Utah Financial Advisor Sentenced To Prison For Tax Evasion, Securities Fraud And Wire Fraud

June 8, 2018

A St. George, Utah, financial advisor was sentenced to 72 months in prison on June 4th for his role in selling fraudulent tax-avoidance and investment strategies to his clients, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney John W. Huber for the District of Utah.

According to documents and information provided to the court, Henry Brock, pleaded guilty to tax evasion, securities fraud and wire fraud.  Brock founded a financial services company in 2009 and served as the president from 2009 through 2017.  As President, he marketed and sold a fraudulent tax scheme, called “IRA Exit Strategy,” to potential investors.  Brock promised investors that he could provide a way for them to avoid paying taxes on IRA withdrawals, which would otherwise be subject to Internal Revenue Service (IRS) penalties and taxes.  To implement his scheme, Brock caused his business to issue tax forms to his clients falsely representing that they were investors in his business who incurred losses, which served to offset the clients’ tax liabilities.  As a result, Brock caused clients to file fraudulent income tax returns claiming a total of approximately $3.8 million in bogus business losses and resulting in a tax loss of over $1.1 million.

During this period, Brock fraudulently raised more than $10.8 million in investments by making false representations to investors regarding the “IRA Exit Strategy,” the financial condition of his company and other matters.  On at least one occasion, Brock also transferred $196,323 of a client’s investment funds and used the money for his own personal and business expenses.

In addition to the term of imprisonment, U.S. District Court Judge Ted Stewart ordered Brock to serve three years of supervised release and to pay restitution in the amount of $12 million.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Huber thanked special agents of IRS Criminal Investigation and the Utah Division of Securities, who conducted the investigation, and AUSA Trina Higgins and Trial Attorney Matthew Hoffman of the Tax Division, who are prosecuting this case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Former Charity Executive Pleads Guilty to Bribery and Embezzlement Scheme

June 7, 2018

A former executive of a Springfield, Missouri charity, who was also an Arkansas lobbyist, pleaded guilty in federal court today to bribing Arkansas elected officials in a multi-million-dollar scheme, and then along with other charity executives, embezzling millions of dollars from the Springfield health care organization.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney Timothy A. Garrison for the Western District of Missouri made the announcement.

Milton Russell Cranford, aka “Rusty,” 57, of Rogers, Arkansas, pleaded guilty before U.S. Magistrate Judge David P. Rush to one count of federal program bribery.  Cranford was an executive at Preferred Family Healthcare Inc. (formerly known as Alternative Opportunities Inc.), a nonprofit corporation headquartered in Springfield, and oversaw the charity’s operations and lobbying efforts in the state of Arkansas. Cranford also operated three lobbying firms: The Cranford Coalition, The Capital Hill Coalition and Outcomes of Arkansas.

By pleading guilty today, Cranford admitted that he and other Preferred Family Healthcare executives paid bribes to Arkansas State Senator Jonathan Woods, Arkansas State legislator Henry Wilkins IV, a person identified in court documents as “Arkansas Senator A,” and others, to provide favorable legislative action for Cranford, his clients, and Preferred Family Healthcare. In exchange for the bribes paid by Cranford, the officials identified in the Information steered Arkansas General Improvement Fund (GIF) money to Preferred Family Healthcare and other Cranford clients; held up agency budgets; requested legislative audits; and sponsored, filed and voted for legislative bills that favored the charity and Cranford clients.

The additional income gained by Preferred Family Healthcare from Cranford’s bribes enabled Cranford and other executives of the charity to engage in multiple schemes to embezzle, steal, and unjustly enrich themselves at the expense of the charity, including, but not limited to, diverting charity funds to for-profit companies owned by the executives, causing the charity to make rental payments to properties owned by Cranford and the executives; paying for their personal expenses using corporate credit cards; and causing the charity to lend significant funds to Cranford personally, and to for-profit companies owned by other charity executives.  The executives also caused the charity to misapply its funds for unlawful contributions to the campaigns of elected public officials and causing the charity to spend substantial amounts of funds on lobbying and political advocacy.

In addition, Cranford entered into an illegal kickback scheme whereby Cranford paid over $600,000 in illegal kickbacks to a charity executive in exchange for more than $3.5 million in payments made to The Cranford Coalition.  Cranford also acknowledged his role in a second illegal kickback scheme involving the charity’s contract with Philadelphia, Pennsylvania-based political operative Donald Andrew Jones, also known as “D.A.” Jones, and another charity employee, former Arkansas State Representative Eddie Wayne Cooper.  In exchange for Cranford’s role in facilitating the charity’s contract with Jones for lobbying and political advocacy, under which the charity paid Jones almost $1 million, Cranford received kickbacks totaling $219,000 from Jones, $18,000 of which Cranford provided to Cooper, and Cooper received another $45,000 directly from Jones.  In separate but related cases, both Jones and Cooper previously entered guilty pleas acknowledging their roles in that kickback scheme.

A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

The case was investigated by IRS-Criminal Investigation, the FBI and the Offices of the Inspectors General from the Departments of Labor, Health and Human Services, Housing and Urban Development, Veterans Affairs, and the Federal Deposit Insurance Corporation. This is a combined investigation with the Western District of Arkansas, the Eastern District of Arkansas, and the Eastern District of Pennsylvania.  This case is being prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich of the Western District of Missouri and Trial Attorneys Marco A. Palmieri and Sean F. Mulryne of the Criminal Division’s Public Integrity Section.

Mississippi Physician Sentenced to Over Three Years in Prison for Role in $3 Million Compounding Pharmacy Fraud Scheme

June 7, 2018

A Biloxi, Mississippi physician was sentenced today to 42 months in prison for his involvement in a $3 million compounding pharmacy fraud scheme.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division; U.S. Attorney D. Michael Hurst Jr. of the Southern District of Mississippi; Special Agent in Charge Christopher Freeze of the FBI’s Jackson, Mississippi Field Division; Acting Special Agent in Charge Thomas J. Holloman III of IRS Criminal Investigation’s (IRS-CI) New Orleans Field Office and Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service’s (DCIS) Southeast Field Office made the announcement.

Albert Diaz, M.D., was sentenced by U.S. District Judge Keith Starrett of the Southern District of Mississippi.  Restitution to TRICARE and other insurance companies will be determined at a later date. On March 2 after a five-day jury trial, Diaz was convicted of one count of conspiracy to commit health care fraud and wire fraud, four counts of wire fraud, one count of conspiracy to distribute and dispense a controlled substance, four counts of distributing and dispensing a controlled substance, one count of conspiracy to falsify records in a federal investigation and five counts of falsification of records in a federal investigation.

According to evidence presented at trial, between 2014 and 2015, Diaz participated in a scheme to defraud TRICARE and other insurance companies by prescribing medically unnecessary compounded medications, some of which included ketamine, a controlled substance, to individuals he had not examined.  The evidence further demonstrated that, based on the prescriptions signed by Diaz, Advantage Pharmacy in Hattiesburg, Mississippi, dispensed these medically unnecessary compounded medications and sought and received reimbursement from TRICARE and other insurance companies totaling more than $3 million. The trial evidence further demonstrated that in response to a TRICARE audit, Diaz falsified patient records to make it appear as though he had examined patients before prescribing the medications.

The FBI, IRS-CI, the Defense Criminal Investigative Service, the U.S. Department of Health and Human Services Office of Inspector General, the Mississippi Bureau of Narcotics and other government agencies investigated the case.  Trial Attorneys Kate Payerle and Jared Hasten of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mary Helen Wall of the Southern District of Mississippi are 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.

Signature HealthCARE to Pay More Than $30 Million to Resolve False Claims Act Allegations Related to Rehabilitation Therapy

June 8, 2018

Signature HealthCARE, LLC (Signature), a Louisville, Kentucky based company that owns and operates approximately 115 skilled nursing facilities, including 7 in middle Tennessee, has agreed to resolve allegations that it violated the False Claims Act by knowingly submitting false claims to Medicare for rehabilitation therapy services that were not reasonable, necessary and skilled, the Department of Justice announced today.  The settlement also resolves allegations that Signature submitted forged pre-admission certifications of patient need for skilled nursing to the state of Tennessee’s Medicaid program.  Under the settlement agreements, Signature has agreed to pay more than $30 million.  As part of the resolution, the State of Tennessee will receive a portion of the overall settlement.

“Today’s settlement demonstrates our continuing efforts to protect patients and taxpayer by ensuring that the care provided to beneficiaries of government-funded healthcare programs is dictated by clinical needs, not a provider’s fiscal interests,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “Nursing home facilities provide important services to our elderly, and those facilities must uphold the trust placed in them by billing the government only for reasonable and necessary services.”

The government alleged that Signature engaged in various practices that resulted in the submission of claims for unreasonable, unnecessary, and unskilled services to Medicare patients, including: (1) presumptively placing patients in the highest therapy reimbursement level, rather than relying on individualized evaluations to determine the level of care most suitable for each patient’s clinical needs; (2) providing the minimum number of minutes required to bill at a given reimbursement level while discouraging the provision of additional therapy beyond that minimum threshold; and, (3) pressuring therapists and patients to complete the planned minutes of therapy even when patients were sick or declined to participate in therapy.

“Health care providers who engage in deceptive practices place patients at unnecessary risk and contribute to the financial distress of our federal healthcare programs,” said U.S. Attorney Cochran for the Middle District of Tennessee.  “Our dedicated teams of civil enforcement attorneys will work tirelessly with the relators who report fraud such as this and with our law enforcement partners who investigate healthcare fraud.  When we determine that companies are cheating the taxpayers, we will hold them accountable as we have in this case.”

“Our most vulnerable citizens are put at risk when healthcare providers put their financial interests above their patients’ needs and valuable federal funds are diverted from where they are surely needed,” said U. S. Attorney Byung J. “BJay” Pak for the Northern District of Georgia. “This settlement demonstrates our commitment to pursuing healthcare providers who provide unnecessary care to advance their bottom line.”

“Signature was charged with illegally boosting profits by providing excessive amounts of therapy to patients whether they needed it or not,” said Special Agent in Charge Derrick L. Jackson for the U.S. Department of Health and Human Services, Office of Inspector General. “The decision to provide therapy should never be based on corporate financial considerations rather than a patient’s medical needs.”

The settlement resolves allegations filed in a lawsuit by Kristi Emerson and LeeAnn Tuesca, former Signature therapy employees, in federal court in Nashville, Tennessee.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The Act also allows the government to intervene and take over the action, as it did in this case.  Ms. Emerson and Ms. Tuesca will receive a portion of the recovered funds.

The settlements were the result of a coordinated effort by the Civil Division of the Department of Justice, the United States Attorney’s Offices for the Middle District of Tennessee and the Northern District of Georgia, the Office of Inspector General of the Department of Health and Human Services, the Tennessee Bureau of Investigation. Department of Defense, Office of Inspector General, the Defense Criminal Investigative Service, and the Department of Health and Human Services, Office of the Inspector General.  Trial Attorneys Christelle Klovers and Denise Barnes of the Civil Division of the Department of Justice, Assistant United States Attorney Sarah K. Bogni of the Middle District of Tennessee, and Assistant United States Attorney Lena Amanti of the Northern District of Georgia represent the United States.  Assistant Attorney General Philip Bangle represents the State of Tennessee.

  The case is captioned United States ex rel. Emerson and Tuesca v. Signature HealthCARE, LLC, et al., Case No. 1:15-cv-00027 (M.D. Tenn.).  The claims resolved by the settlements are allegations only, and there has been no determination of liability.

Two Tennessee Health Care Executives Charged for Role in $4.6 Million Medicare Kickback Scheme

April 9, 2018

Two Tennessee health care executives were charged in an indictment unsealed today for their alleged participation in a $4.6 million Medicare kickback scheme involving durable medical equipment (DME).

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Don Cochran of the Middle District of Tennessee, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Atlanta region, Special Agent in Charge John F. Khin of the U.S. Department of Defense Criminal Investigative Service’s (DCIS) Southeast Field Office and Director Mark Gwyn of the Tennessee Bureau of Investigation (TBI) Medicaid Fraud Control Unit made the announcement.

John Davis, 40, of Brentwood, Tennessee, and Brenda Montgomery, 69, of Camden, Tennessee, were each charged with one count of conspiracy to defraud the United States and to pay and receive health care kickbacks, and seven counts of paying and receiving health care kickbacks.  Davis is the former CEO of Comprehensive Pain Specialists (CPS), a large, multi-state pain management company.  Montgomery is the owner, founder and CEO of CCC Medical Inc., a DME company with five locations in Tennessee and headquartered in Camden.  Davis and Montgomery were arrested this morning and appeared this afternoon before U.S. Magistrate Judge Alistair E. Newbern of the Middle District of Tennessee.

“The charges against John Davis and Brenda Montgomery, alleging almost three quarters of a million dollars in illegal health care kickbacks and the submission of over $4.6 million in fraudulent claims to Medicare, demonstrate the Department of Justice’s commitment to protect taxpayer dollars and to hold corporate executives accountable for fraudulent and abusive conduct,” said Acting Assistant Attorney General Cronan.  “Kickbacks such as those alleged in the indictment distort markets and undermine public trust.  The Criminal Division and our law enforcement partners will continue to root out fraud, waste and abuse in our health care programs, no matter how complex the schemes.”

“Our Medicare program is designed to help those who are most vulnerable and in need of medical services and equipment,” said U.S. Attorney Cochran.  “Stealing funds from our health care system places the vulnerable at greater risk and diverts public funds into the pockets of the greedy individuals who exploit those with the greatest need.  We will be un-relenting in our efforts to bring to justice, those individuals and corporations who choose to profit at the expense of the health of those individuals with the greatest need.”

“Kickback schemes like this one do not benefit patients or the Medicare program,” said Special Agent in Charge Jackson.  “These arrangements are simply designed to line the pockets of the defendants at the expense of the taxpayer.”

“In concert with our partner agencies, DCIS aggressively investigates fraud and corruption that undermines the integrity of Department of Defense programs,” said DCIS Special Agent in Charge Khin.  “These defendants selfishly put greed and personal gain before the safety and well-being of our military members, their families, and retirees, who deserve the best medical care available.”

“Having the support and cooperation of our partner local, state and federal agencies is critical in our combined efforts to protect Tennesseans from individuals attempting to derive a personal benefit at the expense of patients and taxpayers,” said TBI Director Gwyn.

The indictment alleges that from at least June 2011 until at least June 2017, Montgomery agreed to pay Davis, the CEO of CPS, illegal kickbacks in exchange for Medicare referrals for DME ordered by CPS employees that Davis referred to CCC Medical.  As alleged in the indictment, Montgomery agreed to pay Davis 60 percent of Medicare proceeds collected on claims billed for DME ordered by CPS providers and referred by Davis.  In addition, the indictment alleges that Davis and Montgomery took a number of steps to conceal their illegal agreement, including making kickback payments through a nominee, creating and filing false tax documents, and, for Davis, intervening as CEO to prevent the owners of CPS from obtaining their own Medicare DME supplier numbers that would have allowed CPS to bill for its own Medicare DME orders.

Beginning in or around May 2015, according to the indictment, Davis and Montgomery renegotiated their illegal agreement to further obscure their personal contract from Medicare and from CPS owners and employees.  The indictment alleges that from approximately May 2015 until approximately November 2015, Montgomery agreed to pay Davis $200,000 for the sham purchase of a shell entity known as ProMed Solutions LLC (ProMed).  Davis and Montgomery renegotiated the sham transaction after Montgomery complained that her referrals from CPS had been lower than expected, and Montgomery ultimately paid $150,000 for the shell, ProMed, according to allegations in the indictment.  The true purpose of this payment was to induce Davis to continue driving CPS referrals to CCC Medical, the indictment alleges.

The indictment alleges that Montgomery, through CCC Medical, submitted over $4.6 million in fraudulent claims to Medicare, and that Medicare paid a total of $2.6 million on those claims.  Further, the indictment alleges that Montgomery paid more than $770,000 in illegal kickbacks to Davis.

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

This case was investigated by HHS-OIG, DCIS and the Tennessee Bureau of Investigation Medicaid Fraud Control Unit.  Trial Attorney Anthony Burba of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ryan Raybould of the Middle District of Tennessee and are 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 throughout 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 collectively billed the Medicare program for over $12.5 billion.

Transportation Operator Sentenced to 14 Months for Defrauding the State Department

April 6, 2018

A local transportation operator was sentenced to 14 months today for stealing federal funds intended for a foreign exchange program maintained by the U.S. Department of State.  Acting Assistant Attorney General John P. Cronan of the Department of Justice’s Criminal Division, Acting U.S. Attorney Tracy Doherty-McCormick of the Eastern District of Virginia, Inspector General Steve A. Linick of the U.S. Department of State and Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office made the announcement.

Denon T. Hopkins, 49, of Germantown, Maryland, was sentenced by Senior U.S. District Judge T.S. Ellis, III of the Eastern District of Virginia.  Hopkins pleaded guilty to a one-count information charging him with conspiracy to commit honest services wire fraud and theft of public money on Dec. 21, 2017.

According to admissions made in connection with his plea, Hopkins was the operator and de facto owner of a transportation company that contracted with the State Department to provide bus and limousine services to a State Department component devoted to sports diplomacy and which sponsored a foreign exchange program for emerging athletes and coaches from various countries.  The exchange program was managed by George Mason University in Fairfax, Virginia, through a federal grant and cooperative agreement with the State Department.  During a time period when Hopkins received $247,200 in grant funds for legitimate transportation services, he and a State Department official conspired to steal portions of the federal money allocated to the exchange program by, among other things, falsifying vendor-related invoices and making fraudulent checks payable to Hopkins.  In total, Hopkins stole approximately $17,335 from the State Department.  He also admitted that he used portions of the funds to pay kickbacks to the State Department official to retain his transportation contract.

The Department of State’s Office of Inspector General and the FBI’s Washington Field Office investigated the case.  Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Kimberly R. Pedersen of the Eastern District of Virginia are prosecuting the case.

CCC’s: DOJ Announces “Coordination of Corporate Resolution Penalties” Policy

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On May 9, 2018 Deputy Attorney General Rod Rosenstein delivered remarks to the New York City Bar White Collar Crime Institute. He announced a new Department policy that encourages coordination among Department components and other enforcement agencies when imposing multiple penalties for the same conduct.  The full prepared remarks are here.  Below is an excerpt:

Today, we are announcing a new Department policy that encourages coordination among Department components and other enforcement agencies when imposing multiple penalties for the same conduct.

The aim is to enhance relationships with our law enforcement partners in the United States and abroad, while avoiding unfair duplicative penalties.

It is important for us to be aggressive in pursuing wrongdoers. But we should discourage disproportionate enforcement of laws by multiple authorities. In football, the term “piling on” refers to a player jumping on a pile of other players after the opponent is already tackled.

Our new policy discourages “piling on” by instructing Department components to appropriately coordinate with one another and with other enforcement agencies in imposing multiple penalties on a company in relation to investigations of the same misconduct.

In highly regulated industries, a company may be accountable to multiple regulatory bodies. That creates a risk of repeated punishments that may exceed what is necessary to rectify the harm and deter future violations.

Sometimes government authorities coordinate well.  They are force multipliers in their respective efforts to punish and deter fraud. They achieve efficiencies and limit unnecessary regulatory burdens.

Other times, joint or parallel investigations by multiple agencies sound less like singing in harmony, and more like competing attempts to sing a solo.

Modern business operations regularly span jurisdictions and borders. Whistleblowers routinely report allegations to multiple enforcement authorities, which may investigate the claims jointly or through their own separate and independent proceedings.

By working with other agencies, including the SEC, CFTC, Federal Reserve, FDIC, OCC, OFAC, and others, our Department is better able to detect sophisticated financial fraud schemes and deploy adequate penalties and remedies to ensure market integrity.

But we have heard concerns about “piling on” from our own Department personnel. Our prosecutors and civil enforcement attorneys prize the Department’s reputation for fairness.

They understand the importance of protecting our brand. They asked for support in coordinating internally and with other agencies to achieve reasonable and proportionate outcomes in major corporate investigations.

And I know many federal, state, local and foreign authorities that work with us are interested in joining our efforts to show leadership in this area.

“Piling on” can deprive a company of the benefits of certainty and finality ordinarily available through a full and final settlement. We need to consider the impact on innocent employees, customers, and investors who seek to resolve problems and move on. We need to think about whether devoting resources to additional enforcement against an old scheme is more valuable than fighting a new one.

Our new policy provides no private right of action and is not enforceable in court, but it will be incorporated into the U.S. Attorneys’ Manual, and it will guide the Department’s decisions.

This is another step towards greater transparency and consistency in corporate enforcement. To reduce white collar crime, we need to encourage companies to report suspected wrongdoing to law enforcement and to resolve liability expeditiously.

There are four key features of the new policy.

First, the policy affirms that the federal government’s criminal enforcement authority should not be used against a company for purposes unrelated to the investigation and prosecution of a possible crime. We should not employ the threat of criminal prosecution solely to persuade a company to pay a larger settlement in a civil case.

That is not a policy change. It is a reminder of and commitment to principles of fairness and the rule of law.

Second, the policy addresses situations in which Department attorneys in different components and offices may be seeking to resolve a corporate case based on the same misconduct.

The new policy directs Department components to coordinate with one another, and achieve an overall equitable result. The coordination may include crediting and apportionment of financial penalties, fines, and forfeitures, and other means of avoiding disproportionate punishment.

Third, the policy encourages Department attorneys, when possible, to coordinate with other federal, state, local, and foreign enforcement authorities seeking to resolve a case with a company for the same misconduct.

Finally, the new policy sets forth some factors that Department attorneys may evaluate in determining whether multiple penalties serve the interests of justice in a particular case.

Sometimes, penalties that may appear duplicative really are essential to achieve justice and protect the public. In those cases, we will not hesitate to pursue complete remedies, and to assist our law enforcement partners in doing the same.

Factors identified in the policy that may guide this determination include the egregiousness of the wrongdoing; statutory mandates regarding penalties; the risk of delay in finalizing a resolution; and the adequacy and timeliness of a company’s disclosures and cooperation with the Department.

Cooperating with a different agency or a foreign government is not a substitute for cooperating with the Department of Justice. And we will not look kindly on companies that come to the Department of Justice only after making inadequate disclosures to secure lenient penalties with other agencies or foreign governments. In those instances, the Department will act without hesitation to fully vindicate the interests of the United States.

The Department’s ability to coordinate outcomes in joint and parallel proceedings is also constrained by more practical concerns.  The timing of other agency actions, limits on information sharing across borders, and diplomatic relations between countries are some of the challenges we confront that do not always lend themselves to easy solutions.

The idea of coordination is not new. The Criminal Division’s Fraud Section and many of our U.S. Attorney’s Offices routinely coordinate with the SEC, CFTC, Federal Reserve, and other financial regulators, as well as a wide variety of foreign partners. The FCPA Unit announced its first coordinated resolution with the country of Singapore this past December.

The Antitrust Division has cooperated with 21 international agencies through 58 different merger investigations during the past four years.

Here is a link to the policy on Coordination of Corporate Resolution Penalties.

As the Deputy Attorney General stated, coordination is not new.  The Antitrust Division routinely coordinates with other federal and state agencies on most investigations.  And some coordination always occurs on international investigations.  In the recent financial crimes investigations such as Libor and FOREX the amount of coordination was extensive among federal agencies such as the Antitrust Division, Criminal Division, FBI, SEC, CFTC, state AG office, as well as with many foreign jurisdictions.  It is rumored that meetings were held in the Great Hall at the Department of Justice since no conference room could hold the throngs of participating enforcers.

Coordination by the Antitrust Division with enforcers from other federal, state and international enforcers is not new, but there is a continual debate about whether such coordination prevents “piling on.”  Of course, what a defense attorney may call piling on, the prosecutors may deem to be a hard but fair hit.  There is no referee or instant replay.  The question of piling on or double counting is a subject of continuing debate in antitrust circles.  It’s a tough question as foreign jurisdictions are injured by international cartels and they have stakeholders that want a significant penalty.  Sorting out proportional penalties among sovereign nations is a particularly tough ongoing challenge. This new policy document is not going to end that debate but a written policy document (while creating no new rights) could enhance defendants’ power of persuasion with the Department of Justice if they have some credible numbers to back up a “piling on” argument.

Thanks for reading.

PS.  Several publications have reported that Richard Powers will become the next Deputy Assistant Attorney General for Criminal Enforcement in the Antitrust Division.  The Antitrust Division has made no announcement yet.  One of the many qualifications Mr. Powers will bring to the position, if he is named as the Criminal Deputy, is his experience in multi-agency, international prosecutions. He worked on both Libor and Forex while a member of the Antitrust Division’s New York Field Office.

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.

Los Angeles Dentist Charged in Health Care Fraud Scheme

Tuesday, March 13, 2018

A Los Angeles, California-based dentist was charged in an indictment unsealed on Monday for his alleged participation in a health care fraud and identity theft scheme.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Assistant Director in Charge Andrew W. Vale of the FBI’s Washington, D.C. Field Office and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Field Office made the announcement.

Benjamin Rosenberg, D.D.S., 58, of Los Angeles, was charged with six counts of health care fraud and two counts of aggravated identity theft.  Rosenberg was arrested yesterday morning and made his initial court appearance yesterday before U.S. Magistrate Judge Jean Rosenbluth of the Central District of California.

The indictment alleges that Rosenberg billed various insurance companies, including Medicaid-funded Denti-Cal, for dental procedures that were never provided.  Rosenberg allegedly billed the insurance companies by using patients’ identification without their permission.

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

This case was investigated by the FBI’s Washington and Los Angeles Field Offices.  Trial Attorney Emily Culbertson 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 the U.S. Department of Health and Human Services (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.

Immigration Attorney Sentenced to More Than Six Years in Prison for Fraud Scheme and Identity Theft in Relation to Visa Applications

Friday, March 9, 2018

An Indianapolis, Indiana immigration attorney was sentenced today to 75 months in prison for defrauding the U.S. Citizenship and Immigration Services (USCIS) and more than 250 of his clients by filing fraudulent visa applications and reaping approximately $750,000 in illegitimate fees.  Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and Special Agent in Charge James M. Gibbons of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Chicago made the announcement.

Joel Paul, 45, of Fishers, Indiana, was sentenced by U.S. District Judge Jane E. Magnus-Stinson of the Southern District of Indiana.  In addition to the prison sentence, Judge Magnus-Stinson sentenced Paul to serve three years of supervised release, and ordered that he pay up to $750,000 in restitution to his victims.  In November 2017, Paul pleaded guilty to one count each of mail fraud, immigration document fraud, and aggravated identity theft in connection with a scheme to submit fraudulent U-visa applications.

“Immigration fraud undermines not only the public’s faith in our institutions and the legal profession, it also jeopardizes public safety and compromises national security,” said Acting Assistant Attorney General Cronan.  “Attorneys who commit such egregious fraud on our legal system and their own clients will be held accountable.”

“Immigration fraud presents a serious threat to the national security of our country,” said Special Agent in Charge Gibbons. “Illegal schemes like this not only undermine the integrity of our nation’s legal immigration system, but they create potential security vulnerabilities while also cheating deserving immigrants of benefits they rightfully deserve.”

As part of his plea agreement, Paul admitted that from 2013 to 2017, he submitted more than 250 false Applications for Advance Permission to Enter as a Nonimmigrant on behalf of his clients and without their knowledge.  Those applications falsely asserted that Paul’s clients had been victims of a crime and had provided substantial assistance to law enforcement in investigating the crime.  With approximately 200 of the false applications, Paul submitted unauthorized copies of a certification he had obtained from the U.S. Attorney’s Office (USAO) for the Southern District of Indiana in 2013, using the certification without the USAO’s knowledge to falsely claim that the applicant had provided substantial assistance in a criminal prosecution.  In total, Paul charged his clients approximately $3,000 per application.

HSI investigated the case with the assistance of USCIS Fraud Detection and National Security Directorate.  Trial Attorneys Molly Gaston, Peter M. Nothstein and Amanda Vaughn of the Criminal Division’s Public Integrity Section prosecuted the case.