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Monday 17 May 2010
Nine Hospitals in Seven States to Pay U.S. More Than $9.4 Million to <br /> Resolve False Claims Act Allegations Related to KyphoplastyRead the Press Release
Nine hospitals located in Alabama, Indiana, Florida, Michigan, South Carolina, New York and Minnesota have agreed to pay the United States more than $9.4 million to settle allegations that the health care facilities submitted false claims to Medicare, the Justice Department announced today. The settlements resolve allegations that the hospitals overcharged Medicare between 2000 and 2008 when performing kyphoplasty, a minimally-invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. In many cases, the procedure can be performed safely as a less costly out-patient procedure, but the government contends that the hospitals performed the procedure on an in-patient basis in order to increase their Medicare billings.
The settling facilities and the amount being paid by each to the United States are Ball Memorial Hospital, Muncie, Ind. ($1,995,431); Bethesda Memorial Hospital, Boynton Beach, Fla. ($356,079); Bloomington Hospital, Bloomington, Ind. ($1,443,848); Genesys Regional Medical Center, Grand Blanc, Mich. ($931,742); Huntsville Hospital, dba The Health Care Authority of the City of Huntsville, Huntsville, Ala. ($1,992,756); Palmetto Health dba Palmetto Health Baptist Hospital, Columbia, S.C. ($1,861,083.14); St. Elizabeth Medical Center, Utica, N.Y. ($195,976); St. Mary’s of Michigan Hospital, Saginaw, Mich. ($260,065.21); and United Hospital, St. Paul, Minn. ($428,656).
"These hospitals put profits ahead of sound medical judgment," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department is committed to protecting Medicare funds from waste and abuse."
The settlement with these facilities follows the settlements that the government reached in May and September 2009 with nine other hospitals for alleged kyphoplasty-related Medicare fraud claims, as well as the government’s May 2008 settlement with Medtronic Spine LLC, corporate successor to Kyphon Inc. Medtronic Spine paid $75 million to settle allegations that the company defrauded Medicare by counseling hospital providers to perform kyphoplasty procedures as an in-patient procedure, even though in many cases the minimally-invasive procedure should have been done on an out-patient basis.
"The U.S. Attorney’s Office will continue to aggressively and appropriately pursue False Claims Act allegations of wrongdoing consistent with the commitment of the Department of Justice," said William J. Hochul, Jr., U.S. Attorney for the Western District of New York in Buffalo.
All but two of the settling facilities – St. Elizabeth Medical Center and United Hospital – were named as defendants in a lawsuit filed under the False Claims Act in 2008 in federal district court in Buffalo, N.Y., by Craig Patrick and Charles Bates. The qui tam, or whistleblower, provisions of the False Claims Act permit private citizens, called relators, to file an action on behalf of the United States and share in any recovery. Mr. Patrick of Hudson, Wisc., is a former reimbursement manager for Kyphon, and Mr. Bates is a former regional sales manager for Kyphon in Birmingham, Ala. The relators will receive a total of approximately $1.5 million as their share of the settlement proceeds.
"It is critical that providers make patient admission decisions based on medical necessity and the level of care needed rather than on the Medicare payment they will receive," said Daniel R. Levinson, Inspector General for the Department of Health and Human Services. "The Office of Inspector General will continue to pursue providers who abuse the Medicare Trust Fund and divert for personal gain resources that should be going to pay for necessary care."
Assistant Attorney General West noted that the settlement with these hospitals was the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of New York, and the Department of Health and Human Services’ Office of Inspector General and Office of Counsel to the Inspector General.
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
Federal Court Bars Georgia Man from Preparing Federal Tax Returns for OthersRead the Press Release
WASHINGTON – A federal court has barred Robert Knupp of Marietta, Ga., from preparing federal income tax returns for others, the Justice Department announced today. The preliminary injunction order, signed by Chief Judge Julie E. Carnes of the U.S. District Court for the Northern District of Georgia, found that Knupp promotes a tax defier scheme that claims large fraudulent tax refunds for customers. The order remains in effect indefinitely, while the Justice Department lawsuit against Knupp is pending. Violation of a preliminary injunction can result in civil and criminal sanctions, including fines and imprisonment.
The court found that Knupp repeatedly prepared federal income tax returns claiming "huge and fraudulent" refunds for customers, "in amounts sometimes in the millions of dollars," based on a tax-fraud scheme known as the "redemption" or "OID redemption" scheme. The court further found that Knupp prepared and filed 58 income tax returns for customers in 2009 claiming more than $11 million in fraudulent refunds. The court said that the redemption scheme is based on a frivolous theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing IRS 1099-OID forms to their creditors.
Last fall the Justice Department filed seven other lawsuits across the country, all of which seek permanent injunctions against tax preparers who allegedly promote the redemption scheme. The defendants in those cases allegedly prepared tax returns fraudulently requesting a total of $562.4 million in refunds. Under the scheme, participants file a series of false Internal Revenue Service (IRS) forms, including tax returns, amended returns and Forms 1099 (including Form 1099-OID) or Forms W-2, to request fraudulent tax refunds based on phony claims of large income tax withholding. Several of the defendants in those seven other cases have already been permanently enjoined from preparing tax returns.
Schemes like the OID redemption scam that use false IRS forms to report phony tax withholding and claim improper tax refunds are on the IRS’ list of the2010 Dirty Dozen tax scams.
Friday 14 May 2010
Miami-area Clinic Owner Charged in $23 Million Health Care Fraud SchemeRead the Press Release
A Miami-area resident who owned and operated an HIV infusion clinic was arrested today and charged for her alleged participation in a $23 million HIV infusion Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
An indictment unsealed today in U.S. District Court in Miami charges Flor Crisologo, 58, with one count of conspiracy to defraud the United States, to cause the submission of false claims to the Medicare program, and to pay health care kickbacks; one count of conspiracy to commit health care fraud; and three counts of submitting false claims to the Medicare program. Crisologo also is charged with one count of conspiracy to launder the proceeds of her crimes and four counts of money laundering. Crisologo made her initial appearance today in U.S. District Court in Miami before Magistrate Judge William C. Turnoff.
According to the indictment, Crisologo was the owner and operator of J & F Community Medical Center Inc. The indictment alleges that Crisologo submitted approximately $23 million in false and fraudulent claims to the Medicare program for HIV injection and infusion services purportedly provided through J & F. According to the indictment, Crisologo hired a physician at J & F and caused the physician to order unnecessary tests, sign false medical analyses and diagnosis forms, and authorize treatments to make it appear that medical services were being provided to patients who were Medicare beneficiaries. The services included medically unnecessary injection and infusion therapies. The indictment alleges that Crisologo and her co-conspirators paid Medicare beneficiaries kickbacks to induce the beneficiaries to claim they received legitimate services at the clinic when in fact the HIV infusion services were either not provided or were not medically necessary.
According to the indictment, Crisologo engaged in a scheme to launder the proceeds of the fraudulent Medicare claims by, among other things, transferring thousands of dollars in proceeds to two shell corporations that she owned and controlled, ABC Med Way Inc., and MSG Investment and Services Corp.
The maximum sentence for each count of conspiracy to defraud the United States and filing false claims is five years in prison. The maximum sentence for each count of conspiracy to commit health care fraud, conspiracy to commit money laundering and money laundering is 10 years in prison. The indictment seeks forfeiture of assets held by the defendant.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Today’s charges were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies , Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department Settles Lawsuit Against Synapse Data and Telecom Inc. to Enforce the Employment Rights of Utah National Guard MemberRead the Press Release
WASHINGTON — The Justice Department announced today that it has entered into a consent decree with Synapse Data and Telecom Inc. (Synapse), and Matthew Mossbarger, the owner of Synapse, to resolve the department’s complaint filed on behalf of Utah National Guard member Jose A. Ortega, alleging violations of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Enacted by Congress, USERRA prohibits employers from discriminating or retaliating against employees or applicants for employment because of past, current or future military obligations.
The department’s complaint, filed in the U.S. District Court for the District of Utah, alleges that Ortega, then a network administrator for Synapse, enlisted in the Utah National Guard in April 2008 and was given orders to report for basic training the following month. According to the complaint, Mossbarger terminated Ortega’s employment with Synapse when Ortega declined to withdraw from the Utah National Guard. The consent decree obtained by the department, if approved by the court, will require that Synapse and Mossbarger pay Ortega $3,000 in monetary relief, and will enjoin them from committing future violations of USERRA.
"Our nation’s laws ensure that the men and women who commit to serving our nation in the military can do so without fear of discrimination or retaliation at their civilian jobs," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This case illustrates the Department of Justice’s commitment to vigorously enforcing federal laws that protect the employment rights of our service members."
The Department of Labor’s Veterans’ Employment and Training Service investigated and attempted to resolve Mr. Ortega’s USERRA complaint before referring it to the Department of Justice for litigation.
Additional information about USERRA can be found on the Justice Department’s website at www.servicemembers.gov and www.usdoj.gov/crt/emp and on the Labor Department’s website as www.dol.gov/vets/programs/userra.
Justice Department Settles Citizenship Status Discrimination Matter Against ValleyCrest Landscape CompaniesRead the Press Release
WASHINGTON – The Justice Department announced today a settlement agreement with ValleyCrest Landscape Companies to resolve charges of hiring discrimination against U.S. citizens and other work-authorized domestic workers at its Virginia locations.
Under the agreement, ValleyCrest will modify its hiring policy to extend significantly the time period during which it will recruit U.S. workers for jobs that would otherwise be filled with H-2B temporary visa holders. Specifically, ValleyCrest will recruit and hire domestic workers up until two weeks before H-2B workers are scheduled to begin work. It has also made other changes to its personnel practices and will provide full back pay of $11,173 to a U.S. citizen who applied for but was not given a job.
“Every individual who is authorized to work in this country has the right to know they will be free from discrimination, and that they will be on the same playing field as every other applicant or worker,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division.
The charges were filed by the Mid-Atlantic Regional Organizing Coalition (MAROC) of the Laborers’ International Union of North America.The Civil Rights Division’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provisions of the Immigration and Nationality Act (INA), which protect U.S. citizens and certain work-authorized individuals from citizenship status discrimination. The INA also protects all work-authorized individuals from national origin discrimination, over-documentation in the employment eligibility verification process, and retaliation.
For more information about protections against employment discrimination under federal immigration law, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8255 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594. You can also e-mail [email protected], or visit the website at www.justice.gov/crt/osc.
Department of Justice and USDA Announce Schedule and Panelistsfor Agriculture Workshop in AlabamaRead the Press Release
The Department of Justice and the U.S. Department of Agriculture (USDA) today announced the schedule and panelists for the second joint public workshop on competition and regulatory issues in agriculture, which will be held on May 21, 2010, in Normal, Ala., at the Ernest L. Knight Reception Center at Alabama A & M University. The workshop, the second of five, will focus on the poultry industry.
The workshops, which were first announced by Attorney General Eric Holder and Agriculture Secretary Tom Vilsack on Aug. 5, 2009, are the first joint Department of Justice/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector. Attendance at the workshops is free and open to the public.
The general public and media interested in attending the Alabama workshop should register at: www.aamu.edu/saes/FAS/DOJ_USDA/
U.S. Attorney General Eric Holder, U.S. Agriculture Secretary Tom Vilsack and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney will participate in the workshop, and will be joined by Congressman Artur Davis, Alabama Attorney General Troy King and Alabama Agriculture Commissioner Ron Sparks. They will participate in a roundtable discussion with presentations on current issues affecting poultry growers. Testimony and a roundtable discussion by a panel of current and former poultry growers will follow. The workshop will also feature a panel to discuss contracting and regulatory issues in the poultry industry. The workshop will also include two sessions for public testimony.
The schedule is as follows:
9:00 a.m. – 9:15 a.m. CDT Welcome/Introductory Comments
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Eric Holder, Attorney General, U.S. Department of Justice
9:15 a.m. – 10:00 a.m. CDT Roundtable Discussion and Presentation of Issues
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Eric Holder, Attorney General, U.S. Department of Justice
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of Justice
Artur Davis, Congressman, U.S. House of Representatives
Troy King, Attorney General, state of Alabama
Ron Sparks, Agriculture Commissioner, state of Alabama
* The Alabama Congressional Delegation is invited
10:00 a.m. – 10:30 a.m. CDT Coffee Break
10:30 a.m. – 12:00 p.m. CDT Roundtable Discussion on Poultry Grower Issues
This panel will allow a dialogue among growers, former producers and government officials. Expected topics include competition in the poultry industry, poultry contracting, contract terminations and upgrades to poultry houses. The panel will also discuss inputs that affect grower compensation, such as bird quality, feed quality and consistency.
Moderator: Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Gary Alexander, producer, Westminster, S.C.
Kay Doby, former producer, Cameron, N.C.
Garry Staples, producer, Steele, Ala.
Robert Lumzy, former producer, Columbia, Miss.
Carole Morison, former producer, Maryland.
Shane Wootten, producer, Henagar, Ala.
Sandra Genell Pridgen, producer, North Carolina
12:00 p.m. – 1:00 p.m. CDT Lunch Break
1:00 p.m. – 2:00 p.m. CDT Public Testimony
2:00 p.m. – 3:45 p.m. CDT Roundtable Discussion on Trends in Poultry Production
This panel will discuss changes in the structure of poultry production and enforcement under the Packers and Stockyards Act. Issues that will be discussed include the use of the tournament system and other methods of compensation, market access, contracting, credit availability, production efficiency/improvements and poultry house upgrades.
Moderator: Norman Familant, Chief, Economic Litigation Section, U.S. Department of Justice
Benny Bishop, Peco Foods, Tuscaloosa, Ala.
Michael R. Dicks, Watkins Chair, International Trade and Development, Oklahoma State University
Max Carnes, producer, Baldwin, Ga.
John Ingrum, Forest, Miss.
Cindy Johnson, attorney, Cohutta, Ga.
Robert Taylor, professor, Agricultural Economics and Public Policy, College of Agriculture, Auburn University
Mike Weaver, producer and president of Contract Poultry Growers Association of the Virginias, Fort Seybert, W.Va.
3:45 p.m. – 4:00 p.m. CDT Break
4:00 p.m. – 5:00 p.m. CDT Additional Public Testimony
5:00 p.m. – 5:15 p.m. CDT Closing Remarks
John Ferrell, Deputy Under Secretary for Marketing and Regulatory Programs, U.S. Department of Agriculture
Mark Tobey, Special Counsel for State Relations and Agriculture, U.S. Department of Justice
Additional information, including submitted public comments and transcripts for past workshops can be found at the Antitrust Division’s agriculture workshop website at www.justice.gov/atr/public/workshops/ag2010/index.htm. While no streaming webcast will be available, transcripts will be available for this workshop at a later date on the Antitrust Division’s website. Individuals seeking more information on the workshops should contact [email protected] .
Media who wish to attend the workshop may begin arriving at 7:30 a.m. CDT and cameras must be pre-set by 8:30 a.m. CDT. Press inquiries regarding logistics at the Ernest L. Knight Reception Center at Alabama A & M University should be directed to Jerome Saintjones at 256-372-5607 or [email protected] .
Press Contacts:
U.S. Department of Justice
Office of Public Affairs
Gina Talamona
202-514-2007
U.S. Department of Agriculture
Office of Communications
Jim Brownlee
202-720-4623
Thursday 13 May 2010
Two Men Charged with Additional Counts for the Racially-Motivated Arson of a Massachusetts ChurchRead the Press Release
WASHINGTON – A federal grand jury in the District of Massachusetts has charged Michael Jacques and Thomas Gleason of Springfield, Mass., in a three-count superseding indictment in relation to the arson of a church, the Justice Department announced.
The superseding indictment alleges that in the early morning of Nov. 5, 2008, within hours of Barack Obama being elected President of the United States, Jacques, 25, and Gleason, 22, agreed to burn and succeeded in burning the Macedonia Church of God in Christ, a predominantly African-American church in Springfield.
Jacques and Gleason were originally charged on Jan. 27, 2009, with conspiring to interfere with the civil rights of the parishioners of the church. The superceding indictment’s two additional counts allege Jacques and Gleason damaged religious property because of the race, color or ethnic characteristics of individuals associated with that religious property, and used fire to commit a felony.
"The freedom to practice the religion that we choose in a safe environment without being subjected to discrimination or hateful acts is among our nation’s most cherished rights," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "Anyone who violates that right will be prosecuted to the fullest extent of the law."
"This senseless church burning victimized and traumatized a congregation and the larger Springfield community," said U.S. Attorney Carmen M. Ortiz. "Any desecration of a place of worship is a despicable crime, reaching to a deeply felt American tenet, freedom of religion. Incidents of this type illustrate the challenges we still face to protect our civil rights."
The building was 75 percent completed at the time of the fire, which destroyed the entire structure leaving only the metal superstructure and a small portion of the front corner intact. Investigators determined the fire to be incendiary in nature and caused by an unknown quantity of gasoline applied to the exterior and interior of the building. Some of the responding firefighters suffered injuries as they worked to extinguish the blaze.
If convicted, the defendants face up to 10 years in prison to be followed by three years of supervised release on the conspiracy charge; 40 years in prison for the damage to religious property charge; and a mandatory 10 year sentence with up to five years of supervised release for the use of fire to commit a felony.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the FBI; the Massachusetts State Police; the Hampden County, Mass., District Attorney’s Office and the Springfield Police Department. It is being prosecuted by Assistant U.S. Attorneys Paul H. Smyth and Kevin O’Regan of the District of Massachusetts; and Nicole Lee Ndumele, a Trial Attorney in the Justice Department’s Civil Rights Division.
The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Taiwan Citizen Pleads Guilty to Conspiring to Export Missile Components from the U.S. to IranRead the Press Release
Yi-Lan Chen, aka Kevin Chen,40, a Taiwan passport holder, and his Taiwan corporation, Landstar Tech Company Limited, pleaded guilty today in Miami to charges of conspiring to illegally export dual-use commodities to Iran, announced David Kris, Assistant Attorney General for National Security; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; Michael Johnson, Special Agent in Charge, U.S. Department of Commerce, Office of Export Enforcement; and Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement, Office of Investigations. Chen appeared on behalf of himself and Landstar Tech in federal court today to announce their guilty pleas. Sentencing is scheduled for July 30, 2010, at 10:00 a.m. before U.S. District Judge Adalberto Jordan.
Chen pleaded guilty to all three counts filed against him, and Landstar Tech pleaded guilty to count 1 of the criminal information. Count 1 charges conspiracy to export and cause the export of commodities from the United States to the Islamic Republic of Iran, in violation of the embargo imposed upon that country by the United States and in violation of the International Emergency Economic Powers Act. Counts 2 and 3 charge attempts to export and cause the export of commodities from the United States to the Islamic Republic of Iran, in violation of the U.S.-Iran Embargo and in violation of the International Emergency Economic Powers Act. On the conspiracy count, Chen faces a maximum statutory term of 20 years in prison and a maximum fine of $1 million. Landstar Tech also faces a statutory maximum fine of $1 million.
According to documents filed with the court during the plea hearing, Chen, a Taiwan national who was residing in that country during the time of the acts charged in the information, by and through his corporation, Landstar Tech, communicated and coordinated with co-conspirators in the United States, Iran, Hong Kong and elsewhere and facilitated the attempted export of dual-use goods from the United States to Iran. In so doing, Chen communicated with and took requests for U.S. manufactured goods from customers in Iran. Chen and Landstar Tech then purchased those U.S.-manufactured goods from U.S. companies and misrepresented to those companies the ultimate end-user or consignee of the goods.
With respect to the particular items charged in the information, Chen made arrangements with a federal agent acting in an undercover capacity to have those U.S. goods hand-delivered by the undercover agent to Chen in Guam, a territory of the United States. Chen then planned to transport those goods back to Taiwan and then on to his customers in Iran. Chen and Landstar Tech also received payment for the purchase and shipment of the U.S. goods from his customers in Iran and then used funds received from the customers in Iran to pay the U.S. companies for those goods.
Specifically, Chen and Landstar Tech conspired to export and cause the export of and attempted to export and cause the export of 120 circular hermetic connectors (Model MIL-C-81703/Part No. 8403-7-50P) and 8,500 glass to metal seals of various item numbers. The circular hermetic connectors and the glass to metal seals were manufactured in the United States and are dual-use commodities. While the goods or technologies have commercial application, they also could make a significant contribution to the military or nuclear potential of other nations and could be detrimental to the foreign policy or national security of the United States.
Chen ultimately failed to deliver the circular hermetic connectors or the glass to metal seals to his customers in Iran due to the intervention of U.S. Department of Commerce agents. The agents seized the first attempted shipment of 60 glass to metal seals prior to their export from the United States. Agents from the Commerce Department, as well as from the Department of Homeland Security, Immigration and Customs Enforcement (ICE), arrested Chen in Guam before he took delivery of the 60 additional circular hermetic seals or the 8,500 glass to metal seals from a federal law enforcement agent acting in an undercover capacity.
Chen has been in federal custody since his arrest in February of this year and will remain in custody pending his sentencing.
The investigation was conducted by the U.S. Department of Commerce, Office of Export Enforcement; and the U.S. Immigration and Customs Enforcement, Office of Investigations. The case is being prosecuted by Assistant U.S. Attorney Melissa Damian.
Sixth Individual Pleads Guilty for Role in $14.5 Million Medicare Home Health Care Fraud SchemeRead the Press Release
WASHINGTON – Detroit-area resident Christopher Collins pleaded guilty today for his participation in a $14.5 million fraudulent Medicare home health care scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Collins, 39, pleaded guilty before U.S. District Court Judge Denise Page Hood in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, scheduled for Sept. 23, 2010, Collins faces a maximum penalty of 10 years in prison and a $250,000 fine. Collins was originally indicted on Jan. 14, 2010, with 12 other individuals in connection with the Medicare home health care scheme. Collins is the sixth individual charged in the scheme to plead guilty.
Collins admitted in court documents that he was responsible for submitting or causing the submission of approximately $6.96 million in false or fraudulent claims to the Medicare program between August 2007 and October 2009.
According to the plea documents, in the late spring or early summer of 2007, Collins was hired by Muhammad Shahab as a nurse to work at Patient Choice Home Healthcare Inc. Patient Choice purported to provide home health services, including physical and occupational therapy services, to Medicare beneficiaries, which were then billed to Medicare. Collins admitted that he offered to become a beneficiary recruiter for Shahab and Patient Choice. According to plea documents, Collins solicited Medicare beneficiaries for Shahab and Patient Choice and offered them cash kickbacks in exchange for their Medicare patient information and signatures on medical documents. Collins admitted that he knew the beneficiaries he recruited were not homebound nor did they need physical therapy services. Collins also admitted in court papers that he knew Patient Choice used the beneficiaries’ Medicare information to bill Medicare for unperformed or medically unnecessary physical therapy.
According to court documents, in June 2008, Shahab helped finance and establish All American Home Care Inc. All American was owned at various times by Hassan Akhtar and Shahab. Beginning in April 2009, All American was owned by Collins. Collins admitted that he became the exclusive beneficiary recruiter at All American, recruiting hundreds of patients to the home health agency through the payment of cash kickbacks in exchange for their Medicare information and signature on medical documents. Collins admitted that All American billed Medicare for physical therapy services that were either not rendered or not medically necessary.
Shahab and Akhtar were originally charged with Collins in the January 2010 indictment. Shahab and four other individuals have pleaded guilty for their participation in the Medicare home health scheme. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Today’s result was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
The case was prosecuted by Assistant Chief John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for approximately $1.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department Announces Comprehensive, Cooperative Agreement with Cook County, Illinois, Board and Sheriff to Remedy Violations and Ensure Constitutional Rights of Inmates at Cook County JailRead the Press Release
WASHINGTON — The United States has entered into a comprehensive, cooperative agreement with Cook County, Ill., and the Cook County Sheriff that resolves previous findings of unconstitutional conditions at the Cook County Jail, the Justice Department announced today. The agreement resolves the United States’ investigation, which began in 2007 and concluded in 2008, that the jail systematically violated inmates’ constitutional rights by the use of excessive force by staff, the failure to protect inmates from harm by fellow inmates, inadequate medical and mental health care, and a lack of adequate fire safety and sanitation.
The agreement was filed today together with a new federal lawsuit. The 60-page document, called an Agreed Order, is pending approval by a federal judge in U.S. District Court in Chicago. The jail is the nation’s largest single-site county jail, consisting of multiple buildings located on 96 acres on Chicago’s West Side, with an average daily population of more than 8,500 adult male and female inmates.
Under the agreement, Cook County and the sheriff will implement detailed remedial measures to ensure that jail inmates are safe and receive the services necessary to meet their constitutional rights, including hiring more than 600 additional correctional officers over the next year. Other highlights include comprehensive provisions aimed at changing the jail’s permissive culture surrounding the excessive use of force, including steps directed at proper investigation of excessive force allegations; as well as improving jail policies, procedures and practices to protect inmates from harm by providing adequate medical and mental health care, fire and suicide prevention, sanitation, and employee training.
Compliance with the agreement will be overseen by four mutually selected, independent monitors, who will be paid by the county and will exercise broad duties, respectively, over corrections, medical care, mental health care, and the physical plant. Beginning in four months, the monitors are required to issue status reports to the court every six months. The agreement lists eight separate substantive sections and terminates as to each of those sections when Cook County and the sheriff have achieved "substantial compliance" with the provisions regarding each of those sections and then maintain that compliance for 18 months. The agreement anticipates that the parties will achieve substantial compliance with all provisions within four years.
"It is a jurisdiction’s basic responsibility to protect those persons in its custody from harm and to uphold their constitutional rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We have worked cooperatively with Cook County officials to craft an agreement to ensure that the constitutional rights of Cook County Jail inmates are protected, and we commend Sheriff Dart, Cook County and the Cook County Department of Corrections for their willingness to work aggressively to remedy these problems."
"We are pleased that with the cooperation of Sheriff Dart and the County, we have achieved a rigorous, comprehensive agreement that will remedy the unconstitutional conditions that were found at the Cook County Jail," said Patrick J. Fitzgerald, U.S. Attorney for the Northern District of Illinois. "Inmates are entitled to conditions of confinement that pass constitutional muster."
The Civil Rights Division and the U.S. Attorney’s Office began investigating the jail in February 2007, pursuant to the Civil Rights of Institutionalized Persons Act (CRIPA), a federal civil rights law that authorizes the Attorney General to investigate and root out systemic abuses of persons confined in adult detention and correctional facilities. The investigation included two week-long on-site visits to the jail in 2007 and the review of documents dating back to January 2006. The United States’ findings were delivered in July 2008 to Cook County Board President Todd H. Stroger and Sheriff Thomas Dart and were made public later that same month.
According to the 2008 findings, three jail inmates committed suicide in the first four months of that year alone. The investigation further identified, since 2006, multiple preventable inmate deaths and a preventable amputation due to inadequate medical care, and separate incidents of unchecked inmate violence in 2006 that resulted in two inmate deaths. The 2008 findings also concluded that inmates were regularly subjected to inappropriate and excessive use of physical force by jail staff, even when inmates posed no threat to anyone’s safety or to the jail’s security.
The lawsuit filed today names as defendants: Cook County, Sheriff Dart, Board President Stroger and the Cook County Board of Commissioners, all in their official capacity. All corrections and security functions at the jail are administered by the sheriff through the Department of Corrections, while health care services are provided by Cermak Health Services of Cook County, a part of the Cook County Bureau of Health. According to the agreement, "throughout the course of the investigation, the United States received complete cooperation and access to all facilities and documents from the Cook County Board of Commissioners and the Cook County Sheriff’s Office."
Under the agreement, the Department of Corrections is required to hire, train and put on duty at least 448 new corrections officers by Dec. 31, 2010, and an additional 174 new corrections officers by March 30, 2011. Other provisions require increased supervision of inmate housing areas, including regular inspections to prevent inmate possession of dangerous contraband. The county must also increase overhead video surveillance and recording cameras throughout the common areas of the jail.
Other terms include measures to appropriately identify the excessive use of force by staff, including investigations triggered by suspicious inmate injuries and inconsistent reports by staff, which must be written with sufficient detail. All injuries sustained by inmates and staff must be photographed, and disciplinary action must be proposed for correctional officers who either engage in excessive use of force or fail to accurately report any incidents involving use of force.
The county-operated Cermak Hospital, located at the jail, must develop policies and procedures to ensure constitutionally adequate medical and mental health care, including suicide prevention. Detailed provisions require sufficient levels of staffing, an adequate medication distribution system, unified medical and mental health records, and timely access to all levels of medical and mental health care, including specialists. Inmates with serious mental illness must be treated with therapy and other mental health programs, according to the agreement, and an inmate’s serious mental illness must be considered in determining the appropriateness of segregation and other disciplinary measures.
The United States has been represented by former Assistant U.S. Attorney Joan Laser, while Assistant U.S. Attorney Patrick Johnson, together with Kerry Krentler Dean, David Deutsch and Corey Sanders, Trial Attorneys in the Special Litigation Section of the Civil Rights Division, continue to represent the United States.
Foreign National Pleads Guilty for Role in International Money Laundering Scheme <br /> Involving More Than $1.4 Million in Losses to VictimsRead the Press Release
WASHINGTON – A Bulgarian national pleaded guilty today in U.S. District Court in the District of Columbia for his role in laundering money for a transnational criminal group based in Eastern Europe, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. According to court documents, in less than one year, the criminal conspiracy netted more than $1.4 million from U.S. victims.
Georgi Boychev Georgiev, 43, a resident of Bulgaria, pleaded guilty today before U.S. District Court Judge Paul L. Friedman to conspiracy to commit money laundering. Georgiev was extradited from Poland to the United States in December 2009. Georgiev faces a maximum sentence of 20 years in prison at sentencing, scheduled for July 23, 2010.
According to court documents, Georgiev participated in a scheme that operated from July 2005 through November 2006, and involved the posting of fraudulent advertisements on eBay and other web sites offering expensive vehicles and boats for sale that the conspirators did not possess. When the U.S. victims expressed interest in the merchandise, they were contacted directly by an e-mail from a purported seller. According to court documents, the victims were then instructed to wire transfer payments through “eBay Secure Traders”—an entity which has no actual affiliation to eBay but was used as a ruse to persuade the victims that they were sending money into a secure escrow account pending delivery and inspection of their purchases. Instead, the victims’ funds were wired directly into bank accounts in Hungary, Slovakia, the Czech Republic and Poland that were controlled by co-conspirators.
Georgiev was originally charged on Jan. 9, 2008, along with five additional defendants: Roman Teodor, Georgi Vasilev Pletnyov, Ivaylo Vasilev Pletnyov, Nikolay Georgiev Minchev and Antoaneta Angelova Getova. On Dec. 2, 2009, Ivaylo Vasilev Pletnyov and Nikolay Georgiev Minchev were sentenced to four years and 30 months in prison, respectively, for their roles in the money laundering conspiracy. The United States continues to work with foreign counterparts in Romania and Poland regarding the remaining defendants. An indictment is merely an accusation and the defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
This investigation was conducted by the FBI – Hungarian National Bureau of Investigation (HNBI) Organized Crime Task Force located in Budapest, Hungary (Budapest Task Force). The Budapest Task Force was established by the FBI in April 2000 to address the increasing threat of Eurasian organized crime groups to the United States.
The case is being prosecuted by Trial Attorney Lisa Page of the Criminal Division’s Organized Crime and Racketeering Section. The Criminal Division’s Office of International Affairs provided significant assistance on this case.
Fayette County Corrections OfficersConvicted on Civil Rights ChargesRead the Press Release
WASHINGTON – A federal jury in Lexington, Ky., returned seven guilty verdicts against two former corrections officers with the Lexington-Fayette County Urban Detention Center (FCUDC), the Justice Department announced today. The defendants, former Sergeant John McQueen, 33, and former Corporal Clarence McCoy, 31, were convicted for conspiring to abuse arrestees at the FCUDC; for actually abusing arrestees; and for obstructing justice by lying about the abuse. The defendants are scheduled to be sentenced on Aug. 31, 2010.
Evidence at trial established that defendants McQueen and McCoy conspired with each other and with other officers who worked on their shift at the jail to physically assault inmates and to write false reports to cover it up. The conspiracy charge, for which both defendants were convicted, identified multiple incidents of abuse that occurred between Jan. 1, 2006, and Oct.1, 2006, in which one or more officers assaulted inmates in the intake unit of the jail. The other charges related to specific incidents of abuse, and specific acts of obstruction of justice.
"The power granted to correctional officers so that they can perform their critical public safety duties do not give them free reign to abuse the civil and constitutional rights of inmates under their supervision," said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. "Those officers who abuse their power and the public trust in this way will be prosecuted to the fullest extent of the law."
"Everyone, including jail inmates are entitled to the protection of their civil rights," said E.J Walbourn, U.S. Attorney for the Eastern District of Kentucky. "This case is proof that the Department of Justice will actively pursue and prosecute anyone who violates another person's civil rights no matter their position of authority."
At trial, the government presented testimony from fellow officers at the jail, from victims of the defendants’ abuse, and from former Corporal Scott Tyree, who previously pleaded guilty to being part of the civil rights conspiracy for which defendants McQueen and McCoy were convicted. After four days of trial and approximately 90 minutes of deliberation, the jury convicted the defendants on all counts.
Before trial began, three co-defendants, all former employees of the jail, pleaded guilty to federal charges connected to this case. Former Lieutenant Christine LaFoe pleaded guilty to conspiring to obstruct justice; Sergeant Anthony Estep pleaded guilty to a civil rights charge and an obstruction charge for failing to intervene in the abuse of inmates; and former Corporal Scott Tyree pleaded guilty to a civil rights conspiracy charge.
This case was investigated by the Louisville field office of the FBI, and was prosecuted by Jared Fishman and Benjamin Hawk, Trial Attorneys from the Civil Rights Division of the Department of Justice, with assistance from Assistant U.S. Attorney James Arehart.
City of Oswego, N.Y., Agrees to Invest $87 Million in Upgrades to Sewer System to Comply with Clean Water ActRead the Press Release
WASHINGTON—To resolve long-standing problems with unpermitted sewer overflows, the city of Oswego, N.Y., will invest an estimated $87 million in improvements to its west side sewer system, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
The improvements to the city’s sewer system, to be implemented under the settlement lodged in federal court in Syracuse, N.Y., will significantly reduce the number of sewer overflows. The city also will pay a penalty of $99,000. The settlement resolves claims against the city by both the United States and the state of New York.
Under the settlement, the city has agreed to undertake a comprehensive, system-wide program that will bring the city into compliance with the Clean Water Act. Specific measures include at least 75 percent separation of the combined system into sanitary and stormwater components, in order to prevent high volumes of rainwater from overwhelming the treatment plant, a 50 percent expansion of the west side waste water treatment plant’s treatment capacity, disconnection of catch basins to reduce the inflow of rain water into the existing sanitary sewer system, major improvements to its operation and maintenance program, and sewer financing reforms.
The city’s west side sewer system, which serves approximately 10000 people, is designed to transport the city’s sewage to a wastewater treatment plant for treatment prior to discharge into Lake Ontario. The system includes both combined and sanitary components. The combined system collects and transports household sewage and industrial wastewater, as well as rainwater and street runoff, using the same pipes, whereas the sanitary component uses a separate set of pipes to collect and transport sewage and wastewater only. Overflows from the city’s collection system discharge raw sewage directly to water bodies and can be a major source of water pollution.
Heavy rainfall or snowmelt often overwhelms the capacity of the system, resulting in sewer overflows that discharge contaminated stormwater and untreated human and industrial waste to local waterways. Untreated discharges often carry bacteria, pathogens and other harmful pollutants which can seriously degrade water quality, kill aquatic life and threaten public health. Raw sewage can cause a number of diseases in contaminated areas, including cholera, dysentery and gastroenteritis.
"Today’s agreement sets Oswego on a clear path to improve the city’s sewer system in order to achieve compliance with the Clean Water Act. The required upgrades will greatly reduce the amount of pollution entering the Oswego River and Lake Ontario and result in a cleaner, safer environment," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"This legal agreement will significantly reduce raw sewage discharges into Lake Ontario and the Oswego River- two treasured upstate water bodies," said Judith Enck, EPA Regional Administrator. "Exposure to untreated sewage is bad for public health, fish, wildlife and water quality. It is imperative that all communities comply with the Clean Water Act and this agreement puts the city of Oswego in a position to do just that. I commend everyone who was involved in this major step toward cleaner water and look forward to working with the city of Oswego to ensure compliance."
The settlement, lodged today in the U.S. District Court for the Northern District of New York, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Almighty Latin King and Queen Nation Gang Members Sentenced to Life in Prison for Their Roles in Multiple Murder, Narcotics and Firearms CrimesRead the Press Release
WASHINGTON - The leader of the Almighty Latin King and Queen Nation (ALKQN) in Texas and one of his enforcers were sentenced today to life in prison by U.S. District Judge Sam R. Cummings, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney James T. Jacks for the Northern District of Texas.
On Feb. 24, 2010, Jose Robledo Nava, aka "Chino," 31, of Lubbock, Texas, and James Johnathan Cole, aka "Blitz," 19, of Lamesa, Texas, were each found guilty by a federal jury in Lubbock on two counts of using a firearm to commit murder during and in relation to a drug trafficking crime, and one count of a conspiracy to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana. The jury also found Nava guilty on one count of possession with intent to distribute 500 grams or more of cocaine, one count of conspiracy to engage in the business of dealing in firearms and one count of possession of stolen firearms.
Nava and Cole were also found guilty for their involvement in a drive-by shooting in Big Spring, Texas, on May 4, 2008, in which six people were shot with an AK-47 type rifle. According to the evidence presented at trial, the victims included Michael Cardona and Valeria Garcia, who was 26 weeks pregnant at the time of the shooting. Cardona and Garcia ultimately died as a result of their wounds. Evidence presented at trial proved that after the shootings, Nava ordered two of his co-conspirators to destroy the murder weapon.
"The sentences imposed today – life in prison – send a powerful message that heinous acts of gang violence will not be tolerated," said Assistant Attorney General Breuer. "No community should be forced to live in fear. In courtrooms across the United States, the Criminal Division’s Gang Unit and its partners at the U.S. Attorneys’ Offices are working tirelessly to bring dangerous gang members to justice."
"The verdict in this case and the sentences imposed against these gang members is a victory for all law abiding citizens, not only in Big Spring, Texas, but across the country. It also represents a warning to any other individuals who decide to follow the path of a member of a criminal gang," said U.S. Attorney James T. Jacks. "Citizens of this country are tired of gangs, what they represent and the effect of their activities on their communities. The Department of Justice through the work of its Gang Unit, U.S. Attorney’s offices around the country, and our partners in federal, state and local law enforcement agencies have put violent criminal gangs in the cross-hairs and will continue their efforts to eliminate these organizations from our communities ."
According to evidence presented at trial, Nava was the Texas state enforcer and representative for the ALKQN. To date, 18 co-defendants have pleaded guilty and been sentenced for their roles in this conspiracy. The jury found that Nava and Cole were members of a conspiracy that included Luis Nava, aka "Flaco;" Reynaldo Nava, aka "Rat;" Robert Allen Ramirez, aka "Nesyo;" Marie Chavez, aka "Shorty;" Carol Ann Rivas Nava; Cecily Dominique Juarez; Jesus Martinez, aka "Solid;" David Hellums, aka "Cutthroat;" Eduardo Daniel Mares, aka "Pitt;" Gabriel Lee Gonzales; Michael Conde, aka "Psycho;" John Guzman; Guerrero Olivas, aka "Screech;" Eliseo Perez, aka "Wicked;" Joe Canales, aka "Slick;" and others. The jury found that from 2001 until Dec. 13, 2008, Nava and Cole directly or indirectly agreed to distribute, and possessed with intent to distribute, cocaine and marijuana.
The case was investigated by the National Gang Targeting, Enforcement and Coordination Center (GangTECC); the Organized Crime Drug Enforcement Task Force; the U.S. Drug Enforcement Administration; the FBI; U.S. Immigration and Customs Enforcement; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the El Paso Intelligence Center; U.S. Customs and Border Protection; the U.S. Marshals Service; the Texas Department of Public Safety; the Police Departments of Lubbock, Midland, Houston, San Antonio and Big Spring, Texas; the Lubbock County, Texas, Sheriff’s Office; and the Howard County, Texas, District Attorney’s Office.
The case was prosecuted by Trial Attorneys Cody L. Skipper and Joseph A. Cooley of the Criminal Division’s Gang Unit and Assistant U.S. Attorney Denise Williams of the U.S. Attorney’s Office for the Northern District of Texas.
Wednesday 12 May 2010
U.S. Court Bars Kansas City-Area Attorney & CPA from Promoting Tax Fraud Schemes That Cost Treasury at Least $45 MillionRead the Press Release
WASHINGTON - A federal judge in Kansas City, Mo., has permanently barred Allen R. Davison from promoting a variety of tax fraud schemes, including some that used sham companies, sham chicken-flock contracts, and sham pension plans, the Justice Department announced today. The civil injunction order found that Davison engaged in widespread misconduct, and directs the Justice Department to provide a copy of the order to the licensing boards of the states where Davison maintains a CPA license.
The court found that since "at least the mid-1990's, Davison has advised on tax-related matters and promoted tax-fraud schemes," including orchestrating "arrangements that involve sham companies and bogus deductions" that Davison knew were "for the purpose of illegal tax avoidance." Davison, a licensed CPA and member of the Nebraska bar, has been employed at two large accounting firms and, most recently, as a contractor for entities owned by a Kansas City-area businesswoman. The court found that Davison also works through several small accounting firms set up by his former colleagues at a larger firm.
The court order describes improper schemes that Davison set up for clients that included medical practitioners, an insurance broker and car dealership owners. According to the court, Davison made his tax fraud schemes "deliberately complex" in order to "evade IRS detection." Davison’s attempts to evade detection included fabricating records, preparing documents after the fact to address IRS concerns, and intentionally providing false information to the IRS during audits of his clients. Davison himself "deliberately disguised the nature of his work" and also "expressed a willingness to change to new and different tax fraud schemes when faced with the heightened IRS scrutiny of older schemes."
The court found that Davison "deliberately advised his clients to break the law, and helped them go about doing so." Davison’s tax-fraud schemes included sham management companies whose shares were owned by employee stock option plans and Roth IRAs, and bogus chicken-flock deductions claimed for clients who were not eligible to claim them because they did not qualify as farmers under federal tax law. In one scheme, sham corporations were set up for the sole purpose of sponsoring pension plans for the benefit of Davison clients who owned businesses. The sham companies were used to evade the federal tax law requirement that pension plans include rank-and-file employees.
The court ordered Davison to give the Justice Department a list of all clients for whom he has provided any tax-related advice in the last five years. He must continue to provide such a list once a year in the future for as long as he continues to provide tax advice.
"The nation’s tax system relies on the integrity of tax professionals," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. " This decision shows that tax professionals who engage in fraud can expect to pay a steep price for their misconduct."
DiCicco thanked Justice Department trial attorneys Allyson Baker, Daniel Applegate, and Gregory Seador, who handled the case, as well as James Ley and Janice Mallon of the IRS’s Small Business/Self Employed Division, who were the primary revenue agents conducting the investigation.
Man Indicted for Civil Rights Conspiracyin Connection with Cross-Burning in Athens, LouisianaRead the Press Release
WASHINGTON – Joshua James Moro, 23, has been indicted by a federal grand jury for participating in a civil rights conspiracy in connection with an October 2008 cross-burning in Athens, La., near the home of an interracial couple. Moro was arrested today following the return of the indictment on April 28, 2010.
Moro was charged with one count of conspiring to interfere with another person’s civil rights. If convicted, he faces a maximum punishment of 10 years in prison.
Moro’s co-conspirator and cousin, Daniel Earl Danforth, was convicted this past January for conspiring to burn a cross, using fire to commit a federal felony and obstruction of justice charges stemming from this same cross-burning. According to the evidence at Danforth’s trial, on or about Oct. 23, 2008, Moro agreed to help Danforth build, erect and burn a cross near the homes of their cousin, who lived with an African-American man and an 11-year-old son, and other relatives who were believed to approve of the interracial relationship. Specifically, Moro agreed to get diesel fuel for Danforth to use to burn the cross. The evidence at Danforth’s trial established that as part of the conspiracy, Danforth and others built a cross out of small pine trees and transported the cross to an area adjacent to the victims’ homes, where they set it on fire in order to intimidate the interracial couple.
This case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Mary J. Mudrick for the Western District of Louisiana and Trial Attorney Erin Aslan from the Justice Department’s Civil Rights Division.
The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty.
Adult Foster Care Facility Owners and Physical Therapist Plead<br /> Guilty in Medicare Home Health Fraud SchemeRead the Press Release
Detroit-area residents Tariq Chaudhary, Lura Barrett and Stephen Cartier pleaded guilty today for their participation in a fraudulent Medicare home health scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Chaudhary, 37, pleaded guilty before U.S. District Court Judge Denise Page Hood in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. Barrett, 72, and Cartier, 50, each pleaded guilty before Judge Hood to one count of conspiracy to receive kickbacks. At sentencing, scheduled for Sept. 23, 2010, Chaudhary faces a maximum penalty of 10 years in prison and a $250,000 fine. Barrett and Cartier, scheduled to be sentenced on Sept. 16, 2010, face a maximum penalty of five years in prison and a $250,000 fine.
According to the plea documents, Chaudhary was a physical therapy assistant and began working for All American Home Care Inc. and other affiliated entities (All American). All American purported to provide home health services, including physical therapy services, to Medicare beneficiaries. Chaudhary admitted that he signed documents, including therapy visit and revisit notes, that purported to document home health visits to Medicare beneficiaries that were then billed by All American to Medicare. Chaudhary admitted in court documents that a large majority of these home health visits never occurred. Chaudhary also admitted that he was paid approximately $45 by the owners of All American for each therapy visit form he signed. According to court documents, Chaudhary signed documents used to justify approximately $747,282 in home health claims by All American for patients he either never saw or for whom home health services were medically unnecessary. Chaudhary admitted that he knew that the files he helped falsify were used to justify fraudulent billings to Medicare.
Chaudhary also admitted in court documents that he laundered money on behalf of co-defendant Hassan Akhtar. According to court documents, Akhtar wrote checks to Chaudhary from All American’s bank accounts and directed Chaudhary to cash the checks, retain a small portion of the cash for himself and return the rest of the cash to Akhtar. Chaudhary admitted in court documents that he knew the All American accounts from which the checks were drawn contained proceeds of the fraudulent scheme described above. According to court documents, Akhtar’s and Chaudhary’s purpose in orchestrating these transactions was this to conceal the disbursement of funds from the fraudulent scheme to Akhtar.
According to plea documents, Cartier was the owner and/or operator of an adult foster care facility (AFC), Hilltop Estates Inc. Cartier admitted that he received kickbacks from Mohammed Shahab, the owner and/or operator of several home health agencies (HHA), in exchange for Medicare patient referrals. In 2008, Cartier accepted $5,000 from an individual acting on Shahab’s behalf in exchange for allowing Shahab to bill Medicare for home health services purportedly provided to residents at Cartier’s AFC. Cartier admitted that from April 2009 through August 2009, he accepted $2,000 in cash per month from Shahab in exchange for allowing Shahab to bill Medicare for home health services purportedly provided to residents at his AFC. Cartier admitted he knew that Shahab would bill Medicare for home health physical therapy visits purportedly made to the Medicare beneficiaries at Cartier’s facilities.
Over the course of the conspiracy, Cartier referred 13 patients to Shahab’s HHAs. During the time Cartier participated in the scheme, Shahab’s HHA, Patient Choice Home Healthcare, submitted claims for $159,531 in improper benefits from the Medicare program.
Barrett, the owner and/or operator of an AFC and two room and board facilities, admitted in court that she also solicited and received kickbacks from Shahab. Barrett admitted that Shahab offered to pay Barrett in exchange for the opportunity to bill Medicare for home health physical therapy sessions purportedly provided to beneficiaries residing at Barrett’s AFC and room and board facilities. Barrett admitted that she agreed to provide Medicare beneficiary referrals to Shahab’s HHAs in exchange for payments. Barrett admitted in court that she knew Medicare was billed for the patients she referred.
Shahab pleaded guilty on Feb. 17, 2010, to one count of conspiracy to commit health care fraud and is scheduled to be sentenced on June 17, 2010. Hassan Akhtar was charged in an indictment unsealed on Jan. 14, 2010, with conspiracy to commit health care fraud and money laundering. An indictment is merely a charge and defendants are presumed innocent until proven guilty.
Today’s result was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.
The case was prosecuted by Assistant Chief John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for approximately $1.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Tuesday 11 May 2010
U.K. Firm Fined $2 Million After Pleading Guilty to<br /> Illegally Exporting Boeing 747 Aircraft to IranRead the Press Release
Balli Aviation Ltd., a subsidiary of the United Kingdom-based Balli Group PLC, was sentenced today in the U.S. District Court for the District of Columbia to pay a $2 million fine and to serve a five-year corporate period of probation after pleading guilty on Feb. 5, 2010, to a two-count criminal information in connection with its illegal export of commercial Boeing 747 aircraft from the United States to Iran.
The sentence was announced today by David Kris, Assistant Attorney General for National Security; Ronald C. Machem Jr., U.S. Attorney for the District of Columbia; David W. Mills, Commerce Assistant Secretary for Export Enforcement; and Adam J. Szubin, Director of the Department of Treasury's Office of Foreign Assets Control.
Consistent with the plea agreement, U.S. District Judge Ellen Segal Huvelle sentenced Balli Aviation Ltd. to a maximum fine of $2 million and corporate probation for five years. The $2 million fine, combined with a related $15 million civil settlement among Balli Group PLC, Balli Aviation Ltd., the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), is one of the largest fines for an export violation in BIS history.
Under the terms of the related civil settlement, Balli Group PLC and Balli Aviation Ltd. have agreed to pay a civil penalty of $15 million, of which $2 million will be suspended if there are no further export control violations. In addition, Balli Aviation Ltd. and Balli Group PLC are denied export privileges for five years, although this penalty will be suspended provided that neither Balli Aviation, Ltd. nor Balli Group PLC commits any export violations and pays the civil penalty. Under the terms of the settlement, Balli Group PLC and Balli Aviation, Ltd. will also have to submit the results of an independent audit of its export compliance program to BIS and OFAC for each of the next five years.
According to count one of the criminal information filed with the court, beginning in at least October 2007, through July 2008, Balli Aviation Ltd. conspired to export three Boeing 747 aircraft from the United States to Iran without first having obtained the required export license from BIS or authorization from OFAC, in violation of the Export Administration Regulations (EAR) and the Iranian Transactions Regulations. Specifically, the information states that Balli Aviation Ltd., through its subsidiaries, the Blue Sky Companies, purchased U.S.-origin aircraft with financing obtained from an Iranian airline and caused these aircraft to be exported to Iran without obtaining the required U.S. government licenses. Further, Balli Aviation Ltd. entered into lease arrangements that permitted the Iranian airline to use the U.S.-origin aircraft for flights in and out of Iran.
Count two of the criminal information states that Balli Aviation Ltd. violated a Temporary Denial Order (TDO) issued by BIS on March 17, 2008, that prohibited the company from conducting any transaction involving any item subject to the EAR. Starting in or about March 2008 and continuing through about August 2008, Balli Aviation Ltd. willfully violated the TDO by carrying on negotiations with others concerning buying, receiving, using, selling and delivering U.S.-origin aircraft which went to the Export Administration Regulations.
In announcing today’s sentence, Assistant Attorney General Kris, U.S. Attorney Machen, Assistant Secretary Mills, and OFAC Director Szubin commended Assistant Director for Operations John Sonderman, Special Agent in Charge Rick Shimon, Special Agent Joseph Varga, and Chief Counsel Attorney Gregory Michelsen, all of the Department of Commerce’s Bureau of Industry and Security. They also thanked Trial Attorney Jonathan C. Poling of the Counterespionage Section of the Justice Department’s National Security Division, and Assistant U.S. Attorney Anthony Asuncion of the U.S. Attorney’s Office for the District of Columbia, who prosecuted this matter.
Two Los Angeles-area Men Found Guilty for Role in Kidnapping of California Man <br /> Who Was Shot, Shocked with Taser and Held for $1 Million RansomRead the Press Release
A federal jury in Los Angeles convicted two men late yesterday on kidnapping charges for abducting a Van Nuys, Calif., man who was shot, shocked with a taser and held captive for five days while his kidnappers attempted to negotiate a $1 million ransom payment, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney André Birotte Jr., for the Central District of California. The jury convicted the two men after approximately two days of deliberation.
Vagan Adzhemyan, 41, of Costa Mesa, Calif.; Suren Garibyan, 32, of North Hollywood, Calif.; and Galvin Shaun Gibson, 30, of Mira Loma, Calif., were charged in August 2009 with conspiracy to commit kidnapping and kidnapping. In addition, Gibson was charged with manufacturing marijuana and being a felon in possession of ammunition. Adzhemyan and Gibson were found guilty yesterday of conspiring to commit kidnapping and kidnapping. Gibson was also found guilty of manufacturing marijuana at the house in Mira Loma where he was holding the victim at the time he was rescued. Adzhemyan and Gibson were initially tried in federal court in January 2010, but a mistrial was declared when the jury failed to reach a unanimous verdict.
According to evidence presented during this two-week trial, Adzhemyan and Garibyan abducted the victim in the parking garage of the victim’s mother’s house in Van Nuys in the early morning hours of July 29, 2009. During the abduction, the victim was shot and shocked with a taser before he was forced into a waiting vehicle, while an associate of the victim’s was violently assaulted by the kidnappers. In the process of abducting him, the victim was accidentally shot by his friend – a gunshot wound that caused extensive bleeding and ripped through the victim’s intestines. According to the evidence presented at trial, the kidnapping victim was bound and forced to wear a blindfold as he was held at various locations in southern California during the next five days. During the time that the victim was held captive, the kidnappers directed him to use cellular telephones to make calls to family members and close associates in the Los Angeles area and in Russia in order to secure a $1 million ransom in exchange for the victim’s safe release.
According to evidence presented at trial, the captors withheld necessary medical treatment for the victim’s life-threatening gunshot wound. In addition, the kidnappers repeatedly beat the victim during the course of his captivity and focused their beatings on the victim’s stomach area, which was most affected by his gunshot wound.
Adzhemyan, Garibyan and Gibson were taken into custody on Aug. 3, 2009, when the victim was rescued from Gibson’s Mira Loma residence by a team of Los Angeles Police Department SWAT officers. The victim was found lying on an air mattress, unable to move on his own, while one of Gibson’s pit bull dogs kept watch over him. According to testimony at trial, officers were able to locate both the kidnappers and the place where the kidnappers were hiding the victim following an extensive undercover surveillance operation conducted by the LAPD. According to evidence presented at trial, the victim was hospitalized for more than one month after he was rescued and underwent three surgeries during his hospitalization.
Trial evidence also showed that Adzhemyan and Garibyan used the victim’s ATM card to withdraw the maximum amount of cash from the victim’s bank account on three separate occasions while he was being held in captivity.
At sentencing, scheduled for Aug. 2, 2010, Adzhemyan and Gibson each face a maximum penalty of life in prison. Garibyan pleaded guilty to conspiracy to commit kidnapping on Dec. 30, 2009. He is scheduled to be sentenced on Aug. 24, 2010.
The case was prosecuted by Trial Attorney Cristina Moreno of the Criminal Division’s Organized Crime and Racketeering Section, Chief Robert Dugdale of the Violent and Organized Crime Section in the U.S. Attorney’s Office for the Central District of California and Assistant U.S. Attorney Martin Estrada. The investigation was conducted by the Los Angeles Police Department’s Robbery-Homicide Division and the FBI’s Violent Crimes Squad.
Medicare Fraud Fugitive Taken into Custody at Miami International Airport <br /> and Ordered Held in Pre-trial Detention Pending TrialRead the Press Release
WASHINGTON – Jose Garcia, 55, who has been a fugitive since 2008, was taken into federal custody yesterday at Miami International Airport, announced the Departments of Justice and Health and Human Services (HHS). Garcia self-surrendered to FBI agents upon arrival in Miami.
Garcia appeared in federal court in Miami today, where U.S. Magistrate Judge William C. Turnoff ordered him detained pending the resolution of the charges against him. Garcia and his co-defendant, Nayda Freire, were charged in 2008 with allegedly conspiring between April 2003 and November 2003 to submit approximately $10.9 million in false and fraudulent claims to the Medicare program for HIV infusion services allegedly provided at Global Med-Care Corp., an HIV infusion clinic operated by Garcia and Freire.
According to the indictment, Garcia, Freire and their co-conspirators allegedly retained and trained physicians and physicians’ assistants as part of the scheme at Global Med-Care to make it appear that legitimate HIV infusion and medical services were being provided. The indictment also alleges that Garcia and Freire laundered the proceeds of their crimes by sending the proceeds to sham management and marketing companies owned and controlled by their co-conspirators. The charges in the indictment are merely allegations and Garcia is presumed innocent until proven guilty.
Garcia and Freire were charged with one count of conspiracy to defraud the United States, to cause the submission of false claims to the Medicare program and to pay health care kickbacks; one count of conspiracy to commit health care fraud; one count of conspiracy to launder the proceeds of their crimes; and four counts of money laundering. Garcia also was charged with four counts of submitting false claims to the Medicare program.
Freire pleaded guilty on Aug. 28, 2008, to one count of conspiracy to defraud the Medicare program, and was sentenced on Nov. 12, 2008, by U.S. District Court Judge Adalberto Jordan to 30 months in prison. In addition to the prison term, Judge Jordan sentenced Freire to two years of supervised release following her release from prison and ordered her to pay $7,992,391 in restitution to the Medicare program. In her plea, Freire acknowledged that between April 2003 and November 2003, she and others conspired to file $10.9 million in false claims to the Medicare program for HIV infusion services that were not provided and were not medically necessary. In addition, court documents explain how the patients were paid cash kickbacks in return for agreeing to allow Global Med-Care to bill Medicare for the unneeded services.
Freire admitted that after payments from Medicare were made into the bank accounts of Global Med-Care, she and others transferred approximately $6 million of the fraud proceeds to sham management, marketing and investment companies owned and operated by co-conspirators Carlos, Luis and Jose Benitez. Co-conspirators Carlos and Luis Benitez and Thomas McKenzie were charged separately with health care fraud and money laundering crimes in an indictment unsealed on June 11, 2008. According to the separate indictment, these co-conspirators allegedly provided the money and staff necessary to open Global Med-Care; the Medicare patients whom the clinic would bill to the Medicare program; and transportation for the HIV patients who visited the clinic. That indictment also alleges that Carlos and Luis Benitez were the true owners of Global Med-Care.
The three Benitez brothers and McKenzie were charged with participating in the commission of approximately $109 million in HIV infusion fraud and money laundering through Global Med-Care and 10 other HIV infusion clinics. On Sept. 18, 2008, McKenzie pleaded guilty to one count of conspiracy to commit health care fraud and one count of submitting false claims to the Medicare program, and also admitted his role in a $119 million HIV infusion fraud scheme. McKenzie was sentenced by U.S. District Judge Alan S. Gold on Dec. 18, 2008, to 14 years in prison in connection with his role in the HIV-infusion Medicare fraud scheme. In addition to the prison sentence, McKenzie was ordered to serve three years of supervised release following his prison term and pay $84 million in restitution to the Medicare program. The Benitez brothers remain fugitives.
Today’s results were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies , Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (OIG), Office of Investigations Miami office.
The case was prosecuted by Deputy Chief Hank Bond Walther and Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section, and investigated by the FBI and the HHS Office of Inspector General. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Justice Department Sponsors National<br /> Internet Crimes Against Children ConferenceRead the Press Release
Acting Deputy Attorney General Gary G. Grindler today opened the National Internet Crimes Against Children Conference, "PROTECTing our Children; Making the Internet a Safer Place," in Jacksonville, Fla. The conference features highly specialized training provided by the Internet Crimes Against Children (ICAC) Task Force Program, their federal partner agencies and other organizations to an audience of federal, state and local law enforcement investigators, forensic experts and prosecutors. More than 1,200 participants are in Jacksonville for the conference sessions ending on May 14.
"The Department of Justice is committed to fighting against the sexual exploitation of children and a key part of that fight is acting together as a nation to protect our children," said Acting Deputy Attorney General Gary G. Grindler. "The ICAC program does just that by bringing thousands of federal, state, and local investigators and prosecutors together to share information, investigate cases, conduct training, and develop law enforcement technologies and techniques to interdict child exploitation."
Launched in 1998, the ICAC Task Force Program (ICAC Program) is a national network of 61 coordinated task forces representing more than 3,000 federal, state and local law enforcement and prosecutorial agencies. These agencies are engaged in proactive investigations, forensic investigations and criminal prosecutions. In Fiscal Year 2009, task forces reported nearly 28,000 complaints, including child pornography, enticement or obscenity directed to minors and child prostitution. These complaints resulted in more than 13,000 investigations. In addition, The PROTECT Our Children Act of 2008 provided for the development of a national strategy to combat child exploitation and established long range goals for preventing child exploitation.
The Office of Justice Programs’ (OJP) Office of Juvenile Justice and Delinquency Prevention administers funding and provides training and technical assistance to the ICAC task forces and their partners. Last year, the ICAC Program received $75 million in federal funding, with $50 million awarded through the American Recovery and Reinvestment Act of 2009. More than $12 million of that funding supported training, technical assistance and research – key elements in refining and strengthening the effectiveness of the ICAC Program.
The department’s effort to protect children is a personal priority of Attorney General Eric Holder. On March 31, the department announced the availability of more than $5 million to support the Attorney General’s Initiative on Children Exposed to Violence. The funds will sponsor planning, outreach, research and best practices for reducing children’s exposure to violence.
OJP, headed by Assistant Attorney General Laurie O. Robinson, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has seven components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; the Community Capacity Development Office, and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking. More information about OJP can be found at www.ojp.gov .
Justice Department Signs Agreement with St. Clair County, Illinois, to Ensure Civic Access for People with DisabilitiesRead the Press Release
WASHINGTON - The Justice Department today announced an agreement with St. Clair County, Ill., to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).
"Civic access is a basic civil right, and the doors to government programs, services and activities must be open for individuals with disabilities," said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. "I commend St. Clair County officials for making this commitment to its residents with disabilities by agreeing to come into voluntary compliance with the ADA, thereby working towards equal access to all of its programs, services, and activities."
PCA was initiated to ensure that persons with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society. As part of the PCA initiative, Justice Department attorneys, architects and investigators survey state and local government facilities, services and programs in communities across the country to identify the modifications needed for compliance with ADA requirements. The agreements are tailored to address the steps each community must take to improve access. This agreement is the 177th under the PCA initiative.
"All local governments throughout the country are obligated to achieve full compliance with the ADA, and we hope they are committed to doing so, particularly as we approach the 20th anniversary of this landmark civil rights law in July, " Assistant Attorney General Perez said.
Under the agreement announced today, St. Clair County will take several important steps to improve access for individuals with disabilities, such as:
- Making physical modifications to facilities surveyed by the department so that parking, routes into the buildings, entrances, service areas and counters, restrooms, public telephones and drinking fountains are accessible to people with disabilities;
- Surveying other facilities and programs and making modifications wherever necessary to achieve full compliance with ADA requirements;
- Ensuring that buildings and outdoor facilities that will be built or altered by or on behalf St. Clair County comply with the ADA’s architectural requirements;
- Posting, publishing and distributing a notice to inform members of the public of the provisions of title II and their applicability to St. Clair County’s programs, services and activities;
- Ensuring that communications with applicants, participants and members of the public with disabilities are as effective as communications with others;
- Providing information for interested persons with disabilities concerning the existence and location of St. Clair County’s accessible services, activities and facilities;
- Undertaking the required planning and modifications to ensure equal, integrated access to emergency management for individuals with disabilities, including emergency preparedness, notification, evacuation, sheltering, response, clean up and recovery; and
- Installing signs at any inaccessible entrance to a facility directing individuals with disabilities to an accessible entrance or to information about accessing programs and services at other accessible facilities.
St. Clair County was the first county established in the state of Illinois. Located just east of St. Louis, the county is comprised of 22 townships, with an estimated 263,617 residents. According to census data, nearly one in five county residents is a person with a disability.
Today’s agreement was reached under title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement requires all actions to be completed within three years. The department will actively monitor compliance with the agreement, which will remain in effect until the department has confirmed that all required actions have been completed.
People interested in finding out more about the ADA; today’s agreement with St. Clair County, Ill.; the PCA initiative; or the ADA Best Practices Tool Kit for State and Local Governments, can access the ADA website at ww.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).
Canadian Man Pleads Guilty to Selling Counterfeit Cancer Drugs Using the InternetRead the Press Release
Hazim Gaber, 22, of Edmonton, Canada, pleaded guilty today in Phoenix before U.S. Magistrate Judge Edward C. Voss to selling counterfeit cancer drugs using the Internet, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Dennis Burke for the District of Arizona and FBI Special Agent in Charge of the Phoenix Field Office Nathan T. Gray.
Gaber was indicted by a federal grand jury in Phoenix on June 30, 2009, on five counts of wire fraud for selling counterfeit cancer drugs through the website DCAdvice.com. At the plea hearing today, Gaber admitted selling what he falsely claimed was the experimental cancer drug sodium dichloroacetate, also known as DCA, to at least 65 victims in the United States, Canada, the United Kingdom, Belgium and the Netherlands between October and November 2007. According to the plea agreement, Gaber charged $23.68 for 10 grams of the purported DCA, $45.52 for 20 grams or $110.27 for 100 grams, plus shipping.
Gaber admitted that, in actuality, he sent victims a white powdery substance that was later determined through laboratory tests to contain starch, dextrin, dextrose or lactose, and contained no DCA. According to court documents, along with the counterfeit DCA, the packages also contained a fraudulent certificate of analysis from a fictitious laboratory and instructions on how to dilute and ingest the bogus DCA. DCA is an experimental cancer drug that has not yet been approved by the U.S. Food and Drug Administration for use in the United States. According to the plea agreement, Gaber knew that the website DCAdvice.com contained false claims that it was the only legal supplier of DCA and falsely claimed it was associated with the University of Alberta.
According to information contained in the plea agreement, DCA is an odorless, colorless, inexpensive, relatively non-toxic experimental cancer drug that is highly sought after by cancer patients. A doctor at the University of Alberta in Canada published a report in early 2007 summarizing the results of a study, which showed that DCA caused regression in several cancers, including lung cancer, breast cancer, and cancerous brain tumors. According to information contained in the plea agreement, DCA cannot be prescribed by a medical doctor in the United States or Canada, as it is neither currently approved for use in patients with cancer nor available in pharmacies.
At the plea hearing, Gaber also admitted to selling more than 800 pirated copies of business software between February 2007 and December 2008.
Gaber was arrested on July 25, 2009, in Frankfurt, Germany, and was extradited to the United States.
At sentencing, scheduled for Aug. 2, 2010, before U.S. District Court Judge James A. Teilborg, Gaber faces a maximum prison sentence of 20 years on each of the five counts of wire fraud to which he pleaded guilty. Gaber also faces maximum fines of $250,000 per count. As part of the plea agreement, Gaber agreed to forfeit or cancel any website, domain name or Internet services account related to this fraud scheme.
The case is being prosecuted by Trial Attorney Thomas S. Dougherty of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Peter Sexton of the U.S. Attorney’s Office for the District of Arizona. Significant assistance has been provided by the Edmonton Police Service, the Alberta Justice Office of Special Prosecutions-Edmonton, the Competition Bureau of Canada, the U.S. Postal Inspection Service, the Federal Trade Commission and the Alberta Partnership Against Cross Border Fraud. The Criminal Division’s Office of International Affairs provided assistance in this case. The case was investigated by the Phoenix FBI Cyber Squad.
Monday 10 May 2010
Pep Boys Agrees to Pay $5 Million to Resolve Clean Air Act Violations ClaimsRead the Press Release
WASHINGTON — The Pep Boys – Manny, Moe & Jack - have agreed to pay $5 million in civil penalties and take corrective measures to settle claims that it violated the Clean Air Act by importing and selling motorcycles, recreational vehicles and generators manufactured in China that do not comply with environmental requirements, the U.S. Environmental Protection Agency (EPA) and the U.S. Justice Department announced today. Baja Inc., which supplied the non-compliant vehicles to Pep Boys, is also settling with the U.S.
"Importers of foreign made vehicles and engines must comply with the same Clean Air Act requirements that apply to those selling domestic products, and this settlement demonstrates that we will take strong action to ensure that importers comply with their obligations," said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. "Under this settlement Pep Boys and Baja will not only pay a civil penalty, but will offset the excess emissions from the vehicles and engines already sold and take steps that go beyond what the law requires to ensure that their future imports and sales meet Clean Air Act standards."
"Equipment imported into the United States that does not meet our pollution control rules is bad for human health and the environment, and unfair to those companies that play by the rules," said Cynthia Giles, Assistant Administrator for Enforcement and Compliance Assurance. "American consumers deserve products that meet standards and protect their health and environment."
This is the largest vehicle and engine importation case brought by the United States to date under the Clean Air Act, both in number of vehicles and engines imported and penalty paid. The complaint, filed simultaneously with the settlement in federal court in the District of Columbia, alleges that Pep Boys and Baja imported and sold at least 241,000 illegal vehicles and engines from 2004 through 2009.
The agreement requires Pep Boys to export or destroy over 1,300 non-compliant vehicles and engines, and to mitigate the adverse environmental effects of equipment already sold to consumers, estimated at 620 tons of excess hydrocarbon and nitrogen oxide emissions, and more than 6,520 tons of excess carbon monoxide emissions. Under the settlement, Pep Boys will implement projects to offset the excess emissions including offering discounted push or electric lawn mowers in exchange for older more polluting gas-powered mowers.
Motorcycles, recreational vehicles and generators emit carbon monoxide, a gas that is poisonous at high levels in the air even to healthy people and is especially dangerous to people with heart disease. These machines also emit hydrocarbons and nitrogen oxides, which contribute to the formation of ground-level ozone, or smog. Exposure to low levels of ozone can cause respiratory problems, and repeated exposure can aggravate pre-existing respiratory diseases.
The complaint alleges that at least 45 vehicle and generator models imported and sold by Pep Boys and Baja were not certified to meet federal emission standards. The complaint also alleges that Pep Boys failed to provide purchasers with the full emission-system warranty required by the Clean Air Act, and imported and sold vehicles and engines without the proper emission control information labels.
The vehicles and engines were built by more than 35 different manufacturers in China. EPA and U.S. Customs & Border Protection discovered the violations through inspections conducted at Pep Boys stores, at U.S. ports, and through a review of importation documents provided to EPA by the company.
The settlement also requires Pep Boys and Baja to offer a free extended emission warranty on certain vehicle and engine models, to reimburse consumers for emission-related repair expenses, and to implement rigorous corporate compliance plans. Baja also agreed to pay a penalty of $25,000, an amount that was reduced substantially in light of Baja’s current financial condition.
The settlement is part of an ongoing effort by EPA to ensure that all imported vehicles and engines comply with Clean Air Act requirements.
Pep Boys is a national automotive aftermarket and service chain with annual sales of $1.9 billion. The company operates more than 580 stores in 35 states and Puerto Rico. In 2008, the company, based in Philadelphia, was the third largest importer of Chinese-made all terrain vehicles (ATVs) in the United States. In 2006 and 2007, Pep Boys was the fourth largest importer of generators.
Baja, based in Phoenix, contracts with Chinese manufacturers to supply ATVs and motorcycles to Pep Boys and others. Baja also manages all after-sale functions, including servicing warranty claims and providing replacement parts for these vehicles.
The settlement, lodged today in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Los Angeles Medical Equipment Supplier Sentenced<br /> to 55 Months in Prison for Medicare FraudRead the Press Release
WASHINGTON – The owner and operator of a Los Angeles durable medical equipment (DME) company was sentenced to 55 months in prison today in connection with a nearly $1 million power wheelchair fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Ajibola Adekeunle Sadiqr, 51, was also ordered to pay $508,134 in restitution by U.S. District Judge John F. Walter of the Central District of California. In addition, Sadiqr was ordered to serve three years of supervised release following his prison term.
Sadiqr pleaded guilty on Jan. 27, 2010, to conspiracy to commit health care fraud. According to court documents, Sadiqr owned and operated Cooper Medical Supply. Sadiqr admitted that between January 2006 and September 2009, he conspired with Leonard Nwafor, the owner of another DME supply company, and Maria Nela Moreno, a patient recruiter, and others to purchase fraudulent prescriptions and medical documents. Sadiqr then used those documents to submit false claims to Medicare for expensive, high-end power wheelchairs and other DME he claimed he supplied to Medicare beneficiaries who lived hundreds of miles from Cooper Medical Supply’s store front location in Los Angeles. According to court documents, over 80 percent of Cooper Medical Supply’s beneficiaries lived more than 100 miles from Cooper Medical Supply in cities and towns such as Fresno and Oakland, Calif.
Sadiqr also admitted that he knew Cooper Medical Supply’s beneficiaries did not need the power wheelchairs and other DME he billed to Medicare. Sadiqr also admitted that he knew the doctor and beneficiary information contained in the fraudulent prescriptions and medical documents came from fraudulent medical clinics and patient recruiters like Moreno. Sadiqr admitted that he used Cooper Medical Supply to submit or cause the submission of approximately $950,000 in false claims to Medicare as a result of this scheme.
In sentencing Sadiqr, Judge Walter took into consideration Sadiqr’s criminal history, which included prior arrest and conviction for theft of personal property and receiving stolen property.
Sadiqr’s co-conspirators, Nwafor and Moreno, were convicted in September 2008 and February 2010, respectively, of conspiracy to commit health care fraud and health care fraud. Nwafor was sentenced in March 2010 to nine years in prison. Moreno’s sentencing is scheduled for May 24, 2010.Today’s sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the Office of Inspector General (OIG) for HHS (HHS-OIG); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office
The case is being prosecuted by Assistant U.S. Attorney Kerry C. O’Neill of the Central District of California and Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. The case is being investigated by the California Department of Justice and HHS-OIG. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Former ABN Amro Bank N.V. Agrees to Forfeit $500 Million in Connection with Conspiracy to Defraud the United States and with Violation of the Bank Secrecy ActRead the Press Release
WASHINGTON – The former ABN AMRO Bank N.V., now named the Royal Bank of Scotland N.V., has agreed to forfeit $500 million to the United States in connection with a conspiracy to defraud the United States, to violate the International Emergency Economic Powers Act (IEEPA) and to violate the Trading with the Enemy Act (TWEA), as well as a violation of the Bank Secrecy Act (BSA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Ronald C. Machen Jr., for the District of Columbia.
A criminal information was filed today in U.S. District Court for the District of Columbia charging the former ABN AMRO, a Dutch corporation that was headquartered in Amsterdam, with one count of violating the BSA and one count of conspiracy to defraud the United States and violate the IEEPA and TWEA. The bank waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its conduct. ABN AMRO agreed to forfeit $500 million as part of a deferred prosecution agreement, also filed today in the District of Columbia. U.S. District Court Judge Colleen Kollar-Kotelly today accepted the deferred prosecution agreement.
“ABN AMRO facilitated the movement of illegal money through the U.S. financial system by stripping information from transactions and turning a blind eye to its compliance obligations,” said Assistant Attorney General Breuer. “It is essential that financial institutions both large and small properly monitor the origins of funds flowing into our financial system. When financial institutions fail to do so, and, even worse, manipulate information in order to profit from prohibited transactions, they will be held accountable.”
“Over the course of a decade, ABN AMRO assisted sanctioned countries and entities in evading U.S. laws by facilitating hundreds of millions of U.S. dollar transactions,” said U.S. Attorney Machen. “We will continue to use all resources at our disposal to hold those who knowingly and intentionally seek to circumvent U.S. sanctions and banking laws accountable for their actions.”
Under IEEPA, it is a crime to willfully violate, or attempt to violate sanctions administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). TWEA makes it a crime to willfully engage in financial transactions by, at the direction of, or for the benefit of Cuba or Cuban nationals. Under the BSA, it is a crime to willfully fail to establish an adequate anti-money laundering program.
The IEEPA and TWEA violations relate to ABN AMRO conspiring to facilitate illegal U.S. dollar transactions on behalf of financial institutions and customers from Iran, Libya, the Sudan, Cuba and other countries sanctioned in programs administered by OFAC.
According to court documents, from approximately 1995 and continuing through December 2005, certain offices, branches, affiliates and subsidiaries of ABN AMRO removed or altered names and references to sanctioned countries from payment messages. ABN AMRO implemented procedures and a special manual queue to flag payments involving sanctioned countries so that ABN AMRO could amend any problematic text and it added instructions to payment manuals on how to process transactions with these countries in order to circumvent the laws of the United States. Despite the institution of improved controls by ABN and its subsidiaries and affiliates after 2005, a limited number of additional transactions involving sanctioned countries occurred from 2006 through 2007.
According to court documents, ABN AMRO used similar stripping procedures when processing U.S. dollar checks, traveler’s checks, letters of credit and foreign exchange transactions related to sanctioned countries. ABN AMRO and the sanctioned entities knew and discussed the fact that, without such alterations, amendments and code words, the automated OFAC filters at banks in the United States would likely halt the payment messages and other transactions, and, in many cases, the banks would reject or block the sanctions-related transactions and report the same to OFAC. By removing or altering material information, these payments and other transactions would pass undetected through filters at U.S. financial institutions. This scheme allowed U.S. sanctioned countries and entities to move hundreds of millions of dollars through the U.S. financial system.
The BSA violations involved the failure of the New York branch of ABN AMRO to maintain adequate anti-money laundering procedures and processes. According to court documents, beginning as early as January 1998 and continuing until approximately December 2005, ABN AMRO’s New York branch office willfully failed to establish an adequate AML program. According to court documents, the office did not have adequate staffing, training and oversight, which permitted multiple high-risk shell companies and foreign financial institutions to use the bank to launder money through the United States. According to court documents, more than $3.2 billion dollars involving shell companies and high risk transactions with foreign financial institutions flowed through ABN AMRO’s New York branch. ABN AMRO also admitted it failed to maintain proper documentation regarding its customers or maintain readily available documentation about its high risk clients.
“If global banks and businesses wish to conduct financial transactions in America, they are welcome to do so as long as they abide by our laws that govern those transactions,” said Victor S. O. Song, Chief, IRS Criminal Investigation. “The IRS is proud to share its hallmark financial investigative expertise in this and other increasingly sophisticated financial investigations. Indeed, creating new strategies and models of cooperation among governments on international financial compliance is a top priority for the IRS.”
“This agreement is the result of tremendous work by agents, investigators and analysts – here and abroad- who were able to piece together this international crime. Whether or not a threat is overt in nature, together with our partners, we remain vigilant,” said Assistant Director in Charge Shawn Henry of the FBI’s Washington Field Office.
Throughout the investigation, ABN AMRO has provided prompt and substantial cooperation, including working with U.S. and foreign regulators. ABN AMRO has also committed substantial resources to conducting an extensive internal investigation into their misconduct and has agreed to enhance its sanctions compliance programs to be fully transparent in its international payment operations.
In light of the bank’s remedial actions, previous penalty payments and consent agreements, and its willingness to acknowledge and accept responsibility for its actions, the Department of Justice has agreed to recommend the dismissal of the information in one year, provided ABN AMRO fully cooperates with, and abides by, the terms of the deferred prosecution agreement. In December 2005, ABN AMRO entered into a consent decree and paid penalties involving OFAC, the Board of Governors of the Federal Reserve System, the State of Illinois Department of Financial and Professional Regulation, the New York State Banking Department, De Nederlandsche Bank and the U.S. Treasury’s Financial Crimes Enforcement Network.
The case was prosecuted by Steven Pelak, formerly with the U.S. Attorney’s Office for the District of Columbia; Cynthia Stone, formerly with the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS); AFMLS Trial Attorney Kevin Gerrity; and Assistant U.S. Attorney for the District of Columbia Denise Cheung; and was supported by Laurie Bender of AFMLS. The case was investigated by IRS-Criminal Investigation’s Washington Field Division and the FBI’s Washington Field Office. The Department of Justice also expresses gratitude to OFAC, the New York Federal Reserve and the Board of Governors of the Federal Reserve System for their significant and valuable assistance.
Department of Justice, Federal Trade Commission and U.S. Patent and Trademark Office<br /> to Hold Workshop on Promoting InnovationRead the Press Release
WASHINGTON – The Department of Justice, the Federal Trade Commission (FTC) and the Department of Commerce’s United States Patent and Trademark Office (USPTO) announced today that they will hold a joint public workshop on the intersection of patent policy and competition policy and its implications for promoting innovation. Assistant Attorney General for the department’s Antitrust Division Christine Varney, Under Secretary of Commerce for Intellectual Property and Director of the USPTO David J. Kappos and U.S. Chief Technology Officer Aneesh Chopra will give opening remarks at the morning session of the workshop. FTC Commissioner Edith Ramirez will open the afternoon session.
The workshop will be held on May 26, 2010, at the USPTO’s campus at 600 Dulany Street, Madison Building Auditorium, Alexandria, Va. The general public and press are invited to attend and view the proceedings. Seating will be on a first-come, first-served basis.
In recent years, federal agencies and the courts have recognized that patents and competition share the overall purpose of promoting innovation and enhancing consumer welfare. Timely, high-quality patents promote investment in innovation. The competitive drive of a dynamic marketplace fosters the introduction of new and improved products and processes. By contrast, delay, uncertainty and poor patent quality can create barriers to innovation. Additionally, where standards for violating antitrust law are unclear, or where the threshold for antitrust violations is set too low or too high, innovation can be stifled. The workshop will address ways in which careful calibration and balancing of patent policy and competition policy can best promote incentives to innovate.
“We will benefit from working together with our PTO and FTC colleagues to ensure that the United States is using patent and competition policy that maximizes the potential for innovation, which is the primary driving force of economic growth in the 21st century,” said Assistant Attorney General Christine Varney.
FTC Chairman Jon Leibowitz agreed. “The FTC appreciates this opportunity to work with the DOJ and the USPTO to explore a balance of patent and competition policy that most benefits consumers, by spurring more innovative products and lower prices.”
“Since innovation is the only sustainable source of America’s competitive advantage, the relationship between intellectual property, which captures the value of innovation, and competition policy, which maintains a dynamic marketplace for innovation, is of paramount importance,” added Under Secretary of Commerce David Kappos. “This conference is designed to explore the relationship between competition policy and intellectual property policy and how it fosters innovation.”
The first morning panel of experts will examine how challenges posed by the patent backlog affect the competitive strategies of patent applicants and innovators. The second morning panel will examine the impact of the Supreme Court’s 2006 opinion in eBay Inc. v. MercExchange L.L.C. on permanent injunctions for patent infringement in district courts and at the U.S. International Trade Commission (USITC). The afternoon panel will evaluate the role of patents in connection with industry standards and the impact such standards have on competition. The workshop will conclude with reflections on the panel discussions by the chief economists of the department’s Antitrust Division, the FTC and the USPTO.
The schedule for the workshop is as follows:
Welcoming Remarks
9:00 a.m.-9:30 a.m.David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office
Christine Varney, Assistant Attorney General, Antitrust Division, Department of Justice
Aneesh Chopra, U.S. Chief Technology Officer, Executive Office of the PresidentPANEL 1: The Patent Application Backlog: The Competitive Challenges for Innovators
9:30 a.m.-11:00 a.m.Panelists
John F. Duffy, Oswald Symister Colclough Research Professor of Law, The George Washington University Law School
Josh Makower, M.D., Founder & CEO, ExploraMed Development LLC
Michael Meurer, Professor of Law, Boston University School of Law
Richard T. Ogawa, Esq., Ogawa P.C.
Scott Stern, Joseph and Carole Levy Professor, Kellogg School of Management, Northwestern University and Visiting Professor, MIT Sloan School of ManagementBreak
11:00 a.m.-11:15 a.m.PANEL 2: Permanent Injunctions in the District Courts and ITC: Effects on Competition and Innovation
11:15 a.m.-12:45 p.m.Panelists
Bernard J. Cassidy, Executive Vice President and General Counsel, Tessera Technologies Inc.
Colleen Chien, Assistant Professor of Law, Santa Clara Law
Alice A. Kipel, Partner, Steptoe & Johnson LLP
Christine McDaniel, Economic Adviser to Chairman Shara L. Aranoff, U.S. International Trade Commission
William Barr, former General Counsel, Verizon Communications Inc.
Emily Ward, Vice President and Deputy General Counsel, eBay Inc. (invited)Lunch Break
12:45 a.m.-2:15 p.m.Introductory Remarks
2:15 a.m.-2:30 p.m.Edith Ramirez, Commissioner, Federal Trade Commission
PANEL 3: Standard Setting, Patent Rights, and Competition Policy
2:30 p.m.-4:00 p.m.Panelists
Mark Chandler, Senior Vice President & General Counsel, Cisco Systems Inc.
Patrick Gallagher, Director, National Institute of Standards & Technology, Department of Commerce
Brian Kahin, Senior Fellow, Computer & Communications Industry Association
Anne Layne-Farrar, Director, LECG
Amy A. Marasco, General Manager, Standards Strategy, Microsoft Corp.
A. Douglas Melamed, Senior Vice President & General Counsel, Intel Corp.Break
4:00 p.m.-4:15 p.m.Wrap-Up Discussion
4:15 p.m.-5:15 p.m.Carl Shapiro, Deputy Assistant Attorney General for Economic Analysis, Antitrust Division, Department of Justice
Joseph Farrell, Director, Bureau of Economics, Federal Trade Commission
Stuart Graham, Chief Economist, U.S. Patent and Trademark OfficeDirections to the USPTO’s Madison Building Auditorium, 600 Dulany Street, are available on the agency’s website at www.uspto.gov/about/contacts/locations/directions.jsp .
Press contacts:
Department of Justice
Federal Trade Commission
Patent and Trademark Office
Office of Public Affairs
Office of Public Affairs
Office of Public Affairs
Gina Talamona
Claudia Bourne Farrell
Peter Pappas
202-514-2007
202-326-2180
571-272-8400
Friday 7 May 2010
Justice Department to Monitor Elections in TexasRead the Press Release
WASHINGTON – The Justice Department announced today that it will monitor municipal elections on May 8, 2010, in Dallas and Galveston Counties, Texas, to ensure compliance with the requirements of the Voting Rights Act of 1965.
The act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions, including Dallas and Galveston Counties, to provide language assistance in Spanish during the election process. Galveston County is also subject to a court order entered in 2007 that requires the jurisdiction to comply with the minority language requirements of the Voting Rights Act.
Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to areas that are specially covered in the act itself or by a federal court order. Federal observers will be assigned to monitor polling place activities in these counties based on the attorney general’s certification. The observers will watch and record activities during voting hours at polling locations in these jurisdictions, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931. Visit www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
Federal Court Shuts Down South Carolina Tax PreparerRead the Press Release
WASHINGTON - A federal district judge in Columbia, S.C., has permanently barred Dorothy Lee Anderson of Hopkins, S.C., from preparing federal tax returns for others, the Justice Department announced today. According to the order, Anderson is a return preparer operating under the name, "DL Anderson Tax Service." The court also ordered Anderson to provide her customer lists to the government and to mail copies of the court order to her former customers.
The court found that Anderson fraudulently prepared and filed tax returns using individuals’ names and social security numbers without their knowledge or authorization. Anderson’s preparation of false and fraudulent tax returns caused the United States to issue substantial tax refunds. The court found that Anderson deposited more than $290,000 in fraudulently obtained tax refunds into bank accounts she controlled, and then absconded with over $220,000 in fraudulently obtained refunds for her personal use.
Over the past decade, the Justice Department’s Tax Division has obtained more than 465 injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department website.
Thursday 6 May 2010
Two Individuals Plead Guilty to Conspiring to Traffic Counterfeit Slot Machines and Computer ProgramsRead the Press Release
WASHINGTON – Rodolfo Rodriguez Cabrera, 43, a Cuban national, and Henry Mantilla, 35, of Cape Coral, Fla., pleaded guilty today in front of U.S. District Court Judge Philip M. Pro in Las Vegas to one count of conspiracy to produce and sell counterfeit International Game Technology (IGT) video gaming machines, commonly known as slot machines, and counterfeit IGT computer programs, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, U.S. Attorney for the District of Nevada Daniel G. Bogden and FBI Special Agent in Charge of the Las Vegas Field Office Kevin Favreau.
Cabrera and Mantilla were indicted by a federal grand jury in Las Vegas on April 22, 2009, on one count of conspiracy, two counts of trafficking in counterfeit goods, two counts of trafficking in counterfeit labels and two counts of criminal copyright infringement. According to court documents, Cabrera and Mantilla conspired between August 2007 and April 15, 2009, to make and sell unauthorized copies of computer programs designed for IGT video slot machines and counterfeit IGT video slot machines bearing IGT’s registered trademarks, all without the permission of IGT. The defendants also agreed to forfeit any and all counterfeit items in their possession and any illegal proceeds from their criminal activity.
At sentencing, scheduled for Aug. 20, 2010, the defendants each face a maximum of five years in prison and a $250,000 fine. Cabrera was arrested June 8, 2009, in Riga, Latvia, and extradited from Latvia to the United States on Oct. 23, 2009. Cabrera is the first individual to be extradited from Latvia to the United States under a new extradition treaty between the U.S. and Latvia, which entered into force on April 15, 2009. Cabrera’s extradition and prosecution is the result of cooperation between U.S. and Latvian law enforcement and the Latvian government.
The case is being prosecuted by Trial Attorney Thomas S. Dougherty of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Michael Chu of the U.S. Attorney’s Office for the District of Nevada. Significant assistance has been provided by the Central Criminal Police Department of the Latvian Ministry of Interior; Latvia’s Office of the Prosecutor General, International Cooperation Division; and Senior Trial Attorney Deborah Gaynus of the Criminal Division’s Office of International Affairs.
New York Small Business Lender to Pay U.S. $26.3 Million <br /> to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Ciena Capital LLC, a private, non-depository lender located in New York City, has reached an agreement with the United States to settle fraud claims related to its small business lending for $26.3 million, the Justice Department announced today. Ciena and a subsidiary, Business Loan Center (BLC), a small business lending company licensed to originate and service loans under Section 7(a) of the Small Business Act, are alleged to have submitted false claims for payment on loans made through the Small Business Administration (SBA).
The SBA, through various lending programs, provides financial assistance to small businesses by guaranteeing up to 85% of the value of loans made by private lenders. Today’s settlement resolves allegations that Ciena and BLC falsely certified that they complied with SBA regulations when they submitted claims for payment on loans they originated, underwrote, and serviced. Some of these loans defaulted shortly after they were made as a result of Ciena’s and BLC’s disregard of SBA rules, regulations, and underwriting requirements. Other loans were originated by former BLC Executive Vice President Patrick Harrington, or his office, during his tenure. Harrington pleaded guilty to conspiracy to defraud the United States and was sentenced to 10 years in prison for his prominent role in the fraudulent loan scheme, which included falsifying loan documents, inflating property appraisals, and using straw purchasers to engage in sham transactions. This settlement also resolves allegations that the defendants’ parent company, Allied Capital Corporation, is liable for the acts of its subsidiaries.
The United States will not tolerate fraud in lending programs designed to assist small businesses, which are so vital to our nation’s economy,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We will pursue those who seek to take unfair advantage of programs designed to help people start a business and earn a living.”
The settlement for $26.3 million, which includes a credit for $18.1 million previously negotiated by and paid to the SBA, resolves a lawsuit filed by James R. Brickman and Greenlight Capital Inc., under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Mr. Brickman and Greenlight Capital will receive $4.3 million as their share of the government’s recovery.
On Sept. 30, 2008, Ciena and several of its subsidiaries filed petitions for bankruptcy under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The settlement announced today must be approved by the Bankruptcy Court.
“As a result of strong collaboration between SBA’s attorneys, the SBA Office of Inspector General, the Justice Department and the U.S. Attorney’s Offices in Atlanta and New York, we have recovered a significant amount of the loan loss stemming from Ciena’s operations,” SBA General Counsel Sara Lipscomb said."The size of these payments sends a strong message that the government will not tolerate fraud, waste or abuse of SBA programs, ” said SBA Inspector General Peggy E. Gustafson.
This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. It includes representatives from a broad range of federal agencies, including the SBA, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch and, with state and local partners, investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the Financial Fraud Enforcement Task Force please visit www.stopfraud.gov.
Long Island, N.Y., Tax Return Preparer Pleads GuiltyRead the Press Release
WASHINGTON - Ricardo A. Nunez of Lindenhurst, N.Y., pleaded guilty to conspiring to defraud the United States and filing a false tax return, the Department of Justice and the Internal Revenue Service (IRS) announced today.
According to court documents, Nunez owned and operated a tax preparation business called Monstruo Tax Service in Copiague, N.Y. Nunez prepared customers’ tax returns with fraudulent deductions, including fraudulent medical and dental expenses, personal property taxes, gifts to charity, and unreimbursed job expenses. The fraudulent tax returns generated inflated tax refunds for Nunez’s customers, which in turn attracted more customers and tax preparation fees. Additionally, according to court documents, Nunez failed to report $69,000 in income on his own tax return for 2005.
No sentencing date was scheduled. Nunez faces a maximum sentence of eight years in prison and a maximum fine of $500,000.
Acting Assistant Attorney General John A. DiCicco and Loretta Lynch, the U.S. Attorney for the Eastern District of New York, commended the investigative efforts of the IRS agents involved in this case, as well as Tax Division Trial Attorneys Mark Kotila and Jeffrey L. Shih, who prosecuted the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.
Justice Department Settles Citizenship Status Discrimination and Intimidation Claims Against Argosy University in Nashville, TennesseeRead the Press Release
WASHINGTON – The Justice Department announced that it has reached an agreement with Argosy University in Nashville, Tenn., and its parent company, Education Management Corporation (EDMC) of Pittsburgh, to settle allegations that Argosy refused to hire a lawful permanent resident because he is a non-United States citizen and intimidated him for reporting the school’s refusal to hire.
Under the terms of the out-of-court settlement, Argosy and EDMC have agreed to provide full back pay of $7,100 to the lawful permanent resident, to modify their policy on employing foreign nationals to require equal treatment of work authorized non-citizens, and to train Argosy employees on federal protections for workers against citizenship status and national origin discrimination and retaliation.
"Our nation’s laws ensure that all individuals who are authorized to work in this country can do so without fear of discrimination or retaliation because of their citizenship status or national origin," said Thomas E. Perez, Assistant Attorney General for Civil Rights. "The Department of Justice is committed to ensuring that all authorized U.S. workers, regardless of citizenship or national origin, are afforded equal opportunity in the workplace."
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) within the Justice Department’s Civil Rights Division is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act, which protects authorized U.S. workers from employment discrimination on the basis of citizenship status or national origin, and from retaliation.
For more information about protections against employment discrimination under federal immigration law, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8255 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594. You can also e-mail [email protected], or visit the website at www.justice.gov/crt/osc.
Justice Department Files Lawsuit Against Arkansas Alleging Statewide Violations of the Americans with Disabilities ActRead the Press Release
WASHINGTON – The Justice Department announced today that it has filed a lawsuit alleging that the state of Arkansas is systemically violating the Americans with Disabilities Act of 1990 (ADA).
The complaint, filed in U.S. District Court for the Eastern District of Arkansas, encompasses all six Arkansas Human Development Centers (HDCs) and the state’s restrictions on services in integrated settings. It seeks to enforce the ADA’s requirement that Arkansas provide services to individuals with disabilities in the most integrated settings appropriate to their needs. The lawsuit also addresses the state’s systemic failure to comply with the ADA in how it provides services to individuals with developmental disabilities.
"The ADA guarantees individuals with developmental disabilities the right to live in the most integrated setting appropriate to their needs. Arkansas’ lack of community services requires individuals with developmental disabilities to choose between receiving services in segregated institutions and receiving no services at all," said Thomas E. Perez, the Assistant Attorney General in charge of the Civil Rights Division. "Arkansas illegally segregates hundreds of individuals in institutions across the state and places hundreds more at risk of needless institutionalization. We are acting now to remedy discrimination against these individuals."
The six Arkansas HDCs are congregate institutions that segregate approximately 1,100 individuals with developmental disabilities from the community. While confined to the HDCs, residents have extremely limited access to community activities and amenities, as well as limited opportunities to interact with people without disabilities. According to the complaint, hundreds of these individuals are segregated illegally in the HDCs in violation of their rights to services in the most integrated setting appropriate to their needs. The lawsuit also alleges that the state restricts development of adequate community supports and services to enable individuals to leave the HDCs and to offer viable alternatives to many individuals who are at risk of inappropriate institutionalization.
The current wait list in Arkansas for home and community-based waiver services for individuals with developmental disabilities who are seeking community alternatives to institutionalization totals approximately 1,400 people. This wait list moves at an extremely slow pace, with most people waiting several years for community services. Individuals currently at the bottom of the list will likely wait more than a decade to receive community services. Yet, the state is actively expanding its HDC institutions at the cost of developing community alternatives.
In January 2009, the Justice Department filed a lawsuit against Arkansas, in accordance with the Civil Rights of Institutionalized Persons Act (CRIPA), regarding the Conway HDC. That CRIPA complaint alleges that conditions at Conway HDC violate the Constitution, the Individuals with Disabilities Education Act and the ADA. Trial is currently set for September 2010. Because the new statewide ADA lawsuit filed today will encompass the department’s ADA claims regarding Conway HDC, the Justice Department filed a motion yesterday to dismiss those claims from the Conway HDC suit.
The ADA authorizes the attorney general to investigate whether a state is serving individuals with disabilities in the most integrated settings appropriate to their needs. CRIPA authorizes the attorney general to investigate conditions of confinement in certain institutions owned or operated by, or on behalf of, state and local governments. In addition to residential facilities serving persons with developmental disabilities, these institutions include psychiatric hospitals, nursing homes, jails, prisons, and juvenile justice facilities. Please visit the website www.justice.gov/crt to learn more about the ADA, CRIPA, and other laws enforced by the Justice Department’s Civil Rights Division.
Georgia Food Equipment Hardware Manufacturer and Its Former President <br /> Agree to Plead Guilty to Customer Allocation ConspiracyRead the Press Release
A New York corporation, whose principal place of business is Newnan, Ga., and its former president have agreed to plead guilty to conspiring to allocate customers for the sale of food service equipment hardware, including walk-in refrigeration equipment, the Department of Justice today announced.
According to a one-count felony charge filed in U.S. District Court in Atlanta, Kason Industries Inc. and Peter A. Katz, its former president, participated in a conspiracy to allocate customers for food service equipment hardware sold in the United States and elsewhere from December 2004 until at least December 2008. The department said that the purpose of the charged conspiracy was to reduce and eliminate competition in the sale of the food service equipment hardware manufactured or sold by Kason Industries, Katz and their co-conspirators.
Food service equipment hardware includes fabricated parts, such as cafeteria hardware, equipment legs and casters, and fabrication supplies, and walk-in refrigeration components, such as metal racks, door hinges, handles, latches, closers and panel fasteners. According to the plea agreements, which are subject to court approval, Kason Industries and Katz have agreed to cooperate with the department’s ongoing antitrust investigation.
According to court documents, Katz and co-conspirators agreed during meetings and telephone and e-mail discussions to allocate customers of food service equipment hardware; not to compete for one another’s protected customers or to submit intentionally high prices or bids to certain customers; to exchange prices to customers so as not to undercut one another’s prices; and to sell food service equipment hardware at collusive and noncompetitive prices.
Kason Industries and Katz are each charged with allocating customers in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals and a $100 million fine for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either of those amounts is greater than the statutory maximum fines.
Today’s charge is the first to arise from an ongoing federal antitrust investigation of customer allocation in the food service equipment hardware industry. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI’s Atlanta Office.
Anyone with information concerning customer allocation or other anti-competitive conduct in the food service equipment hardware industry should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm .
Departments of Justice and Homeland Security Announce 30 Convictions, <br /> More Than $143 Million in Seizures from Initiative Targeting Traffickers <br /> in Counterfeit Network HardwareRead the Press Release
Operation Network Raider, a domestic and international enforcement initiative targeting the illegal distribution of counterfeit network hardware manufactured in China, has resulted in 30 felony convictions and more than 700 seizures of counterfeit Cisco network hardware and labels with an estimated retail value of more than $143 million.
The results of the operation were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, Assistant Director Gordon Snow of the FBI’s Cyber Division, Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE) and Commissioner Alan Bersin of U.S. Customs and Border Protection (CBP). In addition to the convictions and seizures, according to the CBP there has been a 75 percent decrease in seizures of counterfeit network hardware at U.S. borders from 2008 to 2009. In addition, nine individuals are facing trial and another eight defendants are awaiting sentencing.
This operation is a joint initiative by the FBI, ICE and CBP working with the U.S. Attorneys’ Offices around the country, the Criminal Division’s Computer Crime and Intellectual Property Section and the National Intellectual Property Rights Coordination Center. Through aggressive investigation and prosecution, the initiative seeks to protect computer networks and the nation’s IT infrastructure from failures associated with counterfeit network hardware, including network routers, switches, network cards, and devices that protect firewalls and secure communications that have been intercepted both domestically and abroad.
Today, as a part of this joint initiative, Ehab Ashoor, 49, a Saudi Citizen who resides in Sugarland, Texas, was sentenced in the Southern District of Texas to 51 months in prison and ordered to pay $119,400 in restitution to Cisco Systems. A federal jury found Ashoor guilty on Jan. 22, 2010, of charges related to his trafficking in counterfeit Cisco products. According to evidence presented at trial, Ashoor purchased counterfeit Cisco Gigabit Interface Converters (GBICs) from an online vendor in China with the intention of selling them to the U.S. Department of Defense for use by U.S. Marine Corps personnel operating in Iraq. The computer network for which the GBICs were intended is used by the U.S. Marine Corps to transmit troop movements, relay intelligence and maintain security for a military base west of Fallujah, Iraq. The case was investigated by ICE and the Defense Criminal Investigative Service and was prosecuted by the U.S. Attorney’s Office for the Southern District of Texas.
On Jan. 25, 2010, in the Central District of California, Yongcai Li, 33, a resident of China, was sentenced to 30 months in prison and ordered to pay $790,683 in restitution to Cisco Systems Inc., as a result of his conviction for trafficking in counterfeit Cisco computer products. Li carried out the scheme while doing business as Gaoyi Tech, a company located in Shenzhen, China. Li procured counterfeit Cisco products in China in response to orders and then shipped the products to the United States. Li was arrested by FBI agents in January 2009 while visiting Las Vegas and was prosecuted in Los Angeles. This case was investigated by FBI and prosecuted by the U.S. Attorney’s Office for the Central District of California.
"Trafficking in counterfeit computer components is a problem that spans the globe and impacts most, if not all, major network equipment manufacturers. As this operation demonstrates, sustained cooperation between law enforcement and the private sector is often a critical factor in disrupting and dismantling criminal organizations that threaten our economy and endanger public safety," said Assistant Attorney General Breuer. "Through the IP Task Force, and with recently announced additional resources, we are intensely focused on bringing to justice those who engage in piracy and counterfeiting."
To date, ICE agents have seized counterfeit Cisco products having an estimated retail value of more than $35 million. ICE investigations have led to eight indictments and felony convictions to date. CBP has made 537 seizures of counterfeit Cisco network hardware since 2005, and 47 seizures of Cisco labels for counterfeit products. In total, ICE and CBP seized more than 94,000 counterfeit Cisco network components and labels with a total estimated retail value of more than $86 million during the course of the operation.
"These cases involve greedy businessmen hocking counterfeit and substandard hardware to any buyer—whether it could affect the health and safety of others in a hospital setting or the security of our troops on the battlefield," said John Morton, Assistant Secretary of Homeland Security for ICE. "They pose a triple threat to our nation by stealing from our economy, threatening U.S. jobs and potentially putting the safety of our citizens at risk."
"Operation Network Raider is an outstanding example of cooperation between CBP and its law enforcement partners to combat counterfeiting that threatens our economy," said CBP Commissioner Alan Bersin. "Protecting businesses against these threats is a top priority for CBP, and we are committed to continuing our work with law enforcement and the private sector to ensure the safety and security of the American people."
The FBI, building upon its earlier success in Operation Cisco Raider, worked closely with law enforcement partners including ICE, Defense Criminal Investigative Service, General Services Administration, Department of Interior, Internal Revenue Service and the Royal Canadian Mounted Police. During the last four years as part of Operation Network Raider and Cisco Raider, the FBI has executed 36 search warrants seizing counterfeit network components with an estimated retail value of more than $7 million.
"Individuals who break the law by attempting to profit from counterfeit technology do the marketplace great harm," said FBI Assistant Director Gordon M. Snow. "This case illustrates how effectively the private sector and law enforcement organizations work together to combat fraudulent goods and preserve the integrity of U.S. computer networks and infrastructure."
To date, international enforcement efforts have resulted in five convictions internationally, including one in Canada and four in China. Foreign investigations have led to seizures in France, China and Canada totaling $17 million worth of counterfeit networking equipment. U.S. law enforcement authorities continue to work with China’s Ministry of Public Security (MPS) to combat the manufacture and export of counterfeit network hardware from China. This ongoing work is being facilitated by the IP Criminal Enforcement Working Group of the U.S. -China Joint Liaison Group for law enforcement, which is co-chaired by the Criminal Division and the MPS. The Working Group is dedicated to increasing cooperation in intellectual property enforcement efforts and pursuing more joint IP criminal investigations with China.
The global nature of the problem of trafficking in counterfeit electronics is further reflected in seizures of counterfeit semiconductor devices. From November 2007 to present, CBP and ICE have made more than 1,300 seizures involving 5.6 million counterfeit semiconductor devices. Semiconductors are used extensively in modern products and their proper functioning is critical to the safe and reliable operation of electronics in the aerospace, military, automotive, communications, industrial and consumer electronics sectors. More than 50 seized counterfeit shipments were falsely marked as military or aerospace grade devices. Shipments of seized semiconductors were affixed with counterfeit trademarks from 87 North American, Asian and European semiconductor companies and were destined for importers in the United States and 15 other countries.
Cisco Systems Inc., has provided exceptional assistance throughout these investigations and prosecutions.
Report information on counterfeiting and trademark violations at (866) IPR-2060.
Attorney General Appoints Four New U.S. Attorneys <br /> to Advisory CommitteeRead the Press Release
Attorney General Eric Holder today announced the appointment of four new U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee (AGAC): Loretta E. Lynch, Eastern District of New York; Stephanie M. Rose, Northern District of Iowa; Benjamin B. Wagner, Eastern District of California; and Sally Quillian Yates, Northern District of Georgia.
“These U.S. Attorneys, who have already made significant contributions to the work of the department, will be a strong addition to the AGAC. I will continue to rely heavily on the AGAC as we work to further the department’s efforts to keep our nation safe, reduce violent crime and gang violence, promote civil rights and prosecute those who commit mortgage, financial and health care fraud,” said Attorney General Holder.
The AGAC, chaired by U.S. Attorney for the District of Minnesota B. Todd Jones, was created in 1973. The committee, which reports to the Attorney General through the Deputy Attorney General, represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney General on policy, management and operational issues impacting the Offices of the U.S. Attorneys.
A brief bio on each appointee is below:
Loretta E. Lynch was presidentially appointed U.S. Attorney for the Eastern District of New York on April 23, 2010. Lynch previously served as U.S. Attorney for the Eastern District of New York from 1999 to 2001, serving on the AGAC from 2000-2001. She served as Assistant U.S. Attorney for the Eastern District of New York from 1990-1999.
Stephanie M. Rose was presidentially appointed U.S. Attorney for the Northern District of Iowa on Nov. 24, 2009. Prior to her appointment, she served as Special Assistant U.S. Attorney, Deputy Criminal Chief and Assistant U.S. Attorney for the Northern District of Iowa from 1997-1999. She is a current member of the AGAC’s Resource Allocation Working Group, the Office Management and Budget Subcommittee, and the Controlled Substances and Asset Forfeiture Subcommittee.
Benjamin B. Wagner was presidentially appointed U.S. Attorney for the Eastern District of California on Nov. 9, 2009. Prior to his appointment, he served as an Assistant U.S. Attorney for the Eastern District of California from 1992-2009, including as Chief of the Special Prosecutions Unit (1999-2009). Wagner is a current member of the AGAC’s Resource Allocation Working Group, the Office Management and Budget Subcommittee, and the Civil Rights Subcommittee. Wagner also serves as co-chair of the Mortgage Fraud Working Group on President Obama’s Financial Fraud Enforcement Task Force.
Sally Quillian Yates was presidentially appointed U.S. Attorney for the Northern District of Georgia on March 11, 2010, having served as Acting U.S. Attorney from August 2009 to her confirmation. She also served as an Assistant U.S. Attorney for the Northern District of Georgia from 1989-2009, serving as First Assistant U.S. Attorney from 2002-2009, and serving as Acting U.S. Attorney in 2004. She was Chief of the Fraud and Public Corruption Section from 1994-2002. Yates is a member of the AGAC’s Criminal Practice Subcommittee, the Civil Rights Subcommittee and the Health Care Fraud Working Group.
The full AGAC is listed below:
B. Todd Jones, U.S. Attorney, District of Minnesota, Chair
Paul J. Fishman, U.S. Attorney, District of New Jersey, Vice Chair
Preet Bharara, U.S. Attorney, Southern District of New York
Dennis Burke, U.S. Attorney, District of Arizona
Sanford Coats, U.S. Attorney, Western District of Oklahoma
Steven M. Dettelbach, U.S. Attorney, Northern District of Ohio
Jenny Durkan, U.S. Attorney, Western District of Washington
Patrick J. Fitzgerald, U.S. Attorney, Northern District of Illinois
Jim Letten, U.S. Attorney, Eastern District of Louisiana
Loretta E. Lynch, U.S. Attorney, Eastern District of New York
Neil H. MacBride, U.S. Attorney, Eastern District of Virginia
Peter F. Neronha, U.S. Attorney, District of Rhode Island
Stephanie M. Rose, U.S. Attorney, Northern District of Iowa
Joyce White Vance, U.S. Attorney, Northern District of Alabama
Benjamin B. Wagner, U.S. Attorney, Eastern District of California
Sally Quillian Yates, U.S. Attorney, Northern District of Georgia
Ronald C. Machen, U.S. Attorney, District of Columbia, ex officio
Peter Jongbloed, Criminal Chief, District of Connecticut, ex officio
Gretchen Witt, Civil Chief, District of New Hampshire, ex officio
Wednesday 5 May 2010
U.S. Intervenes in Suit Against KBR and Panalpina<br /> Alleging Kickbacks Under the False Claims ActRead the Press Release
WASHINGTON – The Justice Department has intervened in a whistleblower lawsuit against Kellogg Brown & Root (KBR), Panalpina Inc. and others that alleges that employees of two freight forwarders doing business with the companies provided unlawful kickbacks to KBR transportation department employees. KBR is the prime contractor under the Logistics Civil Augmentation Program (LOGCAP III) contract for logistical support of U.S. military operations in Iraq. The whistleblowers also allege overbilling by a KBR subcontractor in the Balkans, Wesco, under a military contract.
The United States is pursuing allegations that the two freight forwarders, Eagle Global Logistics (which has since merged with TNT Logistics and become CEVA) and Panalpina provided unlawful kickbacks in the form of meals, drinks, tickets to sports events and golf outings to KBR employees. The government will seek damages and penalties under the False Claims Act and common law, as well as penalties under the Anti-Kickback Act. The United States has declined to intervene in the remaining allegations of the relators’ suit.
The lawsuit was filed in U.S. District Court for the Eastern District of Texas under the qui tam or whistleblower provisions of the False Claims Act by David Vavra and Jerry Hyatt who have been active in the air cargo business–the industry relevant to the case. Under the qui tam or whistleblower provisions of the False Claims Act, a private citizen, known as a "relator," can sue on behalf of the United States. If the suit is successful, the relator may share in the recovery.
"Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks," said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. "We are committed to maintaining the integrity of the Department of Defense's procurement process."
The United States previously intervened in and settled the relators’ allegations that EGL included non-existent charges for war risk insurance in invoices to KBR for air shipments to Iraq, costs that KBR passed on to the Army. Two EGL employees pleaded guilty to related criminal charges. EGL paid the United States $4 million in the civil settlement.
The government also intervened in and settled the relators’ allegations that EGL’s local agent in Kuwait, a company known as Al-Rashed, overcharged it for the rental (or demurrage) of shipping containers. The United States resolved potential claims arising from that matter against EGL for $300,000. Finally, EGL paid the government $750,000 to settle the relators’ allegations that the company provided kickbacks to employees in KBR’s transportation department. Former EGL employee Kevin Smoot and former KBR employee Bob Bennett pleaded guilty to related criminal charges in federal court in Rock Island.
This case is being prosecuted as part of a National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. The Defense Criminal Investigative Service and Federal Bureau of Investigation participated in the investigation of this matter. This case, as well as others brought by members of the task force, demonstrates the Department of Justice’s commitment to ensure the integrity of the government procurement process.
The case is United States of America ex rel. Vavra, et al. v. Kellogg Brown & Root, Inc., et al., C.A. No. 1:04-CV-00042 (E.D. Tex.).
Patient Recruiters and Employee at Houston Medical Equipment Company Plead Guilty <br /> to Health Care Fraud Scheme and Illegal Health Care KickbacksRead the Press Release
Houston-area residents Basil Kalu and Ju-Ying Qian, and Louisiana resident Darnell Willis pleaded guilty today in connection with their roles in a durable medical equipment Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.
Qian, Willis and Kalu pleaded guilty today before U.S. District Court Judge Nancy Atlas of the Southern District of Texas to one count of conspiracy to commit health care fraud. According to court documents, Qian, 60, and Willis, 50, were patient recruiters for Onward Medical Supply, a Houston-area durable medical equipment company. Kalu, 41, assisted with Onward activities and also ran his own durable medical equipment company, BOK, through Onward.
Onward began billing Medicare for fraudulent durable medical equipment in 2003, according to court documents. Qian and Willis admitted that they accepted kickbacks at predetermined rates per patient for recruiting patients for Onward. Qian and Willis admitted that they knew Onward would then bill Medicare for durable medical equipment that these patients did not need or never received.
Kalu is the brother of Doris Vinitski, Onward’s owner who pleaded guilty in this case last week. Kalu admitted that as an employee of Onward, he willfully participated in the fraud scheme. He also admitted that he opened his own fraudulent durable medical equipment business and ran it for a time through Onward using Onward recruiters, including Willis.
Kalu and Willis are scheduled to be sentenced on Aug. 19, 2010. Qian is scheduled to be sentenced on Aug. 20, 2010. Each of the three defendants faces a maximum penalty of 10 years in prison and a $250,000 fine.
Three people have already pleaded guilty in connection with the Onward scheme. Doris Vinitski, the owner of Onward and Kalu’s sister, as well as John Lachman, who operated the day-to-day business for several years and is Vinitski’s estranged husband, and patient recruiter Vicki Phillips have all pleaded guilty for their roles in the scheme. Four additional defendants allegedly involved in the scheme – Dr. Howard Grant, Clinton Lee, Michael Kalu Obasi and Obisike Nwankwo - are scheduled for trial on May 17, 2010. The charges against these defendants are merely allegations and they are presumed innocent until proven guilty.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the HHS Office of Inspector General (OIG), Office of Investigations; and Texas Attorney General Greg Abbott on behalf of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).
The cases were prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Jennifer L. Saulino and O. Benton Curtis III of the Criminal Division’s Fraud Section. The cases were investigated by the FBI, HHS-OIG and MFCU.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Former Guatemalan Special Forces Soldier Arrested in Palm Beach County, Fla., <br /> for Masking Role in 1982 Massacre of Guatemalan Villagers on Immigration FormsRead the Press Release
A former Guatemalan special forces soldier was arrested today in Palm Beach County, Fla., for lying on his naturalization application about his participation in a 1982 massacre at a Guatemalan village known as Dos Erres, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida and Assistant Secretary John Morton of U.S. Immigration and Customs Enforcement (ICE).
Gilberto Jordan, 54, of Del Ray Beach, Fla., was arrested today by ICE special agents based on a criminal complaint filed in U.S. District Court for the Southern District of Florida, which charges him with unlawful procurement of naturalized U.S. citizenship. The former Guatemalan soldier allegedly lied to U.S. immigration authorities in his naturalization application about his past foreign military service and criminal role in the Dos Erres massacre.
The criminal complaint alleges that in November 1982 a Guatemalan guerrilla group ambushed a military convoy near Dos Erres, Guatemala, killing soldiers and taking a number of rifles. In response, a patrol of 20 Guatemalan special forces soldiers, known as “Kaibiles,” were deployed in December 1982 to the village of Dos Erres to search for the stolen rifles and find suspected guerillas. Allegedly, the Kaibiles searched the houses for the missing weapons, forced the villagers from their homes and interrogated them about the missing rifles. According to the complaint, the Kaibiles then proceeded to systematically murder the men, women and children at Dos Erres by, among other things, hitting them in the head with a hammer and then throwing them into the village well. These special forces soldiers also allegedly raped many of the women and girls at Dos Erres before killing them.
The criminal complaint alleges that Jordan admitted he served as a Kaibil in the Guatemalan military. Jordan stated that he was present at Dos Erres, and that he participated in the killings. Specifically, Jordan stated that the first person he killed was a baby, whom he murdered by throwing into the village well.
“The acts alleged in this complaint are horrific. It is unacceptable for participation in them allegedly not to have been disclosed to the authorities determining whether to grant citizenship,” said Assistant Attorney General Breuer. “Through the work of our Human Rights and Special Prosecutions Section, in conjunction with our partner U.S. Attorneys’ Offices and law enforcement agencies, the United States will not allow those who commit human rights abuses abroad to find save haven in this country.”
“The massacre at Dos Erres was a dark moment for the Guatemalan people, and we will not allow suspected perpetrators to escape justice by taking refuge in our cities and towns,” said U.S. Attorney Ferrer. “Although South Florida has a long and proud history of welcoming immigrants and exiles, we will not provide shelter and cover to those who lie about their criminal past, especially human rights abuses, to gain U.S. citizenship.”
“Those who commit human rights abuses abroad cannot subvert U.S. immigration laws in order to take shelter in the United States,” said U.S. Immigration and Customs Enforcement Assistant Secretary John T. Morton. “We are firmly committed to denying human rights abusers entrance into this country, weeding out those that are already here, and will enforce this U.S. government policy of no safe haven for human rights violators.”
The criminal complaint alleges that approximately 12 years after the Dos Erres massacre, a Guatemalan judge appointed an Argentinean forensic anthropology team to exhume the corpses at Dos Erres. According to the complaint, this forensic team uncovered approximately 162 skeletal remains from the village well, whose deaths were presumed to have occurred in December 1982 as a result of traumatic injuries and gunshot wounds.
In 1996, Jordan allegedly applied to naturalize as a U.S. citizen. Under penalty of perjury, Jordan allegedly falsely stated in his naturalization application that he had never committed any crime for which he had not been arrested and he denied past military service.
If convicted on charges of naturalization fraud, Gilberto Jordan faces up to 10 years in prison and revocation of U.S. citizenship upon conviction.
The case is being prosecuted by Trial Attorney Hillary Davidson and Brian Skaret of the Human Rights and Special Prosecutions Section of the Criminal Division, and Assistant U.S. Attorney Marie Villafana of the Southern District of Florida. The case was investigated by ICE special agents and ICE’s Human Rights Violators and War Crimes Unit. The Criminal Division’s Office of International Affairs provided assistance in this matter.
The Department of Justice Criminal Division announced the formation of the Human Rights and Special Prosecutions Section (HRSP) on March 30, 2010, as part of the U.S. government’s efforts to bring human rights violators to justice and deny those violators safe haven in the United States. The new section represents a merger of the Criminal Division’s Domestic Security Section (DSS) and Office of Special Investigations (OSI).
A criminal complaint is merely an accusation. All individuals are presumed innocent until proven guilty at trial beyond a reasonable doubt.
Brooklyn Physical Therapy Clinic Executive and Three Employees Charged in Health Care Fraud SchemeRead the Press Release
Four Brooklyn, N.Y.-area residents have been charged in connection with a health care fraud scheme operated out of the Solstice Wellness Center, a Brooklyn-area clinic that purported to specialize in providing physical therapy and various diagnostic tests, announced the Departments of Justice and Health and Human Services (HHS).
Solstice executive Dmitry Shteyman, 35, and Solstice employees Aleksey Shteyman, 41; Maxsim Shvedkin, 38; and Sara Kalantarov, 22, were each charged in an indictment unsealed today in U.S. District Court in the Eastern District of New York, with conspiracy to defraud the United States, to submit and cause the submission of false claims and to pay health care kickbacks. In addition, Dmitry Shteyman, Aleksey Shteyman and Shvedkin were each indicted on one count of conspiracy to commit health care fraud and 16 counts of health care fraud. Dmitry Shteyman, Shvedkin and Kalantarov were arrested today in the Eastern District of New York. Aleksey Shteyman remains at large.
According to the indictment, Dmitry Shteyman was the chief operating officer and vice president of Solstice, Aleksey Shteyman was a consultant at Solstice, Shvedkin assisted in the recruitment of Medicare beneficiaries at Solstice, and Kalantarov was an employee at Solstice who worked at the front desk. All four individuals are alleged to have been involved in paying cash kickbacks to Medicare beneficiaries to induce those beneficiaries to be transported to and from Solstice, to purportedly receive physicians’ services, physical therapy and diagnostic tests. The false and fraudulent claims that were submitted to Medicare were for services that were not actually rendered and that were not medically necessary.
The charge of conspiracy to defraud the United States, to submit and cause the submission of false claims, and to pay health care kickbacks carries a maximum sentence of five years in prison and a fine of up to $250,000, per count. The charges of conspiracy to commit health care fraud and health care fraud each carry a maximum sentence of 10 years in prison and a $250,000 fine, per count.
An indictment is merely a charge and the defendants are presumed innocent until proven guilty.
Today’s charges were announced by Assistant Attorney General of the Criminal Division Lanny A. Breuer, U.S. Attorney for the Eastern District of New York Loretta E. Lynch and Daniel R. Levinson, Inspector General of HHS.
The case is being prosecuted by Trial Attorneys Katherine Houston and Steven Kim of the Criminal Division’s Fraud Section. HHS Office of the Inspector General (HHS-OIG), the Office of the New York Attorney General’s Medicaid Fraud Control Unit, and the New York Office of the Medicaid Inspector General conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Tuesday 4 May 2010
Washington State Slaughterhouse Operator Agrees to Resolve Clean Water Act Permit ViolationsRead the Press Release
WASHINGTON—Washington Beef LLC, the operator of a large slaughterhouse in Toppenish, Wash., has agreed to pay a $750,000 civil penalty and will install several pieces of new waste water treatment equipment that the Environmental Protection Agency (EPA) estimates will cost approximately $3 million to resolve allegations that it violated the Clean Water Act, the Justice Department and EPA announced today.
Washington Beef is owned by AgriBeef Co., a privately held corporation based in Boise, Idaho. Its facility is located in Toppenish on the Yakama Indian Reservation.
Under the settlement, Washington Beef will pay the civil penalty and will install five new pieces of equipment including a new sequential batch reactor, which is a large concrete basin equipped with aerators in which bacteria break down organic pollutants from the slaughterhouse. The addition of the sequential batch reactor and other equipment will greatly increase the treatment capacity at the plant.
According to a complaint filed with the settlement agreement in federal court in Spokane, Wash., Washington Beef violated the Clean Water Act on numerous occasions from 2003 until 2009. EPA alleges that the company discharged partially-treated slaughterhouse wastes into the Spencer Lateral and the Wanity Slough, nearby waterways, without a permit for an extended period, and it also exceeded the level of pollutants allowed by its permit on numerous occasions. The company has recently obtained a permit for all of its discharges, and is currently meeting its permit limits. The new equipment the company is installing should help ensure future compliance with the Clean Water Act.
The consent decree, lodged in the U.S. District Court for the Eastern District of Washington, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at http://www.justice.gov/enrd/Consent_Decrees.html.
U.S. Attorney's Office for the Southern District of New York, <br /> the Federal Bureau of Investigation, and the New York City Police Department <br /> on an Arrest in the Times Square InvestigationRead the Press Release
"At approximately 11:45 P.M. EDT, Faisal Shahzad was taken into custody. Agents of the Federal Bureau of Investigation and detectives of the New York City Police Department arrested Shahzad for allegedly driving a car bomb into Times Square on the evening of May 1, 2010. Shahzad, a naturalized U.S. citizen born in Pakistan, was taken into custody at John F. Kennedy International Airport after he was identified by the Department of Homeland Security’s U.S. Customs and Border Protection while attempting to take a flight to Dubai.
The defendant will appear in Manhattan federal court (500 Pearl Street, 5th Floor, New York, N.Y.) on May 4, 2010, at a currently undetermined time to be presented on formal charges. No further details are available at this time.
We applaud the collective work of the New York Joint Terrorism Task Force and the prosecutors and investigators in the Southern District of New York, who have worked around-the-clock for the last two days in this investigation. We would also like to recognize the diligent work of the Customs and Border Protection agents and the U.S. Attorney’s Office for the District of Connecticut.
The investigation remains very much ongoing, and the dedicated agents, detectives, and prosecutors on this case will continue to follow every lead and use every tool to keep the people of New York City safe. We will not rest until every terrorist, whether homegrown or foreign-based, is neutralized and held to account," said United States Attorney Preet Bharara, FBI Special Agent-in-Charge George Venizelos, and New York City Police Commissioner Raymond W. Kelly.
Puerto Rico Aqueduct and Sewer Authority to Spend More Than $195 Million on Improvements to 126 Drinking Water PlantsRead the Press Release
SAN JUAN—The Puerto Rico Aqueduct and Sewer Authority (PRASA) has agreed to implement major capital improvements and upgrades to resolve alleged longstanding violations of the Clean Water Act at 126 drinking water plants across the island and violations of the Safe Drinking Water Act at three others, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today. Most of the communities served by the drinking water treatment plants that will be upgraded under the agreement are in low income communities.
The agreement, filed in federal court in the District of Puerto Rico, requires PRASA to implement measures to properly handle harmful pollution from 126 drinking water treatment plants that discharge into Puerto Rico’s lakes, rivers and streams, some of which are sources of drinking water. The work required by the agreement, when fully implemented by PRASA, is estimated to cost more than $195 million.
The announcement was made today by John Cruden, Deputy Assistant Attorney General for the Environment and Natural Resources Division of the U.S. Department of Justice, Rosa Rodriguez-Velez, U.S. Attorney for the District of Puerto Rico and Judith Enck, EPA Regional Administrator for Region 2.
PRASA will also pay a $1.02 million civil penalty and spend more than $2.5 million to improve the water quality of either Lake Toa Vaca or both Lake Toa Vaca and Lake Cidra. The consent decree filed today replaces two prior agreements between PRASA and the federal government, one from 1995 and one from 2001. It provides for a comprehensive and integrated set of measures aimed at ending PRASA’s cycle of past violations.
“Today’s settlement agreement sets the Puerto Rico Aqueduct and Sewer Authority on a clear path to improve the infrastructure of their facilities, reduce the amount of harmful pollutants entering the environment and ultimately provide safer drinking water to the people of Puerto Rico,” said Assistant Attorney General Ignacia S. Moreno.
“The long-overdue improvements that will result from this agreement will enhance water quality across Puerto Rico, especially in low income communities,” said EPA Regional Administrator Judith Enck. “Millions of pounds of potentially harmful pollutants will be kept out of Puerto Rico's lakes, rivers and streams, which means a healthier environment and improved public health.”
EPA estimates that the agreement will reduce by 15 million pounds annually the amount of suspended solids discharged into Puerto Rico’s lakes, rivers and streams, some of which are sources of drinking water. Suspended solids are small particles that can carry pathogens potentially harmful to human health and the environment, and can harm water quality by consuming oxygen.
EPA also estimates that discharges of residual chlorine will be reduced by 600,000 pounds per year and discharges of total phosphorous will be reduced by 250,000 pounds per year. Chlorine is used in the treatment process as a disinfectant and phosphorus is in the source water. Phosphorus comes from a number of sources, including fertilizers and detergents. Excess phosphorus in water can lead to significant water quality problems including harmful algal blooms, low oxygen levels, and declines in wildlife and wildlife habitat. Too much chlorine in drinking water can cause eye and nose irritation and stomach discomfort.
Under the consent decree, PRASA will implement multiple capital improvement projects and other upgrades at 126 drinking water treatment plants and related systems over the next 15 years. PRASA will complete 291 short-, mid-, and long-term capital improvement projects, which will include the construction of 34 treatment systems at facilities that currently are discharging untreated sludge into local waterways, installation of flow meters and high-level indicators at all PRASA facilities, improvements to sampling locations, capacity evaluations at over 50 facilities, implementation of an island-wide preventive maintenance program and facility operator training.
PRASA’s efforts to improve the water quality of either Lake Toa Vaca or both Lake Toa Vaca and Lake Cidra will address the growing amount of nutrients in the lakes, both of which are drinking water sources for portions of Puerto Rico. Increased levels of nutrients in water bodies can severely impact ecosystems and human health. As a supplemental environmental project, PRASA will set aside $2.2 million to design and construct an aeration system that will increase oxygen levels in the lakes and an additional $324,000 to operate and maintain the system. This project, when implemented, will enhance the condition of the aquatic ecosystem and restore the water quality of the lakes. A supplemental environmental project is an environmentally-beneficial project that a violator voluntarily agrees to undertake in a settlement and one the violator would not otherwise be required to perform.
The consent decree, lodged in the U.S. District Court for the District of Puerto Rico, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html .
Novartis Vaccines & Diagnostics to Pay More Than $72 Million<br /> to Resolve False Claims Act Allegations Concerning TOBIRead the Press Release
WASHINGTON – Novartis Vaccines & Diagnostics Inc. and Novartis Pharmaceuticals Corporation have agreed to pay $72.5 million to resolve civil False Claims Act allegations arising from the marketing of the cystic fibrosis drug TOBI, the Justice Department announced today. The settlement resolves allegations that, between Jan. 1, 2001 and July 31, 2006, Novartis and its predecessor, Chiron Corporation, caused false claims to be submitted to federal health care programs for certain off-label uses of the drug.
The Food and Drug Administration (FDA) approved TOBI, an inhaled antibiotic, for the treatment of certain cystic fibrosis patients. The United States alleges that Chiron, and then Novartis, marketed TOBI for unapproved uses, such as diseases other than cystic fibrosis, and for cystic fibrosis patients who did not meet the parameters of the FDA-approved indication and for which TOBI was not a medically accepted use. The government alleges that this conduct caused the submission of false claims to federal health care programs.
"Pharmaceutical companies must not promote their drugs for uses that have not been proven to be safe and effective," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We are committed to pursuing False Claims Act violations and recovering taxpayer dollars lost to off-label marketing."
"This office is committed to safeguarding the federal health care programs against false claims caused by off-label marketing and other types of illegal conduct," said Joseph Russoniello, U.S. Attorney for the Northern District of California.
Under the agreement announced today, the proceeds from the settlement will be divided between the federal government and various states, with the United States receiving $43.5 million to resolve the federal claims, and the states receiving $29 million to settle their respective claims.
"The Defense Criminal Investigative Service (DCIS) is thoroughly committed to pursue any and all allegations of fraud that drain precious resources from America's war fighters," said Richard W. Gwin, Special Agent in Charge of the DCIS Western Field Office. "This particular fraud was directly related to the healthcare of our brave soldiers, sailors, airmen, marines and their families throughout the world. The settlement with Novartis was only made possible by the hard work of the prosecutors from the Department of Justice, agents from the DCIS and all the other joint investigative agencies."
This settlement resolves a lawsuit brought by three former Chiron employees – Robert Lalley, Courtney Davis and William Manos – under the qui tam or whistleblower provisions of the False Claims Act, which permit private individuals known as relators to bring a lawsuit on behalf of the United States and to share in any recovery. The relators will receive $7.825 million of the federal share of the settlement announced today.
This settlement is part of the government’s emphasis on combating health care fraud. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $2.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 have topped $3 billion.
The settlement was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Northern District of California; the U.S. Department of Health and Human Services, Office of Inspector General; the Office of Personnel Management, Office of Inspector General, the Department of Veterans’ Affairs, Office of Inspector General; the Defense Criminal Investigative Service; the Federal Bureau of Investigation; the FDA; and the National Association of Medicaid Fraud Control Units.
Miami Clinic Consultant Convicted<br /> in $5.8 Million Fraudulent HIV Infusion SchemeRead the Press Release
WASHINGTON – David Marrero, 49, was convicted today of health care fraud, conspiracy to commit money laundering and money laundering in connection with a $5.8 million Medicare fraud scheme relating to his involvement with a Miami-area HIV/AIDS infusion clinic, announced the Departments of Justice and Health and Human Services (HHS).
According to evidence at trial, in 2004, Marrero established Tendercare Medical Center Inc., with his then wife, listing himself as a “clinic consultant” on Tendercare’s Medicare application. In 2005, Tendercare began billing Medicare for expensive injection and infusion medications purportedly to treat HIV/AIDS-related blood disorders. Marrero recruited Medicare beneficiaries to come to Tendercare and hired Tendercare employees. The evidence at trial showed that these beneficiaries did not have the conditions listed in the Medicare billings for the clinic, and that the employees did not actually administer the treatments for which Medicare was billed. According to evidence presented at trial, between January 2005 and December 2007, Tendercare submitted approximately $5.8 million in false and fraudulent claims to Medicare for medically unnecessary injection and infusion treatments, most of which were not even provided. Medicare paid Tendercare approximately $2.7 million as a result of those fraudulent claims.
At trial, evidence showed that Marrero recruited his 76-year-old aunt to be a “patient” at Tendercare and reached an agreement with the then-owner of Tendercare to receive a portion of whatever Medicare paid Tendercare for billings under his aunt’s name. According to the bills submitted to Medicare, this woman was HIV positive, had multiple blood disorders, and during her first “treatment” received 100 units of medication for which Medicare was billed more than $10,000. In fact, as the evidence showed at trial, his aunt was not HIV positive and was not suffering from blood disorders. In addition, a Medicare representative testified that it was medically impossible to inject a patient with 100 units of this medication in a single office visit, which was the equivalent of an injection of approximately one liter of medication. According to the Medicare representative, there are now certain safeguards in place to prevent Medicare from paying clinics for this type of medically impossible bill.
At trial, a former employee of Tendercare testified that Marrero trained her on how to manipulate blood samples in order to generate a phony lab test that could be used to justify the company’s fraudulent billings. Evidence at trial also showed that Tendercare paid cash kickbacks to Medicare beneficiaries to induce them to participate in the scheme.
Following the verdict, Marrero was remanded into custody by U.S. District Court Judge Donald L. Graham of the Southern District of Florida. Sentencing for Marrero is currently scheduled for July 30, 2010, before U.S. District Judge Ursula Ungaro of the Southern District of Florida. Marrero faces a statutory maximum prison term of up to 10 years on each count for which he was convicted, in addition to a criminal fine of up to $250,000 or twice the gain or loss, whichever is greater.
Today’s guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida and Special Agent in Charge Christopher B. Dennis of the Miami Regional Office of the HHS Office of Inspector General (OIG).
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Special Trial Attorney Martha Talley of the Criminal Division’s Fraud Section. The case was investigated by the FBI. The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Florida and the Criminal Division’s Fraud Section.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 560 individuals who collectively have falsely billed the Medicare program for more than $1.2 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov
Department of Justice Announces Allocation of 33 New Prosecutors, Launches 3 Community Prosecution Pilot Teams in Indian CountryRead the Press Release
Attorney General Eric Holder today announced the allocation of 33 new Assistant U.S. Attorney (AUSA) positions to 21 judicial districts that contain Indian Country. The department has also launched three Indian Country Community Prosecution Teams. These new resources will enable the Justice Department to work with tribal and state law enforcement partners to improve public safety in tribal communities.
“Violent crimes, and particularly crimes against women and girls, continue to devastate tribal communities across the country, and the U.S. Attorney community is crucial to the Department of Justice’s response,” Attorney General Holder said. “With 33 more federal prosecutors headed to Indian Country, and the launch of three new Community Prosecution Pilot Projects, we have made significant progress finding and implementing solutions to the public safety challenges confronting tribal communities. This Administration is committed to reducing the level of violent crime in tribal communities.”
The new AUSA allocation is the result of $6 million provided in the department’s FY2010 budget for the hiring of prosecutors in Indian Country. Districts were asked to submit requests for additional prosecutors, which were reviewed with relevant statistical data by a team of U.S. Attorneys and staff from the Executive Office of U.S. Attorneys. Thirty AUSAs will be distributed to districts as follows:
District of Alaska: 1;
District of Arizona: 5;
District of Colorado: 1;
Eastern District of Michigan: 1;
Western District of Michigan: 1;
District of Minnesota: 1;
Southern District of Mississippi: 1;
District of Montana: 3;
District of Nebraska: 1;
District of Nevada: 1;
District of New Mexico: 2;
Northern District of New York: 1;
District of North Dakota: 1;
Northern District of Oklahoma: 1;
Western District of Oklahoma: 1;
District of Oregon: 1;
District of South Dakota: 2;
District of Utah: 1;
Eastern District of Washington: 1;
Western District of Washington: 1; and
District of Wyoming: 2.
Three additional AUSAs have been allocated for the three community prosecution pilot projects, which will be initiated with three Tribal Nations: the District of New Mexico will launch a pilot with Navajo Nation within the New Mexico border; the District of South Dakota will launch a pilot with the OglalaSioux Tribe on the Pine Ridge Reservation; and the District of Eastern Wisconsin will launch a pilot with the Menominee Indian Tribe. Each Community Prosecution Team will include an AUSA and a victim-witness position (also funded through the FY2010 allocation), and will be assigned to work on a regular basis on the reservation of a specific Tribal Nation. The pilot project was developed in an effort to bring the federal criminal justice system closer to Indian Country, and to improve collaboration between federal and tribal prosecution and law enforcement. The AUSA in each of the pilots will work with the tribal community to identify key objectives and strategies for that community and work with the tribe to implement solutions.
Today’s announcement was developed with the help of recommendations that have been gathered by department leadership as part of a department-wide initiative on public safety in tribal communities. As part of this effort, department officials conducted a series of meetings addressing violent crime in American Indian and Alaska Native communities. In October 2009, Attorney General Holder convened a national Tribal Nations Listening Session and the Justice Department held its annual tribal consultation on violence against women. The department again had the opportunity to engage with tribal leaders on public safety in tribal communities during the White House Tribal Nations Conference in November 2009. In addition to these sessions with tribal leaders, department leadership has conducted meetings with tribal experts on law enforcement and public safety efforts.
For more information on the department’s public safety initiative, go to: http://www.tribaljusticeandsafety.gov
Boeing to Restore Significant Habitat in Washington State Waterway to Resolve Natural Resource Damage LiabilityRead the Press Release
WASHINGTON— The Boeing Company has agreed to undertake two significant habitat restoration projects in Washington state to resolve its liability for natural resource damages caused by hazardous substances released from Boeing facilities along the Duwamish Waterway, the Justice Department and the National Oceanic and Atmospheric Administration (NOAA) announced today.
The projects are the result of a collaborative effort involving Boeing and the natural resource trustees: NOAA, the Department of the Interior, the U.S. Fish and Wildlife Service, the Washington State Department of Ecology, the Washington State Department of Fish and Wildlife, the Suquamish Tribe and the Muckleshoot Indian Tribe.
Under a settlement filed in federal district court in Seattle, Boeing will create habitat for out-migrating juvenile salmon making their transition from fresh water to salt water, as well as other fish and bird species. The restoration projects will be built at the current location of Boeing’s Plant 2 on the Duwamish River and will cover over one-half linear mile of waterway. Boeing also will repay almost $2 million of the natural resource trustees’ costs and will establish a permanent stewardship fund for the projects.
"Restoring injured natural resources in the Lower Duwamish Waterway is very important, and this settlement is a first step in that direction," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Through this settlement, we are sending a signal that we will protect natural resources and we will act to restore them when they are injured."
"The restoration projects and this settlement demonstrate what can be accomplished when those responsible for natural resource injuries cooperate with the natural resource trustees," said Lois Schiffer, General Counsel of the National Oceanic and Atmospheric Administration. "Both projects will create new intertidal, marsh and riparian habitat, which will largely benefit juvenile Chinook salmon, a fishery that relies on these areas during a critical period in their life cycles when they are adapting to marine salinity."
The settlement resolves the natural resource trustees’ claims against Boeing, which are contained in a complaint filed with the consent decree. The complaint asserts claims for natural resource damages under the Superfund statute, the Clean Water Act, the Oil Pollution Act, and Washington’s Model Toxics Control Act.
The consent decree, lodged in the U.S. District Court for the Western District of Washington, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department website at www.justice.gov/enrd/Consent_Decrees.html.
Attorney General Eric Holder on the Times Square InvestigationRead the Press Release
Earlier this evening, Faisal Shahzad was arrested in connection with the attempted car bombing in New York on Saturday. Mr. Shahzad, an American citizen, was taken into custody at JFK Airport in New York as he attempted to board a flight to Dubai.
Since this plot was first uncovered on Saturday night, the FBI, prosecutors and intelligence lawyers in the National Security Division of the Justice Department and the U.S. Attorneys Offices in Manhattan and Connecticut, along with the NYPD have worked night and day to find out who was responsible for what would have been a deadly attack had it been successful. Over the course of the day today, we have gathered significant additional evidence that led to tonight’s arrest, which was made by agents from Department of Homeland Security’s Customs and Border Protection.
This investigation is ongoing, as are our attempts to gather useful intelligence, and we continue to pursue a number of leads. But it’s clear that the intent behind this terrorist act was to kill Americans.
FBI agents are working with their state and local counterparts in New York, Connecticut and other jurisdictions to gather evidence and intelligence related to this case. We are also coordinating with other members of the President’s national security team to ensure we use every resource available to the United States to bring anyone responsible to justice.
We continue to gather leads in this investigation, and it’s important that the American people remain vigilant. The vehicle in Times Square was first noticed on Saturday by a citizen who reported it to authorities, and, as always, any American who notices suspicious activity should report it to the appropriate law enforcement agencies.
This investigation is ongoing, it is multi-faceted, and it is aggressive. As we move forward, we will focus on not just holding those responsible for it accountable, but also on obtaining any intelligence about terrorist organizations overseas.
Because of the fast-moving nature of this investigation, I am not able to make any further information public at this time. But the American people should know that we are deploying every resource available, and we will not rest until we have brought everyone responsible to justice.
Monday 3 May 2010
Two Oklahoma Men Convicted of Devising and Participating <br /> in Stock Manipulation SchemeRead the Press Release
G. David Gordon, a Tulsa, Okla., attorney, and Richard Clark, also of Tulsa, were convicted today by a federal jury of devising and participating in a scheme to defraud investors through the manipulation of publicly traded stocks of three companies, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Thomas Scott Woodward of the Northern District of Oklahoma.
Gordon and Clark were each convicted of one count of conspiracy to commit wire fraud, securities fraud and money laundering. In addition, Gordon was convicted of nine counts of wire fraud, five counts of securities fraud, five counts of money laundering and one count of making a false statement to the U.S. Securities and Exchange Commission (SEC). Clark was also convicted of seven counts of wire fraud, five counts of securities fraud and one count of money laundering. Gordon, 48, and Clark, 62, were originally charged in a 24-count indictment unsealed on Feb. 10, 2009.
According to evidence presented at trial, between April 2004 and December 2006, Gordon and Clark devised and engaged in a scheme to defraud investors known as a "pump and dump," in which they manipulated three publicly traded penny stocks. A penny stock is a common stock that trades for less than $5 per share in the over the counter market, rather than on national exchanges.
"These defendants illegally manipulated the stock market by deceiving potential investors about the true worth of the stocks they were buying. Investors were left with nearly worthless stock while these defendants reaped more than $44 million in profits," said Assistant Attorney General Breuer. "Investors deserve accurate information. When we find evidence of individuals artificially pumping stocks for their own profit, we will vigorously prosecute them."
"The defendants and their co-conspirators are sophisticated con-men who preyed on unsuspecting investors, and they stole tens of millions of dollars from the investing public," said U.S. Attorney Scott Woodward of the Northern District of Oklahoma. "Those who commit such blatant stock fraud will be brought to justice. These white collar criminals are now in custody and they are facing lengthy prison terms without the possibility of parole."
Two companies based in Tulsa at the time of the scheme were among those whose stock was manipulated: Deep Rock Oil & Gas Inc., and Global Beverage Solutions Inc., formerly known as Pacific Peak Investments. The third company, National Storm Management Group Inc., is based in Glen Ellyn, Ill.
According to evidence presented at trial, Gordon and Clark executed the scheme by obtaining a majority of the free-trading shares of stock of the company they intended to manipulate, using fraudulent and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they obtained.
Evidence at trial showed that the defendants hid and "parked" their shares with various nominees, such as friends, relatives or other entities that they owned and controlled. Subsequently, they engaged in coordinated trading in order to create the appearance of an emerging market for these stocks, after which they conducted massive promotional campaigns in which unsolicited fax and e-mail "blasts" were sent to millions of recipients. According to evidence at trial, these blasts touted the respective stocks without accurately disclosing who was paying for the promotions, omitted that the defendants intended to sell their shares, and induced unsuspecting legitimate investors to purchase stock in the companies. The defendants and their nominees obtained significant profits by selling large amounts of shares after they had artificially inflated the stock price. For each of the three manipulated stocks, the defendants’ sell-off caused declines of the stock price and left legitimate investors holding stock of significantly reduced value.
Evidence at trial showed that Gordon, Clark and their co-conspirators received proceeds of more than $44 million from the overall scheme. The government is seeking criminal forfeiture of more than $44 million from Gordon, Clark and three other defendants charged in the February 2009 indictment. The government is also seeking the forfeiture of Gordon’s multi-million dollar residence and proceeds of three bank accounts.
Gordon was also convicted today of one count of wire fraud and one count of obstruction of justice in connection with a fourth penny stock, that of International Power Group Ltd., based in New Jersey. The government is also seeking criminal forfeiture of $2.74 million from Gordon in connection with the wire fraud involving the fourth penny stock.
The February 2009 indictment also charged Louisville, Ky., attorney James Reskin, 51; Dean Sheptycki, 43, at the time a resident of Florida and the Bahamas; and Dallas-area resident Joshua Wayne Lankford, 36, for their participation in the scheme. Reskin pleaded guilty on March 26, 2010, to one count of conspiracy to commit securities fraud, wire fraud and money laundering and to one count of obstruction of a proceeding before the Internal Revenue Service (IRS) by making false and misleading statements to the IRS and to the Department of Justice. Sheptycki and Lankford remain fugitives.
An indictment is merely an allegation and defendants are presumed innocent unless proven guilty in a court of law.
At sentencing, which is scheduled for Aug. 25, 2010, Clark and Gordon face a maximum sentence of five years in prison and a $250,000 fine for each of the conspiracy and false statement charges. Each charge of wire fraud as well as the obstruction of justice count carries a maximum sentence of 20 years in prison and a $250,000 fine. The maximum sentence for each securities fraud count is 20 years in prison and a $5 million fine and the maximum sentence for each money laundering count is 10 years in prison and a $250,000 fine.
The case is being prosecuted by Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Catherine Depew for the Northern District of Oklahoma, and Special Assistant U.S. Attorney Kevin Muhlendorf, who is detailed to the U.S. Attorney’s Office from the SEC. The case is being investigated by the IRS-Criminal Investigation Division, the FBI and the U.S. Postal Inspection Service.
Today’s guilty verdict is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
For more information on the task force, visit www.StopFraud.gov .