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30 September 2020
Three Sentenced for Thefts Related to Cyber Intrusion at Sumter County School DistrictRead the Press Release
Ocala, Florida – Senior United States District Judge John Antoon II has sentenced Josten Rakeem-Hassan Brown (28, Greenville, SC) to 20 months in federal prison for using an unauthorized access device (credit card). Two other defendants have also been sentenced in connection with the offense. Kenbee Omari Hughey (41, Detroit, MI) was sentenced in the Middle District of Florida to 15 months’ imprisonment by United States District Judge Roy B. Dalton, Jr. Dejon Romans Brown (22, Puyallup, WA) was sentenced in the Western District of Washington by United States District Judge Robert S. Lasnik.
According to court records, all three defendants agreed to purchase electronics using fraudulent credit cards issued to them under false names on behalf of the Sumter County School District in Bushnell, Florida. A Russian citizen used a malicious software program to gain access to the district’s computer network while the students and staff were gone for the winter break in 2018. After gaining access, the intruder had credit cards issued using the district’s bank account information and sent the cards to the defendants in California, Michigan, and South Carolina. The defendants then used the credit cards to purchase tens of thousands of dollars in electronic equipment, including cellphones and tablet computers. Following the fraudulent purchases, the defendants sent the electronics to another accomplice, who then resold the items in the United States and internationally.
As a result of these actions, the Sumter County School District suffered a budget shortfall of approximately $206,000 this year. Each of the defendants were ordered to pay restitution totaling $206,094.40. Josten Brown was ordered to pay $59,153.89, Hughey was ordered to pay $88,433.97, and Dejon Brown was ordered to pay $58,506.54.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorney Michael P. Felicetta.
Three Men Plead Guilty to Healthcare Kickback ConspiraciesRead the Press Release
ALEXANDRIA, Va. – An attorney, pharmacist, and sales representative have each pleaded guilty to conspiracy to pay or receive health care kickbacks.
“Health care fraud harms us all and steals valuable resources from those who are in need,” said G. Zachary Terwilliger, U.S. Attorney for the Eastern District of Virginia. “Our office and our law enforcement partners will continue to devote its resources and time to uncovering and detecting health care fraud and those individuals who put their greed above the interests of the public good.”
According to court documents, Daniel Tyler Walker, 50, of Lewes, Delaware, Michael Beatty, 53, of Pasadena, Maryland, and Seth Myers, 52, of Crystal Lake, Illinois, pleaded guilty to engaging in a conspiracy where each defendant either paid or received money in an effort to induce or reward the referral of health care services payable by federal health care programs, including TRICARE, a health care program for uniformed service members, retirees, and their families, Medicare, and Medicaid. In total, the related conspiracies involved millions of dollars of health care kickback payments.
“These pleas demonstrate what happens when medical professionals and those around them betray the public’s trust in the medical system to satisfy their own greed,” said Robert E. Bornstein, Acting Special Agent in Charge of FBI Washington Field Office Criminal Division. “The abuse of the healthcare system can divert federal funds from where they are truly needed, which can put our most vulnerable citizens at risk. The FBI and its local, state and federal partners, are fully committed to identifying individuals who chose to prioritize their own interests in place of appropriate medical care for patients, and we will continue to work with our partners to bring them justice.”
According to court documents, Walker was a medical sales specialist for a pharmaceutical company headquartered in the Eastern District of Virginia. In connection with this role, Walker conspired with the owner of Royal Care Pharmacy to engage in a kickback scheme in which Walker received payments from Royal Care Pharmacy and its affiliate entities in exchange for referring and directing health care providers to have prescriptions for a drug manufactured by Walker's employer filled at Royal Care. Payments for those prescriptions were made in whole or in part under various federal health care programs, including TRICARE, Medicare, Virginia Medicaid, and Maryland Medicaid. Walker and his co-conspirators agreed that he would receive 25 percent of all net sales of the drug filled by Royal Care. During the conspiracy, Royal Care profited more than $1.2 million from the scheme, and in turn, Walker received at least $573,000 in kickbacks for his role in the fraud. As part of his plea agreement, Walker has agreed to forfeit $671,790 to the United States, which represents the proceeds that he received during the course of the conspiracy.
Walker pleaded guilty on Tuesday to conspiracy to solicit and receive health care kickbacks. He faces a maximum penalty of five years in prison when sentenced on Jan. 29, 2021.
“The Defense Criminal Investigative Service is committed to protecting the integrity of the U.S. military health care program to provide top quality medical care to America's Warfighters and their families, while ensuring that health care providers and facilities comply with Federal laws,” said Robert E. Craig Jr., Special Agent in Charge of the DCIS Mid-Atlantic Field Office. “Through joint investigations with our law enforcement partners, DCIS aggressively pursues criminal prosecutions and all available remedies to bring violators to justice. These guilty pleas demonstrate the effectiveness of our investigative efforts.”
According to court documents, Beatty was a pharmacist who practiced in Fallston, Maryland. Beatty, Seth Myers, and a physician who practiced in both Virginia and Maryland entered into a kickback arrangement in which Beatty agreed to pay a company controlled by the physician kickbacks in exchange for the physician referring prescriptions for very expensive compound drugs to Beatty and his pharmacy. Payments for these compound prescriptions were made in part by TRICARE. During the course of the conspiracy, TRICARE paid the co-conspirators a total of approximately $344,280. The pharmacy where Beatty worked made a net profit of approximately $295,782 from payments made by TRICARE for the compound prescriptions that were part of the kickback scheme. In turn, Beatty paid the physician controlled company approximately $147,891 in kickbacks.
“Compounded drugs can serve an important role for patients whose medical needs cannot be met by an FDA-approved drug product. Patients should always receive the medications they need to treat their condition, not medicines that bring financial benefits to the health care provider or pharmacist,” said Mark S. McCormack, Special Agent in Charge of FDA Office of Criminal Investigations Metro Washington Field Office. “We will continue to investigate and bring to justice those who put profits above a patient’s health.”
Beatty also pleaded guilty on Tuesday to conspiracy to offer and pay health care kickbacks. He faces a maximum penalty of five years in prison when sentenced on Jan. 15, 2021.
According to court documents, Myers was a licensed attorney who worked with a physician that practiced in Virginia and Maryland. Myers conspired with the physician to solicit kickback payments from the owner of multiple northern Virginia-based pharmacies, including Royal Care Pharmacy, and Michael Beatty, a pharmacist, in exchange for the physician referring prescriptions for very expensive compound drugs to the pharmacies. Payments for these compound prescriptions were made in part by TRICARE. During the course of the conspiracy, TRICARE paid the pharmacies approximately $4.8 million. In turn, the pharmacies paid Myers and his physician co-conspirator approximately $2.6 million in kickback payments. As part of his plea agreement, Myers has agreed to forfeit $428,124 to the United States, which represents the proceeds that he received during the conspiracy.
Myers pleaded guilty today to conspiracy to solicit and receive health care kickbacks. He faces a maximum penalty of five years in prison when sentenced on Jan. 29, 2021.
The Office of Inspector General for the U.S. Office of Personnel Management, and the Office of Inspector General for the U.S. Department of Health and Human Services assisted in the investigation.
Assistant U.S. Attorneys Uzo Asonye, Monika Moore, Carina Cuellar, and Jamar K. Walker are prosecuting the cases.
A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:20-cr-234, 1:20-cr-209, and 1:20-cr-235.
Tenderloin Drug Dealer Accused of Trafficking Fentanyl That Killed One, Injured AnotherRead the Press Release
SAN FRANCISCO – Charges were unsealed today accusing a Tenderloin drug dealer of selling fentanyl that led to the overdose death of one individual and the hospitalization of another individual, announced United States Attorney David L. Anderson and Assistant Special Agent in Charge Toby Schwartz of the Drug Enforcement Administration. Additional facts regarding the investigation and charges can be found here: https://youtu.be/6Xy3vG9bwq4
According to the complaint, on May 18, 2020, the defendant, Celin David Doblado-Canaca, age 38, sold fentanyl that was packaged as cocaine near the corner of Golden Gate Avenue and Hyde Streets in San Francisco’s Tenderloin District. The drugs were taken to San Bruno, California, where the substance was ingested later that night by two individuals who believed they were using cocaine. The fentanyl killed one user and nearly killed another. The victims were discovered by a family member in the early hours of May 19, 2020.
“Fentanyl is pouring into our community from China and Mexico. Because it is incredibly powerful in even the smallest doses, fentanyl is being mixed with other drugs and marketed as other drugs. Many drug users who die of fentanyl overdoses never even know that they have been given fentanyl. The epicenter of this fentanyl disaster is the Tenderloin neighborhood in San Francisco,” said U.S. Attorney Anderson. “I feel strongly that the Tenderloin is a wonderful neighborhood, a diverse neighborhood, a relatively affordable neighborhood, a neighborhood of children and the elderly. However, the Tenderloin neighborhood is also home to an open-air drug market that is spreading death throughout the Bay Area. The drug dealing that is openly oppressing the Tenderloin is quietly undermining neighborhoods across San Francisco, Oakland, San Mateo, Sonoma, Marin County and elsewhere. What happens in the Tenderloin does not stay in the Tenderloin.”
“We know fentanyl is potent and fatal in the smallest amounts. We are increasingly seeing it mixed with other drugs or sold as something else. Unfortunately, the user often doesn’t know this until it is too late. It is truly a game of Russian roulette,” said DEA Assistant Special in Charge Schwartz. “Working with our local counterparts in these drug overdose cases is a priority for us. We want to send the message to all those who are distributing this poison in our community, we will find you and bring you to justice. I would like to acknowledge the outstanding efforts by officers from the San Bruno, South San Francisco, and San Francisco Police Departments for their partnership in this investigation.”
The complaint affidavit describes how investigators traced backwards from the scene of the overdose death in San Bruno to the Tenderloin, and ultimately identified Doblado-Canaca as the alleged source of the fentanyl. As part of their investigation, officers stopped and searched Doblado-Canaca when he entered a liquor store at the corner of Hyde and Turk Streets in San Francisco, where he was found to have more than a dozen small baggies of substances alleged to be fentanyl and heroin. The drugs and their packaging appeared to be organized for sale.
Doblado-Canaca was arrested in San Francisco on August 21, 2020, and made his initial appearance in federal court in San Francisco on August 25, 2020. Doblado-Canaca is currently being held in custody pending further proceedings. The case was unsealed today, on September 30, 2020, when Doblado-Canaca made an appearance before the Honorable Alex G. Tse, U.S. Magistrate Judge.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years, and a fine of $1,000,000, for each violation of Title 21, United States Code, Section 841(a)(1) and (b)(1)(C). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This case was prosecuted by member agencies of the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies. The case was investigated by the Drug Enforcement Administration, the San Bruno Police Department, the South San Francisco Police Department, and the San Francisco Police Department.
Storm Lake Man Pleads Guilty to Meth and Firearm ChargesRead the Press Release
A man who conspired to distribute methamphetamine while possessing firearms pled guilty September 16, 2020, in federal court in Sioux City.
Jacob Hernandez, 26, from Storm Lake, Iowa, was convicted of conspiracy to distribute methamphetamine and possession of firearms in furtherance of a drug trafficking crime.
At the plea hearing, Hernandez admitted that from January 2020 through March 2020, he was involved in a conspiracy that distributed more than 4 pounds of methamphetamine in the Storm Lake and Fonda areas. In March 2020, law enforcement officers executed a search warrant at Hernandez’s residence. During the search, officers seized $5,010 cash on Hernandez, cell phone, torch lighter, and vape pen. Officers also searched Hernandez’s garage and found: a Kimber .45 caliber pistol and a 20 gauge shotgun; approximately 2 ounces of methamphetamine and 1.4 pounds of marijuana, 3 ounces of marijuana, drug ledgers, drug paraphernalia, various types of ammunition, vacuum seal bags, vacuum sealer, and two ballistic vests.
Sentencing before United States District Court Chief Judge Leonard T. Strand will be set after a presentence report is prepared. Hernandez will remain in custody pending sentencing. Hernandez faces a mandatory minimum sentence of 10 years’ imprisonment and a possible maximum sentence of life imprisonment, a $10,000,000 fine, and at least five years of supervised release following any imprisonment on the drug conviction. On the firearm conviction, Hernandez faces a mandatory minimum sentence of 5 years’ imprisonment, which must be served consecutive to any term of imprisonment imposed on the drug conviction and a possible maximum sentence of life imprisonment, a $250,000 file, and up to five years of supervised release.
This case was brought as part of Project Safe Neighborhoods (PSN). PSN is the centerpiece of the Department of Justice’s violent crime reduction efforts. PSN is an evidence-based program proven to be effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.
This case is also part of Project Guardian, the Department of Justice’s signature initiative to reduce gun violence and enforce federal firearms laws. Initiated by the Attorney General in the fall of 2019, Project Guardian draws upon the Department’s past successful programs to reduce gun violence; enhances coordination of federal, state, local, and tribal authorities in investigating and prosecuting gun crimes; improves information-sharing by the Bureau of Alcohol, Tobacco, Firearms and Explosives when a prohibited individual attempts to purchase a firearm and is denied by the National Instant Criminal Background Check System (NICS), to include taking appropriate actions when a prospective purchaser is denied by the NICS for mental health reasons; and ensures that federal resources are directed at the criminals posing the greatest threat to our communities. For more information about Project Guardian, please see /media/1122011/dl?inline.
The case is being prosecuted by Assistant United States Attorney Mikala Steenholdt and was investigated by the Iowa Department of Narcotics Enforcement, Buena Vista County Sheriff’s Office, Clay County Sheriff’s Office, Sac County Sheriff’s Office, and the Iowa Division of Criminalistics Laboratory.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 20-3029. Follow us on Twitter @USAO_NDIA.
Statement Regarding Deputation of State and Local Law Enforcement OfficersRead the Press Release
PORTLAND, Ore.— Billy J. Williams, U.S. Attorney for the District of Oregon, and Russ Burger, U.S. Marshal for the District of Oregon, provide the below statement on ongoing violence in Portland:
The U.S. Marshal will not cancel the cross-deputation of local and state law enforcement officers. Law enforcement and law-abiding citizens of Portland have endured months of nightly criminal violence and destruction. Officers have been repeatedly assaulted with bottles, bats, sledgehammers, lasers, rocks, and other weapons of convenience. In addition, the public has seen repeated efforts by criminals to burn down public buildings. These violent, senseless, and criminal acts have no bearing on social justice. They only serve to exacerbate lawlessness in this city. Federal cross-deputation of Oregon State Police, Multnomah County Sheriff and Portland Police Bureau personnel underscores the importance of providing accountability and deterrence for these criminal acts. Importantly, the federal deputation supports front line law enforcement officers and their families in a way that they have not seen from City Hall. Portlanders, and Oregonians in general are sick of the boarded-up and dangerous conditions prevalent in downtown Portland due to a lack of leadership. We call upon citizens of this city and state to denounce violence, demand accountability, and work together to end the violence.
Billy J. Williams Russ Burger
United States Attorney United States Marshal
District of Oregon District of Oregon
Springfield Man Sentenced for Heroin ConspiracyRead the Press Release
BOSTON – A Springfield man was sentenced today in connection with his role in a large-scale drug conspiracy that trafficked dozens of kilos of heroin and fentanyl into Springfield from Bronx, N.Y. and the Dominican Republic.
Marcos Pena, 31, was sentenced by U.S. District Court Judge Mark G. Mastroianni to four years in prison and five years of supervised release. In June 2019, Pena pleaded guilty to one count of conspiring to distribute and possession with intent to distribute heroin and two counts of distribution of and possession with intent to distribute more than 100 grams of heroin.
Pena admitted to his part in the conspiracy, which included, amongst other roles, transporting tens of thousands of dollars at a time to sources of heroin in the Bronx and transporting multiple kilograms of heroin back to Springfield, where the heroin would then be packaged at Springfield-based heroin mills.
Pena also admitted to distributing heroin to a government witness on two separate occasions in February 2016. On Feb. 10, 2016, Pena and co-defendant Alberto Marte sold approximately 125 grams of heroin to the witness. Pena again sold 125 grams of heroin to the same witness on Feb. 24, 2016.
Marte pleaded guilty and was sentenced to 180 months in prison.
United States Attorney Andrew E. Lelling; Brian D. Boyle, Special Agent in Charge of the Drug Enforcement Administration’s New England Division; Michael Shea, Acting Special Agent in Charge of Homeland Security Investigations in Boston; Hampden County District Attorney Anthony D. Gulluni; Colonel Christopher Mason, Superintendent of the Massachusetts State Police; Springfield Police Commissioner Cheryl Clapprood; Chicopee Police Chief William Jebb; Holyoke Police Chief Manny Febo; and West Springfield Police Chief Ronald Campurciani made the announcement today. Assistant U.S. Attorney Neil Desroches of Lelling’s Springfield Branch Office prosecuted the case.
Seventeen Arrested in Connection with Jasper County Drug Trafficking and Firearms ViolationsRead the Press Release
BEAUMONT, Texas - U.S. Attorney Stephen J. Cox announced today that 17 individuals have been arrested in the Eastern District of Texas pursuant to a federal indictment which alleges drug trafficking and firearms violations.
A federal grand jury returned the indictment on Sep. 17, 2020, charging the following individuals with drug and gun crimes:
Jonathan Limbrick, 43, of Jasper, Texas;
Rhonda Monschelle Felder, 36, of Houston, Texas;
Deandre Romerus Limbrick, 44, of Jasper, Texas;
Terrence Neil Bronson, 51, of Jasper, Texas;
Don Raynard Larkin, 46, of Beaumont, Texas;
Cedrick Demond Hunt, 42, of Beaumont, Texas;
Dominic Devonte Limbrick, 26, of Jasper, Texas;
Crystal Michelle Carruth, 39, of Jasper, Texas
Alisha Nicole Cleveland, 31, of Vidor, Texas;
Corey Devond McQueen, 34, of Jasper, Texas;
James Parker, 48, of Jasper, Texas;
Ernest Houston, 60, of Jasper, Texas;
Curtis Brumley, 44, of Jasper, Texas;
Russell Limbrick, 36, of Jasper, Texas;
Calvin Jewan Bell, 36, of Jasper, Texas;
Shana Brooks, 39, of Brookeland, Texas; and
Thomas Hadnot, 41, of Kirbyville, Texas.
The defendants were arrested by a joint law enforcement task force today and will make initial appearances in federal court next week.
According to court documents, the defendants are charged with possession and conspiracy to possess a controlled substance, possession of a firearm in furtherance of a drug trafficking crime, and possession of a firearm by an unlawful user of a controlled substance. This joint DEA and ATF operation began in 2018 when agents learned of a Jasper, Texas-based methamphetamine trafficking organization allegedly distributing large amounts of methamphetamine throughout Southeast Texas.
This is an Organized Crime Drug Enforcement Task Force (OCDETF) case and is being investigated by the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Jasper Police Department, the Beaumont Police Department; the Texas Department of Public Safety; the U.S. Marshals Service; the Harris County Sheriff’s Office; the Jasper County District Attorney’s Office; the Vidor Police Department; the Jefferson County Sheriff’s Office; the Orange County Sheriff’s Office; and the Texas Parks and Wildlife Service. This case is being prosecuted by Assistant U.S. Attorney Russell James. OCDETF is the largest anti-crime task force in the country and its mission is to disrupt and dismantle the most significant drug trafficking and transnational criminal organizations that threaten the United States. The prosecutor-led, intelligence-driven, multi-agency task forces leverage the authorities and expertise of federal, state, and local law enforcement.
An indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Second Defendant Pleads Guilty in Newton Armed RobberyRead the Press Release
WICHITA, KAN. – A second defendant pleaded guilty today to an armed robbery at a convenience store in Newton, Stephen McAllister said.
Rico Montes, 28, Wichita, Kan., pleaded guilty to one count of robbery. In his plea, Montes admitted he and co-defendant Jorge Correa, 25, Wichita, robbed the EZ Trip at 100 S. Main in Newton, Kan., while another man waited in the car. Montes and Correa were armed when they entered the store.
Montes is set for sentencing Dec. 16. He could face a penalty of up to 20 years in federal prison and a fine up to $250,000.
Correa pleaded guilty last week and is set for sentencing Dec. 8. He admitted firing several shots during the robbery. No one was injured. A third defendant, Jeremiah Urias, 18, Wichita, who is alleged to have driven the getaway car, is set for a change of plea hearing Oct. 13.
McAllister commended the FBI, the Kansas Highway Patrol, the Newton Police Department and Assistant U.S. Attorney Alan Metzger for their work on the case.
In all cases, defendants are presumed innocent until and unless proven guilty. The indictments merely contain allegations of criminal conduct.
San Antonio Woman Sentenced to Federal Prison for Stealing over $973,000 from Her Former EmployerRead the Press Release
In San Antonio, a federal judge sentenced 46-year-old Rosalinda Fuentes to 45 months in federal prison for stealing more than $973,000 from her former employer, announced U.S. Attorney John F. Bash and FBI Special Agent in Charge Christopher Combs, San Antonio Division.
In addition to the prison term, Senior U.S. District Judge David A. Ezra ordered that Fuentes pay $973,760.98 in restitution to her former employer and be placed on supervised release for a period of one year after completing her prison term. Following today’s hearing, Judge Ezra remanded Fuentes into the custody of the U.S. Marshals Service to begin serving her prison term.
“This case involved a blatant fraud — so blatant that it’s hard to believe the defendant thought she would get away with it. I’m pleased that today justice prevailed,” stated U.S. Attorney Bash.
On December 30, 2019, Fuentes pleaded guilty to one count of wire fraud. By pleading guilty, Fuentes admitted that while processing employee payroll for MUY! Companies, LLC from 2014 to 2019, she implemented a scheme to steal money from the company. Fuentes used names of current and former employees to generate fraudulent pay checks and direct those unauthorized funds to bank accounts which she controlled. Furthermore, once the money had been deposited, Fuentes voided the fraudulent transactions from company records in an effort to conceal her scheme.
The FBI investigated this case with valuable assistance from the Texas Department of Public Safety. Assistant U.S. Attorney William F. Lewis, Jr., prosecuted the case on behalf of the government.
“The San Antonio FBI shares a close working relationship with the Texas Department of Public Safety, which provides a full-time, seasoned investigator to partner with us on significant financial fraud investigations. This case is yet another example of how this relationship benefits both of our agencies as well as the citizens of San Antonio,” said FBI Special Agent in Charge Combs.
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The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years
Sex Offender Receives Extensive Sentence for Preying on ChildRead the Press Release
Chief Federal District Court Judge Scott W. Skavdahl sentenced CHARLES PATRICK JEFFERY, JR. to 360 months imprisonment followed by a lifetime of supervised release. Jeffery entered his plea of guilty to one count of aggravated sexual abuse of a child on July 1, 2020. Jeffery has been and will continue to be required to register as a sex offender. The court found that Jeffery had no ability to pay a fine, but he was ordered to pay $1 in restitution, the amount the victim requested, and a $100 special assessment.
“This case is an example of our ongoing efforts to protect the innocence of children,” said United States Attorney Mark A. Klaassen. “We take this responsibility as seriously as any other enforcement priority because of the vulnerability of these victims and the life-long impacts of abuse. We simply have to do everything we can to identify and stop this criminal behavior.”
The aggravated sexual abuse charge against Jeffery stemmed from his knowing sexual act with a child under the age of twelve between on or about November 18, 2015 and July 1, 2016 on the Wind River Indian Reservation, which the child did not disclose until 2018.
"The FBI remains committed to combating the exploitation and abuse of some of our nation's most vulnerable populations, especially children," stated Denver FBI Special Agent in Charge Michael Schneider. "We thank our partners at the Wyoming US Attorney's Office for the great prosecutorial work which resulted in Charles Jeffery Jr.'s conviction. This prosecution would not have been possible without the victim's courage in bringing forward these allegations and allowing the law enforcement community to pursue justice on their behalf."
Jeffery’s period of supervised release will run concurrent to his supervised release in an earlier case, docket number 16-CR-129-S, in which Jeffery was convicted of possession of child pornography on January 6, 2017.
Russian Hacker Sentenced to over 7 Years in Prison for Hacking into Three Bay Area Tech CompaniesRead the Press Release
SAN FRANCISCO – Yevgeniy Alexandrovich Nikulin was sentenced to 88 months in prison for hacking into LinkedIn, Dropbox, and the now-defunct social networking company formerly known as Formspring, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John L. Bennett. The sentence was handed down by the Honorable William H. Alsup, U.S. District Judge.
The sentence follows a guilty verdict after a 6-day jury trial. A jury found that Nikulin, 32, of Russia, hacked into computers belonging to LinkedIn, Dropbox, and Formspring, damaged computers belonging to LinkedIn and Formspring by installing malware on them, stole and used the login credentials for employees at LinkedIn and Formspring, and sold and conspired with others to sell customer data he stole as a result of his hacks. Evidence at trial showed that Nikulin was located in Moscow when he hacked into a computer belonging to a Bay Area-based LinkedIn employee and installed malicious software on it, allowing him to control the computer remotely and to use the employee’s credentials to access LinkedIn’s corporate VPN. Once he had access to corporate systems, Nikulin stole a database containing LinkedIn users’ login information, including encrypted passwords. In addition, the evidence demonstrated that Nikulin was behind similar intrusions and thefts of data at Dropbox and at Formspring. The Court also found that Automattic, parent company of Wordpress.com, was the victim of an intrusion by defendant, although there was no evidence that defendant stole any customer credentials. Nikulin was arrested while traveling in the Czech Republic on October 5, 2016, and extradited to the United States to face trial on March 30, 2018.
When discussing the reasons for imposing the 88-month prison term, Judge Alsup made clear that he hoped the sentence would send a message to deter anyone, including persons living overseas, from engaging in similar conduct.
Nikulin’s trial began in March, but proceedings were suspended after just two days in light of the COVID-19 pandemic and ensuing closure of the federal courthouse. The trial resumed on July 7, 2020, with the defendant, the attorneys, and Judge Alsup wearing masks, and the courtroom configured to allow social distancing by all participants. Witnesses testified from behind a glass panel to allow testimony to be given while maintaining social distancing. The trial was broadcast via Zoom to allow the public to view the proceedings without entering the courthouse. Nikulin was convicted of selling stolen usernames and passwords, in violation of 18 U.S.C. § 1029(a)(2); installing malware on protected computers, in violation of 18 U.S.C. § 1030(a)(5); conspiracy, in violation of 18 U.S.C. § 371; computer intrusion, in violation of 18 U.S.C. § 1030(a)(2)(C); and aggravated identity theft, in violation of 18 U.S.C. § 1028A(1).
Nikulin has been in U.S. custody since his extradition from the Czech Republic and will begin serving his sentence immediately.
Assistant U.S. Attorneys Michelle J. Kane and Katherine Wawrzyniak are prosecuting the case with the assistance of Helen Yee, Jessica Rodriguez Gonzalez, and Kim Richardson. The prosecution is the result of an investigation by the Federal Bureau of Investigation, with the assistance of authorities in the Czech Republic, the U.S. Secret Service and the U.S. Department of Justice’s Criminal Division, Office of International Affairs.
Richmond Hill man admits concocting 'intricate scheme' to frame a former acquaintance for breach of privacy in health careRead the Press Release
SAVANNAH, GA: A Richmond Hill man has admitted that he created fake email addresses and concocted other information to falsely accuse a former acquaintance of committing violations of patient privacy.
Jeffrey Parker, 43, pled guilty in U.S. District Court to one count of False Statements, said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia. The charge carries a possible sentence of up to five years in federal prison.
“Jeffrey Parker tried to portray himself as a ‘whistleblower’ while attempting to frame a former acquaintance,” said U.S. Attorney Christine. “This fake complaint not only caused potential harm for an innocent victim, but it also unnecessarily diverted resources from federal investigators whose diligent work shredded his web of lies.”
As outlined in court documents, Parker admitted that he “engaged in an intricate scheme” in which he contacted the U.S. Department of Justice (DOJ) to claim that a former acquaintance had violated privacy provisions of the Health Insurance Portability and Accountability Act (HIPAA).
Parker created email addresses using the names of real individuals and pretended to be these individuals to make it appear as if the acquaintance committed a crime. He sent these communications to the hospital where the acquaintance worked, to the DOJ, and to the FBI. Parker then claimed to have received threatening messages in retaliation for acting as a whistleblower, prompting FBI agents to ensure his safety and quickly investigate his allegations. When an FBI agent interviewing Parker found inconsistencies in his story, Parker admitted concocting the scheme in an attempt to harm the former acquaintance.
“Many hours of investigative resources were wasted determining Parkers’ whistleblower claims were a scheme to damage a former acquaintance,” said Chris Hacker, Special Agent in Charge of FBI Atlanta. “Now he will pay for his deliberate transgression and we can affirm that these types of actions will be exposed and punished.”
The case was investigated by the FBI, and is being prosecuted for the United States by Assistant U.S. Attorney J. Thomas Clarkson and Patrick Schwedler.
Renton, Washington, man who aided former Drainage Commissioner in scheme to defraud taxpayers pleads guilty to lying to FBIRead the Press Release
Seattle — A 63-year-old Renton, Washington, man pleaded guilty today in U.S. District Court in Seattle to lying to federal agents about a fraud scheme carried out by a former Drainage District Commissioner and his wife, announced U.S. Attorney Brian T. Moran. DARRELL N. WINSTON pleaded guilty to making a false statement and faces up to five years in prison when sentenced by U.S. District Judge Richard A. Jones on December 18, 2020.
According to the plea agreement, WINSTON repeatedly misled FBI agents about his agreement with and work for former Drainage District Commissioner Allan Thomas and his wife. WINSTON operated a business called City Biz and originally told agents he had submitted a bid and been hired by Thomas to clean some of the drainage ditches in the district. In fact, WINSTON and his company did little or no work, but were paid more than $50,000 by King County based on fake invoices. WINSTON paid most of the money back to Allan Thomas and his wife, and the two used the money for their own benefit. WINSTON lied to investigators on multiple occasions.
Last month, the grand jury returned a superseding indictment against Allan B. Thomas and Joan B. Thomas charging them with 15 federal crimes, including conspiracy, mail fraud, wire fraud, money laundering, and aggravated identity theft in connection with their six-year scheme to divert more than $400,000 in local tax dollars to their own use.
Allan B. Thomas served as Commissioner for Drainage District 5 in King County for more than 35 years. As a Commissioner, Thomas was involved in estimating the costs of drainage maintenance for the district so that the county auditor could set and assess the appropriate taxes. The Commissioners then authorized payment to service providers who were supposed to do maintenance work on the drainage system.
As early as 2012, Joann Thomas set up a joint bank account with Allan Thomas’ son from a previous marriage. The account was a business account for a company called A C Services. Over the next six years, Allan Thomas had $413,323 of local tax dollars paid to A C Services claiming it was for drainage ditch maintenance. However, financial records indicate that over the six years, shortly after the tax dollars were deposited into the A C Services account, the money was quickly transferred to other accounts belonging to the Thomases, or was used to pay their expenses for such things as hay, mortgage payments, or property taxes. More than $70,000 was withdrawn as cash.
In 2018, after the couple became aware of an investigation into their conduct, they began funneling the tax dollars through WINSTON’s company, City Biz.
In all, the indictment alleges the THOMASES defrauded taxpayers of $468,165.
The charges contained in the Thomas indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
Mail fraud, wire fraud, and money laundering are punishable by up to 20 years in prison. Conspiracy is punishable by five years in prison. Aggravated identity theft is punishable by two years in prison to follow any sentence imposed on other counts of conviction.
The FBI and IRS - Criminal Investigation are leading the investigation with assistance from the Enumclaw Police Department. The Enumclaw City Attorney initiated the review of the district finances. The Washington State Auditor’s Office also conducted an audit of the district in 2019. The King County Prosecuting Attorney’s Office, in consultation with the U.S. Attorney’s Office, determined the case was appropriate for federal prosecution.
The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Andrew Friedman.
Plant City Man Sentenced to over Three Years for Making Threats Against Plant City Police OfficersRead the Press Release
Tampa, Florida – U.S. District Judge Mary Scriven today sentenced James Alexander (26, Plant City) to 37 months in federal prison for making online threats to harm two officers from the Plant City Police Department. Alexander had pleaded guilty on June 17, 2020.
According to court documents, beginning in October 2017, Alexander posted threats directed at law enforcement on various Facebook pages online. Between May and June 2018, Alexander sent direct threats to one Plant City Police officer threatening to harm to him. Alexander also sent direct messages to a family member of this officer, threatening to harm the officer. As a result of these threats, the officer obtained a permanent injunction against Alexander and moved his family out of their home of nine years to another location that was kept confidential.
Following the entry of the permanent injunction, Alexander began targeting a second officer from the Plant City Police Department, sending him direct messages on Facebook, saying, in part: “You are going to die this year.” As a result, this officer feared for his safety and that of his family, compelling him to frequently change his routine and routes to various locations, for fear of being followed.
This case was investigated by the Federal Bureau of Investigation and the Plant City Police Department. It was prosecuted by Assistant United States Attorney Candace Garcia Rich.
Philadelphia Man Convicted at Trial of Illegal Firearms Possession While on State ParoleRead the Press Release
PHILADELPHIA –United States Attorney William M. McSwain announced that Steven Mack, 31, of Philadelphia, PA was convicted today at trial of possession of a firearm and ammunition by a convicted felon, arising from an incident during which state parole agents caught Mack with the firearm and ammunition shortly after he was released from prison.
Mack was paroled after serving the low end of a state sentence for robbing multiple women at gunpoint and stealing their possessions. On September 9, 2019, while he was under the supervision of the Pennsylvania Parole Board, agents visited Mack at his residence and observed five different types of ammunition and a loaded revolver. The agents arrested Mack on the spot.
“The crime of being a felon in possession of a firearm is a very serious offense – particularly in a city like Philadelphia, where gun violence is running rampant,” said U.S. Attorney McSwain. “Mack has repeatedly demonstrated his disrespect for the law and the conditions for his parole. The answer to Philadelphia’s violent crime crisis is to get recidivists like Mack off of the streets and have them serve an appropriate sentence, which is exactly what will happen now that he has been convicted in the federal system in which there is no opportunity for parole.”
“The outcome of this prosecution is sending a positive message to the community on ATF’s commitment to keeping the public safe from firearms violence,” said John Schmidt, acting Special Agent in Charge of ATF’s Philadelphia Field Division. “ATF is determined to continue our collaborative efforts with our law enforcement partners in our plight to ensure Philadelphia neighborhoods can be free of violence.”
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 make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Philadelphia Police Department, and the Pennsylvania Parole Board, and is being prosecuted by Assistant United States Attorneys Sara A. Solow and Derek E. Hines.
Pass Christian Man Pleads Guilty to Trafficking over 100 Pounds of Pure MethamphetamineRead the Press Release
Gulfport, Miss – Aaron Conrad Whavers, 50, of Pass Christian, pled guilty today before Senior U.S. District Judge Louis Guirola, Jr. to possession with intent to distribute methamphetamine, announced U.S. Attorney Mike Hurst, Special Agent in Charge Michelle A. Sutphin of the Federal Bureau of Investigation and Mississippi Bureau of Narcotics Director Steve Maxwell.
“I commend our federal and state partners for their incredible work in catching this drug dealer and seizing these massive quantities of illegal drugs, saving countless lives in the process. We will continue this important work with our partners in battling the scourge of meth, fentanyl and other illegal narcotics that destroy lives, tear apart families, and kill our people every single day,” said U.S. Attorney Hurst.
“Working in partnership with local, state, and federal authorities to improve the quality of life for the citizens of Mississippi is a priority for MBN,” said Colonel Steven Maxwell, Director of the Mississippi Bureau of Narcotics. “Thus, the removal of drug traffickers and violent offenders from our businesses and residential communities is imperative."
"Partnerships between law enforcement agencies is essential to identify, investigate and prosecute the illegal distribution of narcotics," said FBI Special Agent in Charge Sutphin. "Criminal activity has no place in our society, and law enforcement throughout Mississippi will continue working together to make our communities safer."
Whavers was arrested November 4, 2019, at his home in Pass Christian following an investigation into methamphetamine trafficking from California to Mississippi. Starting in July 2019, during an investigation by Mississippi Bureau of Narcotics and FBI Safe Streets Task Force, agents seized approximately 3 kilograms of pure methamphetamine in Pascagoula. In August, agents purchased approximately 3 kilograms of pure methamphetamine in Pass Christian. In November, agents learned the source of supply had traveled to Mississippi from California at which time they executed search warrants on Whavers’ home and a tractor trailer. They recovered over 37 kilograms of methamphetamine, 988 grams of fentanyl and a hand gun. The DEA lab confirmed most of the methamphetamine was 100% pure.
Whavers faces not less than 10 years or up to life in prison. He further faces fines up to $10,000,000 and at least 5 years of supervised release. Sentencing is set for January 5, 2021, at 1:30 PM.
The Federal Bureau of Investigation Safe Streets Task Force and the Mississippi Bureau of Narcotics investigated the case. The FBI Safe Streets Task Force is a Gulf Coast High Intensity Drug Trafficking Area (HIDTA) initiative and receives funding from the Office of National Drug Control Policy in Washington, D.C. It is made up of Special Agents from the FBI and law enforcement officers from the Pascagoula, Moss Point, Gautier and Ocean Springs Police Departments, Jackson County Sheriff's Office, MBN, and U.S. Border Patrol. The case is being prosecuted by Assistant United States Attorney Annette Williams.
Ohio Man Pleads Guilty to Paying Co-Conspirator to Illegally Dump Drums of Hazardous WasteRead the Press Release
An Ohio man pleaded guilty in the Southern District of Ohio before U.S. District Judge Edmund A. Sargus Jr. to conspiring to illegally transport and dispose of hazardous waste at several area apartment complexes.
According to court documents, in October 2018, Khaled Ebrigit, 54, of Columbus, Ohio, paid and directed Martin Eldridge, 41, of Williamsport, Ohio, to dump drums of hazardous waste near dumpsters at several apartment complexes throughout Columbus.
Ebrigit knew the material was hazardous and did not have a permit to dispose of it.
In total, six 55-gallon drums and 64 10-gallon drums were dumped at six residential apartment complexes in Columbus. Many of the drums were labeled with brightly colored warning labels with symbols and written statements indicating “flammable” and “irritating,” and with a detailed listing of hazards and precautions including but not limited to “[h]ighly flammable,” “[i]rritating to eyes,” and “[t]ake precautionary measures against static discharges.” Many of the drums were leaking.
As a result of the dumping, the Ohio Environmental Protection Agency (EPA), Franklin County Sheriff’s Office, Columbus Fire Department and Columbus Division of Police responded to reports of illegal dumping and cleaned the various sites.
As part of his plea, Ebrigit agreed to pay at least $30,000 in restitution.
Specifically, Ebrigit pleaded guilty to one count each of conspiring to illegally transport hazardous material, transporting hazardous material and disposing of hazardous material.
Eldridge pleaded guilty in December 2019 to the same three crimes.
The U.S. EPA Criminal Enforcement Program, Ohio EPA, and Franklin County Sheriff’s office investigated the case.
Trial Attorney Adam C. Cullman of the Environment and Natural Resources Division’s Environmental Crimes Section, Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio, and Special Assistant U.S. Attorney Heather Robinson from Franklin County Prosecutor Ron O’Brien’s office are representing the United States in this case.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Offshore Internet Sports Betting Company Agrees to Forfeit over $46.8 Million in Proceeds to Resolve Criminal InvestigationRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that the internet sports betting company, 5D Holdings Ltd. (operating under the unincorporated brand name, “5Dimes”) and Laura Varela, have agreed to forfeit more than $46.8 million in gambling proceeds as part of a settlement agreement in a criminal investigation into 5Dimes’ sports betting operation based in Costa Rica that allowed American gamblers to place bets, primarily through its website www.5Dimes.eu, in violation of U.S. law. Beginning in at least 2011, 5Dimes accepted wagers from and made payouts to U.S. bettors, and transferred more than $46.8 million in proceeds earned from its illegal gambling activities in such a manner as to attempt to hide the nature, location, source, and control of the funds.
5Dimes was previously owned and operated by Varela’s husband, William Sean Creighton, a U.S. citizen who moved to Costa Rica, where he created and operated 5Dimes in violation of U.S. law. From at least 2011 until approximately September 24, 2018, Creighton exercised full and exclusive control over 5Dimes, although he hid his control over the company by utilizing an alias and operating the business through several shell companies. In September 2018, Creighton was kidnapped and subsequently murdered. Over a year later, Creighton’s remains were discovered and positively identified in Costa Rica; Creighton’s death has been ruled a homicide by Costa Rican authorities.
Beginning in approximately May 2016, the United States Attorney’s Office for the Eastern District of Pennsylvania, in conjunction with the Department of Homeland Security Investigations (“HSI”), began investigating Creighton and 5Dimes for possible violations of federal criminal laws including, but not limited to, illegal gambling, money laundering, wire fraud, and other related offenses. During Creighton’s lifetime, Varela, a Costa Rican citizen, was never employed as a manager at 5Dimes, nor did she exercise any control over the operations of 5Dimes. Following Creighton’s death, Varela assumed responsibility for 5Dimes assets, but did not exercise day-to-day authority over the operations of 5Dimes. Varela subsequently took control of 5Dimes and sought to resolve the federal investigation and change the operations of the company in a manner that complies with U.S. law. In order to resolve the federal investigation of 5Dimes (which continued after Creighton’s kidnapping), Varela and 5Dimes have entered into a settlement agreement with the EDPA in which they have agreed to forfeit more than $46.8 million and acknowledged that those funds are the proceeds of various unlawful gambling-related offenses.
Creighton’s operation of 5Dimes in violation of U.S. law involved the use of third-party payment processors (or “TPPPs”) to accept payments from the U.S.-based bettors. These TPPPs processed credit card transactions for 5Dimes, and charged the customers’ credit cards on behalf of 5Dimes, thereby concealing the true nature of the charges from the credit card companies that otherwise would not have processed the payments had 5Dimes attempted to process the charges directly. Once the TPPPs received the betting funds from the U.S. customers’ credit cards, the funds were transferred to bank accounts in the names of shell companies controlled and operated by Creighton until his disappearance and death. Creighton also laundered 5Dimes’ unlawful gambling proceeds in various additional ways, including through bulk cash transportation and the purchase of gold bars, gold coins, and expensive collectible sports cards.
During the investigation, HSI seized approximately $3,376,189 in cash and other assets belonging to Creighton, including a 1948 George Mikan rookie basketball card, which Creighton purchased for over $400,000 (which at the time was the most expensive basketball card ever sold, and which now resides at the Smithsonian Institute), and a 1970 Pete Maravich rookie basketball card, as well as over $715,000 worth of rare coins. As part of the settlement agreement, 5Dimes and Varela have agreed to forfeit these seized assets, and have agreed to help in the collection and forfeiture of additional assets totaling more than $26,000,000. Further, 5Dimes and Varela have agreed to forfeit approximately $2,000,000 that was seized in Costa Rica by Costa Rican law enforcement, and to pay and consent to the forfeiture of an additional $15,000,000 of the proceeds of the criminal conduct.
All told, pursuant to the terms of the settlement agreement, 5Dimes and Varela have agreed to forfeit a total of $46,817,880.60, which they agree constitutes proceeds that are traceable to transactions in violation of Title 18, United States Code, Sections 1343 (wire fraud), 1084 (illegal transmission of gambling information), 371 (conspiracy to commit wire fraud), and were involved in transactions in violation of Title 18, United States Code, Section 1956 (money laundering). Varela has fully cooperated with the investigation and has worked with EDPA to identify criminal assets associated with 5Dimes, has overseen the implementation of compliance procedures, and has reorganized the corporate structure of the company into a streamlined, transparent corporate structure, and caused 5Dimes to cease violating U.S. law.
Pursuant to the terms of the settlement agreement, the United States Attorney’s Office for the Eastern District of Pennsylvania has agreed to not criminally prosecute 5Dimes or Varela for any crimes committed prior to September 30, 2020 (except for criminal tax violations, if any, as to which EDPA does not make any agreement), and will not file a civil action relating to the conduct described in the settlement agreement.
“The settlement agreement announced today is a victory for the United States in ceasing the illegal activity of a company that was being investigated for a multitude of crimes, including a sophisticated money laundering operation,” said U.S. Attorney McSwain. “It is also a testament to the dedication of the investigators and prosecutors who doggedly pursued this case even after the primary target was kidnapped and murdered. As the Office has done with a variety of criminal and civil matters, we will use every tool at our disposal to hold individuals and businesses accountable and ensure their compliance with federal law.”
“Through our 5Dimes investigation, Homeland Security Investigations illuminated a massive global network of criminals whose profession was to launder proceeds for drug cartels, kleptocratic regimes, illegal mining operations, and fraudsters,” said Brian A. Michael, Special Agent in Charge, HSI Philadelphia. “Today’s announcement of the global settlement agreement and significant monetary seizures demonstrates HSI’s commitment with our partners to deny criminal organizations the financial proceeds of their illicit activities.”
“Transnational Criminal Organizations are concerned with one priority: making and hiding money. This investigation demonstrates the sophisticated efforts of the actors to secrete their ill-gotten gains, in this case, from gambling. The scheme is just as viable for laundering drug proceeds, those from weapons or human trafficking, or other illegal activities,” said Jeremiah A. Daley, Executive Director of the Liberty Mid-Atlantic High Intensity Drug Trafficking Area (HIDTA). “We are proud to support HSI in pursuing all forms of money laundering from any source.”
The case was investigated by the Department of Homeland Security, Homeland Security Investigations with support from the Liberty Mid-Atlantic HIDTA, the Philadelphia Police Department, and the Pennsylvania State Police. The criminal investigation and settlement was handled for the Eastern District of Pennsylvania by Assistant United States Attorneys Michael S. Lowe and Maria M. Carrillo.
Northern District of Alabama Announces Charges in Health Care Fraud Cases as Part of Nationwide Law Enforcement EffortRead the Press Release
BIRMINGHAM, Ala. – Seven individuals have been charged in the Northern District of Alabama with a $41 million health care fraud, drug distribution, and kickback conspiracy run out of Northern Alabama Pain Services (“NAPS”), a clinic owned and operated by the husband and wife. The announcements are part of a federal law enforcement effort to crack down on health care fraud nationwide.
U.S. Attorney Prim F. Escalona, FBI Special Agent in Charge Johnnie Sharp, Jr., Office of Inspector General of the U.S. Department of Health and Human Services Special Agent in Charge Derrick L. Jackson, Drug Enforcement Administration New Orleans Division Special Agent in Charge Brad L. Byerley, and IRS-Criminal Investigations Atlanta Field Division Special Agent in Charge James Dorsey made the announcement.
A 25-count indictment filed in U.S. District Court charges MARK MURPHY, 63, of Lewisburg, TN, and his wife JENNIFER MURPHY, 63, of Lewisburg, TN, for conspiring to use their medical practice, NAPS, to unlawfully distribute and dispense controlled substances, and indeed used controlled substances to grow and maintain a large patient population in order to profit from medically unnecessary services that Mark Murphy would order for those patients. Mark Murphy, Jennifer Murphy, BRIAN BOWMAN, 39, of Attalla, Ala., CHRISTIE ROLLINS a/k/a Christie Schneid, 49, of Petersburg, TN, MARK MURPHY, JR., 33, of Lewisburg, TN and WILLIE FRANK MURPHY, 67, of Lewisburg, TN, also conspired to and engaged in a scheme to pay and receive kickbacks and to defraud health care benefit programs out of at least $41,000,000 in payments for items and services that were medically unnecessary and, in some cases not provided. Such items and services included: (1) medical office visits, (2) durable medical equipment (“DME”), (3) urine drug screens (“UDS”), (4) high-reimbursing pharmaceuticals, and (5) nerve conduction studies. Finally, Jennifer Murphy used a purported charity to conceal receipt of illegal kickbacks and submitted false tax returns to conceal income received from the fraud.
A seventh co-conspirator, SHARON LUTRELL, 67, of Lewisburg, TN, who is also part of this conspiracy, has agreed to plead guilty to conspiracy to receive kickbacks. Lutrell has been charged separately by Information.
The announcements are part of a nationwide federal law enforcement effort to combat illegal prescription and/or distribution of opioids or that fall into more traditional categories of health care fraud include charges and guilty pleas involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided. According to court documents, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Also included are charges against medical professionals and others involved in the distribution of more than 30 million doses of opioids and other prescription narcotics.
FBI, HHS-OIG, IRS and DEA investigated the case. Anthony J. Burba, Trial Attorney, DOJ Fraud Section and Assistant U.S. Attorney Chinelo Dike-Minor are prosecuting the case.
An indictment is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Northampton County Man Charged with Defrauding Family and Friends Out of over $1 Million by Selling Them Worthless StockRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Robert McCabe, 76, of Bangor, PA, was charged by Information with multiple counts of securities fraud, mail fraud, and wire fraud in connection with an extensive fraudulent investment scheme.
According to court documents filed today, between September 2010 and July 2020, the defendant stole more than $1,000,000 from more than 50 family members and friends, including former fraternity brothers, by claiming that his company, McCabe Properties, Inc., owned close to two million shares of something he called “founders shares” of a well-known pharmaceutical company. He offered those “shares” to his victims by selling them a corresponding number of shares of McCabe Properties, Inc.
As alleged, McCabe sold this investment to his victims at a price of between $2.60 and $2.70 per share, which would have represented a significant discount over the actual share price for shares of the pharmaceutical company. In reality, however, McCabe Properties, Inc. had no assets whatsoever. The defendant spent the more than $1 million he took in from his victims, leaving them with nothing but worthless shares of McCabe Properties, Inc.
McCabe was able to deceive his victims over the span of the scheme by allegedly: (a) preparing and shipping to them shares of McCabe Properties, Inc. that purported to correspond to the number of shares of the pharmaceutical company; (b) falsely informing victim investors that their “founders shares” could only be sold once the pharmaceutical company was acquired by another company; (c) forwarding press releases, financial analysis reports, and news stories on the status of the pharmaceutical company to the victim investors; (d) falsely representing to clients that the nonexistent “founders shares” owned by McCabe Properties, Inc. had been purchased from a private venture capital firm that had ties to a known securities fraudster, making selling the “founders shares” problematic; and (e) communicating with clients by email and telephone and providing them with false reasons for an inability to sell the “founders shares.”
“As alleged, McCabe is a fraudster who promised something that he had no intention of delivering,” said U.S. Attorney McSwain. “Here, according to the Information, he exploited personal relationships with trusting members of his own family and circle of friends, repeatedly lying about the investment he sold to them. This type of financial fraud has devastating consequences for the victims and must be aggressively prosecuted and deterred at every turn.”
McCabe faces a maximum sentence of 420 years in prison, a three-year period of supervised release, a $10,000,000 fine, and a $2,100 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Newark Man Sentenced to 10 Years in Prison for Role in Conspiracy to Distribute Heroin and Crack CocaineRead the Press Release
NEWARK, N.J. – A Newark man was sentenced today to 120 months in prison for his role in a conspiracy to distribute heroin and crack cocaine, U.S. Attorney Craig Carpenito announced.
Cory Canzater, a/k/a, “Big C,” 47, of Newark, was previously found guilty of one count of conspiracy to distribute and possess with intent to distribute more than one kilogram of heroin and more than 28 grams of cocaine base, distribution of heroin and distribution of cocaine base. Canzater was convicted following a one-week trial before U.S. District Judge Kevin McNulty in Newark federal court, who imposed the sentence today by videoconference.
According to documents filed in this case and the evidence at trial:
Canzater engaged in a heroin and crack cocaine distribution conspiracy, led by Ahmad Johnson, a/k/a “OC,” 40, of Newark. Other members of the conspiracy included Maurice McPhatter, a/k/a “Ree,” Willie McPhatter, a/k/a “Roc,” Keith Henderson, and Sacha Negron, all of Newark. Canzater was a runner, who distributed narcotics for the Johnson drug trafficking organization.
Through the authorized interception of telephone calls and text messages, controlled purchases of heroin, the use of confidential sources of information, and other investigative means, law enforcement learned that Canzater was a member of a conspiracy led by Johnson, who was responsible for obtaining wholesale amounts of drugs, including heroin and cocaine, and processing and packaging the drugs for sale in and around Newark. During the September 2017 takedown of the organization, law enforcement conducted a series of search warrants and found over a kilogram of heroin, over 200 grams of crack cocaine, and over 150 grams of fentanyl.
Johnson pleaded guilty to a drug conspiracy and was sentenced on April 15, 2019, to 180 months in prison. Maurice McPhatter pleaded guilty to a drug conspiracy and was sentenced on May 15, 2020, to 120 months in prison. Willie McPhatter, Henderson, and Negron have all pleaded guilty to drug conspiracy charges and are awaiting sentencing.
This case was conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
In addition to the prison term, Judge McNulty sentenced Canzater to five years of supervised release.
U.S. Attorney Carpenito credited special agents and officers with DEA’s High-Intensity Drug Trafficking Area (HIDTA) Group 1, under the direction of Special Agent in Charge Susan Gibson, with the investigation leading to today’s sentence.
The government is represented by Assistant U.S. Attorneys Patricia Astorga and Ari B. Fontecchio of the U.S. Attorney’s Office in Newark.
Nevada man sentenced in methamphetamine trafficking caseRead the Press Release
BILLINGS—A Nevada man convicted of trafficking methamphetamine after an investigation in which he distributed the drug during an undercover purchase was sentenced today to five years in prison and four years of supervised release, U.S. Attorney Kurt Alme said.
After a two-day trial in November, a jury found Ryan McGuire, 39, of Mound House, Nevada, guilty of conspiracy to distribute meth and distribution of meth.
U.S. District Judge Susan P. Watters presided.
At trial, the prosecution presented evidence that DEA agents learned in May 2016 that a Billings woman, Angela Killen, was selling pills. In September 2016, an undercover agent met with Killen, who indicated she could introduce him to a source for meth. The agent purchased hydromorphone pills from Killen and paid a referral fee for Killen to introduce him to her meth source.
Later in September 2016, undercover agents returned to Killen’s residence and bought about 26 grams of meth from Killen and McGuire. McGuire pulled a package of meth from his jacket and passed it to Killen, who then gave it to one of the agents. The other agent paid Killen $2,200 for the meth. The investigation also showed that McGuire’s phone was in contact with Killen’s phone on the dates leading up to the meth deal as well as on the day of the transaction.
Killen was convicted in the investigation and sentenced to seven years in prison.
Assistant U.S. Attorney Cassady Adams prosecuted the case, which was investigated by the Drug Enforcement Administration.
This case is part of Project Safe Neighborhoods, a U.S. Department of Justice initiative to reduce violent crime. According to the FBI’s Uniform Crime Reports, violent crime in Montana increased by 36% from 2013 to 2018. Through PSN, federal, tribal, state and local law enforcement partners in Montana focus on violent crime driven by methamphetamine trafficking, armed robbers, firearms offenses and violent offenders with outstanding warrants.
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National health care fraud and opioid takedown results in charges against 345 defendants responsible for more than $6 billion in lossesRead the Press Release
BILLNGS — The U.S. Attorney's Office for the District of Montana, along with the U.S. Department of Justice, today announced historic national health care fraud and opioid enforcement actions as part of an investigation that includes the indictments of two Montana nurse practitioners accused of participating in a telemedicine scheme to defraud Medicare of almost $10 million.
Acting Assistant Attorney General Brian C. Rabbitt, of the Justice Department's Criminal Division, said the action involves 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
“This nationwide enforcement operation is historic in both its size and scope, alleging billions of dollars in healthcare fraud across the country,” said Acting Assistant Attorney Rabbitt. “These cases hold accountable those medical professionals and others who have exploited health care benefit programs and patients for personal gain. The cooperative law enforcement actions announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a national health emergency.”
The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications to provide health care services remotely.
According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers.
The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.
Two Montana indictments unsealed today separately charge nurse practitioners Mark Allen Hill, 54, of Edenburg, N.D., and whose address of record for participation in the Medicare program was Cut Bank, and Janae Nichole Harper, 33, of Kalispell and formerly of Billings, with conspiracy to commit health care fraud and health care fraud. Each defendant is accused of receiving money to sign unnecessary brace orders, often without ever talking to the Medicare beneficiary to determine whether the braces were medically necessary.
The indictment charging Hill alleges he signed fraudulent medical orders for braces resulting in more than $10 million in claims to Medicare, of which the government paid more than $5 million. Similarly, the indictment charging Harper alleges she signed fraudulent medical orders for braces resulting in more than $8 million in claims to Medicare, of which the government paid more than $4 million.
If convicted of the most serious crimes, Hill and Harper face a maximum 10 years in prison and a $250,000 fine. The indictments are merely accusations, and the defendants are presumed innocent until proven guilty. Arraignments for Hill and Harper are set for Oct. 27 in Great Falls before U.S. Magistrate Judge John T. Johnston. The cases are being prosecuted by Assistant U.S. Attorney Michael A. Kakuk and Robyn N. Pullio, trial attorney, Fraud Section, Criminal Division of the Justice Department. Pacer case reference numbers: 20-67 and 20-65.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
The following documents related to today’s announcement are available on the Criminal Division, Fraud Section’s Health Care Fraud Unit website through the following links:
- Graphics, Images and Resources: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/graphics-images-resources
- Case Descriptions: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions
- Court Documents: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/court-documents
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National Health Care Fraud and Opioid Takedown Results in Charges Against 345 Defendants Responsible for More than $6 Billion in Alleged Fraud LossesRead the Press Release
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, Deputy Inspector General Gary Cantrell of the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Administrator Tim McDermott of the Drug Enforcement Administration (DEA) today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
“This nationwide enforcement operation is historic in both its size and scope, alleging billions of dollars in healthcare fraud across the country,” said Acting Assistant Attorney General Brian C. Rabbitt. “These cases hold accountable those medical professionals and others who have exploited health care benefit programs and patients for personal gain. The cooperative law enforcement actions announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a national health emergency.”
“Telemedicine can foster efficient, high-quality care when practiced appropriately and lawfully. Unfortunately, bad actors attempt to abuse telemedicine services and leverage aggressive marketing techniques to mislead beneficiaries about their health care needs and bill the government for illegitimate services,” said HHS Deputy Inspector General Gary Cantrell. “Unfortunately, audacious schemes such as these are prevalent and often harmful. Therefore, collaboration is critical in our fight against health care fraud. We will continue working with our law enforcement partners to hold accountable those who steal from federal health programs and protect the millions of beneficiaries who rely on them.”
“The FBI, together with our federal, state, and local partners, remains steadfast in our commitment to identify and root out health care fraud, no matter what form it takes,” said Assistant Director Calvin Shivers. “We will continue to work tirelessly to ensure public and private health care dollars are used as intended, to promote the health and safety of all Americans and safeguard continued access to critical health care services.”
“The opioid epidemic our country is battling is exacerbated when unscrupulous individuals seek to profit from people, in particular those confronting addiction.” said DEA Assistant Administrator Tim McDermott. “When doctors, pharmacists, and individuals exploit the weakness of a fellow human being in order to line their own pockets, DEA will use every tool at its disposal to stop and bring them to justice.”
Telemedicine Fraud Cases
The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications technology to provide health care services remotely. According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers. In addition to the criminal charges announced today, CMS Center for Program Integrity separately announced that it has taken a record-breaking number of administrative actions related to telemedicine fraud, revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.
The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.
“Sober Homes” Cases
The “sober homes” cases announced today include charges against more than a dozen criminal defendants in connection with more than $845 million of allegedly false and fraudulent claims for tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction. The subjects of the charges include physicians, owners and operators of substance abuse treatment facilities, as well as patient recruiters (referred to in the industry as “body brokers”). These individuals are alleged to have participated in schemes involving the payment of illegal kickbacks and bribes for the referral of scores of patients to substance abuse treatment facilities; those patients were subjected to medically unnecessary drug testing – often billing thousands of dollars for a single test – and therapy sessions that were frequently not provided, and which resulted in millions of dollars of false and fraudulent claims being submitted to private insurers. Medical professionals also allegedly prescribed medically unnecessary controlled substances and other medications to these patients, sometimes to entice them to stay at the facility. The patients were then often discharged and admitted to other treatment facilities, or referred to other laboratories and clinics, in exchange for more kickbacks.
Cases Involving the Illegal Prescription and/or Distribution of Opioids And Cases Involving Traditional Health Care Fraud Schemes
The cases announced today involving the illegal prescription and/or distribution of opioids or that fall into more traditional categories of health care fraud include charges and guilty pleas involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided. According to court documents, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Also included are charges against medical professionals and others involved in the distribution of more than 30 million doses of opioids and other prescription narcotics.
National Rapid Response Strike Force
In connection with the nationwide enforcement action announced today, the Department of Justice also announced the creation of the National Rapid Response Strike Force of the Health Care Fraud Unit of the Criminal Division’s Fraud Section. The National Rapid Response Strike Force’s mission is to investigate and prosecute fraud cases involving major health care providers that operate in multiple jurisdictions, including major regional health care providers operating in the Criminal-Division-led Health Care Fraud Strike Forces throughout the United States. The National Rapid Response Strike Force led the telemedicine initiative and helped lead the sober homes cases included in today’s announcement.
Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.
A complaint, information or indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The following documents related to today’s announcement are available on the Criminal Division, Fraud Section’s Health Care Fraud Unit website through the following links:
- Graphics, Images and Resources: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/graphics-images-resources
- Case Descriptions: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions
- Court Documents: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/court-documents
National Health Care Fraud and Opioid Takedown Results in Charges Against 345 Defendants Responsible for More Than $6 Billion in Alleged Fraud Losses; San Diego Defendants ChargedRead the Press Release
Assistant U. S. Attorney Valerie Chu (619) 546-6750
NEWS RELEASE SUMMARY – September 30, 2020
SAN DIEGO – Federal officials today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals located in San Diego and across the country.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
In San Diego, the U.S. Attorney’s Office announced charges against defendants in several unrelated cases who collectively attempted to defraud Medicare of nearly $1 billion and Tricare of over $70 million. In addition, some defendants were charged with distributing fentanyl causing deaths in San Diego County.
“These frauds represent a staggering amount of theft to federal health programs, and ultimately the victims are every patient,” said U.S. Attorney Robert Brewer. “We will continue to investigate and prosecute these selfish criminals whose deplorable schemes drive healthcare costs sky high for everyone.” Brewer praised the federal agents and prosecutors who endeavor to expose these fraudsters and protect patients. Prosecutors who worked on these cases include Blanca Quintero, Valerie H. Chu, Mark Pletcher, Kevin Larsen, Josh Green, Drew Galvin, Paul Starita, Dylan Aste and Larry Casper.
“These cases demonstrate our commitment to pursuing medical providers, suppliers and others who insist on placing profits before patients,” said Timothy B. DeFrancesca, Special Agent in Charge, Office of the Inspector General for the U.S. Department of Health and Human Services. “We will continue to root out fraud, waste, and abuse in federal healthcare programs and hold accountable people who brazenly steal from the vital programs.”
“The FBI, together with our federal, state, and local partners, remains steadfast in our commitment to uncover and investigate health care fraud, no matter what form it takes,” said Suzanne Turner, Special Agent in Charge of the FBI's San Diego Field Office. “Our agents will continue this important work to ensure public and private health care dollars are used as intended, to promote the health and safety of all Americans and safeguard continued access to critical health care services.”
U.S. Attorney Brewer announced the following charges in San Diego as part of the national takedown:
- United States v. Burruss, et. al. On September 29, 2020, Charles A. Burruss and Ardalaan “Armani” Adams were charged with conspiracy to commit wire fraud for participating in a massive scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment. According to the charging documents, the defendants created a network of over 30 DME companies in the names of straw and nominee owners, to increase their profits and avoid scrutiny and audits from Medicare that could occur if the same companies submitted hundreds or thousands of bills for similar DME products in a short period of time. The United States alleges that the Medicare beneficiaries were often harassed by telemarketers through multiple phone calls per day, to accept back, knee, wrist, and other braces covered by Medicare. Because they were paid by the brace, the telemarketers used fast-talking, high-pressure tactics to “upsell” patients (although the patients actually paid nothing for the braces, not even the required co-pays) to consent to receiving multiple products, up to a goal of what was called the “iron man kit” – back brace, neck brace, shoulder brace, two knee braces, two ankle braces, and two wrist braces. Marketing companies purchased those patient names, then paid telemedicine doctors to sign prescriptions and issue cut-and-paste justifications for patients they hadn’t examined and had rarely spoken with. The DME companies owned or managed by Burruss and Adams paid for the referral of these Medicare patients, generally between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute. All told, Burruss and Adams, through their more than 30 different DME companies, submitted bills topping $871 million, and received a whopping $424,648,137 in payment for supplying the mostly-unneeded braces. While Medicare was the primary target of the fraud, bills were submitted to Tricare, Civilian Health and Medical Program of the Department of Veterans Affairs (“CHAMPVA”), and Medi-Cal as well. DME companies associated with Burruss and Adams submitted claims for over 181,218 Medicare beneficiaries nationwide, including 11,312 elderly or disabled residents of California. The defendants have also been charged in the District of New Jersey and the Middle District of Florida for related conduct.
- United States v. Bell, et al. On September 18, 2020, father-and-son duo Anthony Duane Bell Sr. and Anthony Duane Bell Jr. were indicted for conspiracy to commit wire fraud for participating in a huge scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment. Through their companies, Universal Medical Solutions, the Bells paid between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute, in order to submit thousands of dollars in bills for the DME to Medicare, in violation of the health care fraud statutes, according to the indictment. Through just their single company, the Bells submitted over $49 million in bills to Medicare in less than two years. They also perpetuated their business model to increase their own profits by providing funds and the necessary contacts and introductions to set up other DME companies, and encouraging those DME companies to pay unlawful kickbacks by purchasing completed doctors’ orders – all so that they could obtain a “revenue share” (that is, a portion of the payments that those other DME companies received from Medicare). As a further deceptive aspect of their scheme, the defendants lied to Medicare about the ownership and control over their company, and Bell Jr. told multiple lies to the FBI when interviewed about the company in April 2019.
- United States v. Collins, et. al. On June 9, 2020, Jimmy Collins, Ashley Collins, Kyle Adams, Daniel Castro, and Jeremy Syto were indicted for health care fraud and paying and receiving kickbacks for Tricare referrals for their efforts to supply expensive compound medications to beneficiaries covered by Tricare, the health care benefit program for military service members and their dependents. Jimmy and Ashley Collins, a husband-and-wife team, allegedly created a multi-level-marketing network, paying marketing representatives to recruit Tricare beneficiaries at military bases such as Twenty-nine Palms and Miramar by paying them hundreds of dollars to sign up to receive the worthless compound creams. If those service members recruited additional Tricare beneficiaries, they received a portion of the TRICARE reimbursement that resulted. Doctors in Tennessee, who had never examined nor spoken with their purported patients, issued hundreds of prescriptions for these pharmaceuticals to the San Diego soldiers and sailors. The average price of these compounded drugs was $14,510.33 apiece. The conspiring pharmacies submitted over $65 million in bills to Tricare for these drugs, which most beneficiaries did not need and which many simply threw into the trash. With their ill-gotten gains, Jimmy and Ashley Collins purchased an $8 million yacht and farm equipment, which has been forfeited. Former U.S. Marines Adams and Castro, and U.S. Navy service member Syto, have pleaded guilty, admitting their participation in the Tricare fraud and kickback scheme. Each admitted to having received over $100,000 in kickbacks for receiving the worthless creams and for recruiting other service members into the scheme.
- United States v. Green, et. al. On June 29, 2020, Melinda Green and Ron Green were indicted for health care fraud and paying kickbacks for Tricare referrals for their efforts to supply expensive compound creams to beneficiaries covered by Tricare, the health care benefit program for military service members and their dependents. Though neither defendant is a pharmacist, they concocted compounds with the highest-priced ingredients in order to maximize the reimbursement from Tricare, then pushed their marketing representatives to pay doctors and clinics to prescribe these compounds that were supposedly customized for a patient’s individual needs. Through their companies, NHS Pharma and NHS Pharma Sales, they submitted over $4.5 million in bills to Tricare for these compounds, which beneficiaries did not need. The defendants are next due in court on January 8, 2021 at 11:00am.
The following cases were included in today’s takedown figures, but have been previously announced by this office:
- United States v. Matthews. On August 24, 2020, Donald Joseph Matthews, the former Vice President of Market Development for local genetics company Proove Biosciences, Inc., pleaded guilty to participating in a conspiracy to pay kickbacks to doctors for referring Medicare patients to Proove for genetic tests. To paper-over the illegal kickback scheme, the payments were disguised as compensation to doctors for participating in a clinical research study, although no study existed and doctors were told to fabricate the number of “hours” they worked on the study, when in reality they were being paid for each patient referred to Proove. Proove submitted more than $45 million in claims to Medicare for tests procured by the unlawful kickbacks and received approximately $21 million in unlawful payments.
https://www.justice.gov/usao-sdca/pr/vp-genetics-company-pleads-guilty-paying-physicians-sham-clinical-research-fees-part-21
- In re Progenity. On July 21, 2020, the United States reached a settlement with San Diego-based research laboratory Progenity, Inc., in which the company agreed to pay $49 million to resolve claims that it had defrauded Tricare, Medicare, and state health care benefit programs by knowingly using the incorrect code to bill for genetic testing that would otherwise not have been covered by those programs.
https://www.justice.gov/usao-sdca/pr/san-diego-laboratory-admits-fraudulent-tricare-billing-agrees-pay-49-million
- Dr. Prakash Bhatia. On April 30, 2020, local psychiatrist Dr. Prakash Bhatia agreed to pay $145,000 to resolve allegations that he overprescribed opioids, including fentanyl, hydromorphone, morphine, methadone, oxycodone, and oxymorphone, in violation of the civil provisions of the Controlled Substance Act. The United States’ allegations included that Dr. Bhatia inappropriately prescribed opioids along with benzodiazepines and/or muscle relaxants to the same patients, combinations known to increase the risk of abuse, addiction, and overdose.
https://www.justice.gov/usao-sdca/pr/san-diego-psychiatrist-pays-145000-resolve-opioid-overprescribing-investigation
In addition, in light of the ongoing opioid epidemic and an alarming increase in fentanyl overdose deaths within the Southern District, the U.S. Attorney’s Office continues to aggressively prosecute those responsible for illegally distributing fentanyl and other opioids that cause death irrespective of the defendant’s place in the chain of distribution of such deadly drugs.
- United States v. Garcia. On May 20, 2020, Lorenzo Anthony Garcia was indicted for distributing fentanyl that resulted in the death of a 15-year old high school junior who was a member of his school varsity football team. https://www.justice.gov/usao-sdca/pr/law-enforcement-issues-public-safety-warning-about-extreme-danger-fentanyl
- United States v. Davis. On August 18, 2020, Perry Edward Davis was indicted for distributing fentanyl and cocaine resulting the death of a 25-year old victim. The charges followed after three people overdosed and collapsed within minutes of each other outside of a local cocktail bar. Two females were revived by paramedics but the male victim did not survive.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
Some of the cases listed above are part of the joint FBI and HHS Operation Rubber Stamp and the 2020 Telemedicine takedown, which was coordinated by The National Rapid Response Strikeforce of the Health Care Fraud Unit of the Criminal Division Fraud Section. The Telemedicine takedown involves charges and guilty pleas in connection with widespread telemedicine schemes involving over $4 billion in false billing. The focus on telemedicine fraud builds on the 2019 telemedicine and durable medical equipment takedown ("Operation Brace Yourself"), which resulted in an estimated cost avoidance of over $1.5 billion in the amount paid by Medicare for orthotic braces in the seventeen months since the takedown, preserving the Medicare trust fund for legitimate medical care. In addition, CMS/CPI separately announced today that it took the largest number of adverse administrative actions resulting from a single administrative health care fraud investigative initiative in history in revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.
For further information about the national takedown, see https://www.justice.gov/opa/pr/national-health-care-fraud-and-opioid-takedown-results-charges-against-345-defendants.
DEFENDANTS Case Number 202980-WQH
Charles A. Burruss, 51, San Diego, CA
Ardalaan “Armani” Adams, 33, San Diego, CA
SUMMARY OF CHARGES
Conspiracy to Commit Wire Fraud – Title 18, U.S.C., 1349
Maximum penalty: Twenty years in prison and $500,000 fine, or twice the pecuniary gain / loss
AGENCIES
Federal Bureau of Investigation
US. Department of Health and Human Services, Office of Inspector General
DEFENDANTS Case Number 202887-WQH
Anthony Duane Bell Sr., 52, El Cajon, CA
Anthony Duane Bell Jr., 30, Los Angeles, CA
SUMMARY OF CHARGES
Conspiracy to Commit Health Care Fraud and Pay Kickbacks – Title 18, U.S.C., 371
Maximum penalty: Five years in prison and $500,000 fine
Health Care Fraud – Title 18, U.S.C., 1347
Maximum penalty: Ten years in prison and $500,000 fine, or twice the pecuniary gain / loss
Unlawful Remuneration – Title 42, U.S.C., 1320d-7b(b)
Maximum penalty: Four years in prison and $500,000 fine, or twice the pecuniary gain / loss
False statement to Government – Title 18, U.S.C., 1001
Maximum Penalty: Five years in prison and $250,000 fine
AGENCIES
Federal Bureau of Investigation
US. Department of Health and Human Services, Office of Inspector General
DEFENDANTS Case Number 18CR432-JLS
Jimmy Collins, 56, Tennessee
Ashley Collins, 34, Tennessee
Kyle Adams, 33, Texas
Daniel Casto, 32, Illinois
Jeremy Syto, 27, California
SUMMARY OF CHARGES
Conspiracy to Commit Health Care Fraud – Title 18, U.S.C., 1349
Maximum penalty: Ten years in prison and $500,000 fine
Conspiracy to Pay and Receive Illegal Remunerations – Title 18, U.S.C., 371
Maximum penalty: Five years in prison and $500,000 fine
Receive Illegal Remunerations – Title 42, U.S.C., 1320a-7b(b)(1)
Maximum penalty: Four years in prison and $500,000 fine
Pay Illegal Remunerations – Title 42, U.S.C., 1320a-7b(b)(2)
Maximum penalty: Four years in prison and $500,000 fine
AGENCIES
Defense Criminal Investigative Service
Federal Bureau of Investigation
DEFENDANTS Case Number 18CR432-JLS
Melinda Green, 59, Escondido, CA and Windermere, FL
Ronald Green, 66, Escondido, CA and Windermere, FL
SUMMARY OF CHARGES
Conspiracy to Commit Health Care Fraud and Pay Kickbacks – Title 18, U.S.C., 371
Maximum penalty: Five years in prison and $500,000 fine
Unlawful Remuneration – Title 42, U.S.C., 1320d-7b(b)
Maximum Penalty: Four years in prison and $500,000 fine, or twice the pecuniary gain / loss
AGENCY
Defense Criminal Investigative Service
DEFENDANT Case Number 20CR1222-GPC
Lorenzo Anthony Garcia, 21, Brawley, CA
SUMMARY OF CHARGES
Manufacture, distribute, or possess with intent to manufacture, distribute, or dispense a controlled substance resulting in death or serious bodily injury – Title 21, U.S.C., Section 841(a)(1), (b)(1)(C)
Maximum Penalty: Mandatory minimum 20 years in prison, Maximum life in prison
AGENCY
Drug Enforcement Administration
DEFENDANT Case Number 20CR2500-LAB
Perry Edward Davis, 44, San Diego, CA
SUMMARY OF CHARGES
Manufacture, distribute, or possess with intent to manufacture, distribute, or dispense a controlled substance resulting in death or serious bodily injury – Title 21, U.S.C., Section 841(a)(1), (b)(1)(C)
Maximum Penalty: Mandatory minimum 20 years in prison, Maximum life in prison
AGENCIES
Drug Enforcement Administration
El Cajon Police Department
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
- United States v. Burruss, et. al. On September 29, 2020, Charles A. Burruss and Ardalaan “Armani” Adams were charged with conspiracy to commit wire fraud for participating in a massive scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment. According to the charging documents, the defendants created a network of over 30 DME companies in the names of straw and nominee owners, to increase their profits and avoid scrutiny and audits from Medicare that could occur if the same companies submitted hundreds or thousands of bills for similar DME products in a short period of time. The United States alleges that the Medicare beneficiaries were often harassed by telemarketers through multiple phone calls per day, to accept back, knee, wrist, and other braces covered by Medicare. Because they were paid by the brace, the telemarketers used fast-talking, high-pressure tactics to “upsell” patients (although the patients actually paid nothing for the braces, not even the required co-pays) to consent to receiving multiple products, up to a goal of what was called the “iron man kit” – back brace, neck brace, shoulder brace, two knee braces, two ankle braces, and two wrist braces. Marketing companies purchased those patient names, then paid telemedicine doctors to sign prescriptions and issue cut-and-paste justifications for patients they hadn’t examined and had rarely spoken with. The DME companies owned or managed by Burruss and Adams paid for the referral of these Medicare patients, generally between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute. All told, Burruss and Adams, through their more than 30 different DME companies, submitted bills topping $871 million, and received a whopping $424,648,137 in payment for supplying the mostly-unneeded braces. While Medicare was the primary target of the fraud, bills were submitted to Tricare, Civilian Health and Medical Program of the Department of Veterans Affairs (“CHAMPVA”), and Medi-Cal as well. DME companies associated with Burruss and Adams submitted claims for over 181,218 Medicare beneficiaries nationwide, including 11,312 elderly or disabled residents of California. The defendants have also been charged in the District of New Jersey and the Middle District of Florida for related conduct.
National Health Care Fraud and Opioid Takedown Results in Largest Enforcement Action in Department of Justice HistoryRead the Press Release
WASHINGTON – Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division, Deputy Inspector General Gary Cantrell of the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Administrator Tim McDermott of the Drug Enforcement Administration (DEA) today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses, and other licensed medical professionals.
These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.
The Middle District of Florida (MDFL) is playing a significant role in today’s historic announcement. Collaborative efforts among federal, state, and local partners have resulting in charges against 19 defendants in the MDFL.
“Patients place their lives in the hands of medical professionals every day,” said U.S. Attorney Maria Chapa Lopez for the Middle District of Florida. In doing so, they rely upon the oath that they will put forth their best efforts to do no harm. Not only is fraud and abuse of healthcare programs illegal, but they compromise the standard of care and the public trust. We will continue to aggressively investigate these claims and hold those who violate the law accountable by all means.”
"The FBI and its law enforcement partners are determined to expose those who commit healthcare fraud." said Special Agent in Charge of FBI Tampa Division Michael F. McPherson. "We are all victims of this crime when federal healthcare programs that taxpayers fund are cheated."
“We will continue to hold medical professionals accountable for the great responsibility with which they have been entrusted, said Omar Pérez Aybar, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General. “There are no shortcuts when it comes to patient care.”
David Spilker, Special Agent in Charge at the VA Office of Inspector General stated, “The continued oversight of medical professionals who provide community care to veterans—our nation’s heroes—safeguards the integrity of VA’s healthcare programs. The VA OIG will continue to work with our law enforcement partners to hold providers who fraudulently bill CHAMPVA responsible for their unlawful conduct.”
"Unfettered greed erodes public trust, stifles our economy, and hurts hard-working Americans," stated Special Agent in Charge Brian Payne of IRS Criminal Investigation's Tampa Field Office. "Working with our law enforcement partners, we will fervently employ our unique financial investigative skills to lead the fight against white collar crime."
HEALTH CARE FRAUD CASES
The MDFL health care fraud cases included in today’s announcement involve charges brought against 12 defendants for health care fraud and violations of the federal Anti-Kickback statute. These defendants have been charged with submitting hundreds of millions of dollars in false and fraudulent claims to Medicare and other federal health care programs and employing abusive schemes that often involved telemedicine.
All of the MDFL cases described in this section are being investigated by various agencies, including the U.S. Department of Health and Human Services–Office of Inspector General, the Federal Bureau of Investigation, the Department of Veterans Affairs–Office of Inspector General, and the Internal Revenue Service Criminal Investigation.
In September 2020, Charles Burruss (51, San Diego, CA) and Ardalaan “Armani” Adams (33, San Diego, CA) were charged with conspiracy for defrauding Medicare through the submission of medically unnecessary durable medical equipment (“DME”) claims. According to court documents, Adams and Burruss paid millions in kickbacks and bribes to acquire the DME claims, which had been generated using aggressive telemarketing strategies in concert with fraudulent telemedicine involving bribed doctors who rarely spoke to the beneficiaries. During the conspiracy, Burruss, Adams, and their conspirators submitted the illegal DME claims to Medicare and other programs through a conglomerate of fraudulently established DME companies; at least 22 of those fraudulent companies were located in the MDFL. Through the MDFL companies, the conspirators submitted more than $343 million in illegal DME claims to Medicare and to the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), resulting in over $180 million in payments. The defendants have also been charged in related cases in the Southern District of California and the District of New Jersey. Each defendant faces a collective maximum penalty of 25 years’ imprisonment, if imposed consecutively, for the pending charges. The MDFL case is being prosecuted by Assistant United States Attorney Kristen Fiore.
On July 31, 2020, Richard Epstein (28, Aurora, CO) and Michael Nolan (47, Tampa, FL) each pleaded guilty, in separate cases, to conspiracy to commit health care fraud for defrauding Medicare through the submission of medically unnecessary claims for DME and cancer genetic testing (“CGx testing”). According to court documents, during the conspiracy, Epstein and Nolan ran a telemarketing company in Tampa known as REMN Management, LLC, that targeted the elderly to generate thousands of medically unnecessary orders for DME and CGx testing. The two men also created and operated Comprehensive Telcare, LLC (“CompTel”), a “telemedicine” company through which they illegally bribed medical practitioners to sign the orders regardless of medical necessity. They then illegally sold the signed orders to client-conspirators for submission to Medicare. The conspiracy resulted in the submission of at least $134 million in fraudulent claims to Medicare and other federal health benefit programs, resulting in approximately $29 million in payments. The defendants are each facing a maximum penalty of 10 years in federal prison. The cases are being prosecuted by Assistant United States Attorney Kristen Fiore and Trial Attorney Gary A. Winters of the DOJ Criminal Division’s Fraud Section.
Paul Savastano (49, Lake Worth, FL), who conspired with Epstein and Nolan, also pleaded guilty on July 31, 2020, to health care fraud conspiracy. Savastano’s role in the conspiracy was that of a broker who oversaw CompTel’s illegal delivery of thousands of the signed orders to Medicare-enrolled DME supply companies, including at least five DME companies secretly controlled by Patsy Truglia (charged separately). For his part, Savastano received a percentage of the bribes as his fee. He is facing a maximum penalty of 10 years in federal prison. The case is being prosecuted by Assistant United States Attorney Kristen Fiore.
In June 2020, Dr. Jonathan Michael Rouffe (47, Boca Raton, FL) and Dr. Richard Davidson (41, Delray Beach, FL) pleaded guilty in separate cases to conspiracy to commit health care fraud. Each faces a maximum penalty of 10 years in federal prison. According to court documents, Rouffe, Davidson, and other conspirators secretly controlled conglomerates of fraudulently established DME supply companies. During the conspiracies, the companies submitted more than $31 million in illegal DME claims to Medicare and the CHAMPVA, resulting in over $16 million in payments. The conspirators paid millions in kickbacks and bribes to acquire illegally signed doctors’ orders for DME from so-called “marketers,” who, for their part, had generated the signed doctors’ orders using aggressive telemarketing strategies in concert with fraudulent telemedicine involving bribed doctors. The cases are being prosecuted by Assistant United States Attorney Kristen A. Fiore. Additional details can be found in press release.
In August 2020, Sajid “Jay” Geronimo (41, Buena Park, CA) was charged with conspiracy to commit health care fraud. According to court documents, Geronimo owned a telemarketing company known as Cure Healthcare, Inc. that targeted the Medicare-aged population using offshore call centers that employed aggressive tactics to generate orders for DME supply companies. Cure then packaged this information into the format of doctors’ orders and bribed doctors for their signatures. Once signed, Cure sold the illegally signed doctors’ orders to client-conspirators as support for fraudulent claims submitted to Medicare and CHAMPVA, receiving more than $12 million for these illegal sales. Geronimo is facing a maximum penalty of 10 years in federal prison. The case is being prosecuted by Assistant United States Attorney Kristen A. Fiore.
On September 4, 2020, Samuel Friedman (45, Land O’ Lakes, FL) was sentenced to four years in federal prison for conspiracy to commit health care fraud. According to court documents, through his telemarketing company SKF Enterprises, LLC, Friedman targeted the Medicare-aged population using offshore call centers that employed aggressive tactics to generate orders for DME. SKF then packaged this information into the format of doctors’ orders and bribed doctors for their signatures. Once signed, SKF sold the fraudulently signed doctors’ orders to client-conspirators as support for fraudulent claims submitted to Medicare and CHAMPVA, receiving more than $3.4 million for these illegal sales. Forfeiture was ordered against his interests in real property and a bank account containing nearly $475,000. Restitution was ordered in the amount of $3.42 million. The case was prosecuted by Assistant United States Attorney Kristen A. Fiore. Additional details can be found in press release.
In September 2020, Christopher Ryan Helfrich (30, Tampa, FL) was charged with conspiracy to commit health care fraud. According to court documents, Helfrich and his conspirators owned a telemarketing operation known as A2B Insurance Solutions LLC. Helfrich also wholly owned another telemarketing company, CRH Holdings, LLC. Through these enterprises, Helfrich and his conspirators targeted the Medicare-aged population using offshore call centers that employed aggressive tactics to generate orders for DME. They then packaged this information into the format of doctors’ orders and bribed doctors for their signatures. Once signed, the conspirators sold the fraudulently signed doctors’ orders to client-conspirators as support for fraudulent claims submitted to Medicare and CHAMPVA, receiving more than $2.2 million for these illegal sales. The case is being prosecuted by Assistant United States Attorney Kristen A. Fiore and DOJ Trial Attorney Catherine Wagner of the Criminal Division’s Fraud Section.
Patsy Truglia (52, Parkland, FL) and Ruth Bianca Fernandez (37, Lauderhill, FL) were charged in a 13-count indictment alleging a conspiracy to defraud Medicare and to commit health care fraud, submit false statements to Medicare, and violate the federal Anti-Kickback statute, as well as other related charges. The indictment was unsealed with the defendants’ arrests on September 9, 2020. According to the indictment, Truglia and Fernandez conspired to create and submit fraudulent claims to Medicare for medically unnecessary DME, using aggressive telemarketing that targeted Medicare beneficiaries, bogus telemedicine encounters, and signed doctors’ orders secured using illegal bribes and kickbacks. Through the conspiracy, Truglia and Fernandez caused the submission of approximately $25 million of fraudulent claims to Medicare and other federal health care programs, including CHAMPVA, resulting in payments of approximately $10 million from the programs. The case was charged by Assistant U.S. Attorney Kristen Fiore and is being prosecuted by Assistant U.S. Attorney Jay G. Trezevant.
OPIOID FRAUD AND ABUSE DETECTION UNIT CASES
Additional MDFL cases included in today’s announcement involve charges brought against 7 defendants who are being prosecuted by the MDFL Opioid Fraud and Abuse Detection Unit (“OPFAD”), a Department of Justice program created to help combat the devastating opioid crisis that is ravaging families and communities across America and to prosecute individuals who have contributed to the opioid epidemic. OPFAD specifically focuses on opioid-related fraud and abuse by medical and health care professionals who have contributed to the prescription opioid epidemic.
Richard De La Cruz (55, Jacksonville, FL) pleaded guilty and was sentenced on August 25, 2020, to five years’ probation for making false statements relating to health care matters in connection with writing opioid prescriptions. De La Cruz was also ordered to pay restitution and $42,450 in forfeiture. According to court documents, De La Cruz, a Florida-licensed doctor, failed to conduct in-person evaluations with patients before prescribing opiates, as required by Florida law, and concealed such, when he worked for a Kentucky company that provided in-home primary care for patients. This case was investigated by the HHS-OIG. The case was prosecuted by Assistant U.S. Attorneys Kelley Howard Allen and Greg Pizzo. Additional details can be found in press release.
Hong Truong (60, Dunedin, FL), a licensed pharmacist, pleaded guilty to one count of distributing and dispensing a controlled substance outside the scope of professional practice.She was sentenced on September 23, 2020, to 30 months in federal prison, fined $500,000, and ordered to forfeit $766,819 in illegal drug proceeds. According to court documents, Truong owned and operated HP Pharmacy in Pinellas Park, where she dispensed Schedule II controlled substance prescriptions outside the usual course of professional practice, that were not issued for a legitimate medical purpose, and without resolving several red flags. Truong and the pharmacy tech she employed, Jessica Evans (34, St. Petersburg, Florida), falsely noted on the back of many prescriptions that the prescription had been verified with the prescriber’s office, when such was not the case. Evans also pleaded guilty for her role in filling the illegal opiate prescriptions and was sentenced on August 27, 2020, to 25 months in federal prison. Also charged in connection with filling false prescriptions at HP Pharmacy were Lucretia Mullan (35, St. Petersburg, FL) and Patrice Jackson (37, Bradenton, FL) who were sentenced last summer to federal prison terms of 20 months and 70 months, respectively. This case is being investigated by the Drug Enforcement Administration. The case was prosecuted by Assistant U.S. Attorneys Kelley Howard Allen and Greg Pizzo. Additional details can be found in press release.
Steven Chun (57, Sarasota, FL) and Daniel Tondre (50, Tampa, FL) were charged in a 16-count indictment unsealed on September 16, 2020. According to the indictment, Chun owned and operated a Sarasota pain management practice where he prescribed Subsys, a highly addictive and expensive fentanyl spray, to his patients in return for kickbacks paid by the manufacturer, Insys Therapeutics. Insys employed Tondre to work as a pharmaceutical sales representative for Chun’s territory. Through Tondre, Insys paid more than $275,000 in kickbacks to Chun in the form of sham speaker fees and other benefits in return for Chun prescribing higher and larger quantities of Subsys. This case is being investigated by the FBI, HHS-OIG, and the Defense Criminal Investigation Service. It is being prosecuted by Assistant U.S. Attorney Kelley Howard-Allen. Additional details can be found in press release.
An information or indictment is merely a formal charge that a defendant has committed one or more violations of federal criminal law, and every defendant is presumed innocent unless, and until, proven guilty.
NXIVM Executive Board Member Clare Bronfman Sentenced to 81 Months in Prison for Identity Theft and Immigration OffensesRead the Press Release
Clare Bronfman, a high-ranking member of Nxivm’s Executive Board, was sentenced by United States District Judge Nicholas G. Garaufis today in federal court in Brooklyn to 81 months’ imprisonment for conspiracy to conceal and harbor aliens for financial gain and fraudulent use of personal identification information. Bronfman pleaded guilty in April 2019 and pursuant to her plea agreement forfeited $6 million. The Court also imposed a fine of $500,000 and restitution to be paid to victim “Jane Doe 12” in the amount of $96,605.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the sentence.
“Defendant Bronfman twisted our immigration system to serve a reprehensible agenda, and engaged in flagrant fraud to the detriment of her victims and in the service of a corrupt endeavor,” stated Acting United States Attorney DuCharme. “With today’s sentence, she has been held accountable for her crimes.”
Mr. DuCharme extended his appreciation to the Department of Homeland Security, Homeland Security Investigations, the New York State Police and the United States Attorney’s Office for the Northern District of New York for their assistance during the investigation and prosecution.
“Today, Clare Bronfman is the first of many to be sentenced for the crimes she committed in furtherance of Nxivm’s objectives. While her fate in no way removes the trauma Nxivm’s victims will likely continue to suffer, it does highlight the government’s efforts to bring to justice all of those involved in a series of illegal acts carried out for the benefit of this organization. She recently wrote to the judge telling him that Nxivm and Keith Raniere had changed her life for the better. She will now have more than six years behind bars to contemplate that sentiment, and decide once and for all if it’s as easy to accept as she once believed it to be,” stated FBI Assistant Director-in-Charge Sweeney.
“IRS-CI specializes in financial investigations where following the money much of the time is a result of greed,” stated IRS-CI Special Agent-in-Charge Larsen. “Defendant Bronfman is now paying the price for her behavior that reached a depraved level beyond just financial greed.”
Between October 2015 and January 2018, Bronfman recruited individuals into Nxivm-affiliated organizations and then sought to obtain visas or other immigration status for them based on false or fraudulent representations. Bronfman recruited one woman from Mexico (“Jane Doe 12”) to work for a fitness-related Nxivm-affiliated company. Bronfman then submitted documents purporting to hire Jane Doe 12 as a management consultant with a salary of $3,600 per month in order to secure a work visa for her, but Bronfman paid Jane Doe 12 only approximately $4,000 over the course of more than a year for her work. In response to Jane Doe 12’s pleas to be paid a living wage, Bronfman told Jane Doe 12 she would have to “earn” her visa by doing additional uncompensated work.
After the death of one of Raniere’s partners, Bronfman participated in a scheme to assist Raniere in fraudulently using the partner’s credit card information to keep money and assets out of Raniere’s name to evade paying income tax and his creditors or their judgments against him.
Five of Bronfman’s co-defendants were previously convicted on various charges and are awaiting sentencing. On June 19, 2019, Keith Raniere was convicted after a jury trial of racketeering and racketeering conspiracy, sex trafficking, attempted sex trafficking and sex trafficking conspiracy, forced labor conspiracy and wire fraud conspiracy. On March 12, 2019, Nancy Salzman, Nxivm’s president and co-founder, pleaded guilty to racketeering conspiracy. On March 25, 2019, Lauren Salzman, a first-line “master” in DOS, a secret society within Nxivm with levels of women “slaves” headed by “masters,” pleaded guilty to racketeering and racketeering conspiracy. On April 8, 2019, Allison Mack, another first-line “master” in DOS, pleaded guilty to racketeering and racketeering conspiracy. On April 19, 2019, Kathy Russell, a bookkeeper for Nxivm, pleaded guilty to visa fraud.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Tanya Hajjar and Mark J. Lesko are in charge of the prosecution. Assistant United States Attorney Karin Orenstein of the Office’s Civil Division is handling forfeiture matters.
The Defendant:
CLARE BRONFMAN
Age: 41
Clifton Park, New YorkE.D.N.Y. Docket No. 18-CR-204 (S-2) (NGG)
Montreal Man Pleads Guilty to Conspiring to Import a Controlled SubstanceRead the Press Release
ALBANY, NEW YORK – Mihale Leventis, a/k/a “Rookie,” a/k/a “Big Mike,” age 44, of Montreal, Quebec, pled guilty yesterday to conspiring to import marijuana into the United States.
The announcement was made by Acting United States Attorney Antoinette T. Bacon and Special Agent in Charge Ray Donovan, U.S. Drug Enforcement Administration (DEA), New York Division.
As part of his guilty plea, Leventis admitted that from 2007 to 2009, he worked with a drug trafficking organization operating in Quebec, the Northern District of New York, and elsewhere to smuggle large quantities of marijuana from Canada into the United States for distribution to the organization’s customers. Leventis admitted that he coordinated the movement of marijuana from the organization’s suppliers in Canada to the U.S.-Canadian border so that it could be smuggled into the United States, and that he kept track of the organization’s proceeds.
Leventis’s guilty plea follows his extradition from Canada.
United States District Judge Mae A. D’Agostino will sentence Leventis on December 17, 2020. He faces up to 20 years in prison, and a fine up to $1 million. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
This case was investigated by the DEA and is being prosecuted by Assistant U.S. Attorney Katherine Kopita. Leventis was extradited to the United States with assistance from the Department of Justice’s Office of International Affairs.
Milwaukee Corporation Established to Provide Jobs to Blind or Visually-Impaired Individuals Agrees to Pay $1.9 Million to Resolve Allegations It Violated the False Claims Act and Anti-Kickback ActRead the Press Release
United States Attorney Matthew D. Krueger announced today that Industries for the Blind and Visually Impaired, Inc., (IBI) has agreed to pay more than $1.9 million to resolve allegations that it violated the False Claims Act and Anti-Kickback Act in connection with certain federal contracts set aside to employ blind or visually-impaired workers.
IBI was established to increase employment and training opportunities for persons who are blind or visually-impaired. Headquartered in West Allis, Wisconsin, IBI receives set-aside contracts from federal agencies under the federal government’s AbilityOne Program. In exchange, IBI agrees to give jobs to workers who are blind or visually-impaired and comply with other contractual requirements.
The settlement resolves allegations that, between 2009 and 2018, IBI misrepresented to the U.S. AbilityOne Commission when requesting set-aside contracts for furniture design and installation services that it would maintain a 3:1 blind-to-sighted ratio of employees, and that furniture designers and sales representatives working for IBI took impermissible payments and gifts from manufacturers on certain contracts. It also resolves claims that IBI improperly subcontracted a set-aside contract for screen-printed clothing to an entity that did not generally use blind labor.
“AbilityOne contractors have a duty to follow the law and meet their important commitments to employ workers who are blind or severely disabled,” said Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division. “This settlement demonstrates our continuing vigilance to ensure that those receiving set-aside contracts under the AbilityOne Program comply with the conditions of their awards.”
The AbilityOne Commission operates under the authority of the Javits-Wagner-O’Day Act, which was passed in 1971 to increase employment and training opportunities for persons who are blind or visually-impaired, or who have disabilities so severe that they are otherwise unable to work at competitive employment. More than 400 companies participate in the AbilityOne Program and receive set-aside federal contracts in exchange for employing approximately 45,000 people who are blind or have severe disabilities.
“By its conduct, IBI thwarted the AbilityOne Program’s goal of increasing employment and training opportunities for persons who are blind or visually-impaired,” said U.S. Attorney Matthew D. Krueger for the Eastern District of Wisconsin. “This settlement reflects our office’s continuing efforts to combat violations of the False Claims Act and protect federal programs.”
“We are committed to preserving the integrity of the AbilityOne program. False claims on the program exclude blind and significantly disabled workers from opportunities and hinders law-abiding AbilityOne contractors,” said Thomas K. Lehrich, Inspector General of the U.S. AbilityOne Commission. “Working with DOJ and our partners, the Office of Inspector General protects the confidence and public trust in the largest employment program in the nation of blind and significantly disabled workers.”
“The conduct at issue in this case undermined the core purpose of the AbilityOne program -- to provide jobs for the blind and disabled. The settlement reflects our commitment to protect the integrity of the program and hold companies accountable for attempts to subvert it,” said Carol F. Ochoa, Inspector General for the General Services Administration (GSA).
The settlement with IBI resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States. Accordingly, the whistleblower will receive a share of the settlement. The lawsuit is captioned United States ex rel. Inzeo v. Industries for the Blind, Inc., 15-cv-996, in the United States District Court for the Eastern District of Wisconsin. The claims resolved by the settlement are allegations only; IBI does not admit liability for the allegations.
The settlement also resolves conduct that IBI investigated and disclosed to the United States concerning the receipt of gifts and money by its furniture designers and sales representatives that was not alleged in the whistleblower complaint. It received credit in the settlement for its disclosure, cooperation, and remediation efforts in connection with this conduct.
Assistant United States Attorney Lisa Yun and Attorney Jennifer Chorpening of the Civil Frauds Section represented the government in this matter. The settlement was the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of Wisconsin and the Commercial Litigation Branch of the Justice Department’s Civil Division, with assistance from GSA’s Office of Inspector General, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Defense Contract Audit Agency, the AbilityOne Office of the Inspector General, and the U.S. Department of the Interior Office of Inspector General.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
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Michigan Man Pleads Guilty to Federal Firearm OffensesRead the Press Release
BOSTON – A Michigan man pleaded guilty yesterday in federal court in Springfield to firearm charges.
William Scott, 31, pleaded guilty to an Information charging him with receipt and possession of unregistered firearms, making a false statement or representation with respect to information required to be kept by a federal firearms licensee, and making false entries in, failing to make appropriate entries in, and failing to properly maintain records as required. U.S. District Court Judge Mark D. Mastroianni scheduled sentencing for Feb. 1, 2021.
Scott, who worked for Dark Horse Gunsmithing in South Hadley, Mass. at the time of these offenses, received and possessed a machinegun which was not registered in the National Firearms Registration and Transfer Record as required by the National Firearm Act. In addition, on April 12, 2016 and July 20, 2016, Scott made a false statement or representation with respect to information required to be kept by a federal firearms licensee. Scott also made false entries in, failed to make appropriate entries in, and failed to properly maintain records as required of a federal firearms licensee.
The charge of receipt and possession of an unregistered firearm provides for a sentence up to 10 years in prison, three years of supervised release and a fine of up to $250,000. The charge of making a false statement or representation with respect to information required to be kept by a federal firearms licensee provides for a sentence of up to five years in prison, three years of supervised release and a fine of up to $250,000. The charge of making false entries in, failing to make appropriate entries in, and failing to properly maintain records as required provides for a sentence of up to one year in prison, one year of supervised release and a fine of up to $100,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Andrew E. Lelling and Kelly Brady, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms & Explosives, Boston Field Division made the announcement. Assistant U.S. Attorney Catherine G. Curley of Lelling’s Springfield Branch Office is prosecuting the case.
Mexican National Convicted of Firearm and Drug ChargesRead the Press Release
United States Attorney Joe Kelly announced that Jose Mena-Valdez, 36, of Mexico, was convicted on September 30, 2020, following a jury trial before Senior United States District Judge Joseph F. Bataillon of possession with intent to distribute fifty grams or more of methamphetamine and possession of a firearm in furtherance of a drug trafficking offense. Sentencing for Mena-Valdez is scheduled for January 4, 2021. Mena-Valdez is facing a term of imprisonment of at least five years to life on the drug charge and a mandatory consecutive term of imprisonment of at least five years for the firearm charge. There is no parole in the federal system.
At trial, Omaha Police officers testified that on October 30, 2018, they stopped Mena-Valdez after observing several traffic violations. Mena-Valdez was alone in the vehicle. When making contact with Mena-Valdez, the officers smelled a strong odor of alcohol and observed an open container containing alcohol. During a search of the vehicle, half a pound of methamphetamine was located on the passenger side floorboard and a stolen firearm was located between the passenger seat and the center console. The jury watched video and audio recordings of the encounter that were taken from body and cruiser cameras.
In addition to the testimony of the officers, a Nebraska Public Service Laboratory technologist, based out of the University of Nebraska Medical Center, testified to the identification, purity, and weight of the methamphetamine.
This case was investigated by the Omaha Police Department as part of Project Safe Neighborhood. Project Safe Neighborhood is a national initiative of the Department of Justice that was announced in 2001 to reduce and prevent violent crime and make the nation’s neighborhoods safer.
Meth dealer handed 25-year prison sentenceRead the Press Release
CORPUS CHRISTI, Texas – Two Corpus Christi residents have been ordered to federal prison following their convictions of trafficking meth, announced U.S. Attorney Ryan K. Patrick.
Scott Winterberg Jr., 26, and Brianna Sanchez, 23, pleaded guilty March 4.
Today, U.S. District Judge David S. Morales ordered Winterberg to serve a 300-month sentence for the drug conspiracy charge, while Sanchez received 102 months for her respective role. Each will also serve five years of supervised release following their sentences.
Between September and December 2019, Winterberg and Sanchez were involved in a conspiracy to possess with intent to distribute meth. They utilized social media to market and sell narcotics and made multiple meth sales to undercover law enforcement.
On Dec. 17, 2019, Winterberg led law enforcement on a high speed chase after they had attempted to initiate a traffic stop of his vehicle. It lasted over 20 minutes and exceeded speeds of 120 mph. Upon his arrest, authorities discovered he was in possession of a handgun, ammunition and cocaine.
Sanchez and Winterberg both admitted they were trafficking meth. Sanchez further acknowledged they sold over 20 ounces each month from August through November 2019.
Both have been and will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.
The Drug Enforcement Administration; Bureau of Alcohol, Tobacco, Firearms and Explosives; Corpus Christi Police Department and Texas Department of Public Safety conducted the investigation. Assistant U.S. Attorney David M. Paxton is prosecuting the case.
Matalolo Sentenced to 18 Months in Prison for Possessing Firearm While Subject to Domestic Violence Protective OrderRead the Press Release
ST. GEORGE, UT – Rashaan Mamao Matalolo of St. George, Utah, will spend 18 months in federal prison after pleading guilty to one count of possession of a firearm while subject to a domestic violence protective order. Under federal law, individuals subject to a domestic violence protective order are prohibited from possessing a firearm. U.S. District Judge David Nuffer imposed the sentence Wednesday morning in federal court in St. George.
Matalolo, 25, pleaded guilty to the charge in a Felony Information at a hearing in July before U.S. Magistrate Judge Paul Kohler. He admitted that he possessed a Smith & Wesson .40 caliber pistol on May 8, 2020. He also stipulated that he knew he was subject to domestic violence protective order that prohibited him from possessing firearms.
“Cases that allow us to get firearms out of the hands of domestic violence abusers are always a priority. Law enforcement officers around the state are watching for such violations and refer the cases to us. If anyone knows of someone in possession of a firearm while subject to a domestic violence protective order, please reach out to your local police department,” U.S. Attorney John W. Huber said today.
“This is critically important as we work to protect victims of domestic violence during this time of COVID-19. Many stressors are exacerbated during the pandemic, including isolation and financial strain. Victims are in danger if they are isolated with an abuser or fear retaliation if they separate from the abuser,” Huber said. “With these types of prosecutions, we have a valuable tool to help protect victims.”
Matalolo came to the attention of officers with the St. George Police Department about 12:15 a.m. on May 8, 2020. Officers made contact with three individuals, including Matalolo, in the parking lot of the Clarion Suites in St. George. According to a complaint filed in the case, officers smelled the odor of marijuana and observed that an underage individual had an open can of beer.
An officer observed a handgun holstered on the side of a fanny pack Matalolo was wearing on his hips. As officers attempted to detain the three individuals, Matalolo fled on foot. An officer chasing him observed him drop the fanny pack and the firearm on the ground. Matalolo was able to escape and was not apprehended by officers that day.
Officers found the firearm Matalolo dropped. It did not contain ammunition and was later determined to be stolen. The gun holster was still attached to the fanny pack. Officers found identification documents belonging to Matalolo inside the fanny pack. Officers determined that Matalolo is subject to a valid protective order. He was arrested May 24, 2020, on an unrelated drug offense and booked into the Washington County jail.
The case is being prosecuted by Assistant U.S. Attorneys in the St. George Office of the U.S. Attorney’s Office in Utah. Officers with the St. George Police Department and special agents of the DEA are investigating the case.
Malvern Man Sentenced to 10 Years in Federal Prison for Firearms PossessionRead the Press Release
Fayetteville, Arkansas – David Clay Fowlkes, First Assistant United States Attorney for the Western District of Arkansas, announced that James Rhodes, age 35, was sentenced today to 120 months in federal prison, followed by three 3 years of supervised release for being a Felon in Possession of a Firearm. The Honorable Timothy L. Brooks presided over the sentencing hearing in the United States District Court in Fayetteville.
According to court records, on or about December 9, 2019, Rhodes, having previously been convicted of a felony offense, was arrested for shoplifting and found to possess methamphetamine. During the investigation investigators learned that Rhodes had been staying at a hotel and that additional methamphetamine and a firearm were located in the hotel room. Investigators were able to verify that Rhodes had rented a room at a hotel in Bentonville, Arkansas. A search of the room resulted in Investigators locating a loaded handgun.
A federal grand jury indicted Rhodes in January 2020, and he entered a guilty plea in May 2020.
This case was prosecuted as a part of the Department of Justice=s Project Safe Neighborhoods Initiative, which is aimed at reducing gun and gang violence, deterring illegal possession of firearms and improving the safety of residents in the Western District of Arkansas. Participants in the initiative include federal, state and local law enforcement agencies.
This case was investigated by the Rogers Police Department, the Drug Enforcement Administration and the Bureau of Alcohol, Fire, Tobacco, and Explosives (ATF). Assistant United States Attorney Amy Driver prosecuted the case for the United States.
Largest Health Care Fraud and Opioid Enforcement Action in Department of Justice History Results in Charges Against 345 Defendants Responsible for More than $6 Billion in Alleged Fraud LossesRead the Press Release
BEAUMONT, Texas – The Department of Justice Criminal Division today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including the Eastern District of Texas. In conjunction with the takedown, CMS Center for Program Integrity announced that it has taken a record-breaking number of administrative actions related to telemedicine fraud, revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes.
These defendants—more than 100 doctors, nurses and other licensed medical professionals—have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.
Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic. The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.
“The nationwide actions announced today demonstrate the Department of Justice’s commitment to combating health care fraud,” said U.S. Attorney Stephen J. Cox. “The Eastern District of Texas applauds the efforts of our law enforcement partners and commits to continued collaboration in order to hold accountable those who steal from federal health care programs and to protect the beneficiaries who rely on them.”
Telemedicine Fraud Cases
The largest amount of alleged fraud loss charged in connection with the cases announced today – $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts – relates to schemes involving telemedicine: the use of telecommunications technology to provide health care services remotely. According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers.
The continued focus on prosecuting health care fraud schemes involving telemedicine builds on the efforts and impact of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of more than $1.5 billion in the amount paid by Medicare for orthotic braces in the 17 months following that takedown.
Four of the individual defendants have been indicted in the Eastern District of Texas for conspiring to commit illegal remunerations in violation of the Anti-Kickback Statute.
Steven Churchill, 34, of Boca Raton, Florida, Samson Solomon, 22, of West Palm Beach, Florida, David Warren, 49, of Boca Raton, Florida, and Daniel Stadtman, 66, of Allen, Texas, were indicted by a federal grand jury on September 9, 2020.
According to the indictment, the defendants are alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders from purported telemedicine companies. The physicians’ orders were used to submit claims for payment to federal health care programs. The conspirators obtained patient information, including protected health information and personally identifiable information, used the information to create fictitious physicians’ orders, and sold the physicians’ order to each other and to other durable medical equipment providers. Within approximately eight months, the defendants collectively obtained more the $2.9 million in proceeds from the scheme.
The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by federally-funded programs, including Medicare, Medicaid, and TRICARE.
If convicted, they each face up to 5 years in federal prison. It is important to note that an indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, U.S. Department of the Treasury, Internal Revenue Service, Criminal Investigation, and the U.S. Department of Defense, Office of Inspector General, Defense Criminal Investigative Service. It was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Adrian Garcia.
Cases Involving the Illegal Prescription and/or Distribution of Opioids and Cases Involving Traditional Health Care Fraud Schemes
The cases announced today involving the illegal prescription and/or distribution of opioids or that fall into more traditional categories of health care fraud include charges and guilty pleas involving more than 240 defendants who allegedly participated in schemes to submit more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided.
According to court documents, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Also included are charges against medical professionals and others involved in the distribution of more than 30 million doses of opioids and other prescription narcotics.
In another case that is part of today’s takedown, on June 16, 2020, a registered nurse pleaded guilty to recklessly endangering Texarkana, Texas, patients by stealing fentanyl. Clifford Russell Harris, a 38-year-old Bowie County man, pleaded guilty to tampering with a consumer product.
According to information presented in court, Harris, who was a registered nurse at the time, broke into the secure drug storage at Healthcare Express in Texarkana, Texas, and tempered with the vials of fentanyl being stored there. Specifically, Harris extracted the fentanyl from the vials and refilled the vials with another liquid. Harris then returned the vials to the drug stock where they were available for administration to patients. Because the vials were labeled as fentanyl but did not contain fentanyl, Harris placed patients in danger of death or bodily injury. Harris admitted that he had acted with reckless disregard of the danger to patients and that his actions manifested an extreme indifference to that risk. Harris was prosecuted by Assistant U.S. Attorney Jonathan R. Hornok and is awaiting sentencing.
The following documents related to today’s announcement are available on the Criminal Division, Fraud Section’s Health Care Fraud Unit website through the following links:
- Graphics, Images and Resources: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/graphics-images-resources
- Case Descriptions: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions
Court Documents: https://www.justice.gov/criminal-fraud/hcf-2020-takedown/court-documents
Lake Mary Woman Sentenced to Federal Prison for Stealing More Than $470,000Read the Press Release
Orlando, Florida – U.S. District Judge Carlos E. Mendoza has sentenced Kathryn Smith (58, Lake Mary) to 12 months and 1 day in federal prison for wire fraud. In addition, Smith was ordered to pay $472,765.95 in restitution.
Smith had pleaded guilty on July 7, 2020.
According to court documents, Smith worked at a title insurance company. From December 2012 to May 2019, she embezzled $472,765.95 from the company. Smith stole the funds by using her access to the title insurer’s bank accounts to transfer funds into accounts for which she had control. She also wrote checks to herself without authorization. In addition, Smith used funds from the title insurer to pay her personal credit card bills, insurance for her adult child, and other miscellaneous personal expenses.
This case was investigated by the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Amanda Daniels and Roger B. Handberg.
Lackawanna County Man Charged with Drug TraffickingRead the Press Release
SCRANTON - The United States Attorney’s Office for the Middle District of Pennsylvania announced that Jean Quinones, age 25, of Scranton, of Pennsylvania, was indicted on September 29, 2020, by a federal grand jury for drug trafficking.
According to United States Attorney David J. Freed, the indictment charges Quinones with attempt to possess with intent to distribute in excess of 500 grams of cocaine on September 4, 2020.
The investigation was conducted by the Department of Homeland Security, United States Postal Inspectors, United States Customs and Border Patrol and the Scranton Police Department. Assistant United States Attorney Robert J. O’Hara is prosecuting the case.
Indictments and Criminal Informations are only allegations. All persons charged are presumed to be innocent unless and until found guilty in court.
A sentence following a finding of guilt is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines.
Under federal law, the drug trafficking offense carries a mandatory minimum sentence of five years in prison, up to a maximum sentence of forty years in prison, a term of supervised release following imprisonment, and a fine. Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant's educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
This case is also part of Project Safe Neighborhoods (PSN), a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local and tribal enforcement and the local community to develop effective, locally-based strategies to reduce crime.
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Kansas City Man to Federal Prison for Iowa Meth ConspiracyRead the Press Release
Jason Clark, 47, from Kansas City, KS, pled guilty and was sentenced on September 23, 2020, to more than 10 years in federal prison for conspiring to distribute methamphetamine.
Evidence at the hearing showed that Clark was involved in a distribution conspiracy that included more than 50 grams of methamphetamine. On or about May 18, 2019, in Woodbury County, Iowa, law enforcement conducted a traffic stop of Clark. During the traffic stop, officers observed a loaded handgun magazine in the vehicle. A subsequent pat-down of Clark revealed a knife in his pocket. Officers seized roughly a half-pound of methamphetamine from Clark’s vehicle.
Clark was sentenced in Sioux City by United States District Court Chief Judge Leonard T. Strand. Clark was sentenced to 128 months’ imprisonment. He must also serve a 5-year term of supervised release after the prison term. There is no parole in the federal system. Clark is being held in the United States Marshal’s custody until he can be transported to a federal prison.
The case was prosecuted by Special Assistant United States Attorney Patrick T. Greenwood and investigated by Tri-State Drug Task Force based in Sioux City, Iowa, that consists of law enforcement personnel from the Drug Enforcement Administration; Sioux City, Iowa, Police Department; Homeland Security Investigations; Woodbury County Sheriff’s Office; South Sioux City, Nebraska, Police Department; Nebraska State Patrol; Iowa National Guard; Iowa Division of Narcotics Enforcement; United States Marshals Service; South Dakota Division of Criminal Investigation; and Woodbury County Attorney’s Office.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 20-4002. Follow us on Twitter @USAO_NDIA.
Kanawha County Man Pleads Guilty to Federal Drug ConspiracyRead the Press Release
CHARLESTON, W.Va. – A Kanawha County man pled guilty to participating in a drug conspiracy, announced United States Attorney Mike Stuart. Sammy Joe Fragale, II, aka “Bubby Fragale,” 38, of Montgomery, pled guilty to conspiracy to distribute methamphetamine. Fragale is one of 14 defendants charged as a result of a long-term investigation known as “Second Wave,” which dismantled a poly-drug network operating in Kanawha and Fayette Counties.
“Fragale’s conviction is a result of the “Second Wave” investigation,” said United States Attorney Mike Stuart. “The collaborative efforts of our law enforcement partners took more than a dozen drug dealers off the streets that were peddling poisons in Kanawha and Fayette Counties.”
Fragale admitted that he conspired with his father, Sammy Joe Fragale, Sr. to distribute methamphetamine to a DEA informant in August 2020. On several occasions, Fragale “fronted” quantities of methamphetamine to the informant and agreed to accept payment on a later date. On August 21, 2020, Fragale accepted payment from the informant for a transaction that occurred on August 18, 2020. Fragale then returned the money to the informant and directed him to deliver the money to his father at a location in St. Albans. After the transaction was completed, Fragale Sr. was stopped by a St. Albans police officer and found to be in possession of the money along with other controlled substances.
Fragale faces up to 20 years in prison when he is sentenced on January 5, 2021. Fragale Sr. has been charged by criminal complaint with conspiracy to distribute methamphetamine. That complaint remains pending, and the charges against him are mere allegations. He is presumed innocent until convicted by guilty plea or by jury verdict.
The Drug Enforcement Administration (DEA), the St. Albans Police Department, and the Federal Bureau of Investigation (FBI) conducted the investigation. Senior United States District Judge David A. Faber presided over the hearing.
The Organized Crime Drug Enforcement Task Force (OCDETF) is an independent component of the U.S. Department of Justice. Established in 1982, OCDETF is the keystone of the Attorney General’s strategy to reduce the availability of illicit narcotics throughout the United States using a prosecutor-led, multi-agency approach to combat transnational organized crime. OCDETF agents and prosecutors nationwide handle complex investigations and prosecutions of the highest-level drug traffickers, money launderers, and other priority transnational criminal organizations that threaten the citizens of the United States. OCDETF facilitates joint operations by focusing its partner agencies on priority targets, by managing and coordinating multi-agency efforts, and by leveraging intelligence across multiple investigative platforms.
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. 2:20-cr-00176.
Follow us on Twitter: SDWVNews and USAttyStuart
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KC Man Sentenced to 20 Years for Illegal Firearms Following Gunfight, Fatal CollisionRead the Press Release
KANSAS CITY, Mo. – A Kansas City, Missouri, man was sentenced in federal court today for illegally possessing firearms following a three-vehicle collision in which he struck and killed another motorist while fleeing from a gunfight.
Keith L. Carnes, 31, was sentenced by U.S. District Judge Greg Kays to 20 years in federal prison without parole.
On Nov. 5, 2019, Carnes was found guilty at trial of one count of being a felon in possession of a firearm and two counts of being an unlawful user of a controlled substance in possession of a firearm.
On Aug. 30, 2016, Carnes was in a gunfight near the 3600 block of Wabash Avenue in Kansas City, Mo. During the gunfight, his handgun jammed and he was shot numerous times. Carnes, who was high on marijuana, cocaine, and phencyclidine, fled the area of the gunfight at speeds exceeding 100 miles per hour and ran a red light, crashing into a pickup truck, which led to a multiple vehicle accident.
Kansas City police officers responded to the accident at the intersection of 63rd Street and Prospect Avenue. Three vehicles were involved in the accident, including a 2008 Pontiac G6 driven by Carnes. Video evidence introduced during the trial demonstrated that the Pontiac, which had multiple bullet holes in the driver’s side doors, was traveling southbound on Prospect Avenue at a high rate of speed and failed to stop for the red traffic signal. The Pontiac struck a Dodge Ram, which was westbound on 63rd Street, killing the 24-year-old driver and causing it to strike a Nissan Quest and a pole on the southwest corner of the intersection.
Carnes, who had blood on his t-shirt, told officers, “I have been shot, I know I have been shot.” Police officers broke a window in the Pontiac so they could reach Carnes and provide medical assistance. Officers saw a bag of marijuana and a Bersa Thunder .380-caliber semi-automatic handgun on the driver’s side floorboard. The handgun had blood on it. Carnes was transported by emergency medical service to an area hospital for treatment. According to court documents, lab reports from the hospital confirmed that Carnes had marijuana, cocaine and phencyclidine in his system. The driver of the Dodge Ram was transported to an area hospital where he was pronounced dead.
Evidence introduced during the trial indicated Carnes had used the same Bersa Thunder .380-caliber semi-automatic handgun in a shooting on Aug. 16, 2016, in the 3600 block of Wabash Avenue. The victim of that shooting positively identified Carnes in a photographic lineup as the person who fired four shots at him. Officers recovered shell casings from the scene of the shooting and a forensics expert later confirmed they were fired by the same firearm found in Carnes’ vehicle on Aug. 30, 2016.
Carnes had also been arrested for driving while intoxicated following a traffic stop on Feb. 10, 2013. Kansas City police officers stopped Carnes, who was driving a Jeep Liberty, when radar indicated Carnes was driving 54 miles per hour in a 35-miles-per-hour zone. Officers, who smelled a strong odor of marijuana in the vehicle, found a loaded Glock .45-caliber pistol in Carnes’ waistband.
While being detained without bond and awaiting trial, according to court documents, Carnes assaulted a corrections officer.
Under federal law, it is illegal for anyone who has been convicted of a felony, or who is an unlawful user of a controlled substance, to be in possession of any firearm or ammunition. Carnes has prior felony convictions for an assault in which he shot two persons and for possession of a controlled substance.
This case was prosecuted by Assistant U.S. Attorneys Trey Alford and Sean T. Foley. It was investigated by the Kansas City, Mo., Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Project Safe Neighborhoods
The U.S. Attorney’s Office is partnering with federal, state, and local law enforcement to specifically identify criminals responsible for significant violent crime in the Western District of Missouri. A centerpiece of this effort is Project Safe Neighborhoods, a program that brings together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone. Project Safe Neighborhoods is an evidence-based program that identifies the most pressing violent crime problems in the community and develops comprehensive solutions to address them. As part of this strategy, Project Safe Neighborhoods focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.KC Man Sentenced to 20 Years for Drug Trafficking, Illegal FirearmRead the Press Release
KANSAS CITY, Mo. – A Kansas City, Missouri, man was sentenced in federal court today for drug trafficking and illegally possessing a firearm.
Paris B. Young, 49, was sentenced by U.S. District Judge Greg Kays to 20 years in federal prison without parole.
On Feb. 12, 2020, Young was found guilty at trial of possessing crack cocaine with the intent to distribute, possessing a firearm in furtherance of a drug-trafficking crime, being a felon in possession of a firearm, and possessing a firearm with an obliterated serial number.
Kansas City, Mo., police officers stopped Young on June 16, 2018, because he failed to signal while making a turn at the intersection of 41st and Garfield Avenue in Kansas City. Young, who was driving a maroon BMW 650i, was seen making furtive movements by leaning towards the center console of the vehicle and placing items inside the center console. Young opened his car door and got out of the vehicle; he refused to listen to multiple commands by the officers to get back into the vehicle. While speaking with the officers, Young suddenly pushed off of one officer and began to run. The officer grabbed Young’s shirt and Young was immediately taken into custody.
Officers searched Young’s car and found a Taurus .45-caliber revolver, with an obliterated serial number, underneath the driver’s seat. The revolver was loaded with three .45-caliber Colt rounds of ammunition and two 410 shotgun shells in the cylinder. Officers also found a large plastic bag that contained 46 individually wrapped bags of crack cocaine, with a total weight of 12.49 grams, and 4.38 grams of marijuana in the center console of the vehicle.
Under federal law, it is illegal for anyone who has been convicted of a felony to be in possession of any firearm or ammunition. Young has prior felony convictions for murder, armed criminal action, possessing a controlled substance, and two prior felony convictions for distributing a controlled substance.
This case was prosecuted by Assistant U.S. Attorneys Jeffrey Q. McCarther and Sean T. Foley. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Kansas City, Mo., Police Department.
Project Safe Neighborhoods
The U.S. Attorney’s Office is partnering with federal, state, and local law enforcement to specifically identify criminals responsible for significant violent crime in the Western District of Missouri. A centerpiece of this effort is Project Safe Neighborhoods, a program that brings together all levels of law enforcement to reduce violent crime and make neighborhoods safer for everyone. Project Safe Neighborhoods is an evidence-based program that identifies the most pressing violent crime problems in the community and develops comprehensive solutions to address them. As part of this strategy, Project Safe Neighborhoods focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.Justice Department settles sexual harassment lawsuit against Cincinnati landlordRead the Press Release
CINCINNATI – U.S. Attorney David M. DeVillers announced today that landlord John Klosterman and his wife, Susan Klosterman, will pay $177,500 total to resolve a Fair Housing Act lawsuit alleging that John Klosterman sexually harassed female tenants since at least 2013 at the 55 residential properties the couple owned in Sedamsville.
“In this settlement, Klosterman acknowledges that the United States has evidence he sexually harassed tenants on multiple occasions,” said U.S. Attorney David M. DeVillers. “He’s being held accountable under the Fair Housing Act and will pay more than $167,000 to victims of his heinous conduct.”
The defendants acknowledged in the settlement that, if this case had gone to trial, the United States was prepared to introduce the following evidence:
- sworn deposition testimony from John Klosterman acknowledging that, on multiple occasions, he engaged in inappropriate sexual communications with his female tenants and prospective tenants, made comments about the physical appearances of his female tenants and prospective tenants, sent pictures of a naked male statue to his female tenants, and offered to send to his female tenants, and requested that his female tenants send to him, sexual photographs;
- sworn deposition testimony from John Klosterman admitting that he offered to pay an “allowance” to a female tenant in exchange for engaging in a sexual relationship with him; and
- text messages and recordings of phone calls in which John Klosterman made sexual comments to female tenants and prospective female tenants.
According to the complaint filed in 2018, Klosterman engaged in unwanted sexual touching, offered to reduce rent and overlook or excuse late or unpaid rent in exchange for sex. He evicted or threatened to evict female tenants who objected to or refused sexual advances. Klosterman also entered the homes of female tenants without their consent and otherwise monitored their daily activities with cameras directed at their units.
Under the settlement, which still must be approved by the court, the Klostermans will pay $167,125 in damages to former tenants who were harmed by John Klosterman’s harassment, $7,875 to another plaintiff in the lawsuit, and a $2,500 civil penalty to the United States. The consent order also bars the defendants from participating in the rental or management of residential properties in the future.
The United States’ lawsuit was pursued jointly with the Justice Department’s Civil Rights Division. The Civil Rights Division enforces the Fair Housing Act, which prohibits discrimination in housing based on race, color religion, national origin, sex disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt.
Individuals can report sexual harassment or other forms of housing discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, e-mailing the Justice Department at [email protected], or submitting a report online.
David M. DeVillers, United States Attorney for the Southern District of Ohio, and Assistant Attorney General Eric Dreiband for the Civil Rights Division announced the settlement agreement filed in federal court today. Deputy Civil Chief Matthew Horwitz is representing the United States in this case.
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Justice Department Settles Sexual Harassment Lawsuit Against Cincinnati, Ohio LandlordRead the Press Release
The Justice Department today announced that landlord John Klosterman and his wife, Susan Klosterman, will pay $177,500 to resolve a Fair Housing Act lawsuit alleging that John Klosterman sexually harassed female tenants since at least 2013 at residential properties the couple owned in Cincinnati, Ohio.
Under the settlement, which still must be approved by the court, the Klostermans will pay $167,125 in damages to former tenants who were harmed by John Klosterman’s harassment, $7,875 to another plaintiff in the lawsuit, and a $2,500 civil penalty to the United States. The consent order also bars the defendants from participating in the rental or management of residential properties in the future.
“Sexual harassment of women in their homes is indecent, destructive, and illegal,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “The Fair Housing Act protects the right of women and their families to live in peace and security and without the fear that deviant people will intimidate and bully them for sexual favors. This department will continue tirelessly to pursue landlords and others who abuse their authority by preying upon vulnerable women.”
“In this settlement, Klosterman acknowledges that the United States has evidence he sexually harassed tenants on multiple occasions,” said U.S. Attorney David M. DeVillers for the Southern District of Ohio. “He’s being held accountable under the Fair Housing Act and will pay more than $167,000 to victims of his heinous conduct.”
The complaint, filed in 2018, alleged that John Klosterman sexually harassed female tenants at the rental properties since at least 2013. According to the complaint, he engaged in harassment that included, among other things, making unwelcome sexual advances and comments, sending unwanted sexual text messages and photos, engaging in unwanted sexual touching, offering to reduce rent and overlooking or excusing late or unpaid rent in exchange for sex, evicting or threatening to evict female tenants who objected to or refused sexual advances, and entering the homes of female tenants without their consent and otherwise monitoring their daily activities with cameras directed at their units.
The defendants acknowledged in the settlement that, if this case had gone to trial, the United States was prepared to introduce the following evidence: (a) sworn deposition testimony from John Klosterman acknowledging that, on multiple occasions, he engaged in inappropriate sexual communications with his female tenants and prospective tenants, made comments about the physical appearances of his female tenants and prospective tenants, sent pictures of a naked male statue to his female tenants, and offered to send to his female tenants, and requested that his female tenants send to him, sexual photographs; (b) sworn deposition testimony from John Klosterman admitting that he offered to pay an “allowance” to a female tenant in exchange for engaging in a sexual relationship with him; and (c) text messages and recordings of phone calls in which John Klosterman made sexual comments to female tenants and prospective female tenants.
The Justice Department’s Sexual Harassment in Housing Initiative is an effort to combat sexual harassment in housing led by the Civil Rights Division, in coordination with U.S. Attorney’s Offices across the country. The Attorney General recently reaffirmed this commitment by directing the Justice Department to deploy all available enforcement tools against anyone who tries to capitalize on the COVID-19 crisis by sexually harassing people in need of housing. The goal of the department’s initiative is to address sexual harassment by landlords, property managers, maintenance workers, loan officers, or other people who have control over housing. As part of the initiative, the Justice Department developed a public service announcement and formed a joint task force with HUD to combat sexual harassment in housing. Since launching the Initiative in October 2017, the Department of Justice has filed 18 lawsuits alleging sexual harassment in housing. Since January 2017, the Justice Department has filed or settled 23 cases alleging sexual harassment in housing and has recovered over $2.9 million for victims of such harassment.
The Justice Department’s Civil Rights Division enforces the Fair Housing Act, which prohibits discrimination in housing based on race, color, religion, national origin, sex disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt. Individuals can report sexual harassment or other forms of housing discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, e-mailing the Justice Department at [email protected], or submitting a report online. Individuals can also report such discrimination by contacting HUD at 1-800-669-9777 or filing a complaint online.
Justice Department Files Housing Discrimination Lawsuit Against Staten Island, New York Rental Agent and Real Estate AgencyRead the Press Release
The Department of Justice announced today that it has filed a lawsuit against Village Realty of Staten Island Ltd. and Denis Donovan, a sales and former rental agent at Village Realty, alleging discrimination against African Americans in violation of the Fair Housing Act when offering housing units for rent. The lawsuit is based on the results of testing conducted by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.
The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that Donovan discriminated against prospective renters on the basis of race by treating African Americans who inquired about available rental units differently and less favorably than similarly-situated white persons. According to the complaint, Donovan told African-American testers about fewer rental units than white testers, offered white testers rental discounts and opportunities to inspect units that were not offered to African-American testers, generally offered African-American testers units only in racially mixed neighborhoods while offering white testers units in both overwhelmingly white and racially mixed neighborhoods, and made more encouraging comments to white testers about available rental units. The lawsuit alleges that Village Realty is legally responsible for Donovan’s alleged discrimination because Donovan worked as Village Realty’s rental agent.
“Freedom for Americans means that people can live peacefully in our nation without regard to their race, ancestry, sex, and other protected traits,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The United States and its laws forbid segregation in which people are judged, divided, and harmed because of the color of their skin. Race never should be a factor that determines where someone can live. No one should have their housing choices limited, whether by explicit refusals to rent on the basis of race, or more subtle differences in the way home seekers are treated when they ask about available properties. Whether obvious or less apparent, race discrimination in the rental housing market is intolerable. The Department of Justice is committed to enforcement of the Fair Housing Act to ensure that people have equal access to rental housing, and equal treatment when seeking rental housing, regardless of race, including by uncovering hidden discrimination through our Fair Housing Testing Program.”
“The U.S. Attorney’s Office has been, and always will be, dedicated to protecting the rights established by the Fair Housing Act, which demands that individuals and families of all races, colors and nationalities are treated fairly when they want to buy or rent a home,” said Acting U.S. Attorney Seth D. DuCharme. “Today’s lawsuit reinforces this Office’s commitment to eliminating discrimination in housing.”
The lawsuit seeks monetary damages to compensate victims, civil penalties against the defendants to vindicate the public interest, and a court order barring future discrimination.
Individuals who believe they may have experienced discrimination at Village Realty or believe they may have information relevant to this case should contact the Department of Justice toll-free at 1-800-896-7743, by email at [email protected], or by submitting a report online.
The Justice Department’s Civil Rights Division enforces the federal Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the department’s fair housing enforcement can be found at www.justice.gov/fairhousing.
Justice Department Announces $1.2 Million Dollar Settlement of Title VII Intentional Race Discrimination and Retaliation Lawsuit Involving Law Enforcement Victims in MarylandRead the Press Release
The Justice Department announced today that it has reached a settlement with the Worcester County Sheriff, in his official capacity (currently Matthew Crisafulli, formerly Reggie Mason), and the state of Maryland, resolving allegations that a former staff member was subjected to a racially hostile work environment and that he and others who supported him were retaliated against after he complained about the racial discrimination. The Justice Department also announced the settlement of related retaliation claims filed against Pocomoke City, Maryland that were resolved on Dec. 4, 2019.
“Subjecting a law enforcement officer to egregious racial slurs and epithets, then retaliating against him and others who supported him for reporting the misconduct, strikes at the heart of the race discrimination prohibitions that Congress enacted when it passed Title VII of the Civil Rights Act of 1964,” said Assistant Attorney General for Civil Rights Eric S. Dreiband. “The police officers who were the victims of this unlawful race discrimination and retaliation will benefit from this agreement, and the Justice Department will continue vigorously to enforce Title VII to preserve the right of all citizens, including the brave men and women who serve in law enforcement, to work with dignity and respect and without regard to the color of their skin.”
The United States’ complaint in intervention, filed on Dec. 1, 2016, alleged that former Pocomoke City Police Officer Franklin Savage was subjected to a racially hostile work environment, which included repeated racial epithets and other racially-charged acts of harassment, while on assignment to the Criminal Enforcement Team, a multijurisdictional drug enforcement unit operated through the Worcester County Sheriff’s Office. The United States also alleged that Savage’s complaints about racial harassment resulted in a series of retaliatory actions against him by the State of Maryland, through the Worcester County Sheriff’s Office, and by Pocomoke City, culminating in the termination of his employment. The complaint further alleged that Pocomoke City retaliated against two other officers — former Pocomoke City Police Chief Kelvin Sewell and former Pocomoke City Police Lieutenant Lynell Green — for supporting Savage in the course of his complaints. Pocomoke City eventually terminated Chief Sewell’s employment.
Under the terms of a Dec. 4, 2019 consent decree with Pocomoke City and the newly-announced consent decree with the Worcester County Sheriff and the state of Maryland (which is subject to court approval), Pocomoke City and the Worcester County Sheriff’s Office must review and revise their existing anti-discrimination policies and procedures and implement effective policies to protect employees from discrimination on the basis of race and retaliation. These resolutions further require Pocomoke City and the Worcester County Sheriff’s Office to develop effective policies that ensure employees understand how to report potentially discriminatory or retaliatory behavior and that supervisory staff understands its responsibility to report such complaints through the appropriate investigatory process. Pocomoke City agreed to pay a total of $1,101,003.00 to the former officers to resolve all claims against it. The Worcester County Sheriff, in his official capacity, and the State of Maryland agreed to pay an additional $100,000.00 to Savage, in resolution of his claims against those employers.
All three former law enforcement officials filed charges of discrimination with the U.S. Equal Employment Opportunity Commission’s (EEOC) Baltimore Field Office. The EEOC investigated the charges and found that there was a reasonable basis to believe that violations of Title VII had occurred. After unsuccessful conciliation efforts by the EEOC, the charges were referred by the EEOC to the Department of Justice. The former officers filed suit and the United States intervened in their suit. More information about the EEOC’s jurisdiction is available on its website at www.eeoc.gov.
Attorneys assigned to the Employment Litigation Section of the Civil Rights Division represented the United States in this matter. The full and fair enforcement of Title VII is a top priority of the Justice Department’s Employment Litigation Section of the Civil Rights Division. Additional information about the Civil Rights Division and the jurisdiction of the Employment Litigation Section is available on its websites at www.justice.gov/crt/ and https://www.justice.gov/crt/employment-litigation-section.
Judge sentences man pleading guilty to skimming crimesRead the Press Release
ST. LOUIS, MO – United States District Judge Audrey G. Fleissig sentenced Jorge Alexander Betances, Jr., on Tuesday, to 28 months in prison. The 24-year-old Philadelphia, Pennsylvania resident previously pleaded guilty to possession of device-making equipment.
According to court documents, on April 22, 2019, the defendant was pulled over by a Drug Enforcement Administration Task Force Officer with Phelps County Sheriff’s Department for a traffic violation while travelling on Interstate 44. A search of the defendant’s vehicle revealed numerous different components of credit card device making equipment – including skimming devices, a card encoding device, gas pump-style locks and security seals, and plastic card stock (some blank and some printed with banking information on them). In addition, law enforcement discovered inside the vehicle tools that could be used to install credit card skimmer devices on gas pumps. Finally, law enforcement discovered more than 3,572 counterfeit or unauthorized access devices, including in the form of physical credit cards and in electronic form on the defendant’s digital devices.
“Payment card skimming devices continue to be installed inside gas pumps throughout the nation, said Thomas Landry, Special Agent in Charge, United States Secret Service St. Louis Field Office. “Skimmers are designed to covertly steal payment card information from unknowing victims when they purchase fuel at the pump. To protect yourself:
- Make sure the gas pump panel is closed and doesn’t show signs of tampering
- Run your card as a credit rather than a debit
- Go inside to pay or utilize mobile app/cardless payment systems
- Use gas pumps near the front of the store and be aware of your surroundings
- Check your accounts and report fraud to your bank immediately”
The Phelps County Sheriff’s Department and the United States Secret Service investigated the case. Assistant United States Attorney Kyle T. Bateman prosecuted the case for the United States Attorney’s Office.
Judge sentences armed St. Louis drug dealer for narcotics distribution and firearms related offensesRead the Press Release
ST. LOUIS, MO – United States District Judge Ronnie L. White sentenced, Tuesday, Monte Evans to 80 months in prison. The 38-year-old St. Louis resident pleaded guilty to possession with intent to distribute cocaine base and heroin and possessing a firearm in furtherance of a drug trafficking crime.
On April 25, 2019, officers from the St. Louis Metropolitan Police Department were patrolling in the 1300 block of Montclair Avenue when they saw Evans participate in a drug deal. Officers, still in the patrol car, approached Evans and he started acting suspicious. Officer stopped the car and got out and Evans ran.
Officers chased Evans and caught Evans when he slipped on wet grass. Officers did a pat-down, of Evans, and found a stolen Glock 27 semi-automatic pistol. Officers also found a firearms holster on his belt. During a search of Evans, police found 12.05 grams of heroin and 8.65 grams of crack. Officers arrested Evans.
On May 30, 2019, SLMPD officers saw Evans operating a car without a front license plate. Officers learned the car was registered to Evans, and that Evans had multiple active felony warrants. Officers performed a lawful traffic stop. While talking with Evans, officer smelled marijuana and searched the vehicle.
Officers discovered a satchel containing 3.06 grams of heroin, .39 grams of methamphetamine, 66.42 grams of marijuana, and a Glock 27 semi-automatic pistol loaded pistol with 13 rounds in the magazine.
St. Louis Metropolitan Police Department Officers investigated the case. Assistant United States Attorney Jason Dunkel prosecuted the case for the United States Attorney’s Office.
Janitor at Local High School Pleads Guilty to Attempting to Produce Child Pornography in Secretly Filming Students in Girls’ Locker RoomRead the Press Release
Jacksonville, Florida – Jason Brian Goff (44, Starke) has pleaded guilty to attempted production of child pornography. He faces a minimum mandatory penalty of 15 years, and up to 30 years, in federal prison. A sentencing date has not yet been set.
According to the
plea agreement , in August 2019, two 14-year-old Clay High School students reported that they had seen what they believed was a camera lens, concealed within a locked gym locker, in the Clay High School girls’ locker room. When school administrators unlocked the locker, they discovered a cellphone taped to the side wall of the locker with the lens pointed out of a pre-fabricated hole.A forensic analysis of the phone yielded a video, lasting 30 minutes, which had been filmed from a window looking into the locker room where female students were captured changing clothes. At the end of the video, the phone had been panned down to show the identification badge of Clay High School Custodian Jason Goff.
Homeland Security Investigations (HSI) and the Clay County Sheriff’s Office arrested Goff on September 13, 2019. Goff later admitted that he had tried filming girls in the locker room at least three times from different vantage points.
Forensic analyses of other electronic devices belonging to Goff revealed additional images from the girls’ high school locker room and a collection of child pornography, to include a video and images of adults sexually abusing children of various ages, including images of infants.
This case was investigated by the Clay County Sheriff’s Office and Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Kelly S. Karase.
It is another case 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 Attorneys’ 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.
International Sex Tourist and Child Exploiter Arrested After Trip to PhilippinesRead the Press Release
PLANO, Texas – A Lake Kiowa, Texas man has been arrested and charged with international child exploitation crimes in the Eastern District of Texas announced U.S. Attorney Stephen J. Cox today.
David Woods, 68, of Lake Kiowa, Cooke County, Texas has been charged in an indictment returned by a grand jury with coercing and enticing a minor to engage in illegal sexual activity and engaging in illicit sexual conduct in foreign places. Woods has entered “not guilty” pleas to the charges.
Woods came to the attention of authorities in July 2019 when he was encountered by members of Customs and Border Protection at the Dallas-Fort Worth International Airport as he returned to the United States from a months-long trip to the Philippines. Agents with Homeland Security Investigations initiated an investigation, which revealed that Woods has used a cell phone, laptop, and a social media application to persuade, induce, entice, and coerce a minor female victim in the Philippines to engage in sex acts, film those acts, and send the images and videos to him. Agents also discovered that Woods engaged in sex acts with the same child victim after traveling to the Philippines in 2019. Woods was arrested on September 25, 2020 at the George Bush International Airport in Houston, Texas as he arrived on a flight from the Philippines.
If convicted, Woods faces a minimum of 10 years and up to life in federal prison.
This case is being 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 United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case is being investigated by Homeland Security Investigations-Dallas, with assistance from Customs and Border Protection in Houston, Dallas, and Honolulu, HSI-Philippines, and the National Center for Missing and Exploited Children. The case is being prosecuted by Assistant U.S. Attorney Marisa J. Miller.
It is important to note that an indictment or arrest should not be considered as evidence of guilt and that all persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt.
Honolulu man charged with possession of chemical weapon and unregistered destructive deviceRead the Press Release
HONOLULU – Ethan Sandomire, 20, a resident of Honolulu, Hawaii, was indicted by a federal grand jury today with possessing and attempting to possess a chemical weapon, and possessing an unregistered destructive device.
According to the indictment and other court documents, between approximately December 2019 and March 2020, Sandomire conducted extensive research into explosives, explosive devices, chemical and biological weapons, and related topics, and wrote privately about his plans for explosive and chemical attacks in and around Honolulu, Hawaii.
In early 2020, Sandomire ordered the materials to make a destructive device from multiple online vendors, which were then delivered to his residence. At or around the time of Sandomire’s arrest on March 29, 2020, the FBI seized the items that Sandomire had ordered online from a separate location, including, among other things: approximately 30 pounds of aluminum powder, approximately 30 pounds of ultra-pure potassium perchlorate, approximately 45 pounds of potassium perchlorate, and multiple ignition systems, wireless firing systems, and victim-initiated tripwire systems.
On February 24, 2020, Sandomire went to a hardware store in Honolulu and purchased items that, when combined, create chlorine gas, a toxic chemical. That same day, Sandomire searched the internet multiple times for the blueprints and floor plans of a large residential apartment building centrally located in Honolulu, Hawaii (“Building A”). Building A has approximately 450 residential apartment units, several commercial units, and a multi-level grocery store.
Two days later, on February 26, 2020, Sandomire visited Building A in person. Security camera footage showed Sandomire waiting outside the main lobby for someone to exit, then walking into the lobby before the doors closed, and taking the elevator to the sixth-floor parking area. He took pictures on his cellphone of structural support columns inside the parking garage that is located below Building A’s outdoor recreational area and lap pool. He also took pictures of a storage area and large air vents coming out of an air handler that serves a 16,000 square-foot space elsewhere in Building A.
Sandomire returned to Building A’s main lobby and asked for copies of the building’s floor plans from the front desk staff, which the staff member did not provide. He also visited the building developer’s office and took photographs of a physical model of Building A.
Sandomire’s personal computer contained a desktop note entitled “destroy [Building A]” by using chemicals and explosives, among other thing, and numerous folders with extensive research into explosives, chemical weapons, biological weapons, improvised munitions, and similar topics. Some of the folders were entitled “building demolition,” “my attack plan,” “explosives,” and “bio warfare.” The folders contained digital versions of approximately 54 books about explosives and related topics. Sandomire’s computer also contained an instructional document titled “Advanced Chemical Weapons Design and Manufacture,” with the subtitle “Chemicals that Kill in 30 Seconds or your Money Back.”
The charges filed today include one count of Possession of a chemical weapon, which carries a maximum statutory penalty of life imprisonment and a fine of not more than $250,000, and one count of Possession of an unregistered destructive device, which carries a maximum statutory penalty of 10 years’ imprisonment and a fine of not more than $10,000.
In announcing the charges, U.S. Attorney for the District of Hawaii, Kenji M. Price stated “My office will use the tools at its disposal to protect the community from those who possess destructive devices and chemical weapons. These kinds of cases underscore the importance of vigilant action by law enforcement to protect the public from the acquisition and use of materials that can cause devastating harm to our communities. This is the second case this year brought by my office that involves a violation of the federal chemical weapons statute, and we will continue to vigorously pursue, and bring to justice, those who endanger our communities by violating this law.”
“It is our priority at the FBI to keep the citizens of Hawaii and the United States safe and to ensure that individuals like Ethan Sandomire are stopped before they terrorize our communities. Even though Sandomire went to great lengths to obtain the knowledge and the materials to construct a chemical weapon and an explosive device, the men and women of the Honolulu FBI disrupted his evil intentions before he could cause harm. Today’s indictment is an example of the FBI's commitment of making Hawaii a safer place for all,” said Federal Bureau of Investigation Special Agent in Charge Eli S. Miranda.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Marc A. Wallenstein with the assistance of the Department of Justice’s National Security Division.