Executives from Miami-Area Mental Health Care Hospital Convicted for Participating in $70 Million Medicare Fraud Scheme

WASHINGTON – A federal jury today convicted four individuals for their participation in a Medicare fraud scheme involving nearly $70 million in fraudulent billings by Hollywood Pavilion (HP), a mental health care hospital.

Today’s verdict was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

Karen Kallen-Zury, 59, of Lighthouse Point, Fla., and Daisy Miller, 44, of Hollywood, Fla., were each found guilty of one count of conspiracy to commit wire fraud and health care fraud, five substantive counts of wire fraud and two substantive counts of health care fraud.  Michele Petrie, 64, of Ft. Lauderdale, Fla., was found guilty of one count of conspiracy to commit wire fraud and health care fraud and three substantive counts of wire fraud.  Kallen-Zury, Miller, Petrie and a fourth defendant, Christian Coloma, 49, of Miami Beach, Fla., were also convicted of one count of conspiracy to pay bribes in connection with Medicare, with Kallen-Zury and Coloma also each being convicted on five substantive counts of paying bribes.

“The defendants convicted today participated in a massive scheme that attempted to defraud the United States of approximately $70 million by taking advantage of Medicare beneficiaries,” said Acting Assistant Attorney General Raman.  “By paying bribes to a network of patient recruiters and falsifying documents, the defendants created the illusion of providing intensive psychiatric care to qualifying patients, when in reality they provided no care of substance.  Today’s verdict illustrates the success of the inter-agency Medicare Fraud Strike Force, which is dedicated to stamping out Medicare fraud.”

The defendants were charged in an indictment returned on Oct. 2, 2012.  Evidence at trial demonstrated that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through HP, a state-licensed psychiatric hospital located in Hollywood that purportedly provided, among other things, inpatient psychiatric care and intensive outpatient psychiatric care.  The defendants paid illegal bribes and kickbacks to patient brokers in order to obtain Medicare beneficiaries as patients at HP who did not qualify for psychiatric treatment.  The defendants then submitted claims to Medicare for those patients who were procured through bribes and kickbacks.

Karen Kallen-Zury, the CEO and registered agent of HP, attempted to conceal the payment of bribes and kickbacks by creating false documents to make it appear as if legitimate services were being rendered.

Evidence at trial established that Miller, the clinical director of HP’s inpatient facility, and Petrie, the head of HP’s intensive outpatient program, facilitated the payment of bribes to patient recruiters and oversaw the fraudulent admissions and treatment of unqualified patients.

Trial evidence also demonstrated that Coloma, the director of physical therapy for an entity associated with HP, facilitated the payment of bribes and kickbacks, and he supervised the creation of false documents to conceal the bribery scheme.

From at least 2003 through at least August 2012, HP billed Medicare nearly $70 million for services that were not properly rendered, for patients that did not qualify for the services being billed and for claims for patients who were procured through bribes and kickbacks.

The criminal case is being prosecuted by Trial Attorneys Robert A. Zink, Andrew H. Warren and Anne McNamara 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 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Former Department of Health and Human Services Employee Sentenced to Prison for Wire Fraud Scheme

A former employee of the Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response (HHS-ASPR) was sentenced today to serve six months in prison for his role in a scheme to defraud the United States by submitting fraudulent employment offers in order to claim retention bonuses totaling $138,875, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

 Michael A. Balady, 62, of Springfield, Va., was sentenced by U.S. District Judge Rudolph Contreras in the District of Columbia.  In addition to his prison term, Balady was sentenced to serve six months of home confinement and two years of supervised release, and he was ordered to pay a fine of $22,000.

Balady worked in the HHS-ASPR initially as the director of acquisition management systems in ASPR’s Biological Advanced Research and Development Authority and later as the acting director of ASPR’s Office of Acquisitions, Management, Contracts and Grants.  As part of his plea agreement, Balady admitted that he conspired with an employee of a communications firm based in Alexandria, Va., to fabricate employment offers for a position with that firm in order to justify retention bonuses paid to him by HHS.  Retention bonuses are monetary incentives paid by HHS to employees deemed essential to its mission who would be likely to leave in the absence of such a bonus.

From 2009 until 2012, Balady improperly received retention bonus payments totaling $94,940.  In June 2012, HHS approved another retention bonus in the amount of $38,875, but that bonus was never paid to Balady.

This case was investigated by the HHS Office of the Inspector General and was prosecuted by Trial Attorneys Richard B. Evans and Mark Angehr of the Criminal Division’s Public Integrity Section.

Four Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions

Four Northern California real estate investors have agreed to plead guilty for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Wesley Barta of Oakland, Irma Galvez of Pacheco, Calif., Stan Kahan of Berkeley, Calif., and Joseph Vesce of San Francisco.

To date, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 35 individuals, including Barta, Galvez, Kahan and Vesce, have agreed to plead or have pleaded guilty.

“These conspirators manipulated and suppressed the competitive process through their fraudulent and collusive conduct to the detriment of lenders and distressed homeowners,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will continue to pursue those responsible for these illegal activities.”

According to court documents, for various lengths of time between June 2008 and January 2011, Barta and Vesce conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa County, Calif.   Barta and Vesce were also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Contra Costa County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.

The same charges were brought against Galvez and Kahan for their involvement in similar conduct in Alameda County, Calif., from November 2008 through May 2010.

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Alameda and Contra Costa County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“The continued success of our investigation into the bid rigging conspiracies at Northern California public foreclosure auctions is evident in today’s four guilty pleas,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI will remain focused with the Antitrust Division in holding those accountable for such illegal acts.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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’s 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 nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.

General Electric Aviation Systems to Pay U.S. $6.58 Million to Resolve False Claims Act Allegations

General Electric Aviation Systems (GEAS) has agreed to pay $6.58 million to settle allegations that it submitted false claims in connection with multiple Department of Defense contracts, the Justice Department announced today.  GEAS, headquartered in Ohio, manufactures and sells integrated systems and components for commercial, corporate, military and marine aircraft.

“This case demonstrates the Department of Justice’s commitment to ensure that our military receives quality products to perform the important mission of protecting and defending our country,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “The department will aggressively pursue those who put that mission at risk.”

GEAS contracted to manufacture and deliver to the Navy external fuel tanks (EFTs) for use on the F/A-18 Hornet strike fighter jet.  GEAS manufactured the EFTs at its plant in Santa Ana, California.  In March 2008, a GEAS-manufactured EFT failed government testing, which led to a multi-year investigation by the local California offices of the Defense Contract Management Agency, the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Navy Criminal Investigative Service.  As a result of that investigation, the United States alleged that GEAS knowingly failed to comply with contract specifications and failed to undertake proper quality control procedures in connection with 641 EFTs it delivered to the Navy between June 2005 and February 2008.

In addition, the settlement resolves allegations that, between June 2010 and June 2011, GEAS knew that it falsely represented to another government contractor that GEAS had performed a complete inspection of 228 drag beams to be used on Army UH-60 Blackhawk helicopters, and that those 228 drag beams conformed to all contract specifications.

“Defense contractors agree to provide the government with a quality product, and in doing so, they promise to follow strict manufacturing and testing protocols to ensure that our military receives only the best equipment,” said André Birotte Jr., U.S. Attorney for the Central District of California.  “In this case, some of the hardware sold to the government did not meet quality-control standards, and that failure could have put our service members at risk.  This multimillion dollar settlement is designed to ensure that General Electric Aviation Systems does not engage in this type of misconduct in the future, and this case should serve as a warning to any government contractor who thinks it can cut corners.”

Carter Stewart, U.S. Attorney for the Southern District of Ohio, added, “We are determined to protect the integrity of the system that provides goods and services to the men and women who serve in the armed forces.  The False Claims Act is an effective and powerful tool to help us carry out our mission.”

Allegations about GEAS’s misconduct at the Santa Ana facility were included in a lawsuit filed by former GEAS Santa Ana employee Jeffrey Adler under the qui tam or whistleblower provisions of the False Claims Act, which permit private individuals called “relators” to bring lawsuits for false claims on behalf of the United States, and to receive a portion of the proceeds of any settlement or judgment.  Mr. Adler’s share of the settlement has not yet been determined.

This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Central District of California; the U.S. Attorney’s Office for the Southern District of Ohio; the Defense Contract Management Agency; the Defense Contract Audit Agency; the Defense Criminal Investigative Service; and the Navy Criminal Investigative Service in investigating and resolving the allegations.

The qui tam lawsuit, filed in the U.S. District Court for the Southern District of Ohio, is captioned United States ex rel. Adler v. General Electric Aviation Services (1-CV-00313).  The claims resolved by the settlement are allegations only and do not constitute a determination of liability.

The Hill: Lobbying World

 

Click Here:  The Hill: Lobbying World (June 25, 2013)

Former Executive at Florida-Based Lender Processing Services Inc. Sentenced to Five Years in Prison for Role in Mortgage-Related Document Fraud Scheme

A former executive of Lender Processing Services Inc. (LPS) – a publicly traded company based in Jacksonville, Fla. – was sentenced today to serve five years in prison for her participation in a six-year scheme to prepare and file more than 1 million fraudulently signed and notarized mortgage-related documents with property recorders’ offices throughout the United States, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida Robert E. O’Neill, and Special Agent in Charge Michelle S. Klimt of the FBI Jacksonville Division.

Lorraine Brown, 56, of Alpharetta, Ga., was sentenced by Senior U.S. District Judge Henry Lee Adams Jr. in the Middle District of Florida. In addition to her prison term, Brown was sentenced to serve two years of supervised release and ordered to pay a fine of $15,000.   On Nov. 20, 2012, Brown pleaded guilty to conspiracy to commit mail and wire fraud.   

“Lorraine Brown will spend five years in prison for her central role in a scheme to fraudulently execute thousands of mortgage-related documents while our nation’s housing market was at its most vulnerable point in generations,” said Acting Assistant Attorney General Raman.  “The documents that were fraudulently produced under Brown’s direction were relied upon in court proceedings, including a significant number of foreclosure and bankruptcy matters. Today’s sentencing represents appropriate punishment for someone who sought to capitalize on the nation’s housing crisis.”

“Floridians were hard hit by the downturn in the real estate market,” said U.S. Attorney O’Neill.  “We will continue to pursue individuals like Brown who took advantage of consumers for personal gain and contributed to the financial crisis.  Prosecuting financial crimes remains a priority for our office.”

“The investigation of sophisticated mortgage and corporate fraud schemes continues to be a priority for the Federal Bureau of Investigation as such criminal activities have a significant economic impact on our community,” said Special Agent in Charge Klimt.

Brown was an executive at LPS and the chief executive of DocX LLC, which was a wholly-owned subsidiary of LPS, until it was closed down in early 2010.    DocX’s main clients were residential mortgage servicers, which typically undertake certain actions for the owners of mortgage-backed promissory notes.    Servicers hired DocX to, among other things, assist in creating and executing mortgage-related documents filed with recorders’ offices.

According to Brown’s plea agreement, employees of DocX, at the direction of Brown and others, began forging and falsifying signatures of authorized personnel on the mortgage-related documents that they had been hired to prepare and file with property recorders’ offices.    Only specific personnel at DocX were authorized by clients to sign the documents, but the documents were fraudulently notarized as if actually executed by authorized DocX employees.

According to plea documents, Brown implemented these signing practices at DocX to enable DocX and Brown to generate greater profit.   Specifically, DocX was able to create, execute and file larger volumes of documents using these signing and notarization practices.    To further increase profits, DocX also hired temporary workers to act as authorized signers.    These temporary employees worked for much lower costs and without the quality control represented by Brown to DocX’s clients.   Some of these temporary workers were able to sign thousands of mortgage-related instruments a day.   Between 2003 and 2009, DocX generated approximately $60 million in gross revenue.

After these documents were falsely signed and fraudulently notarized, Brown authorized DocX employees to file and record them with local county property records offices across the country.   Many of these documents were later relied upon in court proceedings, including property foreclosures and federal bankruptcy actions.   Brown admitted she understood that property recorders, courts, title insurers and homeowners relied upon the documents as genuine.

This case is being prosecuted by Trial Attorney Ryan Rohlfsen and Assistant Chief Glenn S. Leon of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark B. Devereaux of the U.S. Attorney’s Office for the Middle District of Florida.    This case was investigated by the FBI, with assistance from the state of Florida’s Department of Financial Services.

This case 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’s 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 2,900 mortgage fraud defendants.

Maurice E. Stucke Curriculum Vitae

Maurice E. Stucke Curriculum Vitae (pdf)

Leading Antitrust Lawyers and DOJ Alumni Allen P. Grunes and Maurice E. Stucke Join GeyerGorey LLP

GeyerGorey LLP is pleased to announce that two veteran Department of Justice prosecutors, Allen P. Grunes and Maurice E. Stucke, have joined the firm.  Grunes, recently named as a “Washington D.C. Super Lawyer for 2013” in antitrust litigation, government relations, and mergers & acquisitions, joins as a partner.  Stucke, a widely-published professor with numerous honors including a Fulbright fellowship, joins as of counsel.  Stucke will continue to teach at the University of Tennessee College of Law.

“We are delighted that Allen and Maurice have decided to join us,” said Brad Geyer.  “They add considerable fire power to our already impressive antitrust, compliance and white collar roster and give us more capabilities and capacity, particularly on the civil side.”

Robert Zastrow, who was Verizon’s Assistant General Counsel for 15 years before co-founding the firm in October 2012, added, “Allen’s and Maurice’s extensive background and expertise nicely complement our firm’s unique philosophy and enrich our competition and merger practices.  We are thrilled they are joining our innovative effort in delivering legal services.”

GeyerGorey LLP presents a new way to practice law.  It may be the only law firm in the country where prior federal prosecutorial experience is a prerequisite for partnership.  Given its lawyers’ extensive legal expertise, GeyerGorey can handle trials involving the most complex legal and factual issues, and, when advantageous, work with other law firms, economists and specialists, particularly former federal prosecutors and agents, who bolster existing resources, expertise and constantly freshen perspective.  As founding partner Hays Gorey added, “We seek to avoid the traditional hierarchal partner-associate pyramid, hourly billing fee structure, and practice fiefdoms.  We want to attract entrepreneurial lawyers, like Allen and Maurice, who love competition policy and practicing law.  Having worked with them at DOJ, I am excited about the expertise and enthusiasm they bring to our clients.”

Consistent with GeyerGorey’s philosophy, both Grunes and Stucke are alumni of the U.S. Department of Justice, Antitrust Division, in Washington, D.C.  At DOJ, they led numerous civil investigations, worked on high-profile trials, and negotiated consent decrees involving significant divestitures across many different industries.  In their last case together at the Division, In re Visa Check/MasterMoney Antitrust Litigation, they successfully sought, as a matter of equity and the first time in the Division’s history, for the government’s share of damages in a private class action settlement.

Grunes and Stucke are regarded as leading authorities on competition policy in the media.  Their scholarship on media and telecommunications policy has been published in the Antitrust Law Journal, the Northwestern University Law Review, the Connecticut Law Review, the Journal of European Competition Law & Practice, and the Federal Communications Law Journal.  They have spoken at numerous conferences on competition policy and the media, including the U.S. Federal Trade Commission’s workshop, How Will Journalism Survive the Internet Age?  Both are frequently quoted in the press on mergers and anticompetitive conduct.  In addition, both serve on the advisory boards of the American Antitrust Institute and the Loyola Institute for Consumer Antitrust Studies in Chicago.

Allen Grunes joins GeyerGorey from another Washington, D.C. firm, where he was a shareholder.  His recent matters include acting as class counsel in litigation against several hospitals and an association in Arizona that allegedly artificially depressed the rates paid to temporary nurses, opposing the merger of AT&T and T-Mobile for a coalition of companies including DISH Network, and representing Warner Music Group in connection with the merger of Universal and EMI.  He has counseled dozens of companies and associations on antitrust issues and corporate mergers.  He also serves as chair of the antitrust committee of the Bar Association of the District of Columbia.

Maurice Stucke is a tenured professor at the University of Tennessee and a leading competition law scholar.  With over 30 articles and book chapters, Stucke has been invited by competition authorities from around the world and the OECD to speak about behavioral economics and competition policy.  He currently is one of the United States’ non-governmental advisors to the International Competition Network, the only international body devoted exclusively to competition law enforcement.  His scholarship has been cited by the U.S. federal courts, the OECD, competition agencies and policymakers.

Headquartered in Washington, D.C., GeyerGorey specializes in white collar criminal defense, particularly investigations and cases involving allegations of economic crimes, such as violations of the federal antitrust laws (price fixing, bid rigging, territorial and customer allocation agreements), procurement fraud, securities fraud, foreign bribery (Foreign Corrupt Practices Act) and qui tam (False Claims Act) and whistleblower actions.  The firm also conducts internal investigations of possible criminal conduct and provides advice regarding compliance with U.S. antitrust and other laws.

Former Enron CEO Jeffrey Skilling Resentenced to 168 Months for Fraud, Conspiracy Charges

Former Enron Chief Executive Officer Jeffrey K. Skilling has been resentenced to 168 months in prison on conspiracy, securities fraud, and other charges related to the collapse of Enron Corporation. In addition to the prison sentence, Skilling, 59, was ordered to forfeit approximately $42 million to be applied toward restitution for the victims of the fraud at Enron.

Acting Assistant Attorney General Mythili Raman of the Criminal Division made the announcement after Skilling was resentenced before U.S. District Judge Sim Lake at the U.S. District Court in Houston.

“The sentence handed down today ends years of litigation, imposes significant punishment upon the defendant and precludes him from ever challenging his conviction or sentence,” said Acting Assistant Attorney General Raman. “With today’s court action, victims of Skilling’s crimes will finally receive more than $40 million that he owes them.  We appreciate the hard work and dedication of all the prosecutors and agents who have handled this important case from the initial investigation to today’s successful conclusion.”

A federal jury found Skilling guilty in Houston on May 25, 2006, of one count of conspiracy, 12 counts of securities fraud, one count of insider trading, and five counts of making false statements to auditors.  Judge Lake initially sentenced Skilling to serve 292 months of imprisonment on Oct. 23, 2006.  On Jan. 6, 2009, the United States Court of Appeals for the Fifth Circuit affirmed Skilling’s convictions but vacated his sentence and remanded for a new sentencing hearing.  The court of appeals concluded that the district court erred by increasing Skilling’s sentence for having substantially jeopardized the safety and soundness of a financial institution – that is, Enron’s pension plan.  As a result, the court of appeals effectively reduced Skilling’s guidelines range of imprisonment by approximately nine years.

In May 2013, the government and Skilling entered into an agreement to recommend jointly to the district court a sentence between 168 months and 210 months of imprisonment, a limited reduction in Skilling’s guidelines range of imprisonment in exchange for Skilling agreeing, among other things, not to contest the original forfeiture and restitution order and to waive all appeals and other litigation.  As court documents make clear, the government entered into this agreement, in part, to bring finality to Skilling’s convictions and thereby allow the government to promptly seek the distribution of approximately $42 million to victims of Skilling’s crimes.

Skilling’s convictions stemmed from a scheme to deceive the investing public, the U.S. Securities and Exchange Commission, and others about the true performance of Enron’s businesses. The scheme was designed to make it appear that Enron was growing at a healthy and predictable rate, consistent with analysts’ published expectations, that Enron did not have significant write-offs or debt and was worthy of an investment-grade credit rating, that Enron was comprised of a number of successful business units, and that the company had an appropriate cash flow. This scheme had the effect of artificially inflating Enron’s stock price, which increased from approximately $30 per share in early 1998 to over $80 per share in January 2001, and artificially stemming the decline of the stock during the first three quarters of 2001.

The fraud scheme eventually unraveled and Enron filed for bankruptcy in December 2001, making its stock virtually worthless.

The investigation into Enron’s collapse was conducted by the Enron Task Force, a team of federal prosecutors supervised by the Justice Department’s Criminal Division, and Special Agents from the FBI and IRS Criminal Investigation. The Task Force received considerable assistance from the Securities and Exchange Commission. The resentencing hearing was handled by Patrick Stokes, Albert Stieglitz and Robert Heberle of the Criminal Division’s Fraud Section.