Former Siemens Executive Pleads Guilty To Role in $100 Million Foreign Bribery Scheme

Thursday, March 15, 2018

The former Technical Manager of the Major Projects division of Siemens Business Services GmbH & Co. OGH (SBS), a wholly owned subsidiary of Siemens Aktiengesellschaft (Siemens AG), pleaded guilty today to conspiring to pay tens of millions of dollars in bribes to Argentine government officials to secure, implement and enforce a $1 billion contract to create national identity cards.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman of the Southern District of New York and Assistant Director in Charge Andrew W. Vale of the FBI’s Washington, D.C. Field Office made the announcement.

Eberhard Reichert, 78, of Munich, Germany, was employed by Siemens AG from 1964 until 2001.  Beginning in approximately 1990, Reichert was the Technical Manager of the Major Projects division of SBS.  Reichert pleaded guilty today in the Southern District of New York to one count of conspiring to violate the anti-bribery, internal controls and books and records provisions of the Foreign Corrupt Practices Act (FCPA) and to commit wire fraud.  Reichert was arraigned last December on a three-count indictment filed in December 2011 charging him and seven other individuals.  He will be sentenced by U.S. District Judge Denise L. Cote of the Southern District of New York, who accepted his plea today.

“Far too often, companies pay bribes as part of their business plan, upsetting what should be a level playing field and harming companies that play by the rules,” said Acting Assistant Attorney General Cronan.  “In this case, one of the largest public companies in the world paid staggeringly large bribes to officials at the uppermost levels of the government of Argentina to secure a billion-dollar contract.  Eberhard Reichert’s conviction demonstrates the Criminal Division’s commitment to bringing both companies and corrupt individuals to justice, wherever they may reside and regardless of how long they may attempt to avoid arrest.”

“Eberhard Reichert tried to sidestep laws designed to root corruption out of the government contracting process,” said U.S. Attorney Berman.  “As he admitted in Manhattan federal court today, Reichert helped to conceal tens of millions of dollars in bribes that were paid to unfairly secure a lucrative contract from the Argentine government.  Today’s plea should be a warning to others that our office is committed to bringing corrupt criminals to justice, no matter how long they run from the law.”

In 1998, the government of Argentina awarded to a subsidiary of Siemens AG a contract worth approximately $1 billion to create state-of-the-art national identity cards (the Documento Nacional de Identidad or DNI project).  The Argentine government terminated the DNI project in 2001.  In connection with his guilty plea, Reichert admitted that he engaged in a decade-long scheme to pay tens of millions of dollars in bribes to Argentine government officials in connection with the DNI project, which was worth more than $1 billion to Siemens.  Reichert admitted that he and his co-conspirators concealed the illicit payments through various means, including using shell companies associated with intermediaries to disguise and launder the funds.

Reichert also admitted that he used a $27 million contract between a Siemens entity and a company called MFast Consulting AG that purported to be for consulting services to conceal bribes to Argentine officials.

In 2008, Siemens AG, a German entity, pleaded guilty to violating the books and records provisions of the FCPA; Siemens Argentina pleaded guilty to conspiracy to violate the books and records provisions of the FCPA; and Siemens Bangladesh Limited and Siemens S.A. – Venezuela each pleaded guilty to conspiracy to violate the anti-bribery and books and records provisions of the FCPA.  As part of the plea agreements, the Siemens companies paid a total of $450 million in criminal fines.  The U.S. Securities and Exchange Commission (SEC) also brought a civil case against Siemens AG alleging that it violated the anti-bribery, books and records and internal controls provisions of the FCPA.  In resolving the SEC case, Siemens AG paid $350 million in disgorgement of wrongful profits.  The Munich Public Prosecutor’s Office also resolved similar charges with Siemens AG that resulted in a fine of $800 million.  In August 2009, following these corporate resolutions with U.S. and German authorities, Siemens AG withdrew its claim to the more than $200 million arbitration award.

The FBI’s International Corruption Squad in Washington, D.C. is investigating the case.  The case is being prosecuted by Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Niketh Velamoor of the Southern District of New York.  The Criminal Division’s Office of International Affairs, the SEC, Croatian authorities and the Munich Public Prosecutor’s Office also provided significant assistance.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Former Employee of U.S. Army Corps of Engineers in Afghanistan Sentenced to Prison for Soliciting Approximately $320,000 in Bribes From Contractors

Thursday, March 8, 2018

A former employee of the U.S. Army Corps of Engineers (USACE) based in Afghanistan was sentenced today to 100 months in prison for soliciting approximately $320,000 in bribes from Afghan contractors in return for his assistance in U.S. government contracts.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division; Acting U.S. Attorney John E. Childress of the Central District of Illinois; Special Agent in Charge Sean Cox of the FBI’s Springfield, Illinois Field Office; Special Inspector General for Afghanistan Reconstruction John F. Sopko; Special Agent in Charge Michael Mentavlos of the Defense Criminal Investigative Service’s (DCIS) Southwest Field Office and Director Frank Robey of the U.S. Army Criminal Investigation Command’s (CID) Major Procurement Fraud Unit (MPFU) made the announcement.

Mark E. Miller, 49, of Springfield, was sentenced by U.S. District Judge Richard H. Mills of the Central District of Illinois, who also ordered Miller to serve three years of supervised release following his prison sentence and forfeit $180,000 and a Harley-Davidson motorcycle.  Miller previously pleaded guilty to a one-count information charging him with seeking and receiving bribes.

As part of his guilty plea, Miller admitted that he worked for the USACE from 2005 until 2015, including in Afghanistan from 2009 to 2012, and maintained a residence in Springfield during that time.  From February 2009 to October 2011, Miller was assigned to a military base, Camp Clark, in eastern Afghanistan.  He was the site manager and a contracting officer representative for a number of construction projects in Afghanistan.

On Dec. 10, 2009, the USACE awarded a contract worth approximately $2.9 million to an Afghan construction company for the construction of a road from eastern Afghanistan to the Pakistani border.  This contract later increased in value to approximately $8,142,300.  Miller oversaw the work of the Afghan company on this road project, including verifying that the company performed the work called for by the contract and, if so, authorizing progress payments to the company by the USACE, he admitted.

Also as part of his guilty plea, Miller admitted that, in the course of overseeing the contract with the Afghan company, he solicited from the owners of the company approximately $280,000 in bribes in return for making things easier for the company on the road project, including making sure the contract moved along and was not terminated.  He further admitted that, after the contract was no longer active, he solicited an additional $40,000 in bribes in return for the possibility of future contract work and other benefits.

This matter was investigated by the FBI, DCIS, SIGAR and Army CID-MPFU, with assistance from the U.S. Postal Inspection Service, Fort Worth Division.  Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Gregory K. Harris of the Central District of Illinois are prosecuting the case.

Transport Logistics International Inc. Agrees to Pay $2 Million Penalty to Resolve Foreign Bribery Case

Tuesday, March 13, 2018

Transport Logistics International Inc. (TLI), a Maryland-based company that provides services for the transportation of nuclear materials to customers in the United States and abroad, agreed to resolve criminal charges in connection with a scheme that involved the bribery of an official at a subsidiary of Russia’s State Atomic Energy Corporation and to pay a $2 million criminal penalty.  Three individuals have been charged for their alleged roles in the bribery scheme.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephen M. Schenning of the District of Maryland, Principal Deputy Inspector General April G. Stephenson of the U.S. Department of Energy’s Office of Inspector General (DOE-OIG) and Assistant Director in Charge Andrew W. Vale of the FBI’s Washington, D.C. Field Office made the announcement.

TLI entered into a deferred prosecution agreement (DPA) with the Department in connection with a criminal information filed in the District of Maryland charging the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).  In the DPA, TLI and the Department agreed that, because of the company’s financial inability to pay the penalty calculated under the U.S. Sentencing Guidelines, the appropriate criminal penalty is $2 million.  As part of the agreement, TLI also committed to cooperate fully with the Department’s ongoing investigation, and to continue to implement a compliance and ethics program designed to prevent and detect violations of the FCPA and other anti-corruption laws throughout its operations.  In reaching the resolution with the Department, TLI received full credit for its substantial cooperation with the Department’s investigation and for engaging in remedial measures, including terminating the employment of all employees engaged in the misconduct.

“Bribery of foreign officials not only distorts markets and undermines democratic institutions; it can also pervert the incentives of those who are in a position to safeguard the public, as it did in this case involving the transportation of nuclear material,” said Acting Assistant Attorney General Cronan.  “Today’s resolution, along with the related charges against the corporate executives and the Russian official in this matter, underscore the Department’s continued commitment to holding both companies and individuals accountable for their roles in corruption-related crimes and for breaching the public’s trust.”

“The Department of Energy remains committed to ensuring the integrity of our contractors and subcontractors, as well as providing the nation transparency, accountability, and security when it comes to safe and reliable transport of sensitive materials,” said Principal Deputy Inspector General Stephenson.  “We appreciate the efforts of the FBI, the Justice Department’s FCPA Unit and the U.S. Attorney’s Office in pursuing this matter and will continue to work collaboratively with them to aggressively investigate those who seek to defraud Department programs.”

“Today’s charges reflect the determination and ability of the FBI to investigate and prosecute companies that engage in foreign corrupt business practices, regardless of how sophisticated or far-flung the scheme may be,” said Assistant Director in Charge Vale.  “No entity is above the law and those that try to perpetrate a similar scheme will be pursued by the FBI.”

According to admissions and court documents, beginning in at least 2004 and continuing until at least 2014, TLI conspired with others to corruptly pay more than $1.7 million to offshore bank accounts associated with shell companies, at the direction of, and for the benefit of, Vadim Mikerin, a Russian official at JSC Techsnabexport (TENEX), a subsidiary of Russia’s State Atomic Energy Corporation.  The bribe payments were made to help TLI secure improper business advantages and obtain and retain business with TENEX.   In order to effectuate and conceal the bribe payments, TLI executives and others caused fake invoices to be prepared, purportedly from TENEX to TLI, that described services that were never provided.  TLI then wired payments for those purported services to shell companies in Latvia, Cyprus and Switzerland to further the bribery scheme.

On June 17, 2015, TLI co-president Daren Condrey pleaded guilty to conspiracy to violate the FCPA and commit wire fraud.  On Aug. 31, 2015, Mikerin pleaded guilty to conspiracy to commit money laundering involving violations of the FCPA, and Mikerin was sentenced to 48 months in prison on Dec. 15, 2015.  On Jan. 12, an 11-count indictment was unsealed against TLI co-president Mark Lambert, which charged Lambert with one count of conspiracy to violate the FCPA and to commit wire fraud, seven counts of violating the FCPA, two counts of wire fraud and one count of international promotion money laundering.  The charges in the indictment are merely allegations, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The cases against TLI and Lambert are assigned to U.S. District Court Judge Theodore D. Chuang of the District of Maryland.

The case is being investigated by DOE-OIG and the FBI.  Assistant Chiefs Ephraim Wernick and Christopher J. Cestaro and Trial Attorney Derek J. Ettinger of the Criminal Division’s Fraud Section, as well as Assistant U.S. Attorneys David I. Salem and Michael T. Packard of the District of Maryland, are prosecuting the case.

The Criminal Division’s Office of International Affairs provided significant assistance in this matter.  The Department also thanks its law enforcement colleagues in Switzerland, Latvia and Cyprus for providing valuable assistance with the investigation and prosecution of the case.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Miami-Area Man Sentenced to Five Years in Prison for Role in $63 Million Health Care Fraud Scheme

Thursday, February 22, 2018

A Miami-area man was sentenced to 60 months in prison today for his role in a $63 million health care fraud scheme involving a now-defunct community mental health center located in Miami that purported to provide partial hospitalization program (PHP) services to individuals suffering from mental illness.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, Special Agent in Charge Robert Lasky of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Samuel Konell, 70, of Boca Raton, Florida, was sentenced by U.S. District Judge Jose E. Martinez of the Southern District of Florida.  Judge Martinez also ordered Konell to pay $9,921,726 in restitution and to forfeit certain substitute assets, including several pieces of jewelry, in partial satisfaction of a personal money judgment entered against the defendant in the amount of $432,829.  Konell pleaded guilty on Nov. 21, 2017, to one count of conspiracy to defraud the United States and receive health care kickbacks.

As part of his guilty plea, Konell admitted that from approximately January 2006 through June 2012, he received kickbacks and/or bribes in return for referring Medicare beneficiaries from the Miami-Dade state court system to Greater Miami Behavioral Healthcare Center Inc. (Greater Miami) to serve as patients.  He admitted that he coordinated with criminal defendants in the state court system to obtain court orders for mental health treatment in lieu of incarceration so that he could refer those individuals to Greater Miami to serve as patients in return for kickbacks and/or bribes.  Konell further admitted that he did so knowing that certain of those individuals were not mentally ill or otherwise did not meet the criteria for PHP treatment.

In addition, Konell admitted that he and his co-conspirators at Greater Miami took steps to disguise the true nature of the kickbacks and/or bribes that Greater Miami paid to Konell and other patient brokers. Specifically, Konell was placed on the Greater Miami payroll to make the kickbacks and/or bribes appear as though they were legitimate salary payments, he admitted.  Konell further admitted that he was originally paid a flat monthly rate that was based on the number of patients he referred to Greater Miami from the state court system, and when Konell referred more patients to Greater Miami, his co-conspirators found ways to pay him over and above his regular kickback payments, including by providing him with holiday bonuses.

In furtherance of the kickback conspiracy, Konell made representations to judges and others in the Miami-Dade state court system that the individuals he referred to Greater Miami received medically necessary PHP services from Greater Miami when in reality such services were not always needed, he admitted.

According to plea documents, Konell’s co-conspirators caused the submission of over $63 million in false and fraudulent claims to Medicare.  These claims were based on kickbacks and/or bribes paid to Konell and others and were for services that were medically unnecessary, were not eligible for Medicare reimbursement or were never provided by Greater Miami.  Konell admitted that his participation in the Greater Miami scheme resulted in the submission of claims to Medicare totaling between at least approximately $9.5 and $25 million.

Eleven other individuals have pleaded guilty and have been sentenced for their roles in the scheme, including the owner of Greater Miami, three administrators and seven patient brokers.

This 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.  Former Senior Trial Attorney Christopher J. Hunter and Trial Attorneys Elizabeth Young and Leslie Wright of the Fraud Section prosecuted the case.  Assistant U.S. Attorney Adrienne Rosen of the Southern District of Florida is handling the forfeiture aspects of the case.

The Medicare Fraud Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Owner of Numerous Miami-Area Home Health Agencies Sentenced to 20 Years in Prison for Role in $66 Million Medicare Fraud Conspiracy

Wednesday, February 28, 2018

The owner and operator of numerous Miami, Florida-area home health agencies was sentenced to 240 months in prison today for his role in a $66 million conspiracy to defraud the Medicare program.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Benjamin G. Greenberg of the Southern District of Florida, Special Agent in Charge Robert F. Lasky of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Field Office made the announcement.

Rafael Arias, 52, of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida, who ordered Arias to pay $66.4 million in restitution and to forfeit the gross proceeds traced to the offense.  Arias pleaded guilty on Nov. 30, 2017, to one count of conspiracy to commit health care fraud and wire fraud.

“Today’s sentencing sends a clear message to anyone who is considering defrauding the Medicare system:  You will not only be caught, prosecuted, and sent to prison, but you will also have to pay back all of your ill-gotten gains,” said Acting Assistant Attorney General Cronan.

“Arias assumed that in Medicare fraud lay a path to riches,” said Special Agent in Charge Richmond. “Instead he discovered that we are working tirelessly with our law enforcement partners to protect patients and taxpayers while holding criminals accountable for their unlawful actions.”

As part of his guilty plea, Arias admitted that, between December 2007 and September 2015, he was the owner and operator of more than 20 home health agencies.  In many cases, however, Arias recruited nominee owners to falsely and fraudulently represent themselves as the agencies’ owners to hide his identity and ownership interest.  Arias and his co-conspirators paid illegal bribes and kickbacks to patient recruiters to refer patients to these agencies, and submitted false and fraudulent home health care claims to Medicare for beneficiaries who, in many cases, did not qualify or for whom the services were never provided.  In addition, Arias provided checks to other individuals and entities to cash so that Arias and his co-conspirators could obtain fraud proceeds to benefit themselves and further the fraudulent scheme.

Arias was charged along with Aylen Gonzalez, 39, of Hialeah, Florida; Ana Gabriela Mursuli Caballero, 51, of Miami; and Rafael Cabrera, 51, of Miami, in a July 2017 indictment.  Gonzalez, a patient recruiter who owned a medical clinic and co-owned two home health agencies, pleaded guilty in November 2017 to one count of conspiracy to commit health care fraud and wire fraud and was sentenced to 180 months in prison.  Mursuli Caballero, a patient recruiter and owner of two home health agencies, pleaded guilty in October 2017 to one count of conspiracy to commit health care fraud and wire fraud and was sentenced to 115 months in prison.  Cabrera, who participated in laundering and concealing the proceeds from the fraud, pleaded guilty in November 2017 to one count of conspiracy to commit money laundering and was sentenced to 71 months in prison.

This case was investigated by the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  Trial Attorneys Angela Adams and Jessica Collins of the Criminal Division’s Fraud Section prosecuted the case.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Two New Orleans-Area Psychiatrists and a Health Care Marketer Charged for Roles in Kickback Scheme; Psychiatrists Also Charged With Health Care Fraud

Thursday, February 8, 2018

Two New Orleans, Louisiana-area psychiatrists and a third individual were charged in an indictment filed today for their alleged participation in a health care kickback scheme.  The two psychiatrists were also charged for their roles in a home health care fraud scheme.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Duane A. Evans of the Eastern District of Louisiana, Special Agent in Charge Eric J. Rommal of the FBI’s New Orleans Field Office and Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Field Office made the announcement.

Muhammad Kaleem Arshad, M.D., 62, of New Orleans, Louisiana, Padmini Nagaraj, M.D., 60, of Kenner, Louisiana, and Joseph A. Haynes, 61, of New Orleans, were each charged with one count of conspiracy to receive illegal health care kickbacks and three counts of receiving illegal health care kickbacks.  Arshad and Nagaraj were also charged with one count of conspiracy to commit health care fraud and five counts of health care fraud.

The indictment alleges that the defendants, who were affiliated with a company that provides outpatient psychiatric services, conspired with the owner of a New Orleans home health agency to take bribes in exchange for referring psychiatric patients for medically unnecessary home health services. Haynes, who worked at the company as a marketer, allegedly helped to negotiate and enforce the bribes and kickbacks for the doctors.  The indictment further alleges that the New Orleans home health agency then submitted the fraudulent claims to Medicare to receive payment.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the FBI and HHS-OIG.  Trial Attorney Kate Payerle of the Criminal Division’s Fraud Section is prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Owner of Florida Pharmacy Pleads Guilty in $100 Million Compounding Pharmacy Fraud Scheme; Real Properties, Cars and a 50-Foot Boat Will Be Forfeited

Monday, November 6, 2017

Seven Others Previously Pleaded Guilty

The president and owner of a Florida pharmacy that was at the center of a massive compounding pharmacy fraud scheme, which impacted private insurance companies, Medicare and TRICARE, pleaded guilty today for his role in the scheme.  Seven other individuals have previously pleaded guilty in connection to the scheme.  Various real properties, cars and a 50-foot boat will be forfeited as part of the guilty pleas.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida, Special Agent in Charge Eric W. Sporre of the FBI’s Tampa Field Office, Special Agent in Charge Robert F. Lasky of the FBI’s Miami Field Office, Special Agent in Charge Shimon Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office and Resident Agent in Charge Brooke Harris of the U.S. Defense Criminal Investigative Service’s (DCIS) Tampa Regional Office made the announcement.

Nicholas A. Borgesano Jr., 45, of New Port Richey, Florida, the president and owner of A to Z Pharmacy of New Port Richey, pleaded guilty in the Middle District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to engage in monetary transactions involving criminally derived property.  His sentencing will be scheduled before U.S. District Judge James S. Moody Jr of the Middle District of Florida.

According to admissions made as part of his plea agreement, Borgesano owned and operated numerous pharmacies and shell companies that he and his co-conspirators used to execute a fraud scheme involving prescription compounded medications.  The scheme generated over $100 million in fraud proceeds, he admitted.  Borgesano acquired and controlled A to Z Pharmacy in New Port Richey, Havana Pharmacy, Medplus/New Life Pharmacy and Metropolitan Pharmacy, all of Miami; and Jaimy Pharmacy and Prestige Pharmacy, both of Hialeah, Florida.  He admitted using these pharmacies to cause the submission of false and fraudulent reimbursement claims for prescription compounded medications, chiefly pain creams and scar creams, to private insurance companies, Medicare and TRICARE.  Borgesano admitted that he and his co-conspirators manipulated billing codes in the reimbursement claims and submitted reimbursement claims for pharmaceutical ingredients they did not have.  Borgesano and his co-conspirators also paid kickbacks and bribes in exchange for prescriptions and patient identifying information used to further the scheme, including to a physician in exchange for the physician signing prescriptions for patients he never saw.  Borgesano admitted using A to Z Pharmacy as the hub of his operation on behalf of all his pharmacies.  He disbursed proceeds of the fraud scheme through a variety of methods, including by check and wire transfer to co-conspirators’ shell companies and through the purchase of assets, he admitted.

In addition to Borgesano, the following defendants have previously pleaded guilty to conspiracy to commit health care fraud for their roles in the scheme:

  • Bradley Sirkin, 55, of Boca Raton, Florida;
  • Scott P. Piccininni, 49, of Fort Lauderdale, Florida;
  • Edwin Patrick Young, 49, of New Port Richey, Florida;
  • Wayne M. Kreisberg, 40, of Parkland, Florida;
  • Matthew N. Sterner, 48, of New Port Richey, Florida;
  • Peter B. Williams, 57, of New Port Richey, Florida; and
  • Joseph Degregorio, 71, of New Port Richey, Florida

The cars that will be forfeited include a 1936 Ford Deluxe, a 1964 Chevrolet Corvette convertible, a 1967 Chevrolet Camaro, a 1970 Chevrolet Monte Carlo and a 2008 Lamborghini convertible.  The boat that will be forfeited is a 2009 50’7” Cigarette racing boat.   The cars and boat had previously been seized.  The combined equity in the real properties, cars and boat that will be forfeited is over $7.6 million.  The real properties, cars and boat had been purchased with proceeds from the fraud scheme.

This case was investigated by the FBI with support from HHS-OIG and DCIS and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida.  The case is being prosecuted by Senior Trial Attorney Christopher J. Hunter and Trial Attorney Timothy P. Loper of the Fraud Section.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Middleman Who Lied About Being an Agent of a Foreign Official Sentenced to 3 ½ Years in Prison for Role in Foreign Bribery Scheme Involving $800 Million International Real Estate Deal

Thursday, October 5, 2017

The middleman in a foreign bribery scheme who falsely held himself out as an agent of a foreign official was sentenced today to 42 months in prison for each count, to run concurrently, for his role in a scheme to bribe a foreign official in the Middle East to land a real estate deal, and to defrauding his co-schemers.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.

Malcom Harris, 53, of New York City, was sentenced by U.S. District Judge Edgardo Ramos of the Southern District of New York.  Harris pleaded guilty to one count of wire fraud and one count of money laundering on June 21.

According to admissions made in connection with Harris’s plea, Harris participated in a corrupt scheme to pay bribes to a foreign official in a country in the Middle East in order to facilitate the sale by South Korean construction company Keangnam Enterprises Co., Ltd., (Keangnam) of a commercial building known as Landmark 72 in Hanoi, Vietnam, to the Middle Eastern country’s sovereign wealth fund.  According to the indictment, the building sale was valued at $800 million, and purported bribe would total $2.5 million.

In connection with his guilty plea, Harris admitted that, from on or about March 2013 to on or about March 2015, he wrongfully obtained $500,000 from his co-defendants by falsely holding himself out as an agent of a foreign official in text messages and emails.  Harris admitted directing the $500,000 to be deposited into an account in the name of Muse Creative Consulting, but which Harris actually controlled.  Thereafter, Harris used the illegally obtained money to engage in transactions exceeding $10,000, he admitted.

Harris was charged in a December 2016 indictment along with codefendants Joo Hyun Bahn aka Dennis Bahn (Bahn) and Ban Ki Sang (Ban).  According to the indictment, during this time, Ban was a senior executive at Keangnam, and allegedly convinced Keangnam to hire his son Bahn, who worked as a broker at a commercial real estate firm in Manhattan, to secure an investor for Landmark 72.

Bahn and Ban are awaiting trial.  The charges and allegations contained in an indictment are only accusations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI’s International Corruption Squad in New York City investigated the case.  In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.  Trial Attorney Dennis R. Kihm of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Daniel S. Noble of the Southern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

CCC’s: Antitrust Division DAAG Delivers Remarks at International Conference

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The Antitrust Division’s Deputy Assistant Attorney General for International Affairs, Roger Alford delivered a speech on October 3, 2017 in San Paolo, Brazil. (here).  There were no groundbreaking announcements in the speech, but since it was the first delivered since Makan Delrahim took over as head of the Antitrust Division, I thought it might be of interest.

There were two aspects of the talk worth noting.  First, Mr. Alford highlighted the Division’s longstanding focus on holding individuals accountable:

As my colleagues at the Antitrust Division have explained before, “[h]olding companies accountable and assessing large fines, alone, are not the only means, or even the most effective way, to accomplish our goal of deterring and ending cartels. Individuals commit the crimes for which corporate offenders pay. Every corporate crime involves individual wrongdoing.” For that reason, we at the Antitrust Division have a long history of holding individuals accountable for antitrust crimes, and we have consistently touted prison time for individuals as the single most effective deterrent to criminal collusion.

The other item that caught my eye in the speech was the Mr. Alford’s reference to two Antitrust Division recent prosecutions:

  • In June of this year, Yuval Marshak was sentenced to 30 months in prison for participating in a scheme to defraud the U.S. Department of Defense.
  • In 2016, we tried and obtained the conviction of John Bennett for fraud against the United States as a result of a kickback scheme in the procurement of environmental clean-up services. He was ultimately sentenced to five years in prison.

These examples of “fraud prosecutions” are interesting because there is sometimes an internal debate in the Antitrust Division about whether only Sherman Act, (i.e. price fixing or bid rigging) charges should be brought or whether the Division has a broader mandate to prosecute what is sometimes called “corruption of the bidding process.” A “corruption of the bidding process” example would be bribing a procurement official to tailor bid specifications to favor one company.  In a hybrid case, there may be both a bribe of a procurement official and collusion among the favored bidders.

At times, investigation and prosecution of collusion on public contracts such as defense, roads, and schools has been a priority for the Division.  Public contracts are typically where collusion and bribery turn up–and jail sentences tend to be long.  The Division has limited resources, however, so when international cartels dominate, there may be few resources left to devote to public contracts.

The interesting thing about public contract investigations, is that the Division has some ability to be proactive in generating new investigations (as opposed to being reactive to leads/leniencies that come into the Division.)  When resources are available, the Division will often beat the bushes talking to federal agents and procurement officials looking for tips on possible worthwhile investigations.  It will be worth watching to see if there is any noticeable shift in emphasis under the new Antitrust Division leadership.

Thanks for reading.

Naval Employee Pleads Guilty to Accepting More Than $250,000 in Cash Bribes From Unauthorized Liquor Buyers

Tuesday, August 1, 2017

An employee of the U.S. Department of the Navy pleaded guilty today to accepting more than $250,000 in cash bribes from three people making unauthorized liquor purchases from the Navy Exchange Service Command where he worked, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Special Agent in Charge Leo Lamont of the Naval Criminal Investigative Service’s (NCIS) Northeast Field Office.

Eric Jex, 29, of Uniondale, New York, pleaded guilty to one count of bribery before U.S. District Judge Joanna Seybert of the Eastern District of New York. Sentencing is set for Feb. 2, 2018.

According to admissions made in connection with his guilty plea, as a supervisory sales associate at the NEX at Mitchel Field in Garden City, New York, Jex was responsible for preparing and processing retail transactions, and he had direct authority to make decisions concerning large liquor orders and shipments from the NEX’s warehouse. He was also subject to policies limiting access to the NEX’s goods to authorized personnel, such as Navy service members, and requiring NEX employees to check purchasers’ IDs. In connection with his guilty plea, Jex admitted that from approximately November 2015 through December 2016, he agreed with three unauthorized purchasers, one of whom had a New York State Liquor License, to arrange repeated large purchases of liquor from the NEX. He allowed the three unauthorized purchasers access to the NEX’s low prices and frequently provided additional price-matching discounts to which the purchasers were not entitled. In exchange, the three unauthorized purchasers paid cash bribes to Jex, typically $5 to $20 per case of liquor. According to plea documents, these bribes added up to more than $250,000 for the period of the scheme.

The NCIS; U.S. Treasury Department, Alcohol and Tobacco Tax and Trade Bureau; and the New York State Department of Taxation and Finance, Criminal Investigations Division investigated this case. Trial Attorneys Luke Cass and Andrew Laing of the Criminal Division’s Public Integrity Section are prosecuting the case with the assistance of the U.S. Attorney’s Office for the Eastern District of New York.