCRUM”), an investment firm based in Austin, Texas, alleging that FULCRUM fraudulently obtained payments from the MVF, an entity created by the Department of Justice (“DOJ”) to distribute funds collected by the United States through civil and criminal asset forfeiture to victims of the fraud perpetrated by Bernard L. Madoff. Specifically, the United States alleges that FULCRUM, in violation of the False Claims Act, purchased recovery rights from various Madoff fraud victims who had submitted claims to the MVF and required the Madoff fraud victims to conceal these transactions from the MVF. As a result, FULCRUM caused the MVF to make inflated payouts to the victims, which they paid over to FULCRUM. Under the settlement, submitted today to U.S. District Judge Valerie E. Caproni for review and approval, FULCRUM will pay $2,511,084 to the United States. FULCRUM also made extensive factual admissions regarding its conduct, including that it caused inaccurate statements to be submitted to the MVF and received amounts from the MVF to which FULCRUM was not entitled.
U.S. Attorney Damian Williams said: “The Madoff Victim Fund was created to compensate victims who suffered unreimbursed losses from the massive fraud perpetrated by Bernard Madoff. The MVF’s ability to make fair and accurate distributions to Madoff victims depends on claimants’ compliance with MVF reporting requirements, including truthful disclosure of all Madoff-related recoveries received from any other source. Fulcrum obtained a fraudulent windfall from the MVF by purchasing recovery rights from Madoff fraud victims, then compelling them to conceal the sales proceeds from the MVF and transfer the resulting inflated MVF payments to Fulcrum. This Office will not tolerate lying to the MVF and will continue to pursue and hold accountable those who would use deceptive practices to obtain MVF funds.”
MVF Special Master Richard C. Breeden said: “The defendant Fulcrum is a claim buying financial firm that never lost a penny from Madoff’s conduct. After secretively buying claims from real victims, Fulcrum caused others to conceal information from the Madoff Victim Fund with the objective of gaining greater payments for itself. The inevitable consequence of orchestrating false reports to MVF was diminishing the help that we could be provided to real fraud victims. We applaud the SDNY U.S. Attorney’s Office for recovering $2.5 million that the defendants should never have received. Of equal importance is the message that lying to MVF and concealing recoveries is an illegal act that will be prosecuted vigorously.”
From as early as the 1970s through December 2008, Bernard L. Madoff perpetrated the largest Ponzi scheme in history, defrauding thousands of victims of billions of dollars through Bernard L. Madoff Investment Securities LLC (“Madoff Securities”) (the “Madoff Fraud”). The U.S. Attorney’s Office for the Southern District of New York has recovered over $9 billion related to the Madoff Fraud through civil and criminal asset forfeitures. In 2013, the DOJ created the MVF to distribute to victims of the Madoff Fraud certain of the forfeited funds through a process called remission.
As alleged in the Complaint filed in Manhattan federal court:
From at least October 2016 through October 2022, FULCRUM violated the False Claims Act by causing the submission of false claims and statements to the MVF that failed to disclose payments certain MVF claimants had received from FULCRUM. As a result of this scheme, FULCRUM fraudulently received payments from the MVF to which it was not entitled.
FULCRUM is an investment firm that specializes in trading distressed assets, including Madoff Securities feeder fund shares and attendant rights. One Madoff Securities feeder fund whose underlying investors suffered losses from the Madoff Fraud was the Luxembourg-based Luxalpha SICAV Fund (“Luxalpha”). From 2014 to 2019, FULCRUM purchased Luxalpha shares and attendant Madoff-related recovery rights from three investor groups: (i) Carac, a public pension fund based in France; (ii) a group of investors in Fondaco Absolute Return, a fund based in Italy (the “Fondaco Investors”); and (iii) a group of related individual investors based in France (the “Planckes”).
Carac, the Fondaco Investors, and the Planckes (the “Claimants”) had previously filed claims with the MVF seeking remission payments for losses they claimed to have incurred as a result of their investments in Madoff Securities through Luxalpha. FULCRUM entered into a series of Purchase and Sale Agreements (“PSAs”) with Carac, one of the Fondaco Investors (a foundation called Compagnia di San Paolo (“CSP”)), and the Planckes, pursuant to which FULCRUM bought their rights to receive remission payments from the MVF. In particular, under the PSAs, Carac, CSP, and the Planckes each agreed to deliver all payments received from the MVF to FULCRUM; permit FULCRUM to act in each of their names, places, and steads with respect to the MVF; and take all actions requested by FULCRUM regarding the MVF.
FULCRUM was aware that the MVF requires all claimants to disclose collateral recoveries received from any other source, including proceeds from the sale of MVF recovery rights. The MVF issued multiple Collateral Recovery Update (“CRU”) Notices to each of the Claimants, requiring them to report all collateral recoveries. FULCRUM instructed Carac, CSP, and the Planckes to fraudulently conceal in their CRU responses the payments they had received from FULCRUM for the sale of their Luxalpha shares and rights to remission payments from the MVF. The MVF was required to reduce the Claimants’ remission payments by the amount of their collateral recoveries to prevent the Claimants from receiving duplicative recoveries. As a result of FULCRUM’s fraudulent scheme, the MVF made inflated remission payments to the Claimants. Carac, CSP, and the Planckes then transferred these amounts to FULCRUM.
As part of the settlement, FULCRUM made extensive admissions of conduct alleged in the United States’ Complaint, including the following:
- FULCRUM knew that the MVF remission process was governed by remission regulations and the MVF’s Plan of Distribution, pursuant to which DOJ requires that remission payments be reduced by the victims’ collateral recoveries, including any payments victims received, directly or indirectly, from any source for the victims’ Madoff losses. Furthermore, FULCRUM knew that the MVF issued multiple CRU Notices to each of the Claimants requiring them to disclose any recoveries they received from any source other than the MVF, including proceeds received from the sale or assignment of Madoff feeder fund shares and rights and from the purported sale or assignment of MVF remission claims.
- Despite the stated requirement that victims disclose all collateral recoveries they received, FULCRUM instructed or otherwise caused the Claimants to submit inaccurate CRU responses to the MVF that failed fully to disclose the amounts the Claimants had received from selling their Luxalpha shares and related rights and remission claims to FULCRUM.
- Under their PSAs with FULCRUM, Carac, CSP, and the Planckes agreed that they would retain no beneficial interest in any distributions they received from the MVF, that they would hold any such distributions as agents of FULCRUM, and that they would deliver any such distributions to FULCRUM within five days of receipt. Carac, CSP, and the Planckes further agreed to grant FULCRUM irrevocable power of attorney with respect to the remission claims, to deliver all correspondence they received from the MVF to FULCRUM, and take all actions requested by FULCRUM to effectuate the terms of the PSAs.
- In September 2017 and May 2019, respectively, pursuant to the PSA and at FULCRUM’s behest, Carac submitted two CRU responses to the MVF that inaccurately represented that Carac had received no collateral recoveries, when, in fact, it had received significant sales proceeds from FULCRUM.
- From February 2017 through July 2019, pursuant to the PSA and at FULCRUM’s behest, CSP submitted four CRU responses to the MVF that inaccurately failed to disclose the full amount that CSP had received from FULCRUM for its Luxalpha shares and related rights. CSP stated that it had sold its remission claim to an unidentified secondary market player for a specified amount, but this amount reflected only the amount CSP received from FULCRUM for the purported sale of its remission rights rather than the total proceeds CSP had received from FULCRUM for the sale of its Luxalpha shares and related rights. During the same time period, the other Fondaco Investors likewise submitted 28 documents to the MVF that inaccurately represented that these investors had received no collateral recoveries, when, in fact, they had received significant sales proceeds from FULCRUM.
- From August 2019 through October 2020, pursuant to the PSA, and at FULCRUM’s behest, the Planckes submitted 20 CRU responses to the MVF that inaccurately represented that the Planckes had received no collateral recoveries other than those they received from a financial intermediary in connection with a litigation settlement, when in fact they had received significant additional proceeds from FULCRUM for the sale of their Luxalpha shares and related rights.
- As a result of FULCRUM instructing or otherwise causing the Claimants to submit inaccurate collateral recovery information as described above, the MVF distributed remission payments to the Claimants that they were not entitled to receive. Pursuant to the PSA, Carac, CSP, and the Planckes then transferred the amounts they had improperly received from the MVF to FULCRUM.
FULCRUM will pay $2,511,084 to the United States under the settlement. In addition, FULCRUM agreed that it and the Claimants are not entitled to receive any amounts from the MVF in the future, and that FULCRUM shall not seek to obtain, on behalf of itself or the Claimants, any further amounts from the MVF. In connection with the filing of the lawsuit and the settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.
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Mr. Williams thanked the Federal Bureau of Investigation and the MVF for their assistance with the case.
This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Pierre G. Armand is in charge of the case.
U.S. Attorney’s Office for District of New Jersey and Department of Justice’s Civil Rights Division Secure Compensation for Servicemembers Charged Illegal Lease Termination Fees at New Jersey Apartment ComplexRead the Press Release
NEWARK, N.J. – The U.S. Attorney’s Office for the District of New Jersey and the Department of Justice’s Civil Rights Division announced today that a company that manages large apartment properties in several states has agreed to pay $61,581 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA).
The complaint alleges that JAG Management Company LLC (JAG) imposed unlawful charges on at least nine servicemembers who had exercised their right under the SCRA to terminate their leases after receiving qualifying military orders. The servicemembers were residents of the Jefferson Mount Laurel apartment complex in Mount Laurel, New Jersey. The termination fees ran as high as $2,750 per servicemember.
U.S. Attorney Philip R. Sellinger“Our office is committed to protecting the rights of servicemembers who make tremendous sacrifices on behalf of our nation. Landlords and property managers may not unlawfully penalize members of our armed forces who are simply carrying out their duty. Through this consent order, we protect the rights of servicemembers and provide compensation to those who suffered harm when they were allegedly unlawfully charged early lease termination fees upon receiving military orders.”
“Servicemembers should not have to pay any fees – much less exorbitant fees – to landlords when they are simply complying with their military orders and protecting our country,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This resolution reaffirms the Justice Department’s unwavering commitment to protecting the rights of servicemembers, veterans and their families.”
The complaint filed today in the U.S. District Court for the District of New Jersey alleges that Coast Guard Lieutenant Daniel Pereira sought to terminate his lease with JAG Management after he received permanent change of station orders transferring him from Philadelphia to New London, Connecticut. Lt. Pereira provided JAG with timely written notice of his lease termination and a copy of his transfer orders before vacating his apartment. However, two months after moving, Lt. Pereira was notified – for the first time – that JAG was demanding that he repay a $2,100 rent concession he received when he signed his lease. Despite Lt. Pereira’s efforts to resolve the matter, including providing JAG with the relevant provisions of the SCRA and prior Justice Department cases on this issue, JAG reported the debt to credit reporting agencies, and Lt. Pereira’s credit score was downgraded. The complaint also alleges that JAG charged illegal fees to at least eight other servicemembers, representing the United States Air Force, Army, Coast Guard and Air National Guard, who had exercised their right to terminate their residential leases upon receipt of qualifying military orders.
Under the terms of the proposed consent order, which was filed with the complaint and is subject to court approval, JAG Management must pay a total of $41,581 in damages to the nine servicemembers. JAG must also pay a civil penalty of $20,000 to the federal government. In addition, JAG must implement policies to ensure it complies with the SCRA, trains employees on the protections afforded by the SCRA and reports future SCRA-related complaints to the federal government.
The U.S. Attorney’s Office for the District of New Jersey and the Civil Rights Division’s Housing and Civil Enforcement Section investigated JAG Management’s leasing practices after receiving a referral from the Justice Department’s Servicemembers and Veterans Initiative.
The purpose of the SCRA is to allow servicemembers to devote their entire energy to the national defense. The SCRA provides protections to servicemembers in areas such as evictions, security deposits, pre-paid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. The SCRA also allows servicemembers to terminate their residential leases after entering military service or receiving military orders for a permanent change of station, deployment or retirement without paying a penalty or an early termination charge.
Since 2011, the department has obtained over $481 million in monetary relief for over 146,000 servicemembers through its enforcement of the SCRA. For more information about the department’s SCRA enforcement efforts, please visit www.servicemembers.gov. Servicemembers and their dependents who believe their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at legalassistance.law.af.mil.
Individuals who believe their civil rights have been violated in the District of New Jersey may also file a complaint with the U.S. Attorney’s Office for the District of New Jersey at: www.justice.gov/usao-nj/civil-rights-enforcement/complaint or may call the U.S. Attorney’s Office’s Civil Rights Complaint Hotline at (855) 281-3339.
The government is represented by Assistant U.S. Attorney Thandiwe Boylan, Civil Rights Division.
ecf_no._2-1_consent_order.pdf
ecf_no._1_complaint.pdfU.S. Attorney’s Office Targets Straw Purchasers of Firearms, Including Man Who Illegally Purchased the Handgun Used to Kill 6-Year-Old Chicago GirlRead the Press Release
INDIANAPOLIS- Eric Lamar Keys, Jr., 25, of Indianapolis, Indiana, has been sentenced for making a false statement during the purchase of a firearm. He is the latest of several defendants to be federally prosecuted for gun trafficking offenses as the U.S. Attorney’s Office partners with the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Indianapolis Metropolitan Police Department, and other federal, state, and local law enforcement partners, to target illegal sources of guns used in crime.
According to court documents, on April 18, 2021, Chicago Police Department Officers were dispatched to a report of shots fired in the parking lot of a McDonald’s restaurant. When they arrived, they found one man shot in the stomach and a 6-year-old girl who had been shot and killed. The suspect in the shooting was ultimately arrested by law enforcement officers and found to be in possession of multiple guns. A ballistics analysis later confirmed that one of the guns, a Glock .40 caliber pistol, was used to murder the 6-year-old girl. That gun was purchased by Eric Lamar Keys in Indiana 48 days before it was used to shoot and kill the little girl.
Investigation by the ATF found that on February 21, 2021, Keys purchased a Taurus 9mm pistol from a federally licensed firearms dealer in Indianapolis, Indiana. Keys intentionally made a false statement by declaring on a required federal firearms purchase form that he was the actual buyer of the firearm, when in fact, he intended to purchase it for an individual prohibited by law from possessing a firearm in return for $750.
This form of gun trafficking is frequently referred to as “straw purchasing.” Straw purchasing occurs when a person who is allowed to legally purchase a gun from a federally licensed dealer falsely states that they are purchasing a firearm for themselves, when they know that the gun is actually intended for someone else—frequently someone who is legally prohibited from making the purchase themselves.
This sentencing comes on the tail-end of a series of similar straw purchasing cases prosecuted by the U.S. Attorney’s Office for the Southern District of Indiana within the last year:
Defendant
Charge(s)
Sentence
Abdul Hadi, 34, Toronto, Canada
Carrying a Firearm During and in Relation to a Drug Trafficking Crime
6.5 years’ imprisonment, 2 years supervised release, $500 fine.
Amru Hasani, 34, Indianapolis
Aiding and Abetting the Making of a False Statement during the Purchase of a Firearm
2.5 years’ imprisonment, 2 years supervised release, $500 fine.
Stephen King, 67, Indianapolis
Dealing Firearms without a License
18 months’ imprisonment, 2 years supervised release.
Ryan White, 21, Indianapolis
Dealing Firearms without a License
18 months’ imprisonment, 2 years supervised release.
Xavier Wilson, 24, Otterbein, IN
Making a False Statement During Purchase of a Firearm
18 months’ imprisonment, 3 years supervised release.
Tashia Overton, 23, Indianapolis
Making a False Statement During Purchase of a Firearm
15 months imprisonment, 2 years supervised release, $250 fine.
Traven Armstrong, 26, Indianapolis
Making a False Statement During Purchase of a Firearm
1 year and 1 day imprisonment, 3 years supervised release, $500 fine.
DeAngelo Carnell, 25, Indianapolis
6 counts of Making a False Statement in Connection with the Acquisition of a Firearm and 1 count of Dealing in Firearms without a Federal License
1 year and 1 day imprisonment, 3 years supervised release, $500 fine.
Ariel Campbell, 28, Bloomington
Making a False Statement During Purchase of a Firearm
10 months’ imprisonment, 3 years supervised release, $250 fine.
Kwamay Armstrong, 31, Indianapolis
Making a False Statement During Purchase of a Firearm
3 months’ imprisonment, 2 years supervised release, $250 fine
Jayte Davis, 24, Indianapolis
Making a False Statement During Purchase of a Firearm
3 months’ imprisonment, 2 years supervised release, $1000 fine.
Jordan Henry, 24, Indianapolis
Making a False Statement During Purchase of a Firearm
3 months’ imprisonment, 3 months supervised release
Sierra
Vasquez, 27, Indianapolis
Making a False Statement During Purchase of a Firearm
11 months served, 3 years supervised release, $500 fine.
Victor Anderson, 26, Indianapolis
Making a False Statement During Purchase of a Firearm
5 days served; 2 years supervised release, $1000 fine.
Stephany Irby, 28. Indianapolis
Making a False Statement During Purchase of a Firearm
4 days served; 2 years supervised release
Erniesha Collins, 23, Indianapolis
Making a False Statement During Purchase of a Firearm
3 days served, 3 years supervised release, $250 fine.
Latasha Davis, 30, Anderson
Making a False Statement During Purchase of a Firearm
3 days served, 3 years supervised release, $100 fine
Charles
Hunter, 24, Indianapolis
Making a False Statement During Purchase of a Firearm;
Making a False Statement with Respect to Information Required to Be Kept by Licensed Firearms Dealers
2 days served; 3 years supervised release.
Destiny Langston, 23, Indianapolis
Making a False Statement During Purchase of a Firearm
3 years’ probation, $500 fine.
Eric Lamar Keys Jr., 25, Indianapolis
Making a False Statement During Purchase of a Firearm
2 years’ probation, $800 fine
Ryanne Godfrey, 40, Indianapolis
Unlawful Possession of a Firearm by Person Under Felony Indictment; Making a False Statement During Purchase of a Firearm
2 years’ probation, $250 fine
Edward Wilson, 24, Indianapolis
Making a False Statement During Purchase of a Firearm
2 years’ probation, $250 fine.
Jacob Tomlin, 28, Indianapolis
Making a False Statement During Purchase of a Firearm
2 years’ probation.
The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated these cases, with valuable assistance provided by the Indianapolis Metropolitan Police Department, The Cook County Sheriff’s Department, and the Chicago Police Department
“The tragic loss of a little girl’s life is an unfortunate example of how those who straw purchase firearms can be directly responsible for gun violence plaguing our communities,” said U.S. Attorney for the Southern District of Indiana, Zachary A. Myers. “Gun traffickers help arm criminals who should never have had access to deadly weapons in the first place. Our office is committed to working closely with the ATF and local law enforcement agencies to address the sources of crime gun to reduce gun violence—and to hold gun traffickers accountable in federal court.”
“Purchasing firearms for prohibited people is a major source of crime guns around the country and here in Indiana,” stated Daryl S. McCormick, Special Agent in Charge of ATF’s Columbus Field Division. “In all of these cases investigated by the ATF Chicago Trafficking Strike Force, firearms were purchased by straw buyers and ended up in the wrong hands. The hard work of Strike Force with support of the Columbus Field Division and our law enforcement partners represents ATF’s commitment to stop the flow of firearms from legal purchases to illegal commerce.”
U.S. District Court Judge Jane Magnus-Stinson imposed the sentence on Keys. Judge Stinson also ordered that Keys be supervised by the U.S. Probation Office for 2 years following his release from federal prison and pay an $800 fine.
U.S. Attorney Myers thanked Assistant United States Attorneys Lawrence D. Hilton, Kelsey L. Massa, Jayson W. McGrath, Patrick J. Gibson, Peter A. Blackett, and Abhi Kambli, who prosecuted these cases.
The U.S. Attorney’s Office for the Southern District of Indiana is pursuing these prosecutions as a part of the U.S. Department of Justice’s Chicago Gun Trafficking Strike Force. On July 22, 2021, the Department of Justice launched five cross-jurisdictional strike forces to help reduce gun violence by disrupting illegal firearms trafficking in key regions across the country. These gun trafficking strike forces are designed to ensure coordination across jurisdictions and help stem the supply of illegally trafficked firearms from source cities, through other communities, and into five key market regions: New York, Chicago, Los Angeles, the San Francisco Bay Area/Sacramento Region and Washington, D.C.
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U.S. Attorney’s Office Partners with City of Detroit to Gather for a Community Huddle and Peace March as Part of the One Detroit PartnershipRead the Press Release
DETROIT – As part of the One Detroit Violence Reduction Partnership, United States Attorney Dawn N. Ison and One Detroit partners, local community organizations, and state and federal law enforcement agencies will gather for a Community Huddle and Peace March on Saturday, September 30, 2023, at 3pm starting at Mike’s Fresh Market located at 14383 Gratiot Avenue, Detroit, Michigan.
The peace march is part of the One Detroit Violence Reduction Partnership, a targeted strategy aimed at reducing gun violence in Detroit’s neighborhoods with the highest incidence of violent crime – Detroit’s 8th and 9th Precincts. The strategy has three components—enforcement, prevention, and reentry. One Detroit is a coalition of community and law enforcement partners working together to develop and execute the best strategies to reduce violent crime.
During the peace march, One Detroit partners will report on the results of the summer enforcement strategy while in the community and walk with residents in the name of peace. Other activities include yoga and mindfulness sessions and other community bonding experiences.
Residents in the 9th Precinct, as well as residents citywide, are welcome and encouraged to attend the march.
Media is welcome to attend the event and should contact Gina Balaya at [email protected] or contact her directly at (313)226-9758.U.S. Attorney’s Office Concludes Investigation into Fatal Officer-Involved Shooting in Southeast D.C.Read the Press Release
WASHINGTON - The U.S. Attorney’s Office for the District of Columbia announced today that there is insufficient evidence to pursue federal criminal civil rights or District of Columbia charges against two Deputy U.S. Marshals involved in the fatal shooting, in February 2023, of Alaunte Scott outside of an apartment building in Southeast Washington.
The U.S. Attorney’s Office and the Metropolitan Police Department (MPD) conducted a comprehensive review of the incident. This included a review of witness accounts, physical evidence, surveillance video, and reports from the Metropolitan Police Department.
According to the evidence, on February 28, 2023, a team of Deputy U.S. Marshals (DUSM) from that agency’s Enforcement Branch attempted to execute an arrest warrant on Scott outside of the Atlantic Gardens apartment complex in the 4300 block of 3rd Street SE. After being approached by several deputies, Scott fled into a courtyard and attempted to scale a fence that ran across the courtyard. As Scott stood on a horizontal rail, the deputies tried to pull him off the fence to arrest him. Scott was reaching into his waistband, and the deputies directed him to stop reaching. However, Scott pulled out a gun. Two deputies, DUSM Agents, then fired their service weapons at Scott. After the shooting, deputies provided medical aid to Scott until DCFEMS arrived to transport him to Washington Hospital Center (WHC). He was pronounced deceased by a WHC doctor during the transport.
After a careful, thorough, and independent review of the evidence, federal prosecutors have found insufficient evidence to prove beyond a reasonable doubt that DUSM Agents used excessive force under the circumstances.
Use-of-force investigations generally
The U.S. Attorney’s Office reviews all police-involved fatalities to determine whether sufficient evidence exists to conclude that any officers violated either federal criminal civil rights laws or District of Columbia law. To prove civil rights violations, prosecutors must typically be able to prove that the involved officers willfully used more force than was reasonably necessary. Proving “willfulness” is a heavy burden. Prosecutors must not only prove that the force used was excessive, but must also prove, beyond a reasonable doubt, that the officer acted with the deliberate and specific intent to do something the law forbids. Similarly, for District of Columbia offenses such as second degree murder or voluntary manslaughter, mitigating circumstance can exist, establishing a defense where a person actually believes and reasonably believes both that he is or others are in danger of serious bodily injury, and that the use of force is necessary to defend against that danger.
The U.S. Attorney’s Office remains committed to investigating allegations of excessive force by law enforcement officers and will continue to devote the resources necessary to ensure that all allegations of serious civil rights violations are investigated fully and completely. The Metropolitan Police Department’s Internal Affairs Division investigates all police-involved fatalities in the District of Columbia.