A federal jury in New York City today convicted three former financial services
executives for their participation in frauds related to bidding for contracts
for the investment of municipal bond proceeds and other municipal finance
contracts, the Department of Justice announced.
Peter Ghavami, Gary Heinz, and Michael Welty, all former UBS AG executives,
were found guilty on conspiracy and fraud charges in the U.S. District Court in
New York City. Ghavami was found guilty on two counts of conspiracy to commit
wire fraud and one count of substantive wire fraud. Heinz was found guilty on
three counts of conspiracy to commit wire fraud and two counts of substantive
wire fraud. Welty was found guilty on three counts of conspiracy to commit wire
fraud. Heinz was found not guilty on one count of witness tampering, and Welty
was found not guilty on one count of substantive wire fraud.
The trial began on July 30, 2012. Ghavami, Heinz, and Welty were initially
indicted on December 9, 2010.
“For years, these executives corrupted the competitive bidding process and
defrauded municipalities across the country out of money for important public
works projects,” said Scott D. Hammond, Deputy Assistant Attorney General of the
Antitrust Division’s criminal enforcement program. “Today’s convictions
demonstrate that the division is committed to holding accountable those who seek
to unfairly and illegally undermine competitive markets.”
According to evidence presented at trial, while employed at UBS, Ghavami,
Heinz, and Welty participated in separate fraud conspiracies and schemes with
various financial institutions and with a broker at various time periods from as
early as March 2001 until at least November 2006. These financial institutions,
or providers, offered a type of contract—known as an investment agreement— to
state, county, and local governments and agencies and not-for-profit entities
throughout the United States. The public entities were seeking to invest money
from a variety of sources, primarily the proceeds of municipal bonds that they
had issued to raise money for, among other things, public projects. Public
entities typically hire a broker to assist them in investing their money and to
conduct a competitive bidding process to determine the winning provider.
According to evidence presented at trial, while acting as providers, Ghavami,
Heinz, and Welty, with their provider and broker co-conspirators, corrupted the
bidding process for more than a dozen investment agreements to increase the
number and profitability of the agreements awarded to UBS. At other times, while
acting as brokers, Ghavami, Heinz, Welty, and their co-conspirators arranged for
UBS to receive kickbacks in exchange for manipulating the bidding process and
steering investment agreements to certain providers.
Ghavami, Heinz, and Welty deprived the municipalities of competitive interest
rates for the investment of tax-exempt bond proceeds that were to be used by
municipalities to refinance outstanding debt and for various public works
projects, such as for building or repairing schools, hospitals, and roads.
Evidence at trial established that they cost municipalities around the country
and the U.S. Treasury millions of dollars.
During the trial, the government presented specific evidence relating to
approximately 26 corrupted bids and approximately 76 recorded conversations made
by the co-conspirator financial institutions. Among the issuers and
not-for-profit entities whose agreements or contracts were subject to the
defendants’ schemes were the Commonwealth of Massachusetts, the New Mexico
Educational Assistance Foundation, the Tobacco Settlement Financing Corporation
of Rhode Island, and the RWJ Health Care Corp at Hamilton.
“Corrupt bidding schemes serve to weaken the public’s trust in the municipal
bond market and prevent public entities from enjoying the benefits of a true
competitive bidding process,” said Mary E. Galligan, Acting Assistant Director
in Charge of the FBI in New York. “Today’s conviction is further proof of our
efforts to weed out these corrupt criminals and ensure justice is served.”
“Today’s verdict is important because it confirms that these complex,
seemingly uninteresting backroom deals have a real impact on taxpayers, who
should benefit from a municipal bond issue and are ultimately responsible for
paying it off,” said Richard Weber, Chief, Internal Revenue Service-Criminal
Investigation (IRS-CI). “Today’s convictions send a strong message to the
municipal bond industry and demonstrates the commitment of the Internal Revenue
Service and the Justice Department to rid the industry of corrupt
practices.”
A total of 20 individuals have been charged as a result of the department’s
ongoing municipal bonds investigation. Including today’s convictions, a total of
19 individuals have been convicted or pleaded guilty, and one awaits trial.
Additionally, one company has pleaded guilty.
Two of charged fraud conspiracies carry a maximum penalty per count of 30
years in prison and a $1 million fine. A third fraud conspiracy charge carries a
maximum penalty of five years in prison and a $250,000 fine. The two wire fraud
charges carry a maximum penalty per count of 30 years in prison and a $1 million
fine. These maximum fines per count may be increased to twice the gain derived
from the crime or twice the loss suffered by the victims of the crime, if either
amount is greater than the statutory maximum fine.
The verdict announced today resulted from an ongoing investigation conducted
by the Antitrust Division’s New York and Chicago Offices, the FBI, and the
IRS-CI. The division is coordinating its investigation with the U.S. Securities
and Exchange Commission, the Office of the Comptroller of the Currency, and the
Federal Reserve Bank of New York.
Today’s convictions are part of efforts underway by President Obama’s
Financial Fraud Enforcement Task Force (FFETF), which was created in November
2009 to wage an aggressive, coordinated, and proactive effort to investigate and
prosecute financial crimes. With more than 20 federal agencies, 94 U.S.
Attorneys’ Offices and state and local partners, it is the broadest coalition of
law enforcement, investigatory, and regulatory agencies ever assembled to combat
fraud. Since its formation, the task force has made great strides in
facilitating increased investigation and prosecution of financial crimes;
enhancing coordination and cooperation among federal, state, and local
authorities; addressing discrimination in the lending and financial markets; and
conducting outreach to the public, victims, financial institutions, and other
organizations. Over the past three fiscal years, the Justice Department has
filed more than 10,000 financial fraud cases against nearly 15,000 defendants
including more than 2,700 mortgage fraud defendants. For more information on the
task force, visit www.stopfraud.gov.
Anyone with information concerning bid rigging and related offenses in any
financial markets should contact the Antitrust Division’s New York Field Office
at 212-335-8000, the FBI at
212-384-5000 , or IRS-CI at
212-436-1761 ; or visit
www.justice.gov/atr/contact/newcase.htm.
Friday, August 31, 2012
Wednesday, August 29, 2012
Chagrin Falls Woman Charged with Conspiracy to Commit Wire Fraud for Acts That Resulted in Losses of More Than $300,000
A criminal information was filed charging Leslie Apisdorf, age 51, of Chagrin
Falls, Ohio, with conspiracy to commit wire fraud for acts that resulted in loss
of more than $300,000, said Steven M. Dettelbach, United States Attorney for the
Northern District of Ohio.
From on or about October 24, 2005 through on or about February 1, 2009, Apisdorf conspired to defraud financial institutions in connection with the financing of trucks and trailers which were purported to be owned by Mark’s Akron Medina Truck Sales Inc., according to the information.
Apisdorf owned and operated Hazel Financial Ltd., which provided financing through Hazel on vehicles sold and purchased by Mark’s. Both Hazel and Mark’s were located at 2636 Brecksville Road in Richfield, Ohio, according to the information.
It was part of the scheme that between 2005 and 2009, Apisdorf and others submitted false documents to financial institutions which purported to show transactions for the sales of trucks and trailers, according to the information.
In fact, the trucks and trailers submitted for financing were inflated above their market rate, were already collateralized or did not exist, according to the information.
Apisdorf and others received loan proceeds and fees in connection with the financing of trucks and trailers based on false documents, according to the information. As a result of the acts committed by Apisdorf during the time period of the conspiracy, financial institutions suffered total losses of approximately $308,474.
The information is a result of an investigation conducted by Special Agent Jeffrey P. Kassouf with the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Henry F. DeBaggis.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal records, if any, the defendant’s role in the offense and the characteristics of the violation.
In all cases the sentence will not exceed the statutory maximum, and, in most cases, it will be less than the maximum.
An information is only a charge and is not evidence of guilt.
A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
From on or about October 24, 2005 through on or about February 1, 2009, Apisdorf conspired to defraud financial institutions in connection with the financing of trucks and trailers which were purported to be owned by Mark’s Akron Medina Truck Sales Inc., according to the information.
Apisdorf owned and operated Hazel Financial Ltd., which provided financing through Hazel on vehicles sold and purchased by Mark’s. Both Hazel and Mark’s were located at 2636 Brecksville Road in Richfield, Ohio, according to the information.
It was part of the scheme that between 2005 and 2009, Apisdorf and others submitted false documents to financial institutions which purported to show transactions for the sales of trucks and trailers, according to the information.
In fact, the trucks and trailers submitted for financing were inflated above their market rate, were already collateralized or did not exist, according to the information.
Apisdorf and others received loan proceeds and fees in connection with the financing of trucks and trailers based on false documents, according to the information. As a result of the acts committed by Apisdorf during the time period of the conspiracy, financial institutions suffered total losses of approximately $308,474.
The information is a result of an investigation conducted by Special Agent Jeffrey P. Kassouf with the Federal Bureau of Investigation. This case is being prosecuted by Assistant United States Attorney Henry F. DeBaggis.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal records, if any, the defendant’s role in the offense and the characteristics of the violation.
In all cases the sentence will not exceed the statutory maximum, and, in most cases, it will be less than the maximum.
An information is only a charge and is not evidence of guilt.
A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Virginia Attorney Charged in South African Ponzi Scheme
Brian Ray Dinning, 47, of Toronto, Canada, has been indicted by a federal grand
jury on wire fraud charges.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after the indictment was returned by the grand jury. Dinning has been charged with 25 counts of wire fraud, which each carry a maximum penalty of 20 years in prison, if convicted.
According to the indictment, Dinning was a graduate of Regent University Law School and also obtained an LL.M in tax from the Georgetown University Law Center. From early 2005 until the present, Dinning allegedly recruited approximately 23 individuals to invest in his numerous “for-profit” corporations that he had established. He did this by falsely advising investors that they would accrue significant financial gains from South African projects, such as a luxury Oceanside housing development, a luxury Oceanside hotel and private residence club, as well as diamond and gold mining operations. The indictment alleges that Dinning also used “not-for-profit” corporations to obtain donations purportedly for charitable, environmental, agricultural, medical, and community projects for the tribal people of South Africa, as well as developing wildlife habitats for native African species.
Regardless of whether his investors made investments for profit or donations for charitable causes to Dinning’s various corporations, upon receipt of these funds from his investors, Dinning is alleged to have immediately used their money for personal and family gain, for payment of his and his family’s expenses, for payment of alimony and child support to his ex-wife, for payment of private school tuition for his children, and to make the down payment and subsequent mortgage payments on his new $975,000 home in Suffolk. As a result, Dinning allegedly obtained more than $2.9 million from his investors, of which he retained more than $2 million for his and his family’s benefit.
This case was investigated by the Norfolk Division of the FBI. Assistant United States Attorney Steve Haynie is prosecuting the case on behalf of the United States.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, made the announcement after the indictment was returned by the grand jury. Dinning has been charged with 25 counts of wire fraud, which each carry a maximum penalty of 20 years in prison, if convicted.
According to the indictment, Dinning was a graduate of Regent University Law School and also obtained an LL.M in tax from the Georgetown University Law Center. From early 2005 until the present, Dinning allegedly recruited approximately 23 individuals to invest in his numerous “for-profit” corporations that he had established. He did this by falsely advising investors that they would accrue significant financial gains from South African projects, such as a luxury Oceanside housing development, a luxury Oceanside hotel and private residence club, as well as diamond and gold mining operations. The indictment alleges that Dinning also used “not-for-profit” corporations to obtain donations purportedly for charitable, environmental, agricultural, medical, and community projects for the tribal people of South Africa, as well as developing wildlife habitats for native African species.
Regardless of whether his investors made investments for profit or donations for charitable causes to Dinning’s various corporations, upon receipt of these funds from his investors, Dinning is alleged to have immediately used their money for personal and family gain, for payment of his and his family’s expenses, for payment of alimony and child support to his ex-wife, for payment of private school tuition for his children, and to make the down payment and subsequent mortgage payments on his new $975,000 home in Suffolk. As a result, Dinning allegedly obtained more than $2.9 million from his investors, of which he retained more than $2 million for his and his family’s benefit.
This case was investigated by the Norfolk Division of the FBI. Assistant United States Attorney Steve Haynie is prosecuting the case on behalf of the United States.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.
Four of Six Arrested on New Indictment in Sutter County Benefits Fraud Case
Arrests were made on new charges in a continuing investigation into a
fraudulent unemployment and disability benefits scheme based out of Sutter
County, United States Attorney Benjamin B. Wagner announced.
“Whether it’s against the employer-funded unemployment insurance program or the employee-funded disability insurance program, fraud is costly to all of us,” said EDD Director Pam Harris. “Our department and its dedicated investigators are committed to detecting and deterring fraud and ensuring justice is served in this case and any other where individuals are cheating a system meant to benefit hard-working Californians and businesses.”
In a 24-count indictment that was unsealed today, a federal grand jury charged Ryan Herbert Smith, 46, of Turlock; Chindo Gharu, 49, of Yuba City; Seema Rajput, 45, of Modesto; Rajinder Kaur Dhillon, 70, of Sacramento; Rajinder Kaur Dhillon 47, of Yuba City; and Balwinder Singh Khangura, 64, of Yuba City and Sacramento, with participating in a scheme to defraud the state of California of unemployment and disability benefits. Smith, Gharu, Rajinder Kaur Dhillon, and Khangura were arrested. The remaining two defendants are expected to self-surrender.
According to the previous indictment, Mohammad Nawaz Khan, 56; Mohammad Adnan Khan, 31; Iqila Begum Khan, 31, all of Live Oak; and Mohammad Shahbaz Khan 56, of Yuba City, controlled a series of companies that were reported to the Employment Development Department as farm labor contractors. The Khans sold fake paystubs to other people in the community and used the companies they controlled to report false wages for the individuals who purchased those paystubs. The Khans at times instructed the purchasers how the fake paystubs could be used to fraudulently claim unemployment and disability benefits. Over the course of the conspiracy, the defendants reported wages for over 400 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits. The loss in this case is over $5 million.
According to the new indictment, Smith, Charu, Rajput, Dhillon, Dhillon, and Khangura purchased paystubs that falsely showed they had been paid wages by companies controlled by the Khans. The defendants would then use that paystub to file for unemployment benefits, disability benefits, or both.
The investigation in this case is ongoing to determine the full extent of the fraud.
This case is the product of a joint investigation by the Federal Bureau of Investigation, the Department of Labor-Office of Inspector General, and the Employment Development Department-Investigations Division. Assistant United States Attorney Jared Dolan is prosecuting the case.
The maximum statutory penalty for mail fraud is 20 years in prison and a $250,000 for each count. The actual sentence, if convicted, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
The charges are only allegations and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
“Whether it’s against the employer-funded unemployment insurance program or the employee-funded disability insurance program, fraud is costly to all of us,” said EDD Director Pam Harris. “Our department and its dedicated investigators are committed to detecting and deterring fraud and ensuring justice is served in this case and any other where individuals are cheating a system meant to benefit hard-working Californians and businesses.”
In a 24-count indictment that was unsealed today, a federal grand jury charged Ryan Herbert Smith, 46, of Turlock; Chindo Gharu, 49, of Yuba City; Seema Rajput, 45, of Modesto; Rajinder Kaur Dhillon, 70, of Sacramento; Rajinder Kaur Dhillon 47, of Yuba City; and Balwinder Singh Khangura, 64, of Yuba City and Sacramento, with participating in a scheme to defraud the state of California of unemployment and disability benefits. Smith, Gharu, Rajinder Kaur Dhillon, and Khangura were arrested. The remaining two defendants are expected to self-surrender.
According to the previous indictment, Mohammad Nawaz Khan, 56; Mohammad Adnan Khan, 31; Iqila Begum Khan, 31, all of Live Oak; and Mohammad Shahbaz Khan 56, of Yuba City, controlled a series of companies that were reported to the Employment Development Department as farm labor contractors. The Khans sold fake paystubs to other people in the community and used the companies they controlled to report false wages for the individuals who purchased those paystubs. The Khans at times instructed the purchasers how the fake paystubs could be used to fraudulently claim unemployment and disability benefits. Over the course of the conspiracy, the defendants reported wages for over 400 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits. The loss in this case is over $5 million.
According to the new indictment, Smith, Charu, Rajput, Dhillon, Dhillon, and Khangura purchased paystubs that falsely showed they had been paid wages by companies controlled by the Khans. The defendants would then use that paystub to file for unemployment benefits, disability benefits, or both.
The investigation in this case is ongoing to determine the full extent of the fraud.
This case is the product of a joint investigation by the Federal Bureau of Investigation, the Department of Labor-Office of Inspector General, and the Employment Development Department-Investigations Division. Assistant United States Attorney Jared Dolan is prosecuting the case.
The maximum statutory penalty for mail fraud is 20 years in prison and a $250,000 for each count. The actual sentence, if convicted, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
The charges are only allegations and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
AEP Power Surge Scammers Sentenced to Federal Prison
U.S. Attorney Booth Goodwin announced that three individuals were sentenced to
federal prison in connection with a scheme to obtain money by
submitting fraudulent claims for power surge damage to American Electric Power
Service Corporation Inc. (“AEP”). Lead defendant and former AEP property damage
claims adjuster Deborah Farmer, 47, was sentenced to three years in prison.
Farmer previously pleaded guilty in April to conspiracy to commit mail and wire
fraud. Farmer admitted she arranged the scheme and conspired with other
individuals to unlawfully obtain money from the power company by submitting the
fraudulent claims. Co-defendant Julia Washington, 45, of Charleston, was
sentenced to two years in prison. Washington previously pleaded guilty in April
to conspiracy to commit mail and wire fraud. A third defendant, Freda Bradshaw,
47, of Pliny, Putnam County, West Virginia, was sentenced to one year in prison
(six months of which will be served on home confinement) and three years of
supervised release. Bradshaw previously pleaded guilty in April to conspiracy to
commit mail and wire fraud.
Four other co-defendants involved in the conspiracy were also sentenced for their roles in the conspiracy: Jonathan Shaffer, 32, of Charleston, was sentenced to eight months of home confinement with electronic monitoring. Tiffany Shaffer, 24, of Poca, West Virginia, was sentenced to four months of home confinement with electronic monitoring. Bryan P. Javins, 33, of Nitro, West Virginia, was sentenced to four months of home confinement with electronic monitoring. Jeanette Boggs, 58, also of Nitro, was sentenced to four months of home confinement with electronic monitoring. These four defendants also received five years of probation once their sentences have been discharged.
A two-year investigation revealed that false claims were filed with AEP related to phony power surge damage to homes. These claims were submitted by Deb Farmer. Claims checks, ranging from $2,000 to as much as $25,000 per fraudulent claim, were mailed to the defendants at various times between March 2009 and March 2010. Farmer and Washington recruited other people into the scheme in exchange for a “cut” of the claims checks. A total of 57 fraudulent claims were filed resulting in a loss of approximately $598,485. The final restitution figure was slightly lowered due to account for some offsets that were uncovered in the course of the investigation and one scam participant settling with AEP in the civil suit filed in Putnam County.
At sentencing, the court also ordered Farmer and Washington to pay $558,412.36 in restitution, jointly and severally with each other. Defendant Freda Bradshaw was ordered to pay $115,639.07 in restitution. Defendant Jonathan Shaffer was ordered to pay $44,929 in restitution. Defendant Bryan Javins was ordered to pay $20,945 in restitution and defendant Janette Boggs was ordered to pay $25,724.57 in restitution, with a $5,000 down payment due in 20 days. All defendants were placed on payment plans.
Judge Copenhaver stated during the sentencing of defendant Deborah Farmer that he was shocked at the “ease in which more than 30 people were recruited into this fraudulent scheme.” The court continued that Farmer spent a considerable amount of time “assailing the treasury of AEP” and “acting with abandon until the scheme ended in March 2010.”
The Federal Bureau of Investigation (FBI), the United States Postal Inspection Service, and the West Virginia State Police conducted the investigation. Assistant United States Attorney Erik S. Goes handled the prosecution.
Four other co-defendants involved in the conspiracy were also sentenced for their roles in the conspiracy: Jonathan Shaffer, 32, of Charleston, was sentenced to eight months of home confinement with electronic monitoring. Tiffany Shaffer, 24, of Poca, West Virginia, was sentenced to four months of home confinement with electronic monitoring. Bryan P. Javins, 33, of Nitro, West Virginia, was sentenced to four months of home confinement with electronic monitoring. Jeanette Boggs, 58, also of Nitro, was sentenced to four months of home confinement with electronic monitoring. These four defendants also received five years of probation once their sentences have been discharged.
A two-year investigation revealed that false claims were filed with AEP related to phony power surge damage to homes. These claims were submitted by Deb Farmer. Claims checks, ranging from $2,000 to as much as $25,000 per fraudulent claim, were mailed to the defendants at various times between March 2009 and March 2010. Farmer and Washington recruited other people into the scheme in exchange for a “cut” of the claims checks. A total of 57 fraudulent claims were filed resulting in a loss of approximately $598,485. The final restitution figure was slightly lowered due to account for some offsets that were uncovered in the course of the investigation and one scam participant settling with AEP in the civil suit filed in Putnam County.
At sentencing, the court also ordered Farmer and Washington to pay $558,412.36 in restitution, jointly and severally with each other. Defendant Freda Bradshaw was ordered to pay $115,639.07 in restitution. Defendant Jonathan Shaffer was ordered to pay $44,929 in restitution. Defendant Bryan Javins was ordered to pay $20,945 in restitution and defendant Janette Boggs was ordered to pay $25,724.57 in restitution, with a $5,000 down payment due in 20 days. All defendants were placed on payment plans.
Judge Copenhaver stated during the sentencing of defendant Deborah Farmer that he was shocked at the “ease in which more than 30 people were recruited into this fraudulent scheme.” The court continued that Farmer spent a considerable amount of time “assailing the treasury of AEP” and “acting with abandon until the scheme ended in March 2010.”
The Federal Bureau of Investigation (FBI), the United States Postal Inspection Service, and the West Virginia State Police conducted the investigation. Assistant United States Attorney Erik S. Goes handled the prosecution.
Two Investment Advisers Convicted in California of High-Yield Investment Fraud
William J. Ferry, a former stock broker and investment adviser, and Dennis J.
Clinton, a former real estate investment manager, were found guilty by a federal
jury in Santa Ana, California for their roles in a conspiracy to defraud a
wealthy investor of $1 billion in a high-yield investment fraud scheme,
announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s
Criminal Division. The investor was, in reality, part of an undercover FBI team
that posed as wealthy investors and investment managers in an effort to stop
fraudsters before they actually harmed victims.
“Mr. Ferry and Mr. Clinton tried to dupe undercover agents into believing their high-yield investment program would earn them extremely high rates of return,” said Assistant Attorney General Breuer. “In fact, Ferry and Clinton were conspiring to steal their money, along with the money of trusting investors. Undercover operations are an integral part of our efforts to stop financial fraudsters before they wipe out the life savings of innocent victims. Based on today’s verdict, the defendants will now pay a heavy price for their conduct.”
Ferry, 70, of Newport Beach, California, and Clinton, 64, of San Diego, were each found guilty in U.S. District Court for the Central District of California of one count of conspiracy, two counts of mail fraud, and six counts of wire fraud. They face a maximum penalty of 20 years in prison on each fraud count. They will be sentenced on February 1, 2013.
Paul R. Martin, a former senior vice president and managing director of Bankers Trust, was found guilty in U.S. District Court for the Central District of California for his role in the scheme in a separate trial on August 3, 2012. Martin, 63, of New Jersey, was convicted of one count of conspiracy, two counts of mail fraud, and six counts of wire fraud. At sentencing, scheduled for February 1, 2013, Martin faces a maximum penalty of 20 years in prison on each fraud count.
On August 21, 2008, Ferry, Clinton, and Martin were indicted along with Oregon resident John Brent Leiske, Canadian citizen and resident Alex Chelak, Iowa resident Richard Arthur Pundt, California resident Brad Keith Lee, and Florida resident Ronald J. Nolte.
Evidence at trial established that, from February to December 2006, Ferry, Clinton, Martin, and others conspired to promote a high-yield investment fraud scheme promising an extremely high return at little or no risk to principal. The defendants claimed that their high-yield investment program (HYIP) was a “Fed trade program” regulated by the “Fed” (Federal Reserve Bank), that they had to follow strict Fed guidelines, and that a Fed trade administrator administered their program, with compliance duties handled by a Fed compliance officer.
Investors also were told that once they had passed compliance, they would become registered with the Fed in Washington, D.C. The defendants falsely represented to FBI undercover agents that they would arrange for them to meet a Federal Reserve official and/or the chairman of the board of a major U.S. bank to confirm the existence of the defendants’ HYIP. The defendants falsely claimed that these Fed investment programs existed primarily to generate funds for project funding and humanitarian purposes, such as Hurricane Katrina relief. They further falsely claimed that the promised profits from investing in a Fed program had to be divided, in equal amounts, with one portion going for some humanitarian purpose, another portion for some kind of project financing, and the remainder to the investor. The defendants represented to the undercover agents that the agents’ offshore bank account would be managed by a Swiss banker who was already managing billions of dollars for the defendants. In the scheme, Ferry acted as an underwriter and member of the compliance team; Martin acted as a banking expert; Clinton acted as a troubleshooter during the compliance phase and transfer of funds to the Swiss banker; Lee acted as the contact with the Swiss banker; and Leiske acted as the trader. Chelak is charged with having acted as a compliance officer.
On April 13, 2009, Lee pleaded guilty to wire fraud and conspiracy to commit mail and wire fraud. On January 11, 2010, he was sentenced to 24 months in prison.
Leiske’s case was transferred to the District of Oregon, where he pleaded guilty to all counts on January 24, 2012. He is scheduled to be sentenced on September 19, 2012.
Nolte was acquitted today of all charges by a jury in the Central District of California. In August 2010, charges against Pundt were dismissed by the government.
Chelak remains a fugitive.
This continuing investigation is being conducted by the FBI. This case is being prosecuted by Senior Trial Attorney David Bybee and Trial Attorney Fred Medick of the Justice Department Criminal Division’s Fraud Section.
“Mr. Ferry and Mr. Clinton tried to dupe undercover agents into believing their high-yield investment program would earn them extremely high rates of return,” said Assistant Attorney General Breuer. “In fact, Ferry and Clinton were conspiring to steal their money, along with the money of trusting investors. Undercover operations are an integral part of our efforts to stop financial fraudsters before they wipe out the life savings of innocent victims. Based on today’s verdict, the defendants will now pay a heavy price for their conduct.”
Ferry, 70, of Newport Beach, California, and Clinton, 64, of San Diego, were each found guilty in U.S. District Court for the Central District of California of one count of conspiracy, two counts of mail fraud, and six counts of wire fraud. They face a maximum penalty of 20 years in prison on each fraud count. They will be sentenced on February 1, 2013.
Paul R. Martin, a former senior vice president and managing director of Bankers Trust, was found guilty in U.S. District Court for the Central District of California for his role in the scheme in a separate trial on August 3, 2012. Martin, 63, of New Jersey, was convicted of one count of conspiracy, two counts of mail fraud, and six counts of wire fraud. At sentencing, scheduled for February 1, 2013, Martin faces a maximum penalty of 20 years in prison on each fraud count.
On August 21, 2008, Ferry, Clinton, and Martin were indicted along with Oregon resident John Brent Leiske, Canadian citizen and resident Alex Chelak, Iowa resident Richard Arthur Pundt, California resident Brad Keith Lee, and Florida resident Ronald J. Nolte.
Evidence at trial established that, from February to December 2006, Ferry, Clinton, Martin, and others conspired to promote a high-yield investment fraud scheme promising an extremely high return at little or no risk to principal. The defendants claimed that their high-yield investment program (HYIP) was a “Fed trade program” regulated by the “Fed” (Federal Reserve Bank), that they had to follow strict Fed guidelines, and that a Fed trade administrator administered their program, with compliance duties handled by a Fed compliance officer.
Investors also were told that once they had passed compliance, they would become registered with the Fed in Washington, D.C. The defendants falsely represented to FBI undercover agents that they would arrange for them to meet a Federal Reserve official and/or the chairman of the board of a major U.S. bank to confirm the existence of the defendants’ HYIP. The defendants falsely claimed that these Fed investment programs existed primarily to generate funds for project funding and humanitarian purposes, such as Hurricane Katrina relief. They further falsely claimed that the promised profits from investing in a Fed program had to be divided, in equal amounts, with one portion going for some humanitarian purpose, another portion for some kind of project financing, and the remainder to the investor. The defendants represented to the undercover agents that the agents’ offshore bank account would be managed by a Swiss banker who was already managing billions of dollars for the defendants. In the scheme, Ferry acted as an underwriter and member of the compliance team; Martin acted as a banking expert; Clinton acted as a troubleshooter during the compliance phase and transfer of funds to the Swiss banker; Lee acted as the contact with the Swiss banker; and Leiske acted as the trader. Chelak is charged with having acted as a compliance officer.
On April 13, 2009, Lee pleaded guilty to wire fraud and conspiracy to commit mail and wire fraud. On January 11, 2010, he was sentenced to 24 months in prison.
Leiske’s case was transferred to the District of Oregon, where he pleaded guilty to all counts on January 24, 2012. He is scheduled to be sentenced on September 19, 2012.
Nolte was acquitted today of all charges by a jury in the Central District of California. In August 2010, charges against Pundt were dismissed by the government.
Chelak remains a fugitive.
This continuing investigation is being conducted by the FBI. This case is being prosecuted by Senior Trial Attorney David Bybee and Trial Attorney Fred Medick of the Justice Department Criminal Division’s Fraud Section.
Detroit-Area Resident Pleads Guilty in $13.8 Million Health Care Fraud Scheme
A Detroit-area resident pleaded guilty today in federal court in the Eastern
District of Michigan for his role in managing a $13.8 million psychotherapy
fraud scheme, announced the Department of Justice, the Department of Health and
Human Services (HHS), and the FBI.
Jawad Ahmad, 42, pleaded guilty before U.S. District Judge Gerald E. Rosen in Detroit to one count of conspiracy to commit health care fraud. At his sentencing, scheduled for November 28, 2012, Ahmad faces a maximum potential penalty of 10 years in prison and a $250,000 fine.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge of the FBI’s Detroit Field Office Robert D. Foley III; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
According to court documents, beginning in July 2008, two of Ahmad’s co-conspirators, Tausif Rahman and Muhammad Ahmad, acquired control over a home health care company known as Physicians Choice Home Health Care LLC (Physicians Choice). From in or around January 2009 and continuing through in or around March 2010, Jawad Ahmad managed the operations of Physicians Choice.
Court documents indicate that Jawad Ahmad managed numerous aspects of the fraud at Physicians Choice, including delivering the payment of kickbacks to beneficiary recruiters who obtained Medicare beneficiaries’ information needed to bill Medicare for home health services, including physical therapy and skilled nursing, that were never rendered. Jawad Ahmad also provided information to employees of Physicians Choice to check the billing eligibility of the Medicare beneficiaries before Physicians Choice began billing them.
In exchange for kickbacks, Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate they received home health services they had never received. Jawad Ahmad delivered the pre-signed beneficiary paperwork to various medical professionals, including nurses, physical therapists, and physical therapy assistants to create and/or sign fictitious patient files to document purported home health services that were never rendered. From in or around January 2009 through in or around March 2010, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice.
According to court documents, from in or around May 2010 through in or around September 2011, Jawad Ahmad managed Phoenix Visiting Physicians PLLC, a company incorporated by co-conspirator Dr. Dwight Smith. Dr. Smith signed home health care referrals for beneficiaries he had not seen or treated. Phoenix employed individuals who held themselves out to be “doctors,” but who were not, in fact, licensed in the state of Michigan to perform any medical services. The unlicensed “doctors” met and purported to examine non-homebound Medicare beneficiaries for home health care services. Jawad Ahmad drove one unlicensed “doctor” to meet and purportedly examine beneficiaries who were not, in fact, homebound.
Between 2008 and 2009, Ahmad’s co-conspirators acquired beneficial ownership and control over three additional home health care companies: First Care Home Health Care LLC, Quantum Home Care Inc., and Moonlite Home Care Inc. Each of these home health companies billed Medicare and operated in a manner the same as or similar to Physicians Choice. Each of these companies received fraudulent home health referrals from Dr. Smith through Phoenix Visiting Physicians. From in or around May 2010 through in or around September 2011, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice, First Care, Quantum, and Moonlite based on Dr. Smith’s fraudulent referrals. The four home health companies at the center of the indictment received approximately $13.8 million from Medicare in the course of the conspiracy.
Eight other defendants have pleaded guilty in this case, including Tausif Rahman and Muhammad Ahmad, who each pleaded guilty to one count of conspiracy to commit health care fraud and one count of money laundering, as well as Dr. Dwight Smith who pleaded guilty to one count of conspiracy to commit health care fraud.
The case is being prosecuted by Trial Attorney Catherine K. Dick 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 its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
Jawad Ahmad, 42, pleaded guilty before U.S. District Judge Gerald E. Rosen in Detroit to one count of conspiracy to commit health care fraud. At his sentencing, scheduled for November 28, 2012, Ahmad faces a maximum potential penalty of 10 years in prison and a $250,000 fine.
The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge of the FBI’s Detroit Field Office Robert D. Foley III; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.
According to court documents, beginning in July 2008, two of Ahmad’s co-conspirators, Tausif Rahman and Muhammad Ahmad, acquired control over a home health care company known as Physicians Choice Home Health Care LLC (Physicians Choice). From in or around January 2009 and continuing through in or around March 2010, Jawad Ahmad managed the operations of Physicians Choice.
Court documents indicate that Jawad Ahmad managed numerous aspects of the fraud at Physicians Choice, including delivering the payment of kickbacks to beneficiary recruiters who obtained Medicare beneficiaries’ information needed to bill Medicare for home health services, including physical therapy and skilled nursing, that were never rendered. Jawad Ahmad also provided information to employees of Physicians Choice to check the billing eligibility of the Medicare beneficiaries before Physicians Choice began billing them.
In exchange for kickbacks, Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate they received home health services they had never received. Jawad Ahmad delivered the pre-signed beneficiary paperwork to various medical professionals, including nurses, physical therapists, and physical therapy assistants to create and/or sign fictitious patient files to document purported home health services that were never rendered. From in or around January 2009 through in or around March 2010, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice.
According to court documents, from in or around May 2010 through in or around September 2011, Jawad Ahmad managed Phoenix Visiting Physicians PLLC, a company incorporated by co-conspirator Dr. Dwight Smith. Dr. Smith signed home health care referrals for beneficiaries he had not seen or treated. Phoenix employed individuals who held themselves out to be “doctors,” but who were not, in fact, licensed in the state of Michigan to perform any medical services. The unlicensed “doctors” met and purported to examine non-homebound Medicare beneficiaries for home health care services. Jawad Ahmad drove one unlicensed “doctor” to meet and purportedly examine beneficiaries who were not, in fact, homebound.
Between 2008 and 2009, Ahmad’s co-conspirators acquired beneficial ownership and control over three additional home health care companies: First Care Home Health Care LLC, Quantum Home Care Inc., and Moonlite Home Care Inc. Each of these home health companies billed Medicare and operated in a manner the same as or similar to Physicians Choice. Each of these companies received fraudulent home health referrals from Dr. Smith through Phoenix Visiting Physicians. From in or around May 2010 through in or around September 2011, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice, First Care, Quantum, and Moonlite based on Dr. Smith’s fraudulent referrals. The four home health companies at the center of the indictment received approximately $13.8 million from Medicare in the course of the conspiracy.
Eight other defendants have pleaded guilty in this case, including Tausif Rahman and Muhammad Ahmad, who each pleaded guilty to one count of conspiracy to commit health care fraud and one count of money laundering, as well as Dr. Dwight Smith who pleaded guilty to one count of conspiracy to commit health care fraud.
The case is being prosecuted by Trial Attorney Catherine K. Dick 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 its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
Japanese Automobile Parts Manufacturer Agrees to Plead Guilty to Price Fixing on Parts Installed in U.S. Cars
Nagoka, Japan-based Nippon Seiki Co. Ltd. has agreed to plead guilty and to pay
a $1 million criminal fine for its role in a conspiracy to fix prices of
instrument panel clusters, commonly known as meters, installed in cars sold in
the United States and elsewhere, the Department of Justice announced.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Nippon Seiki engaged in conspiracies to rig bids for and to fix, stabilize, and maintain the prices of instrument panel clusters sold to an automaker in the United States and elsewhere. According to the court document, Nippon Seiki’s involvement in the conspiracy lasted from at least as early as April 2008 until at least February 2010.
Nippon Seiki manufactures and sells a variety of automotive parts, including instrument panel clusters. Instrument panel clusters are the mounted array of instruments and gauges housed in front of the driver of an automobile. The department said that Nippon Seiki and its co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to rig bids for and to fix, stabilize, and maintain the prices of instrument panel clusters, sold to an automaker in the United States and elsewhere, on a model-by-model basis.
As part of the plea agreement, which will be subject to court approval, Nippon Seiki has agreed to cooperate with the department’s investigation.
“For nearly two years, Nippon Seiki conspired to sell instrument control panels at collusive and non-competitive prices, affecting the prices of many automobiles sold in the United States,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The division will continue to hold companies accountable for these types of anti-competitive practices that harm American consumers.”
Including Nippon Seiki, eight companies and 11 executives have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., and Autoliv Inc. pleaded guilty and were sentenced to pay a total of more than $785 million in criminal fines. In July 2012, TRW Deutschland Holding GmbH agreed to plead guilty and is awaiting sentencing. Additionally, seven of the individuals—Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa, and Hisamitsu Takada—have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Makoto Hattori and Norihiro Imai have pleaded guilty and await sentencing. Kazuhiko Kashimoto and Toshio Sudo have also agreed to plead guilty.
Nippon Seiki is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company 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 fine.
Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anti-competitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI Headquarters’ International Corruption Unit. Anyone with information concerning this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Detroit Field Office at 313-965-2323.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Nippon Seiki engaged in conspiracies to rig bids for and to fix, stabilize, and maintain the prices of instrument panel clusters sold to an automaker in the United States and elsewhere. According to the court document, Nippon Seiki’s involvement in the conspiracy lasted from at least as early as April 2008 until at least February 2010.
Nippon Seiki manufactures and sells a variety of automotive parts, including instrument panel clusters. Instrument panel clusters are the mounted array of instruments and gauges housed in front of the driver of an automobile. The department said that Nippon Seiki and its co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to rig bids for and to fix, stabilize, and maintain the prices of instrument panel clusters, sold to an automaker in the United States and elsewhere, on a model-by-model basis.
As part of the plea agreement, which will be subject to court approval, Nippon Seiki has agreed to cooperate with the department’s investigation.
“For nearly two years, Nippon Seiki conspired to sell instrument control panels at collusive and non-competitive prices, affecting the prices of many automobiles sold in the United States,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The division will continue to hold companies accountable for these types of anti-competitive practices that harm American consumers.”
Including Nippon Seiki, eight companies and 11 executives have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., and Autoliv Inc. pleaded guilty and were sentenced to pay a total of more than $785 million in criminal fines. In July 2012, TRW Deutschland Holding GmbH agreed to plead guilty and is awaiting sentencing. Additionally, seven of the individuals—Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa, and Hisamitsu Takada—have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Makoto Hattori and Norihiro Imai have pleaded guilty and await sentencing. Kazuhiko Kashimoto and Toshio Sudo have also agreed to plead guilty.
Nippon Seiki is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company 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 fine.
Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anti-competitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI Headquarters’ International Corruption Unit. Anyone with information concerning this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Detroit Field Office at 313-965-2323.
Forensic Accountant Found Guilty of Bankruptcy Fraud
Attorney Robert E. O’Neill announces that a federal jury found John K.
Freeman (66, Mount Dora) guilty of concealing property belonging to the estate
of a bankruptcy debtor. Freeman faces a maximum penalty of five years in federal
prison. His sentencing hearing is scheduled for November 30, 2012.
A superseding indictment was returned against Freeman on September 7, 2011.
According to testimony presented at trial, Freeman, who is a certified public accountant and forensic accountant, did not disclose that he was in possession of over $700,000 in checks the day before he filed for bankruptcy in the Middle District of Florida. Bank and real estate records revealed that several checks were made out to his 85 year-old mother, while Freeman had the legal authority to negotiate the checks as his mother’s “attorney in fact.”
Within a week of filing bankruptcy, Freeman opened a joint bank account under his mother’s Social Security number and deposited the checks into the account. Representatives from the Office of the United States Trustee testified that Freeman had the obligation to disclose the existence of the checks and the account during the creditors meeting and amend his bankruptcy petition, but failed to do so. Bank records showed that between August 2005 and the time that the account was closed, in July 2006, Freeman used funds from the account to pay a Lake County, Florida country club, purchase a luxury vehicle, pay various attorneys, pay-off an existing mortgage for a commercial building that he owned in Indiana, and withdraw approximately $150,000 in cash. He transferred the balance of the account (approximately $380,000) to another account on the day that he filed a motion to dismiss his bankruptcy petition.
At trial, Freeman testified that he notified his bankruptcy attorney of all of the facts surrounding a real estate transaction and assignment of judgment that caused the checks to be issued; that he was not present at a real estate closing when the checks were issued; that his elderly mother had a valid judgment lien against him and that she opened the joint bank account, made the initial deposit, and directed him to write the various checks in 2005 and 2006.
This case was investigated by the Federal Bureau of Investigation and assistance was provided by the Office of the United States Trustee. It is being prosecuted by Assistant United States Attorney Daniel W. Eckhart.
A superseding indictment was returned against Freeman on September 7, 2011.
According to testimony presented at trial, Freeman, who is a certified public accountant and forensic accountant, did not disclose that he was in possession of over $700,000 in checks the day before he filed for bankruptcy in the Middle District of Florida. Bank and real estate records revealed that several checks were made out to his 85 year-old mother, while Freeman had the legal authority to negotiate the checks as his mother’s “attorney in fact.”
Within a week of filing bankruptcy, Freeman opened a joint bank account under his mother’s Social Security number and deposited the checks into the account. Representatives from the Office of the United States Trustee testified that Freeman had the obligation to disclose the existence of the checks and the account during the creditors meeting and amend his bankruptcy petition, but failed to do so. Bank records showed that between August 2005 and the time that the account was closed, in July 2006, Freeman used funds from the account to pay a Lake County, Florida country club, purchase a luxury vehicle, pay various attorneys, pay-off an existing mortgage for a commercial building that he owned in Indiana, and withdraw approximately $150,000 in cash. He transferred the balance of the account (approximately $380,000) to another account on the day that he filed a motion to dismiss his bankruptcy petition.
At trial, Freeman testified that he notified his bankruptcy attorney of all of the facts surrounding a real estate transaction and assignment of judgment that caused the checks to be issued; that he was not present at a real estate closing when the checks were issued; that his elderly mother had a valid judgment lien against him and that she opened the joint bank account, made the initial deposit, and directed him to write the various checks in 2005 and 2006.
This case was investigated by the Federal Bureau of Investigation and assistance was provided by the Office of the United States Trustee. It is being prosecuted by Assistant United States Attorney Daniel W. Eckhart.
Former Owner of Daytona Beach Clinic Pleads Guilty to Fraud, Conspiracy, and Money Laundering
United States Attorney Robert E. O’Neill announces that Joseph Wagner (62,
Daytona Beach pleaded guilty to health care fraud, conspiracy to
illegally distribute prescription drugs, and money laundering. Wagner faces a
maximum penalty of 30 years in federal prison. He was indicted on June 13,
2012.
According to the plea agreement, Wagner was a licensed chiropractor and owner of Wagner Chiropractic and Acupuncture Clinic (WCAC) in Volusia County, Florida. He operated WCAC as a facility that purported to provide chiropractic and other medical services to customers. On occasion, Wagner did provide chiropractic services to customers of WCAC. However, he also submitted inflated bills to public and private health care beneficiary programs, including Medicare. Wagner charged those programs at the higher rates for services rendered by medical doctors, instead of the rates appropriate for chiropractors. In addition, Wagner systematically submitted claims for reimbursement for services not rendered.
As part of the fraud scheme, Wagner submitted fraudulent billings in the names of medical doctors. By doing so, the health care beneficiary programs would make payments directly to those medical doctors. The doctors accepted those payments and would often split the fraudulently obtained insurance payments with Wagner. In the case of at least one medical doctor participating in the fraudulent scheme, Wagner received payments from the health care beneficiary programs by check and then deposited those checks into the medical doctor’s bank account.
Wagner also provided customers of WCAC with prescriptions for prescription drugs, often in return for cash payments. Since he could not prescribe controlled substances, Wagner provided prescriptions for controlled substances to customers of WCAC using the names of medical doctors who were aware that Wagner was using their names illegally. Many of the patients who obtained prescriptions for controlled substances through Wagner used their Medicaid coverage at pharmacies to pay for those controlled substances.
This case was investigated by the Federal Bureau of Investigation, Food and Drug Administration, Department of Health and Human Services Office of Inspector General, Florida Department of Financial Services, Florida Department of Health, and the Florida Department of Law Enforcement. It is being prosecuted by Assistant United States Attorney Daniel C. Irick.
According to the plea agreement, Wagner was a licensed chiropractor and owner of Wagner Chiropractic and Acupuncture Clinic (WCAC) in Volusia County, Florida. He operated WCAC as a facility that purported to provide chiropractic and other medical services to customers. On occasion, Wagner did provide chiropractic services to customers of WCAC. However, he also submitted inflated bills to public and private health care beneficiary programs, including Medicare. Wagner charged those programs at the higher rates for services rendered by medical doctors, instead of the rates appropriate for chiropractors. In addition, Wagner systematically submitted claims for reimbursement for services not rendered.
As part of the fraud scheme, Wagner submitted fraudulent billings in the names of medical doctors. By doing so, the health care beneficiary programs would make payments directly to those medical doctors. The doctors accepted those payments and would often split the fraudulently obtained insurance payments with Wagner. In the case of at least one medical doctor participating in the fraudulent scheme, Wagner received payments from the health care beneficiary programs by check and then deposited those checks into the medical doctor’s bank account.
Wagner also provided customers of WCAC with prescriptions for prescription drugs, often in return for cash payments. Since he could not prescribe controlled substances, Wagner provided prescriptions for controlled substances to customers of WCAC using the names of medical doctors who were aware that Wagner was using their names illegally. Many of the patients who obtained prescriptions for controlled substances through Wagner used their Medicaid coverage at pharmacies to pay for those controlled substances.
This case was investigated by the Federal Bureau of Investigation, Food and Drug Administration, Department of Health and Human Services Office of Inspector General, Florida Department of Financial Services, Florida Department of Health, and the Florida Department of Law Enforcement. It is being prosecuted by Assistant United States Attorney Daniel C. Irick.
Sunday, August 26, 2012
Highlights From Conference Call With Senator John Barrasso (R-WY) on President Obama’s Green Energy Cronyism
U.S. Senator John Barrasso (R-WY):
“I just want to tell you this whole thing smells. It’s the kind of thing that is so discouraging to the public and the taxpayers and I’m here today as kind of the only Republican in the Senate who is on both the Energy Committee as well as the Environment and Public Works Committee. On Energy I’m the ranking member of the Public Lands Subcommittee. What I want to discuss here though is the latest developments in the Obama administrations Chicago style crony-capitalism. Start with one of the revelations from today, it turns out that the supposedly independent investigator of the energy loan program that produced the Solyndra debacle is actually a donor to the president’s campaign, a major donor, Herb Allison a Wall Street executive. He testified before Congress that there had been no wrongdoing in the program that squandered billions of taxpayer dollars. And then, turns out, he’s donated $52,500 to the Obama campaign. That donation to me raises a major red flag.
“And I think to any outside observer, this operation by the Obama Energy Department, their loan program was a disaster. Half a billion dollars was lost on Solyndra alone, even though people in President Obama’s inner circle saw the warning signs and refused to act on it. And then when you look at the so called independent investigator, I mean to me it makes his so called independent investigation illegitimate. It was already questionable as an investigation but when you take a look at the fact that he’s donated over $52,000 to the president’s campaign, it looks like now he also made a major in-kind contribution by turning a blind eye to the administration’s reckless use of taxpayer dollars…
“Also out today, front page story New York Times, news that a company with long-standing ties to the Obama administration and, actually, to Barack Obama from his days in Illinois. Excelon received favorable treatment, special access. You know, this report is nothing new from an administration that has given preferential treatment to companies like Fisker, Solyndra, First Wind, many more that have special relationships with the White House. The president, he promised to change Washington, promised to have a more transparent administration. I think he actually said it was going to be the most transparent administration in history. But what we’re seeing is scandal after scandal and it’s clear that what the president may have said running up to his becoming President and even after being elected turns out to be empty rhetoric. So, you know, we should know a Chicago politician would play Chicago politics and that’s what we’re getting from Barack Obama.
“The final point, I think Tim mentioned it, was that today Mitt Romney is in New Mexico. He’s outlining his plan for North American energy independence by the year 2020. He has a plan to make energy more affordable, more secure, it creates jobs, it creates opportunity for the middle class. And I just look at that and see how it contrasts to President Obama’s record. The president’s record is one of handing out taxpayer dollars to energy companies, of his political supporters of his cronies, and trying to choose winners and losers and picking winners and losers is not an energy policy. I believe the president is clearly looking out only for himself and that at this time we need new leadership in the White House.”
Click Here To Listen To The Full Audio: http://ActNow.gop.com/uploads/8.23.2012_GOP.mp3
“I just want to tell you this whole thing smells. It’s the kind of thing that is so discouraging to the public and the taxpayers and I’m here today as kind of the only Republican in the Senate who is on both the Energy Committee as well as the Environment and Public Works Committee. On Energy I’m the ranking member of the Public Lands Subcommittee. What I want to discuss here though is the latest developments in the Obama administrations Chicago style crony-capitalism. Start with one of the revelations from today, it turns out that the supposedly independent investigator of the energy loan program that produced the Solyndra debacle is actually a donor to the president’s campaign, a major donor, Herb Allison a Wall Street executive. He testified before Congress that there had been no wrongdoing in the program that squandered billions of taxpayer dollars. And then, turns out, he’s donated $52,500 to the Obama campaign. That donation to me raises a major red flag.
“And I think to any outside observer, this operation by the Obama Energy Department, their loan program was a disaster. Half a billion dollars was lost on Solyndra alone, even though people in President Obama’s inner circle saw the warning signs and refused to act on it. And then when you look at the so called independent investigator, I mean to me it makes his so called independent investigation illegitimate. It was already questionable as an investigation but when you take a look at the fact that he’s donated over $52,000 to the president’s campaign, it looks like now he also made a major in-kind contribution by turning a blind eye to the administration’s reckless use of taxpayer dollars…
“Also out today, front page story New York Times, news that a company with long-standing ties to the Obama administration and, actually, to Barack Obama from his days in Illinois. Excelon received favorable treatment, special access. You know, this report is nothing new from an administration that has given preferential treatment to companies like Fisker, Solyndra, First Wind, many more that have special relationships with the White House. The president, he promised to change Washington, promised to have a more transparent administration. I think he actually said it was going to be the most transparent administration in history. But what we’re seeing is scandal after scandal and it’s clear that what the president may have said running up to his becoming President and even after being elected turns out to be empty rhetoric. So, you know, we should know a Chicago politician would play Chicago politics and that’s what we’re getting from Barack Obama.
“The final point, I think Tim mentioned it, was that today Mitt Romney is in New Mexico. He’s outlining his plan for North American energy independence by the year 2020. He has a plan to make energy more affordable, more secure, it creates jobs, it creates opportunity for the middle class. And I just look at that and see how it contrasts to President Obama’s record. The president’s record is one of handing out taxpayer dollars to energy companies, of his political supporters of his cronies, and trying to choose winners and losers and picking winners and losers is not an energy policy. I believe the president is clearly looking out only for himself and that at this time we need new leadership in the White House.”
Click Here To Listen To The Full Audio: http://ActNow.gop.com/uploads/8.23.2012_GOP.mp3
Friday, August 24, 2012
Two Plead Guilty in Scheme to Defraud Consumers Seeking Immigration Services
Two Missouri men pleaded guilty for their roles in a scheme to defraud
consumers seeking immigration-related services, the Department of Justice
announced.
Thomas Joseph Strawbridge, 49, and Thomas Barret Laurence, 30, pleaded guilty to conspiracy to commit mail fraud and wire fraud in connection with Immigration Forms and Publications (IFP), a Sedalia, Missouri company that sold immigration forms otherwise available at no charge from the government. According to court documents, IFP sales representatives fraudulently told consumers that the company was affiliated with the government and that fees paid to IFP covered government processing charges. Strawbridge and Laurence each face up to 20 years in prison, three years’ supervised release, and a fine of up to $250,000.
“Over a year ago, the Department of Justice announced its commitment to combatting immigration services scams, which often prey upon individuals who are in this country legally and trying to abide by the rules,” said Acting Associate Attorney General Tony West. “Today’s guilty pleas represent an important step in our continued fight to protect vulnerable individuals against fraud.”
“Those who seek to defraud immigrants should heed the message of this case: you cannot take advantage of someone’s unfamiliarity with the immigration process, engage in fraud and expect to get away with it,” said Stuart Delery, Acting Assistant Attorney General of the Justice Department’s Civil Division.
According to court documents, Strawbridge founded and owned IFP, while Laurence managed the business, which operated in 2009 and 2010. In pleading guilty, Strawbridge and Laurence admitted that IFP representatives falsely told consumers that the company employed paralegals who would help customers correctly fill out immigration forms, that IFP handled excess call volume for U.S. Citizenship and Immigration Services (USCIS), that fees paid to IFP included government processing fees, and that forms purchased through IFP would be processed more quickly than if consumers dealt directly with USCIS.
“This company preyed on legal immigrants who were doing their best to follow the law,” said David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri. “These defendants operated a busy call center where so-called agents lied to hundreds of customers about the firm’s affiliation with the government. Their victims paid more than $400,000 in total to purchase government forms that anyone can obtain for free.”
U.S. District Judge Nannette K. Laughrey presided over the change of plea hearing.
Elizabeth Lindsey Meredith, 24, was also charged in the scheme.
These cases are being prosecuted by Alan Phelps and Adrienne Fowler, Trial Attorneys for the Civil Division’s Consumer Protection Branch; and Tony Gonzales, Assistant U.S. States Attorney for the Western District of Missouri. They were investigated by the FBI, the U.S. Postal Inspection Service, the Missouri Secretary of State Corporate Division, the Missouri Secretary of State Securities Division, and the Missouri Attorney General’s Office. The Justice Department has also been working with the Federal Trade Commission on immigration services fraud cases and thanks the FTC for its assistance in this matter.
For information regarding immigration forms and information concerning the immigration process, go to the U.S. Citizenship and Immigration Services website: www.uscis.gov/avoidscams.
Thomas Joseph Strawbridge, 49, and Thomas Barret Laurence, 30, pleaded guilty to conspiracy to commit mail fraud and wire fraud in connection with Immigration Forms and Publications (IFP), a Sedalia, Missouri company that sold immigration forms otherwise available at no charge from the government. According to court documents, IFP sales representatives fraudulently told consumers that the company was affiliated with the government and that fees paid to IFP covered government processing charges. Strawbridge and Laurence each face up to 20 years in prison, three years’ supervised release, and a fine of up to $250,000.
“Over a year ago, the Department of Justice announced its commitment to combatting immigration services scams, which often prey upon individuals who are in this country legally and trying to abide by the rules,” said Acting Associate Attorney General Tony West. “Today’s guilty pleas represent an important step in our continued fight to protect vulnerable individuals against fraud.”
“Those who seek to defraud immigrants should heed the message of this case: you cannot take advantage of someone’s unfamiliarity with the immigration process, engage in fraud and expect to get away with it,” said Stuart Delery, Acting Assistant Attorney General of the Justice Department’s Civil Division.
According to court documents, Strawbridge founded and owned IFP, while Laurence managed the business, which operated in 2009 and 2010. In pleading guilty, Strawbridge and Laurence admitted that IFP representatives falsely told consumers that the company employed paralegals who would help customers correctly fill out immigration forms, that IFP handled excess call volume for U.S. Citizenship and Immigration Services (USCIS), that fees paid to IFP included government processing fees, and that forms purchased through IFP would be processed more quickly than if consumers dealt directly with USCIS.
“This company preyed on legal immigrants who were doing their best to follow the law,” said David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri. “These defendants operated a busy call center where so-called agents lied to hundreds of customers about the firm’s affiliation with the government. Their victims paid more than $400,000 in total to purchase government forms that anyone can obtain for free.”
U.S. District Judge Nannette K. Laughrey presided over the change of plea hearing.
Elizabeth Lindsey Meredith, 24, was also charged in the scheme.
These cases are being prosecuted by Alan Phelps and Adrienne Fowler, Trial Attorneys for the Civil Division’s Consumer Protection Branch; and Tony Gonzales, Assistant U.S. States Attorney for the Western District of Missouri. They were investigated by the FBI, the U.S. Postal Inspection Service, the Missouri Secretary of State Corporate Division, the Missouri Secretary of State Securities Division, and the Missouri Attorney General’s Office. The Justice Department has also been working with the Federal Trade Commission on immigration services fraud cases and thanks the FTC for its assistance in this matter.
For information regarding immigration forms and information concerning the immigration process, go to the U.S. Citizenship and Immigration Services website: www.uscis.gov/avoidscams.
Internet Businessman Pleads Guilty to Infringing Copyrights
Dennis Newsome, 36, of Beacon, New York, pleaded guilty in Norfolk federal
court to illegally copying and distributing copyrighted computer software and
computer-based training materials from 2008 through 2010.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and John Boles, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement after Newsome entered guilty pleas to counts one through four of the pending indictment before United States Magistrate Judge Tommy E. Miller. Newsome faces a maximum penalty of 20 years in prison when he is sentenced on December 3, 2012, by United States District Judge Raymond A. Jackson.
According to court documents, Dennis Newsome owned and operated an online business, known as PCTech101, which sold computer software, education, and training materials to customers via the Internet and by means of websites (at www.pctech101.com and www.pctech101.net ). In spite of having previously been sued in federal court for civil copyright infringement and having received repeated complaints and notices from webhosting companies and copyright holders, from 2008 through 2010 Newsome illegally sold copies of valuable, copyrighted works from his websites at a fraction of the true cost of the genuine copyrighted works. For example, Newsome sold illegal copies of several copyrighted computer security training products made and sold by the SANS Institute for $24.99, when the SANS Institute sold such products at prices ranging from $750 to $4,295.
Other copyright holders whose products Newsome copied and distributed without permission included Shon Harris, CBT Nuggets, John Wiley & Sons Inc., Virtual Training Company Inc., Mark Minasi, and Arnold Jagt and the Robinson Curriculum. From 2008 through 2010, Newsome sold over 750 illegal copies of these copyright holders’ products throughout the United States and the world.
In response to complaints from copyright holders and after making undercover purchases from Newsome’s websites, the FBI obtained a warrant to search Newsome’s residence and seized from his home office computers, servers, hard drives, optical disks, and other items and records documenting Newsome’s infringing activities. As part of his guilty plea, Newsome agreed to forfeit the proceeds of his infringing activities, property that he used to facilitate that illegal activity, and illegal copies of the copyrighted products seized during the search.
This case was investigated by the FBI’s Norfolk Field Office. Assistant United States Attorney Robert Krask is prosecuting the case on behalf of the United States.
Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and John Boles, Special Agent in Charge of the FBI’s Norfolk Field Office, made the announcement after Newsome entered guilty pleas to counts one through four of the pending indictment before United States Magistrate Judge Tommy E. Miller. Newsome faces a maximum penalty of 20 years in prison when he is sentenced on December 3, 2012, by United States District Judge Raymond A. Jackson.
According to court documents, Dennis Newsome owned and operated an online business, known as PCTech101, which sold computer software, education, and training materials to customers via the Internet and by means of websites (at www.pctech101.com and www.pctech101.net ). In spite of having previously been sued in federal court for civil copyright infringement and having received repeated complaints and notices from webhosting companies and copyright holders, from 2008 through 2010 Newsome illegally sold copies of valuable, copyrighted works from his websites at a fraction of the true cost of the genuine copyrighted works. For example, Newsome sold illegal copies of several copyrighted computer security training products made and sold by the SANS Institute for $24.99, when the SANS Institute sold such products at prices ranging from $750 to $4,295.
Other copyright holders whose products Newsome copied and distributed without permission included Shon Harris, CBT Nuggets, John Wiley & Sons Inc., Virtual Training Company Inc., Mark Minasi, and Arnold Jagt and the Robinson Curriculum. From 2008 through 2010, Newsome sold over 750 illegal copies of these copyright holders’ products throughout the United States and the world.
In response to complaints from copyright holders and after making undercover purchases from Newsome’s websites, the FBI obtained a warrant to search Newsome’s residence and seized from his home office computers, servers, hard drives, optical disks, and other items and records documenting Newsome’s infringing activities. As part of his guilty plea, Newsome agreed to forfeit the proceeds of his infringing activities, property that he used to facilitate that illegal activity, and illegal copies of the copyrighted products seized during the search.
This case was investigated by the FBI’s Norfolk Field Office. Assistant United States Attorney Robert Krask is prosecuting the case on behalf of the United States.
Wednesday, August 22, 2012
Georgia Governor Nathan Deal Requests EPA Waive Ethanol Mandate; Cites Severe Economic Harm in State
"It
is abundantly clear that substantial evidence exists now within the existing
reports of USDA regarding expected crop yields and within private sector
forecasts of crop yields that current and futures pricing of corn will result in
severe economic harm in the poultry and livestock sectors," wrote Georgia
Governor Nathan Deal (R) in a petition sent yesterday
(http://www.nationalchickencouncil.org/wp-content/uploads/2012/08/Letter-to-Lisa-P-Jackson-Petition-for-Waiver.pdf)
to the U.S. Environmental Protection Agency (EPA). "Georgia is experiencing
severe economic harm during this crisis, and important economic sectors in the
state are in serious economic jeopardy. This harm is precisely of the type,
character and extent that Congress envisioned when it granted EPA authority to
waive Renewable Fuel Standard (RFS) applicable volumes..."
Deal
becomes the fifth governor, and first Republican, to request that EPA waive the
RFS, joining the governors of Maryland, Delaware, North Carolina and
Arkansas.
"It
can also be reasonably projected that this harm will continue well into 2013, if
not beyond 2013, and that the decreasing availability of stocks of grains will
only be eased when a new crop season provides an abundance of supply," Deal
continued.
As
Georgia's largest industry, agriculture accounts for over 15.7 percent of the
state's economy in terms of sales and output and represents 11.2 percent of the
state's value added production. Georgia agriculture has an annual impact of
$68.9 billion on the state's economy and provides 380,000 jobs to citizens of
the state. Poultry and livestock are critically important components of the
state's economy, representing over 50 percent of Georgia's farm gate value,
while broilers alone account for over 40 percent of farm gate value. From a
national perspective, Georgia ranks first in broiler production and third in
value of eggs produced. For Georgia, the poultry industry alone accounts for
over $20 billion in annual economic impact, and an estimated 98,000 jobs depend
on poultry directly or indirectly.
Deal's
petition notes the University of Georgia has reported that the state's poultry
producers are spending $1.4 million extra per day on corn due to the drought and
the upward pressure on corn prices caused by the demand created by the RFS for
ethanol. This translates to over $516 million per year if these market
conditions continue. "These additional input costs are not sustainable, and I
urge you to consider all options available to the agency to provide some relief
in the coming year," Deal urged.
The
National Chicken Council (NCC) voiced strong support for Governor Deal's
petition and leadership on this critical issue.
"I
am very pleased that Governor Deal has joined the many other voices and requests
that EPA has received in recent weeks to waive the RFS for ethanol, including 14
of 15 members of Georgia's congressional delegation in Washington," said NCC
President Mike Brown. "As Governor Deal noted, it is now abundantly clear that
severe economic damage has occurred, and will continue, as a result of the RFS'
strain on the corn supply that has been exacerbated by the worst drought in more
than 50 years. Again, I call on EPA Administrator Lisa Jackson to implement the
law and grant a full, one-year waiver for the corn-ethanol mandate," Brown
concluded.
Governor
Deal's petition comes on the heels of an announcement yesterday from EPA that
the agency is issuing a Federal Register notice opening a 30-day public comment
period on requests from the governors of Arkansas and North Carolina to waive
the RFS requirements. The statute provides the agency with 90 days in which to
make a decision.
The
Energy Independence and Security Act of 2007 updated renewable fuel volume
targets. Congress has also given EPA the authority to include provisions that
allow the EPA Administrator to grant a full or partial waiver if implementation
would severely harm the economy or environment of a state, region, or the entire
country.
More
information about the comment period and Notice from EPA is available by
clicking here (http://www.epa.gov/otaq/fuels/renewablefuels/notices.htm) and
here
(http://www.epa.gov/otaq/fuels/renewablefuels/documents/2012-rfs-waiver-request-comment.pdf).
Tuesday, August 21, 2012
Houston Doctor Arrested on Charges of Health Care Fraud
Dr. Emmanuel Nwora, 48, of Houston, has been arrested following the return of a
sealed indictment alleging health care fraud and conspiracy to commit health
care fraud, United States Attorney Kenneth Magidson announced.
The 13-count indictment was unsealed just moments ago upon Nwora’s arrest by agents with FBI, the Texas Attorney General’s Medicaid Fraud Control Unit, and Department of Health and Human Services-Office of Inspector General, Office of Investigations. He is expected to appear before U.S. Magistrate Judge Nancy Johnson. Also charged is Charles Harris, 52, aka Celestine Nwajfor and Okechi Nwajfor, also of Houston. Harris (photo below) is currently a fugitive and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact the FBI at 713-693-5000.
The indictment alleges that from 2007 to 2010, Nwora and Harris falsely
billed Medicare and Medicaid under vestibular diagnostic codes. They allegedly
billed Medicare and Medicaid approximately $850,000 and were paid approximately
$390,000. Vestibular problems are traditionally inner ear problems with the
patients reporting chronic dizziness and balance problems.
Nwora operated a family practice clinic in Houston called Houston Optimum Care Medical Association, while Harris operated a Houston business called Cevine Health Care and Rehabilitation Center. According to the indictment, Harris would send unlicensed persons into Medicare beneficiaries homes to perform some types of vestibular testing. Harris allegedly would then submit “superbills” to Nwora and his billing contractor for this testing. The indictment indicates that patients reported either that none of the testing was performed or that some form of testing was performed but not in the quantity that was actually billed. One patient’s Medicare number was allegedly billed for more than 800 tests on 161 different days over the course of one year. Others were billed for more than 500 tests over a period of one year, according to the indictment. The patients, their families or their treating doctors reported that these patients did not need vestibular testing and did not complain of dizziness.
Nwora allegedly billed Medicare and Medicaid for these diagnostic tests and split the paid claims with Harris. The indictment indicates that Nwora kept 35 percent, while Harris received the remainder.
Each of the 13 counts in the indictment carry as possible punishment up to 10 years in federal prison and a possible $250,000 fine.
The charges are the result of the investigative efforts of the Department of Health and Human Services-Office of Inspector General, Office of Investigations as well as the Texas Attorney General’s Medicaid Fraud Control Unit, FBI, and the United States Attorney’s Office. Special Assistant United States Attorney Suzanne Bradley is prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
The 13-count indictment was unsealed just moments ago upon Nwora’s arrest by agents with FBI, the Texas Attorney General’s Medicaid Fraud Control Unit, and Department of Health and Human Services-Office of Inspector General, Office of Investigations. He is expected to appear before U.S. Magistrate Judge Nancy Johnson. Also charged is Charles Harris, 52, aka Celestine Nwajfor and Okechi Nwajfor, also of Houston. Harris (photo below) is currently a fugitive and a warrant remains outstanding for his arrest. Anyone with information about his whereabouts is asked to contact the FBI at 713-693-5000.
Nwora operated a family practice clinic in Houston called Houston Optimum Care Medical Association, while Harris operated a Houston business called Cevine Health Care and Rehabilitation Center. According to the indictment, Harris would send unlicensed persons into Medicare beneficiaries homes to perform some types of vestibular testing. Harris allegedly would then submit “superbills” to Nwora and his billing contractor for this testing. The indictment indicates that patients reported either that none of the testing was performed or that some form of testing was performed but not in the quantity that was actually billed. One patient’s Medicare number was allegedly billed for more than 800 tests on 161 different days over the course of one year. Others were billed for more than 500 tests over a period of one year, according to the indictment. The patients, their families or their treating doctors reported that these patients did not need vestibular testing and did not complain of dizziness.
Nwora allegedly billed Medicare and Medicaid for these diagnostic tests and split the paid claims with Harris. The indictment indicates that Nwora kept 35 percent, while Harris received the remainder.
Each of the 13 counts in the indictment carry as possible punishment up to 10 years in federal prison and a possible $250,000 fine.
The charges are the result of the investigative efforts of the Department of Health and Human Services-Office of Inspector General, Office of Investigations as well as the Texas Attorney General’s Medicaid Fraud Control Unit, FBI, and the United States Attorney’s Office. Special Assistant United States Attorney Suzanne Bradley is prosecuting the case.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
Former President of Children’s Social Networking Company and Stockbroker Found Guilty of Securities Fraud and Commercial Bribery Charges
A federal jury in Brooklyn returned guilty verdicts against Pino
Baldassarre, the former president of Dolphin Digital Media, Inc. (“Dolphin”) and
Robert Mouallem, a stockbroker, on conspiracy, securities fraud, and commercial
bribery charges. These charges arose from the defendants’ scheme to sell their
shares of Dolphin at inflated prices by bribing stockbrokers. When sentenced by
United States District Judge Jack B. Weinstein, the defendants face a maximum
sentence of 25 years’ imprisonment on the most serious charge.
The verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyck, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.
According to the evidence at trial, Dolphin created secure social networking websites for children. Its stock was publicly traded on the Over The Counter Bulletin Board. In addition to serving as Dolphin’s President, Baldassarre was a substantial shareholder of the company. Baldassarre was fired from Dolphin in March 2009. Shortly thereafter, Baldassarre and another Dolphin shareholder met with an individual, identified as “John Doe,” who claimed to have access to a network of stockbrokers who managed client brokerage accounts and to have authority to trade in those accounts on behalf of their clients. John Doe agreed to have these stockbrokers purchase, through their clients’ accounts, Dolphin shares owned by Baldassarre and the other shareholder in exchange for a kickback of 30 percent of the sale proceeds. Baldassarre and the other shareholder arranged for Mouallem to act as their stockbroker to sell their Dolphin shares. Mouallem, who knew of the kickback arrangement, placed orders to sell the stock in such a way as to ensure that John Doe’s network of stockbrokers bought the conspirators’ Dolphin stock instead of other Dolphin stock that may have been available for sale. Unbeknownst to Baldassarre, Mouallem, or the other Dolphin shareholder, John Doe was a special agent of the Federal Bureau of Investigation acting in an undercover capacity. In March and April 2010, Baldassarre, Mouallem, and the other shareholder orchestrated five test sales of their Dolphin stock, supposedly to John Doe’s network of stockbrokers. In each case, Baldassarre paid the 30 percent kickback to John Doe.
“Rather than let the market set the true value of Dolphin stock, these defendants engaged in a bribery scheme to manipulate the market for Dolphin stock for corrupt personal gain,” stated United States Attorney Lynch. “It is essential for the securities markets to be free of such corruption in order to preserve investor confidence. Those who would engage in such manipulation schemes should consider whether their ‘partners’ in crime are actually working for the FBI.”
FBI Assistant Director in Charge Fedarcyk stated, “Schemes like this one not only stack the deck unfairly for the schemers and undermine investor faith in the integrity of the marketplace. If not for the presence of the FBI undercover agent, this scheme would have resulted in real shareholders unknowingly paying inflated prices for stock.”
The government’s case is being prosecuted by Assistant United States Attorney Patrick Sinclair.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendants:
PINO BALDASSARRE
Age: 53
Residence: Indialantic, Florida
ROBERT MOUALLEM
Age: 57
Residence: Boca Raton, Florida
The verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Janice K. Fedarcyck, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office.
According to the evidence at trial, Dolphin created secure social networking websites for children. Its stock was publicly traded on the Over The Counter Bulletin Board. In addition to serving as Dolphin’s President, Baldassarre was a substantial shareholder of the company. Baldassarre was fired from Dolphin in March 2009. Shortly thereafter, Baldassarre and another Dolphin shareholder met with an individual, identified as “John Doe,” who claimed to have access to a network of stockbrokers who managed client brokerage accounts and to have authority to trade in those accounts on behalf of their clients. John Doe agreed to have these stockbrokers purchase, through their clients’ accounts, Dolphin shares owned by Baldassarre and the other shareholder in exchange for a kickback of 30 percent of the sale proceeds. Baldassarre and the other shareholder arranged for Mouallem to act as their stockbroker to sell their Dolphin shares. Mouallem, who knew of the kickback arrangement, placed orders to sell the stock in such a way as to ensure that John Doe’s network of stockbrokers bought the conspirators’ Dolphin stock instead of other Dolphin stock that may have been available for sale. Unbeknownst to Baldassarre, Mouallem, or the other Dolphin shareholder, John Doe was a special agent of the Federal Bureau of Investigation acting in an undercover capacity. In March and April 2010, Baldassarre, Mouallem, and the other shareholder orchestrated five test sales of their Dolphin stock, supposedly to John Doe’s network of stockbrokers. In each case, Baldassarre paid the 30 percent kickback to John Doe.
“Rather than let the market set the true value of Dolphin stock, these defendants engaged in a bribery scheme to manipulate the market for Dolphin stock for corrupt personal gain,” stated United States Attorney Lynch. “It is essential for the securities markets to be free of such corruption in order to preserve investor confidence. Those who would engage in such manipulation schemes should consider whether their ‘partners’ in crime are actually working for the FBI.”
FBI Assistant Director in Charge Fedarcyk stated, “Schemes like this one not only stack the deck unfairly for the schemers and undermine investor faith in the integrity of the marketplace. If not for the presence of the FBI undercover agent, this scheme would have resulted in real shareholders unknowingly paying inflated prices for stock.”
The government’s case is being prosecuted by Assistant United States Attorney Patrick Sinclair.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
The Defendants:
PINO BALDASSARRE
Age: 53
Residence: Indialantic, Florida
ROBERT MOUALLEM
Age: 57
Residence: Boca Raton, Florida
California Hedge Fund Manager Doug Whitman Found Guilty in Manhattan Federal Court on All Counts for Insider Trading
Preet Bharara, the United States Attorney for the Southern District of New
York, announced that DOUG WHITMAN, a portfolio manager at Whitman Capital, LLC,
was found guilty by a jury in Manhattan federal court of conspiracy and
securities fraud crimes stemming from his involvement in two insider trading
schemes that earned his firm more than $900,000 in illegal profits. WHITMAN was
convicted on all four counts with which he was charged. As part of the schemes,
WHITMAN executed trades based on material, non-public information (“Inside
Information”), related to three publicly traded companies: Marvell Technology
Group, Ltd. (“Marvell”); Polycom, Inc. (“Polycom”); and Google, Inc. (“Google”).
He was convicted after a three-week trial before U.S. District Judge Jed S.
Rakoff.
Manhattan U.S. Attorney Preet Bharara said: “Douglas Whitman now joins the grim procession of convicted Wall Street professionals who decided that the rules don’t apply to them. The rules do apply. Over and over again, juries of good, common-sense citizens have said the rules do apply, and they have held defendants like Mr. Whitman accountable for breaking them. Mr. Whitman had a hedge fund with his name on the door, with rules against insider trading. He flouted those rules, tarnished his name, and now is a convicted felon facing imprisonment. I want to thank both the jury for their service and the fine career prosecutors from my office who so ably tried this case for their hard work and dedication.”
According to the indictment, evidence presented at Whitman’s trial, as well as testimony from other trials and court proceedings:
From 2007 through 2009, while running Whitman Capital, WHITMAN bought and sold Marvell stock and options based on Inside Information, including earnings, revenue, and/or other material financial and business information. The Inside Information was provided to WHITMAN by Karl Motey, an independent research consultant, who had obtained it from certain Marvell employees. In exchange for the Inside Information, WHITMAN paid Motey through a soft dollar payment arrangement between Whitman Capital and Motey’s consulting firm. WHITMAN also provided the Marvell Inside Information to Wesley Wang, in exchange for other Inside Information.
In another scheme, from 2006 to 2007, WHITMAN obtained Inside Information, including earnings information and other material financial information, pertaining to Polycom and Google from Roomy Khan, who worked in the hedge fund industry. Khan obtained the Polycom Inside Information from an employee at the company, and she obtained the Google Inside Information from an employee of a firm that provided investor relations services to Google. WHITMAN used the Polycom and Google Inside Information to execute securities transactions that earned his firm more than $900,000 in illegal profits. In exchange for the Inside Information, WHITMAN provided Khan with information about other publicly traded technology companies.
WHITMAN, 54, of Atherton, California, was convicted of two counts of conspiracy to commit securities fraud and two counts of securities fraud. Each of the conspiracy counts carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Each of the securities fraud counts carries a maximum penalty of 20 years in prison and a maximum fine of $5 million. WHITMAN is scheduled to be sentenced by Judge Rakoff on December 20, 2012, at 4:00 p.m.
WHITMAN’s co-conspirators, Karl Motey, Roomy Khan, and Wesley Wang, previously pled guilty to insider trading charges and are awaiting sentencing.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and thanked the U.S. Securities and Exchange Commission. He noted that the investigation is continuing.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. 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.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jillian Berman, Christopher LaVigne, and Micah Smith are in charge of the prosecution.
Manhattan U.S. Attorney Preet Bharara said: “Douglas Whitman now joins the grim procession of convicted Wall Street professionals who decided that the rules don’t apply to them. The rules do apply. Over and over again, juries of good, common-sense citizens have said the rules do apply, and they have held defendants like Mr. Whitman accountable for breaking them. Mr. Whitman had a hedge fund with his name on the door, with rules against insider trading. He flouted those rules, tarnished his name, and now is a convicted felon facing imprisonment. I want to thank both the jury for their service and the fine career prosecutors from my office who so ably tried this case for their hard work and dedication.”
According to the indictment, evidence presented at Whitman’s trial, as well as testimony from other trials and court proceedings:
From 2007 through 2009, while running Whitman Capital, WHITMAN bought and sold Marvell stock and options based on Inside Information, including earnings, revenue, and/or other material financial and business information. The Inside Information was provided to WHITMAN by Karl Motey, an independent research consultant, who had obtained it from certain Marvell employees. In exchange for the Inside Information, WHITMAN paid Motey through a soft dollar payment arrangement between Whitman Capital and Motey’s consulting firm. WHITMAN also provided the Marvell Inside Information to Wesley Wang, in exchange for other Inside Information.
In another scheme, from 2006 to 2007, WHITMAN obtained Inside Information, including earnings information and other material financial information, pertaining to Polycom and Google from Roomy Khan, who worked in the hedge fund industry. Khan obtained the Polycom Inside Information from an employee at the company, and she obtained the Google Inside Information from an employee of a firm that provided investor relations services to Google. WHITMAN used the Polycom and Google Inside Information to execute securities transactions that earned his firm more than $900,000 in illegal profits. In exchange for the Inside Information, WHITMAN provided Khan with information about other publicly traded technology companies.
WHITMAN, 54, of Atherton, California, was convicted of two counts of conspiracy to commit securities fraud and two counts of securities fraud. Each of the conspiracy counts carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense. Each of the securities fraud counts carries a maximum penalty of 20 years in prison and a maximum fine of $5 million. WHITMAN is scheduled to be sentenced by Judge Rakoff on December 20, 2012, at 4:00 p.m.
WHITMAN’s co-conspirators, Karl Motey, Roomy Khan, and Wesley Wang, previously pled guilty to insider trading charges and are awaiting sentencing.
Mr. Bharara praised the investigative work of the Federal Bureau of Investigation and thanked the U.S. Securities and Exchange Commission. He noted that the investigation is continuing.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities and Commodities Fraud Working Group. 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.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jillian Berman, Christopher LaVigne, and Micah Smith are in charge of the prosecution.
Sunday, August 19, 2012
New Charges in Insider Trading Case Include Former CEO and Professional Baseball Player
The Securities and Exchange Commission announced a second round of charges in an insider trading case involving former professional baseball players and the former top executive at a California-based medical eye products company that was the subject of the illegal trading.
The SEC brought initial charges in the case last year, accusing former professional baseball player Doug DeCinces and three others of insider trading on confidential information ahead of an acquisition of Advanced Medical Optics Inc. DeCinces and his three tippees made more than $1.7 million in illegal profits, and they agreed to pay more than $3.3 million to settle the SEC’s charges.
Now the SEC is charging the source of those illegal tips about the impending transaction – DeCinces’s close friend and neighbor James V. Mazzo, who was the Chairman and CEO of Advanced Medical Optics. The SEC also is charging two others who traded on inside information that DeCinces tipped to them – DeCinces’ former Baltimore Orioles teammate Eddie Murray and another friend David L. Parker, who is a businessman living in Utah.
The SEC alleges that Murray made approximately $235,314 in illegal profits after Illinois-based Abbott Laboratories Inc. publicly announced its plan to purchase Advanced Medical Optics through a tender offer. Murray agreed to settle the SEC’s charges by paying $358,151. The SEC’s case continues against Parker and Mazzo, the latter of whom was directly involved in the tender offer and tipped the confidential information to DeCinces along the way.
“It is truly disappointing when role models, particularly those who have achieved so much in their professional careers, give in to the temptation of easy money,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit and Director of the Philadelphia Regional Office.
“Mazzo had repeated personal contacts and communications with DeCinces, who promptly traded and tipped Murray, Parker and others that a deal involving Mazzo’s company was imminent. CEOs and other employees of public companies must resist the lure of sharing confidential information with their friends and always put the interests of their shareholders and company first.”
According to the SEC’s complaint filed in U.S. District Court for the Central District of California, the total unlawful profits resulting from Mazzo’s illegal tipping was more than $2.4 million. Once Mazzo began tipping DeCinces with confidential information about the upcoming transaction, DeCinces began to purchase Advanced Medical Optics stock in several brokerage accounts. DeCinces bought more and more shares as the deal progressed and as he continued communicating with Mazzo. DeCinces tipped at least five others who traded on the inside information, including Murray, Parker, and the three traders who settled their charges along with DeCinces last year – physical therapist Joseph J. Donohue, real estate lawyer Fred Scott Jackson, and businessman Roger A. Wittenbach.
According to the SEC’s complaint, Mazzo and DeCinces had been close friends for quite some time and lived in the same exclusive gated community in Laguna Beach, Calif. They socialized together with their wives, belonging to the same Orange County country club and vacationing together overseas. They also communicated frequently by e-mail and through phone calls. Mazzo invested in the restaurant business of DeCinces’ son, and DeCinces’ daughter provided interior decorating services for Mazzo and his wife. Mazzo was directly involved in the impending Advanced Medical Optics/Abbott transaction from its inception in October 2008. With knowledge of confidential information about the deal and his duty not to disclose it, Mazzo illegally tipped DeCinces, who made significant purchases of Advanced Medical Optics shares on Nov. 5, 2008, and continuing up until and near the time of the public announcement of the acquisition.
The SEC alleges that Parker and DeCinces had been friends and business associates at the time of the illegal trading. Between Jan. 6 and Jan. 8, 2009, Parker bought 25,000 shares of Advanced Medical Optics stock on the basis of confidential information received from DeCinces about the impending transaction. Parker made approximately $347,920 when he sold the stock on the same day as the public announcement. Meanwhile on January 7, Murray used all of the available cash in his self-directed brokerage account to purchase 17,000 shares of Advanced Medical Optics stock on the basis of the confidential information that DeCinces communicated to him. Murray sold all of his shares following the public announcement.
Murray agreed to settle the charges against him without admitting or denying the SEC’s allegations by consenting to the entry of a final judgment permanently enjoining him from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Murray agreed to pay disgorgement of $235,314, prejudgment interest of $5,180, and a penalty of $117,657 for a total of $358,151. The settlement is subject to final approval by the court.
The SEC’s investigation, which is continuing, has been conducted by Colleen K. Lynch, John S. Rymas, and David W. Snyder, who are members of the Market Abuse Unit in Philadelphia, as well as Elaine C. Greenberg, Associate Regional Director in the Philadelphia office, and Sanjay Wadhwa, Deputy Unit Chief in New York. G. Jeffrey Boujoukos, Michael J. Rinaldi, and Scott A. Thompson are handling the litigation. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) and the Internal Revenue Service.
The SEC brought initial charges in the case last year, accusing former professional baseball player Doug DeCinces and three others of insider trading on confidential information ahead of an acquisition of Advanced Medical Optics Inc. DeCinces and his three tippees made more than $1.7 million in illegal profits, and they agreed to pay more than $3.3 million to settle the SEC’s charges.
Now the SEC is charging the source of those illegal tips about the impending transaction – DeCinces’s close friend and neighbor James V. Mazzo, who was the Chairman and CEO of Advanced Medical Optics. The SEC also is charging two others who traded on inside information that DeCinces tipped to them – DeCinces’ former Baltimore Orioles teammate Eddie Murray and another friend David L. Parker, who is a businessman living in Utah.
The SEC alleges that Murray made approximately $235,314 in illegal profits after Illinois-based Abbott Laboratories Inc. publicly announced its plan to purchase Advanced Medical Optics through a tender offer. Murray agreed to settle the SEC’s charges by paying $358,151. The SEC’s case continues against Parker and Mazzo, the latter of whom was directly involved in the tender offer and tipped the confidential information to DeCinces along the way.
“It is truly disappointing when role models, particularly those who have achieved so much in their professional careers, give in to the temptation of easy money,” said Daniel M. Hawke, Chief of the SEC Enforcement Division’s Market Abuse Unit and Director of the Philadelphia Regional Office.
“Mazzo had repeated personal contacts and communications with DeCinces, who promptly traded and tipped Murray, Parker and others that a deal involving Mazzo’s company was imminent. CEOs and other employees of public companies must resist the lure of sharing confidential information with their friends and always put the interests of their shareholders and company first.”
According to the SEC’s complaint filed in U.S. District Court for the Central District of California, the total unlawful profits resulting from Mazzo’s illegal tipping was more than $2.4 million. Once Mazzo began tipping DeCinces with confidential information about the upcoming transaction, DeCinces began to purchase Advanced Medical Optics stock in several brokerage accounts. DeCinces bought more and more shares as the deal progressed and as he continued communicating with Mazzo. DeCinces tipped at least five others who traded on the inside information, including Murray, Parker, and the three traders who settled their charges along with DeCinces last year – physical therapist Joseph J. Donohue, real estate lawyer Fred Scott Jackson, and businessman Roger A. Wittenbach.
According to the SEC’s complaint, Mazzo and DeCinces had been close friends for quite some time and lived in the same exclusive gated community in Laguna Beach, Calif. They socialized together with their wives, belonging to the same Orange County country club and vacationing together overseas. They also communicated frequently by e-mail and through phone calls. Mazzo invested in the restaurant business of DeCinces’ son, and DeCinces’ daughter provided interior decorating services for Mazzo and his wife. Mazzo was directly involved in the impending Advanced Medical Optics/Abbott transaction from its inception in October 2008. With knowledge of confidential information about the deal and his duty not to disclose it, Mazzo illegally tipped DeCinces, who made significant purchases of Advanced Medical Optics shares on Nov. 5, 2008, and continuing up until and near the time of the public announcement of the acquisition.
The SEC alleges that Parker and DeCinces had been friends and business associates at the time of the illegal trading. Between Jan. 6 and Jan. 8, 2009, Parker bought 25,000 shares of Advanced Medical Optics stock on the basis of confidential information received from DeCinces about the impending transaction. Parker made approximately $347,920 when he sold the stock on the same day as the public announcement. Meanwhile on January 7, Murray used all of the available cash in his self-directed brokerage account to purchase 17,000 shares of Advanced Medical Optics stock on the basis of the confidential information that DeCinces communicated to him. Murray sold all of his shares following the public announcement.
Murray agreed to settle the charges against him without admitting or denying the SEC’s allegations by consenting to the entry of a final judgment permanently enjoining him from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Murray agreed to pay disgorgement of $235,314, prejudgment interest of $5,180, and a penalty of $117,657 for a total of $358,151. The settlement is subject to final approval by the court.
The SEC’s investigation, which is continuing, has been conducted by Colleen K. Lynch, John S. Rymas, and David W. Snyder, who are members of the Market Abuse Unit in Philadelphia, as well as Elaine C. Greenberg, Associate Regional Director in the Philadelphia office, and Sanjay Wadhwa, Deputy Unit Chief in New York. G. Jeffrey Boujoukos, Michael J. Rinaldi, and Scott A. Thompson are handling the litigation. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) and the Internal Revenue Service.
SEC Shuts Down $600 Million Online Pyramid and Ponzi Scheme
The Securities and Exchange Commission announced fraud charges and an
emergency asset freeze to halt a $600 million Ponzi scheme on the verge of
collapse. The emergency action assures that victims can recoup more of their
money and potentially avoid devastating losses.
The SEC alleges that online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group have raised money from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.
According to the SEC’s complaint filed in federal court in Charlotte, N.C., customers were offered several ways to earn money through the ZeekRewards program, two of which involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.
The SEC alleges that investors were collectively promised up to 50 percent of the company’s daily net profits through a profit sharing system in which they accumulate rewards points that they can use for cash payouts. However, the website fraudulently conveyed the false impression that the company was extremely profitable when, in fact, the payouts to investors bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the “net profits” paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion.
“The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,” said Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement. “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”
The SEC’s complaint alleges that the scheme is teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers continue to increasingly elect to receive cash payouts rather than reinvesting their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would eventually exceed its total revenue.
Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.
According to the SEC’s complaint, ZeekRewards has paid out nearly $375 million to investors to date and holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds will be frozen under the emergency asset freeze granted by the court at the SEC’s request. Meanwhile, Burks has personally siphoned several million dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.
The SEC’s investigation was conducted by Brian M. Privor and Alfred C. Tierney in the SEC’s Enforcement Division in Washington D.C. The SEC acknowledges the assistance of the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.
The SEC alleges that online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group have raised money from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.
According to the SEC’s complaint filed in federal court in Charlotte, N.C., customers were offered several ways to earn money through the ZeekRewards program, two of which involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.
The SEC alleges that investors were collectively promised up to 50 percent of the company’s daily net profits through a profit sharing system in which they accumulate rewards points that they can use for cash payouts. However, the website fraudulently conveyed the false impression that the company was extremely profitable when, in fact, the payouts to investors bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the “net profits” paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion.
“The obligations to investors drastically exceed the company’s cash on hand, which is why we need to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors,” said Stephen Cohen, an Associate Director in the SEC’s Division of Enforcement. “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor.”
The SEC’s complaint alleges that the scheme is teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers continue to increasingly elect to receive cash payouts rather than reinvesting their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would eventually exceed its total revenue.
Burks has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver.
According to the SEC’s complaint, ZeekRewards has paid out nearly $375 million to investors to date and holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds will be frozen under the emergency asset freeze granted by the court at the SEC’s request. Meanwhile, Burks has personally siphoned several million dollars of investors’ funds while operating Rex Venture and ZeekRewards, and he distributed at least $1 million to family members. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.
The SEC’s investigation was conducted by Brian M. Privor and Alfred C. Tierney in the SEC’s Enforcement Division in Washington D.C. The SEC acknowledges the assistance of the Quebec Autorite des Marches Financiers and the Ontario Securities Commission.
Saturday, August 18, 2012
Citadel Malware Continues to Deliver Reveton Ransomware in Attempts to Extort Money
The IC3 has been made aware of a new Citadel malware platform used to deliver
ransomware named Reveton. The ransomware lures the victim to a drive-by download
website, at which time the ransomware is installed on the user’s computer. Once
installed, the computer freezes and a screen is displayed warning the user they
have violated United States federal law. The message further declares the user’s
IP address has been identified by the Federal Bureau of Investigation as
visiting websites that feature child pornography and other illegal content.
To unlock the computer, the user is instructed to pay a fine to the U.S. Department of Justice using a prepaid money card service. The geographic location of the user’s IP address determines what payment services are offered. In addition to the ransomware, the Citadel malware continues to operate on the compromised computer and can be used to commit online banking and credit card fraud.
This is an attempt to extort money with the additional possibility of the victim’s computer being used to participate in online bank fraud. If you have received this or something similar, do not follow payment instructions. Infected computers may not operate normally. If your computer is infected, you may need to contact a local computer expert for assistance to remove the malware.
It is suggested that you:
To unlock the computer, the user is instructed to pay a fine to the U.S. Department of Justice using a prepaid money card service. The geographic location of the user’s IP address determines what payment services are offered. In addition to the ransomware, the Citadel malware continues to operate on the compromised computer and can be used to commit online banking and credit card fraud.
This is an attempt to extort money with the additional possibility of the victim’s computer being used to participate in online bank fraud. If you have received this or something similar, do not follow payment instructions. Infected computers may not operate normally. If your computer is infected, you may need to contact a local computer expert for assistance to remove the malware.
It is suggested that you:
- File a complaint at www.IC3.gov. Look for updates about the Reveton virus on the IC3 website.
- Seek out a local computer expert to assist with removing the malware.
- Do not pay any money or provide personal information.
- Be aware that even if you are able to unfreeze your computer on your own, the malware may still operate in the background. Certain types of malware have been known to capture personal information such as user names, passwords, and credit card numbers through embedded keystroke logging programs.
Thursday, August 16, 2012
Wednesday, August 15, 2012
Owner of Miami Home Health Company Pleads Guilty in $60 Million Health Care Fraud Scheme
The owner of a Miami health care agency pleaded guilty for his
participation in a $60 million home health Medicare fraud scheme, announced the
Department of Justice, the FBI, and the Department of Health and Human Services
(HHS).
Rodolfo Nieto Jr., 40, of Miami, pleaded guilty before U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida to one count of conspiracy to defraud the United States and to receive health care kickbacks.
According to the court documents, Nieto was the owner and operator of Ronat Home Health Care Inc. According to court documents, during the time of the conspiracy, Ronat was a Florida home health “staffing agency” that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Ronat subsequently became a home health agency.
According to court documents, from approximately January 2006 to approximately November 2009, Nieto accepted kickbacks in return for recruiting Medicare beneficiaries to be placed at Nany Home Health Inc., a Miami home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. The owners and operators of Nany paid Nieto kickbacks in return for allowing Nany to bill the Medicare program on behalf of the patients Nieto had recruited through Ronat. Specifically, as part of the scheme, Nany billed Medicare for home health services purportedly provided by Ronat.
In a related case, on April 25, 2012, Roberto Gonzalez and Olga Gonzalez, president and vice president of Nany, and their son, Fabian Gonzalez, all of whom operated Nany, were sentenced to 120, 87, and 87 months in prison, respectively, following their December 19, 2011 guilty pleas to one count each of conspiracy to commit health care fraud. From approximately January 2006 through November 2009, Roberto, Olga, and Fabian Gonzalez and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare, and Medicare paid approximately $40 million on those claims.
At sentencing, scheduled for October 23, 2012, Nieto faces a maximum penalty of five years in prison and a fine of $250,000 or twice the pecuniary gain or loss.
The plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Jeffrey C. Mazanec, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations, Miami Office.
This case is being prosecuted by Senior 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 Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is 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.
Rodolfo Nieto Jr., 40, of Miami, pleaded guilty before U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida to one count of conspiracy to defraud the United States and to receive health care kickbacks.
According to the court documents, Nieto was the owner and operator of Ronat Home Health Care Inc. According to court documents, during the time of the conspiracy, Ronat was a Florida home health “staffing agency” that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Ronat subsequently became a home health agency.
According to court documents, from approximately January 2006 to approximately November 2009, Nieto accepted kickbacks in return for recruiting Medicare beneficiaries to be placed at Nany Home Health Inc., a Miami home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. The owners and operators of Nany paid Nieto kickbacks in return for allowing Nany to bill the Medicare program on behalf of the patients Nieto had recruited through Ronat. Specifically, as part of the scheme, Nany billed Medicare for home health services purportedly provided by Ronat.
In a related case, on April 25, 2012, Roberto Gonzalez and Olga Gonzalez, president and vice president of Nany, and their son, Fabian Gonzalez, all of whom operated Nany, were sentenced to 120, 87, and 87 months in prison, respectively, following their December 19, 2011 guilty pleas to one count each of conspiracy to commit health care fraud. From approximately January 2006 through November 2009, Roberto, Olga, and Fabian Gonzalez and their co-conspirators submitted approximately $60 million in false and fraudulent claims to Medicare, and Medicare paid approximately $40 million on those claims.
At sentencing, scheduled for October 23, 2012, Nieto faces a maximum penalty of five years in prison and a fine of $250,000 or twice the pecuniary gain or loss.
The plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Jeffrey C. Mazanec, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations, Miami Office.
This case is being prosecuted by Senior 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 Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is 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.
New London Man Involved in Mortgage Fraud Scheme Sentenced to 18 Months in Prison
David B. Fein, United States Attorney for the District of Connecticut,
announced that Michael Hodges, 53, of New London, was sentenced by Senior
United States District Judge Alfred V. Covello in Hartford to 18 months of
imprisonment, followed by two years of supervised release, for his participation
in an eastern Connecticut mortgage fraud scheme. Hodges also was ordered to
forfeit $25,000 and to pay restitution in the amount of $328,516.31.
According to court documents and statements made in court, from approximately 2004 to 2007, Jose Guzman and others used mortgage brokerage, property management, and home improvement companies to arrange for individuals (“buyers”) to purchase real estate, primarily residential housing properties located in New London County, by obtaining funding from various mortgage companies and mortgage originators after submitting false information on the buyers’ mortgage loan applications. The fraudulent information included information regarding income, assets, employment, rent history, as well as the buyers’ intention to make the properties their primary residences. The buyers were compensated for participating in the scheme.
Hodges, who was unemployed at the time, acted as a buyer in connection with Guzman’s purchase of one property in New London in 2006 and one property in Norwich in 2007. Hodges also referred individuals to Guzman to act as buyers and identified properties to be bought and sold as part of the conspiracy. Hodges received $5,000 both times he acted as a buyer and additional compensation when he identified a buyer or a property to be bought and sold.
According to previously filed court documents, the government believes that more than 200 fraudulent mortgages were funded through this mortgage fraud scheme, causing more than $9 million in losses to lenders.
On October 12, 2011, Hodges pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud. Fifteen other individuals, including Jose Guzman, have been convicted of various charges stemming from this scheme. Guzman awaits sentencing.
This case has been investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development, Office of Inspector General. The case is being prosecuted by Assistant United States Attorneys Michael S. McGarry and David T. Huang.
In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 begin_of_the_skype_highlighting
FREE 203-333-3512 end_of_the_skype_highlighting and requesting
the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to
ctmortgagefraud@ic.fbi.gov.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
According to court documents and statements made in court, from approximately 2004 to 2007, Jose Guzman and others used mortgage brokerage, property management, and home improvement companies to arrange for individuals (“buyers”) to purchase real estate, primarily residential housing properties located in New London County, by obtaining funding from various mortgage companies and mortgage originators after submitting false information on the buyers’ mortgage loan applications. The fraudulent information included information regarding income, assets, employment, rent history, as well as the buyers’ intention to make the properties their primary residences. The buyers were compensated for participating in the scheme.
Hodges, who was unemployed at the time, acted as a buyer in connection with Guzman’s purchase of one property in New London in 2006 and one property in Norwich in 2007. Hodges also referred individuals to Guzman to act as buyers and identified properties to be bought and sold as part of the conspiracy. Hodges received $5,000 both times he acted as a buyer and additional compensation when he identified a buyer or a property to be bought and sold.
According to previously filed court documents, the government believes that more than 200 fraudulent mortgages were funded through this mortgage fraud scheme, causing more than $9 million in losses to lenders.
On October 12, 2011, Hodges pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud. Fifteen other individuals, including Jose Guzman, have been convicted of various charges stemming from this scheme. Guzman awaits sentencing.
This case has been investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development, Office of Inspector General. The case is being prosecuted by Assistant United States Attorneys Michael S. McGarry and David T. Huang.
In July 2009, the U.S. Attorney’s Office and the Federal Bureau of Investigation announced the formation of the Connecticut Mortgage Fraud Task Force to investigate and prosecute mortgage fraud cases and related financial crimes occurring in Connecticut. Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 begin_of_the_skype_highlighting
FREE 203-333-3512 end_of_the_skype_highlighting and requesting
the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to
ctmortgagefraud@ic.fbi.gov.The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
Groton Resident Sentenced to Federal Prison for Role in Mortgage Fraud Conspiracy
David B. Fein, United States Attorney for the District of Connecticut,
announced that Kenneth Perkins, 30, of Groton, was sentenced by Chief
United States District Judge Alvin W. Thompson in Hartford to eight months of
imprisonment, followed by three years of supervised release, for his role in an
extensive mortgage fraud scheme.
According to court documents and statements made in court, between February 2007 and April 2010, Syed Babar of New London orchestrated a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications, and fraudulent property appraisals. Perkins conspired with Babar and others by serving as a “buyer” in approximately eight residential property sales in 2007. All but one of these properties are in Connecticut. Perkins knew that the sales prices on the sales contracts and closing documents were fraudulently inflated in order to secure loans at amounts higher than the prices actually agreed to by the sellers. Also included on the loan applications was false information about his income, his assets and liabilities, his intention to occupy the home as his primary residence, and his ownership interest in property in the prior three years.
Perkins received as much as $20,000 each time he agreed to act as a buyer.
Perkins also assisted the conspiracy by helping to obtain residential real estate loans in the names of other straw buyers. This assistance included creating false documentation in support of loan applications, including false employment records, false wage records, and false bank records. It also included utilizing a bank account into which some of the fraudulent proceeds were funneled and working with an appraiser to generate fraudulent appraisals that would be sent to lenders in support of loan applications.
Babar and his co-conspirators conducted approximately 30 fraudulent mortgage transactions. As a result, various lenders suffered total losses of approximately $4.75 million.
Chief Judge Thompson ordered Perkins to pay restitution in the amount of $4,180,565.
On October 1, 2010, Perkins pleaded guilty to one count of conspiracy to commit wire fraud.
Thirteen individuals have been convicted in connection with this scheme.
On November 28, 2011, Syed Babar was sentenced to 120 months of imprisonment. Six other scheme participants have received prison terms ranging from 30 to 90 months.
This case was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development-Office of Inspector General and is being prosecuted by Assistant United States Attorneys Eric J. Glover, Susan Wines, and Liam Brennan.
Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 begin_of_the_skype_highlightingFREE 203-333-3512 end_of_the_skype_highlighting and requesting
the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to
ctmortgagefraud@ic.fbi.gov.
The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
According to court documents and statements made in court, between February 2007 and April 2010, Syed Babar of New London orchestrated a scheme to obtain millions of dollars in residential real estate loans, including loans insured by the Federal Housing Administration, through the use of sham sales contracts, false loan applications, and fraudulent property appraisals. Perkins conspired with Babar and others by serving as a “buyer” in approximately eight residential property sales in 2007. All but one of these properties are in Connecticut. Perkins knew that the sales prices on the sales contracts and closing documents were fraudulently inflated in order to secure loans at amounts higher than the prices actually agreed to by the sellers. Also included on the loan applications was false information about his income, his assets and liabilities, his intention to occupy the home as his primary residence, and his ownership interest in property in the prior three years.
Perkins received as much as $20,000 each time he agreed to act as a buyer.
Perkins also assisted the conspiracy by helping to obtain residential real estate loans in the names of other straw buyers. This assistance included creating false documentation in support of loan applications, including false employment records, false wage records, and false bank records. It also included utilizing a bank account into which some of the fraudulent proceeds were funneled and working with an appraiser to generate fraudulent appraisals that would be sent to lenders in support of loan applications.
Babar and his co-conspirators conducted approximately 30 fraudulent mortgage transactions. As a result, various lenders suffered total losses of approximately $4.75 million.
Chief Judge Thompson ordered Perkins to pay restitution in the amount of $4,180,565.
On October 1, 2010, Perkins pleaded guilty to one count of conspiracy to commit wire fraud.
Thirteen individuals have been convicted in connection with this scheme.
On November 28, 2011, Syed Babar was sentenced to 120 months of imprisonment. Six other scheme participants have received prison terms ranging from 30 to 90 months.
This case was investigated by the Federal Bureau of Investigation and the U.S. Department of Housing and Urban Development-Office of Inspector General and is being prosecuted by Assistant United States Attorneys Eric J. Glover, Susan Wines, and Liam Brennan.
Citizens are encouraged to report any suspected mortgage fraud activity by calling 203-333-3512 begin_of_the_skype_highlighting
FREE 203-333-3512 end_of_the_skype_highlighting and requesting
the Connecticut Mortgage Fraud Task Force, or by sending an e-mail to
ctmortgagefraud@ic.fbi.gov.The Connecticut Mortgage Fraud Task Force includes representatives from the U.S. Attorney’s Office; Federal Bureau of Investigation; Internal Revenue Service-Criminal Investigation; U.S. Postal Inspection Service; U.S. Department of Housing and Urban Development, Office of Inspector General; Federal Deposit Insurance Corporation, Office of Inspector General; and State of Connecticut Department of Banking.
To report financial fraud crimes, and to learn more about the President’s Financial Fraud Enforcement Task Force, please visit www.stopfraud.gov.
Long Island Railroad Retiree Pleads Guilty in Connection with Massive Disability Fraud Scheme
Preet Bharara, the United States Attorney for the Southern District of New
York, announced that Gary Satin, a former electrician with the Long Island
Railroad (LIRR), pled guilty to federal charges in connection with his
participation in a massive fraud scheme in which LIRR workers claimed to be
disabled upon early retirement so that they could receive disability benefits to
which they were not entitled. Satin also pled guilty today to perjury for making
false statements to the grand jury that was hearing evidence in this case. Satin
pled guilty before U.S. Magistrate Judge Henry Pitman.
Manhattan U.S. Attorney Preet Bharara said, “The money train has come to a halt for Gary Satin, as it will for others. It was corruption, not coincidence, that caused Gary Satin’s purportedly disabling condition to align with his early retirement, making him eligible for annual benefit payments that almost matched his salary. As he acknowledged today, his disability and its timing were part of a pre-planned scam designed to game the system. What’s worse, in an effort to cover-up his fraud, he lied to a grand jury. He will now answer for his crimes.”
According to the complaint and the superseding information filed today in Manhattan federal court:
The LIRR Disability Fraud Scheme
The Railroad Retirement Board (RRB) is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50—the age of eligibility has since changed to 55—if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. At 65, they then receive a full RRB pension. For LIRR workers who retired at 50, they would receive less than their prior salary and substantially lower pension payments than those to which the workers would be entitled at 65. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under oath in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 2004 through 2008, 61 percent of LIRR employees who stopped working and began receiving RRB disability benefits were between the ages of 50 and 55. In contrast, only seven percent of employees at Metro-North who stopped working and received disability benefits during the same time period were between the ages of 50 and 55.
Satin’s Fraud
Gary Satin was an LIRR electrician who retired in June 2005 at the age of 55. In his last year of employment, Satin received approximately $84,000 in compensation. After retirement, he sought and obtained sickness and disability benefits from the RRB. In 2010, he received approximately $32,000 in LIRR pension payments and approximately $36,000 from his RRB disability annuity, for a total of $68,000 in annual benefits.
In applying for disability benefits, Satin claimed that he was unable to perform his railroad job and that indoor and outdoor chores were “difficult.” However, as Satin admitted during today’s proceeding, no medical condition prevented him from performing his railroad job. Instead, Satin had pre-planned his false disability to supplement his retirement income. In fact, in the 18 months prior to his retirement, Satin did not take a single day of sick leave, and in the five months prior to his retirement, he worked approximately 154 overtime hours. In the years after his retirement, Satin performed landscaping, contracting, and electrical work for pay. Satin also exploited his false disability to obtain other benefits to which he was not entitled, such as a handicapped parking pass from New York State, claiming that his disability “severely limited” his “ability to walk.”
Satin’s Perjury
On April 28, 2011, Satin appeared before a grand jury in the Southern District of New York. After swearing to tell the truth, and after having been advised of his rights and his obligation to provide truthful testimony, Satin intentionally provided false and misleading testimony on material matters, including falsely denying that he performed landscaping, contracting, and electrical work post-retirement.
The Voluntary Disclosure and Disposition Program
On May 22, 2012, the U.S. Attorney’s Office, in conjunction with the RRB and the LIRR, announced a voluntary disclosure and disposition program. Under the program, the U.S. Attorney’s Office will agree not to prosecute, or file a civil action against, any LIRR retiree who voluntarily comes forward and admits that he or she obtained RRB disability benefits by making false and/or misleading statements to the RRB and agrees to give up his or her right to certain RRB disability benefits. In addition, the RRB will agree not to commence any administrative proceedings seeking the repayment of any disability benefits that are the subject of this program, and the LIRR will agree not to seek forfeiture of LIRR Company Pension Plan(s) benefits. Under the Early Version of the program, any participating LIRR retiree will give up his or her right to future disability benefits, while under the Standard Version of the program, any participating LIRR retiree will give up not only future disability benefits but 50 percent of the RRB disability benefits he or she has already received. The deadline for the Early Version of the program is September 14, 2012. The deadline for the Standard Version of the program is October 15, 2012.
***
Satin, 63, of Mooresville, North Carolina, pled guilty to one count of conspiracy to defraud the U.S. RRB and to commit health care fraud, mail fraud; the submission of false claims; and one count of perjury. Each count carries a maximum sentence of five years in prison.
Manhattan U.S. Attorney Bharara praised the RRB-OIG, the FBI, and the MTA-OIG for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
In addition to Satin, 21 people have been charged in connection with the LIRR disability fraud scheme. They include two doctors and an office manager for one of the doctors who were involved in falsely diagnosing retiring LIRR workers as disabled; two “facilitators” who served as liaisons between retiring workers and the participating doctors; and 17 LIRR retirees, one of whom was also charged as a facilitator. The charges against the defendants are allegations and they are presumed innocent unless and until proven guilty.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Danya Perry, and Daniel Tehrani are in charge of the prosecution.
Manhattan U.S. Attorney Preet Bharara said, “The money train has come to a halt for Gary Satin, as it will for others. It was corruption, not coincidence, that caused Gary Satin’s purportedly disabling condition to align with his early retirement, making him eligible for annual benefit payments that almost matched his salary. As he acknowledged today, his disability and its timing were part of a pre-planned scam designed to game the system. What’s worse, in an effort to cover-up his fraud, he lied to a grand jury. He will now answer for his crimes.”
According to the complaint and the superseding information filed today in Manhattan federal court:
The LIRR Disability Fraud Scheme
The Railroad Retirement Board (RRB) is an independent U.S. agency that administers benefit programs, including disability benefits, for the nation’s railroad workers and their families. A unique LIRR contract allowed employees to retire at the relatively young age of 50—the age of eligibility has since changed to 55—if they had been employed by the LIRR for at least 20 years. Eligible employees are entitled to receive an LIRR pension, which is a portion of the full retirement payment for which they are eligible at 65. At 65, they then receive a full RRB pension. For LIRR workers who retired at 50, they would receive less than their prior salary and substantially lower pension payments than those to which the workers would be entitled at 65. However, LIRR employees who retired and claimed disability could receive a disability payment from the RRB on top of their LIRR pension, regardless of age. A retiree’s LIRR pension, in combination with RRB disability payments, can be roughly equivalent to the base salary earned during his or her career.
Hundreds of LIRR employees have exploited the overlap between the LIRR pension and the RRB disability program by pre-planning the date on which they would falsely declare themselves disabled so that it would coincide with their projected retirement date. These false statements, made under oath in disability applications, allowed LIRR employees to retire as early as age 50 with an LIRR pension, supplemented by the fraudulently obtained RRB disability annuity. From 2004 through 2008, 61 percent of LIRR employees who stopped working and began receiving RRB disability benefits were between the ages of 50 and 55. In contrast, only seven percent of employees at Metro-North who stopped working and received disability benefits during the same time period were between the ages of 50 and 55.
Satin’s Fraud
Gary Satin was an LIRR electrician who retired in June 2005 at the age of 55. In his last year of employment, Satin received approximately $84,000 in compensation. After retirement, he sought and obtained sickness and disability benefits from the RRB. In 2010, he received approximately $32,000 in LIRR pension payments and approximately $36,000 from his RRB disability annuity, for a total of $68,000 in annual benefits.
In applying for disability benefits, Satin claimed that he was unable to perform his railroad job and that indoor and outdoor chores were “difficult.” However, as Satin admitted during today’s proceeding, no medical condition prevented him from performing his railroad job. Instead, Satin had pre-planned his false disability to supplement his retirement income. In fact, in the 18 months prior to his retirement, Satin did not take a single day of sick leave, and in the five months prior to his retirement, he worked approximately 154 overtime hours. In the years after his retirement, Satin performed landscaping, contracting, and electrical work for pay. Satin also exploited his false disability to obtain other benefits to which he was not entitled, such as a handicapped parking pass from New York State, claiming that his disability “severely limited” his “ability to walk.”
Satin’s Perjury
On April 28, 2011, Satin appeared before a grand jury in the Southern District of New York. After swearing to tell the truth, and after having been advised of his rights and his obligation to provide truthful testimony, Satin intentionally provided false and misleading testimony on material matters, including falsely denying that he performed landscaping, contracting, and electrical work post-retirement.
The Voluntary Disclosure and Disposition Program
On May 22, 2012, the U.S. Attorney’s Office, in conjunction with the RRB and the LIRR, announced a voluntary disclosure and disposition program. Under the program, the U.S. Attorney’s Office will agree not to prosecute, or file a civil action against, any LIRR retiree who voluntarily comes forward and admits that he or she obtained RRB disability benefits by making false and/or misleading statements to the RRB and agrees to give up his or her right to certain RRB disability benefits. In addition, the RRB will agree not to commence any administrative proceedings seeking the repayment of any disability benefits that are the subject of this program, and the LIRR will agree not to seek forfeiture of LIRR Company Pension Plan(s) benefits. Under the Early Version of the program, any participating LIRR retiree will give up his or her right to future disability benefits, while under the Standard Version of the program, any participating LIRR retiree will give up not only future disability benefits but 50 percent of the RRB disability benefits he or she has already received. The deadline for the Early Version of the program is September 14, 2012. The deadline for the Standard Version of the program is October 15, 2012.
***
Satin, 63, of Mooresville, North Carolina, pled guilty to one count of conspiracy to defraud the U.S. RRB and to commit health care fraud, mail fraud; the submission of false claims; and one count of perjury. Each count carries a maximum sentence of five years in prison.
Manhattan U.S. Attorney Bharara praised the RRB-OIG, the FBI, and the MTA-OIG for their outstanding work in the investigation, which he noted is ongoing. He also acknowledged the previous investigation conducted by the New York State Attorney General’s Office into these pension fraud issues.
In addition to Satin, 21 people have been charged in connection with the LIRR disability fraud scheme. They include two doctors and an office manager for one of the doctors who were involved in falsely diagnosing retiring LIRR workers as disabled; two “facilitators” who served as liaisons between retiring workers and the participating doctors; and 17 LIRR retirees, one of whom was also charged as a facilitator. The charges against the defendants are allegations and they are presumed innocent unless and until proven guilty.
The Office’s Complex Frauds Unit is handling the case. Assistant U.S. Attorneys Justin Weddle, Danya Perry, and Daniel Tehrani are in charge of the prosecution.
Subscribe to:
Posts (Atom)