Monthly Archives: October 2013

Former Veterans Affairs Psychiatrist Pleads Guilty to Medicare Fraud

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Dr. Mikhail L. Presman, a licensed psychiatrist employed by the Department of Veterans Affairs (VA), pleaded guilty today to health care fraud for falsely billing Medicare for home medical treatment to Medicare beneficiaries and agreed to forfeit more than $1.2 million in illegal profits.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

According to court documents, from Jan. 1, 2006, through May 10, 2013, Presman submitted approximately $4 million in Medicare claims for home treatment of Medicare beneficiaries notwithstanding his full-time, salaried position as a psychiatrist at the VA hospital in Brooklyn.  Contrary to his representations, Presman did not provide any treatment to a substantial number of the beneficiaries he claimed to have treated.  For example, Presman submitted claims to Medicare for home medical visits at locations within New York City even though he was physically located in China at the time of these purported home visits.  Additionally, Presman submitted claims to Medicare for 55 home medical visits to beneficiaries who were hospitalized on the date of the purported visits.

Presman is scheduled to be sentenced by U.S. District Judge I. Leo Glasser of the Eastern District of New York on Feb. 13, 2014, and faces a maximum sentence of 10 years in prison.

The case was investigated by the HHS-OIG, with assistance from the Department of Veterans Affairs Office of Inspector General, and 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 Eastern District of New York.  The case is being prosecuted by Trial Attorney Bryan D. Fields of the Fraud Section and Assistant U.S. Attorney Patricia E. Notopoulos of the Eastern District of New York.

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.

US Government Intervenes in False Claims Lawsuit Against United States Investigations Services for Failing to Perform Required Quality Reviews of Background Investigations

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The government has intervened in a lawsuit filed under the False Claims Act against United States Investigations Services LLC (USIS) in the U.S. District Court for the Middle District of Alabama, the Department of Justice announced today.  The lawsuit alleges that USIS, located in Falls Church, Va., failed to perform quality control reviews in connection with its background investigations for the U.S. Office of Personnel Management (OPM).

The lawsuit was filed by a former employee of USIS, Blake Percival, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties, known as relators, to sue on behalf of the government when they believe false claims for government funds have been submitted.  The private party is entitled to receive a share of any funds recovered through the lawsuit.  The False Claims Act also permits the government to investigate the allegations made in the relator’s complaint and to decide whether to intervene in the lawsuit, and to recover three times its damages plus civil penalties.  The government is intervening now based on the results of its investigation of the relator’s allegations and has requested that the court give it until Jan. 22, 2014, to file its own complaint.

“We will not tolerate shortcuts taken by companies that we have entrusted with vetting individuals to be given access to our country’s sensitive and secret information,”  said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Justice Department will take action against those who charge the taxpayers for services they failed to provide, especially when their non-performance could place our country’s security at risk.”

Since 1996, USIS has contracted with OPM to perform background investigations on individuals seeking employment with various federal agencies.  Executed in 2006, the contract at issue in the lawsuit required USIS to conduct the investigatory fieldwork on each prospective applicant.  It also required that a trained USIS Reviewer perform a full review of each background investigation to ensure it conformed to OPM standards before sending the file back to OPM for processing.

According to the relator’s complaint, starting in 2008, USIS engaged in a  practice known at USIS as “dumping.”  Specifically, USIS used a proprietary computer software program to automatically release to OPM background investigations that had not gone through the full review process and thus were not complete.  USIS allegedly would dump cases to meet revenue targets and maximize its profits.  The lawsuit alleges that USIS concealed this practice from OPM and improperly  billed OPM for background investigations it knew were not performed in accordance with the contract.

“Thorough, appropriate and accurate background checks are essential in the employment of government personnel,” said George L. Beck Jr., U.S. Attorney for the Middle District of Alabama.  “The increase in foreign and domestic terrorism places an increased responsibility on our government to ensure that unsuitable individuals are prohibited from government employment.”

“This is a clarion call for accountability,” said Patrick E. McFarland, Inspector General of OPM.    “As recent events have shown, it is vital for the safety and security of Americans to have these background investigations performed in a thorough and accurate manner.  We can accept no less.  Those responsible for any malfeasance that compromises the integrity of the background investigations process must be held accountable.”

“OPM does not tolerate fraud or falsification,” said Elaine Kaplan, Acting Director of OPM.  “We work hard to prevent and detect both through a variety of means including a robust integrity assurance program, multiple levels of review and workforce education and training.  We also work hand in hand with our Inspector General and the Department of Justice when we discover fraud so that bad actors are held accountable to the fullest extent of the law.”

This matter was handled by the Commercial Litigation Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Middle District of Alabama in conjunction with OPM’s Office of Inspector General and Federal Investigative Service.

The claims asserted against USIS are allegations only, and there has been no determination of liability.

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Illinois Man Arrested for Alleged Role in $12 Million Health Care Fraud Scheme

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A Rockford, Ill., man was arrested today in connection with an indictment charging three Chicago-area residents for their roles in an alleged $12 million health care fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Zachary Fardon of the Northern District of Illinois, Acting Special Agent in Charge Robert J. Shields Jr. of the FBI’s Chicago Office, and Special Agent in Charge Lamont Pugh III of the Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.
According to the 10-count indictment returned on Oct. 23, 2013, and unsealed today, Rick E. Brown, 56, and two other individuals allegedly participated in a Medicare fraud scheme operating out of a home visiting physician practice, Medicall Physicians Group Ltd., in Schaumburg, Ill., that billed for services that Medicall never provided.  Medicare allegedly paid the company approximately $4.7 million for fraudulently reported services from January 2007 to December 2011.
Brown and an alleged co-conspirator, Roger A. Lucero, 62, of Elmhurst, Ill., are charged with conspiracy to commit health care fraud and health care fraud.  The two men and another defendant, Mary C. Talaga, 53, of Elmwood Park, Ill., are also charged with making false statements relating to health care matters.
According to the indictment, Lucero and Brown owned and operated Medicall, and Talaga submitted the company’s bills to Medicare.  The indictment alleges that Brown instructed employees to bill Medicare for patient oversight and other services that were never provided, and Lucero created backdated records in an effort to conceal the fraudulent billings.  Talaga is alleged to have billed Medicare for these services even though she knew they had not been documented, a practice that required her to fabricate the information submitted to Medicare.
The charges of health care fraud conspiracy and health care fraud each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.  The charges of false statements relating to health care matters carry a maximum potential penalty of five years in prison and a $250,000 fine.

An indictment is merely a charge and defendants are presumed innocent unless and until proven guilty.
The investigation is being conducted jointly by the FBI and HHS-OIG and 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 Northern District of Illinois.  The case is being prosecuted by Trial Attorney Brooke Harper of the Criminal Division’s Fraud Section.
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 and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

RABOBANK ADMITS WRONGDOING IN LIBOR INVESTIGATION, AGREES TO PAY $325 MILLION CRIMINAL PENALTY

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WASHINGTON — Coöperatieve Centrale  Raiffeisen-Boerenleenbank B.A. (Rabobank) has entered into an  agreement with the Department of Justice to pay a $325 million penalty to  resolve violations arising from Rabobank’s submissions for the London InterBank  Offered Rate (LIBOR) and the Euro Interbank Offered Rate (Euribor), which are  leading benchmark interest rates around the world, the Justice Department  announced today.

A criminal information will be filed  today in U.S. District Court for the District of Connecticut that charges  Rabobank as part of a deferred prosecution agreement (DPA). The  information charges Rabobank with wire fraud for its role in manipulating the  benchmark interest rates LIBOR and Euribor. In addition to the $325  million penalty, the DPA requires the  bank to admit and accept responsibility for its misconduct as described in an  extensive statement of facts. Rabobank has agreed to continue cooperating  with the Justice Department in its ongoing investigation of the manipulation of  benchmark interest rates by other financial institutions and  individuals.

“For years, employees at Rabobank, often working with traders at other  banks around the globe, illegally manipulated four different interest rates –  Euribor and LIBOR for the U.S. dollar, the yen, and the pound sterling – in the  hopes of fraudulently moving the market to generate profits for their traders  at the expense of the bank’s counterparties,” said Acting Assistant Attorney  General Mythili Raman of the Justice Department’s Criminal Division.  “Today’s criminal resolution – which represents the second-largest penalty in  the Criminal Division’s active, ongoing investigation of the manipulation of  global benchmark interest rates by some of the largest banks in the world –  comes fast on the heels of charges brought against three former ICAP brokers  just last month. Rabobank is the fourth major financial institution that  has admitted its misconduct in this wide-ranging criminal investigation, and  other banks should pay attention: our investigation is far from over.”

“Rabobank rigged multiple benchmark rates, allowing its traders to reap  higher profits at the expense of their unsuspecting counterparties,” said  Deputy Assistant Attorney General Leslie C. Overton of the Justice  Department’s Antitrust Division. “Not only was this conduct fraudulent,  it compromised the integrity of globally-used interest rate benchmarks –  undermining financial markets worldwide.”

“Rabobank admitted to manipulating LIBOR and Euribor submissions which  directly affected the rates referenced by financial products held by and on  behalf of companies and investors around the world,” said Assistant Director in  Charge Valerie Parlave of the FBI’s Washington Field Office. “Rabobank’s  actions resulted in the deliberate harm to counterparties holding products  referencing the manipulated rates. Today’s announcement is yet another  example of the tireless efforts of the FBI special agents and forensic  accountants who are dedicated to investigating complex fraud schemes and,  together with prosecutors, bringing to justice those who participate in such  schemes.”

Together with approximately $740 million in criminal and regulatory  penalties imposed by other agencies in actions arising out of the same conduct  – $475 million by the Commodity Futures Trading Commission (CFTC) action, $170  million by the U.K. Financial Conduct Authority (FCA) action and approximately  $96 million by the Openbaar Ministerie (the Dutch Public Prosecution Service) –  the Justice Department’s $325 million criminal penalty brings the total amount  to be paid by Rabobank to more than $1 billion.

According to signed documents, LIBOR is an average interest rate,  calculated based upon submissions from leading banks around the world and  reflecting the rates those banks believe they would be charged if borrowing  from other banks. LIBOR serves as the primary benchmark for short-term  interest rates globally and is used as a reference rate for many interest rate  contracts, mortgages, credit cards, student loans and other consumer lending  products. The Bank of International Settlements estimated that as of the  second half of 2009, outstanding interest rate contracts were valued at  approximately $450 trillion.

LIBOR is published by the British Bankers’ Association (BBA), a trade  association based in London. At the time relevant to the conduct in the  criminal information, LIBOR was calculated for 10 currencies at 15 borrowing  periods, known as maturities, ranging from overnight to one year. The  LIBOR for a given currency at a specific maturity is the result of a  calculation based upon submissions from a panel of banks for that currency (the  Contributor Panel) selected by the BBA. From at least 2005 through 2011,  Rabobank was a member of the Contributor Panel for a number of currencies,  including United States dollar (dollar) LIBOR, pound sterling LIBOR, and yen  LIBOR.

The Euro Interbank Offered Rate (Euribor) is published by the European  Banking Federation (EBF), which is based in Brussels, Belgium, and is  calculated at 15 maturities, ranging from overnight to one year. Euribor  is the rate at which Euro interbank term deposits within the Euro zone are  expected to be offered by one prime bank to another at 11:00 a.m. Brussels  time. The Euribor at a given maturity is the result of a calculation based  upon submissions from Euribor Contributor Panel banks. From at least 2005  through 2011, Rabobank was also a member of the Contributor Panel for  Euribor.

According to the statement of facts accompanying the agreement, from as  early as 2005 through at least November 2010, certain Rabobank derivatives  traders requested that certain Rabobank dollar LIBOR, yen LIBOR, pound sterling  LIBOR, and Euribor submitters submit LIBOR and Euribor contributions that would  benefit the traders’ trading positions, rather than rates that complied with  the definitions of LIBOR and Euribor.

In addition, according to the statement of facts accompanying the  agreement, from as early as January 2006 through October 2008, a Rabobank yen  LIBOR submitter and a Rabobank Euribor submitter had two separate agreements  with traders at other banks to make yen LIBOR and Euribor submissions that  benefitted trading positions, rather than submissions that complied with the  definitions of LIBOR and Euribor.

The Rabobank LIBOR and Euribor submitters accommodated traders’  requests on numerous occasions, and on various occasions, Rabobank’s  submissions affected the fixed rates.

According to the statement of facts, Rabobank employees engaged in this  conduct through electronic communications, which included both emails and  electronic chats. For example, on Sept. 21, 2007, a Rabobank Yen  derivatives trader emailed the Rabobank Yen LIBOR submitter at the time with  the subject line “libors,” writing: “Wehre do you think today’s libors are?  If you can, I would like 1mth libors higher today.” The submitter  replied: “Bookies reckon 1m sets at .85.” The trader wrote back: “I have  some fixings in 1 mth so would appreciate if you can put it higher mate.”  The submitter replied: “No prob mate let me know your level.” The trader  responded: “Wud be nice if you could put 0.90% for 1mth cheers.” The  submitter wrote back: “Sure no prob. I’ll probably get a few phone calls but no  worries mate!” The trader replied: “If you may get a few phone calls then  put 0.88% then.” The submitter responded: “Don’t worry mate – there’s  bigger crooks in the market than us guys!” That day, as requested,  Rabobank’s 1-month Yen LIBOR submission was 0.90, an increase of seven basis  points from its previous submission, whereas the other panel banks’ submissions  decreased by approximately a half of a basis point on average. Rabobank’s  submission went from being tied as the tenth highest submission on the  Contributor Panel on the previous day to being the highest submission on the  Contributor Panel.

On Nov. 29, 2006, a Rabobank dollar derivatives trader wrote to  Rabobank’s Global Head of Liquidity and Finance and the head of Rabobank’s  money markets desk in London, who supervised rate submitters: “Hi mate, low 1s  high 3s LIBOR pls !!! Dont tell [another Rabobank U.S. Dollar derivatives  trader] haa haaaaaaa. Sold the market today doooooohhhh!” The money  markets desk head replied: “ok mate , will do my best …speak later.”  After the LIBOR submissions that day, Rabobank’s ranking compared to other  panel banks dropped as to 1-month dollar LIBOR and rose as to 3-month dollar  LIBOR. Two days later, on Dec. 1, 2006, the trader again wrote to the money  markets desk head: “Appreciate 3s go down, but a high 3s today would be nice…  cheers chief.” The money markets desk head wrote back: “I am fast turning  into your LIBOR bitch!!!!” The trader replied: “Just friendly  encouragement that’s all , appreciate the help.” The money markets desk  head wrote back: “No worries mate , glad to help ….We just stuffed ourselves  with good ol pie , mash n licker !!”

In an example of an agreement with traders at other banks, on July 28,  2006, a Rabobank rate submitter and Rabobank trader discussed their mutual  desires for a high fixing. The submitter stated to the trader: “setting a  high 1m again today – I need it!” to which the trader responded: “yes pls  mate…I need a higher 1m libor too.” Within approximately 20 minutes, the  submitter contacted a trader at another Contributor Panel bank and wrote: “morning  skipper…..will be setting an obscenely high 1m again today…poss 38 just  fyi.” The other bank’s trader responded, “(K)…oh dear..my poor  customers….hehehe!! manual input libors again today then!!!!” Both  banks’ submissions on July 28 moved up one basis point, from 0.37 to 0.38, a  move which placed their submissions as the second highest submissions on the  Contributor Panel that day.

As another example, on July 7, 2009, a Rabobank trader wrote to a  former Rabobank yen LIBOR submitter: “looks like some ppl are talking with each  other when they put libors down. . . quite surprised that 3m libors came down a  lot.” The former submitter replied: “yes deffinite manipulation – always  is tho to be honest mate. . . i always used to ask if anyone needed a favour  and vise versa. . . . a little unethical but always helps to have friends in  mrkt.”

By entering into a DPA with Rabobank, the Justice Department took  several factors into consideration, including that Rabobank has no history of  similar misconduct and has not been the subject of any criminal enforcement  actions or any significant regulatory enforcement actions by any authority in  the United States, the Netherlands, or elsewhere. In addition, Rabobank  has significantly expanded and enhanced its legal and regulatory compliance  program and has taken extensive steps to remediate the misconduct.  Significant remedies and sanctions are also being imposed on Rabobank by  several regulators and an additional criminal law enforcement agency (the Dutch  Public Prosecution Service).

This ongoing investigation is being conducted by special agents, forensic  accountants, and intelligence analysts of the FBI’s Washington Field  Office. The prosecution of Rabobank is being handled by Assistant Chief  Glenn S. Leon and Trial Attorney Alexander H. Berlin of the Criminal Division’s  Fraud Section and Trial Attorneys Ludovic C. Ghesquiere, Michael T. Koenig and  Eric L. Schleef of the Antitrust Division. Deputy Chiefs Daniel Braun and  William Stellmach of the Criminal Division’s Fraud Section, Criminal Division  Senior Counsel Rebecca Rohr, Assistant Chief Elizabeth B. Prewitt and Trial  Attorney Richard A. Powers of the Antitrust Division’s New York Office, and  Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s  Office for the District of Connecticut, along with Criminal Division’s Office  of International Affairs, have provided valuable assistance in this  matter.

The investigation leading to these cases has  required, and has greatly benefited from, a diligent and wide-ranging  cooperative effort among various enforcement agencies both in the United States  and abroad. The Justice Department acknowledges and expresses its deep  appreciation for this assistance. In particular, the CFTC’s Division of  Enforcement referred this matter to the department and, along with the FCA, has  played a major role in the investigation. The department has also worked  closely with the Dutch Public Prosecution Service and De Nederlandsche Bank  (the Dutch Central Bank) in the investigation of Rabobank. Various  agencies and enforcement authorities from other nations are also participating  in different aspects of the broader investigation relating to LIBOR and other  benchmark rates, and the department is grateful for their cooperation and  assistance. In particular, the Securities and Exchange Commission has  played a significant role in the LIBOR investigation, and the department  expresses its appreciation to the United Kingdom’s Serious Fraud Office for its  assistance and ongoing cooperation.

This  prosecution is part of efforts underway by President Barack Obama’s Financial  Fraud Enforcement Task Force. President Obama established the interagency  Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and  proactive effort to investigate and prosecute financial crimes. The task  force includes representatives from a broad range of federal agencies,  regulatory authorities, inspectors general and state and local law enforcement  who, working together, bring to bear a powerful array of criminal and civil  enforcement resources. The task force is working to improve efforts  across the federal executive branch, and with state and local partners, to  investigate and prosecute significant financial crimes, ensure just and  effective punishment for those who perpetrate financial crimes, combat  discrimination in the lending and financial markets and recover proceeds for  victims of financial crimes. For more information about the task force  visit: www.stopfraud.gov.

 

Former Owner of Salt Lake City Medical Equipment Supply Company Indicted and Three Company Employees Plead Guilty for Roles in Medicare Fraud Scheme

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A former owner of a Salt Lake City medical equipment supply company has been indicted and three former company employees have pleaded guilty for allegedly engaging in a $20 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney David B. Barlow of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office, Special Agent in Charge Gerry Roy of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Kansas City Regional Office, and Special Agent in Charge Janice M. Flores of the Defense Criminal Investigative Service’s (DCIS) Southwest Field Office made the announcement.

Jacob Kilgore, 34, of Fruit Heights, Utah, was indicted in the District of Utah on three counts of health care fraud, three counts of false statements relating to health care matters, and three counts of wire fraud.

According to court documents, Kilgore was the co-owner, vice president, and regional sales manager of Orbit Medical Inc. (Orbit), a durable medical equipment supplier located in Salt Lake City specializing in power wheelchairs.  From approximately September 2008 through June 2011, Kilgore allegedly directed a scheme to defraud Medicare by submitting false and fraudulent claims to Medicare for power wheelchairs.  Court documents allege that Kilgore and others falsified medical records – including power wheelchair prescriptions and chart notes obtained from physicians – to make it appear that beneficiaries qualified to receive power wheelchairs when they did not and that the claims otherwise met all Medicare requirements.  Kilgore and others then used these falsified documents to support false and fraudulent claims from Orbit to Medicare.

Additionally, former Orbit sales representatives Morgan Workman, 35, of Farmington, Utah; David Evans, 29, of South Jordan, Utah; and Hunter Hartman, 29, of Ladera Ranch, Calif., have each pleaded guilty to conspiring to commit health care fraud, based on the same alleged scheme to defraud Medicare.  They are awaiting sentencing.

The scheme allegedly resulted in more than $20 million in claims from Orbit to Medicare for power wheelchairs, of which Medicare paid more than $15 million.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The case was investigated by the FBI, HHS-OIG and DCIS.  This case is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark Y. Hirata of the U.S. Attorney’s Office for the District of Utah.

GeyerGorey partner Allen Grunes to speak at conference in Seoul, South Korea, about private antitrust enforcement.

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Allen Grunes will speak at a conference on international trends in private antitrust enforcement that is being held in Seoul, South Korea on November 1, 2013.  He will present a paper on the U.S. experience with treble damages as part of a program examining private enforcement in the EU, U.S. and China and recent developments in Korea.  The program is jointly sponsored by the Korea University ICR Law Center, the Korean Competition Law Association, and the SNU Center for Competition Law.  More information may be found on the ICR website.

 

Former USAID Senior Official Conflict of Interest

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David Ostermeyer, who retired from the U.S. Agency for International Development (USAID) in 2012, will pay the government a $30,000 penalty to settle allegations that he participated in a matter in which he had a financial interest that conflicted with his duties when he was Chief Financial Officer of the agency, the Justice Department announced today.

We expect government officials to earn and maintain the trust of taxpayers by acting with the This requires, at a minimum, that they do their work free of prohibited conflicts of interest. The ” The government alleged that shortly before Ostermeyer retired from USAID, he helped the a position that Ostermeyer intended to apply for after he retired. In an effort to ensure he would be awarded the position, Ostermeyer allegedly tailored the solicitation to his specific skills and experiences.  Federal conflict of interest laws prohibit executive branch employees from participating personally and substantially in matters in which they have a financial interest. Since Ostermeyer had a financial interest in the contract solicitation, the government alleged that he could not participate in drafting it and, therefore, violated 18 U.S.C. § 208(a).
“To maintain public trust in our institutions, it is vital that those in government adhere to the highest standards of integrity,” said Michael Carroll, Acting Inspector General for USAID. “The exceptional work of the investigators and attorneys on this case reflects our resolve to uphold these standards.”  This settlement was the result of a coordinated effort by the Justice Department’s Civil Division and USAID’s Office of Inspector General. The claims resolved by this settlement are allegations only; there has been no determination of liability.

Two Plead Guilty to Money Laundering Conspiracy in $10.5 Million Medicare Fraud Scheme

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Two men from Miami have pleaded guilty to laundering millions of dollars obtained through a $10.5 million Medicare fraud scheme using shell companies they controlled.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office, and Special Agent in Charge Christopher B. Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) region including all of Florida made the announcement.

Rafael Roche, 43, and Alain Remy, 35, pleaded guilty on Oct. 24, 2013, and Oct. 23, 2013, respectively, in the U.S. District Court for the Middle District of Florida to an indictment charging them with conspiracy to commit money laundering involving the proceeds of a health care fraud scheme.  Remy is scheduled for sentencing on Jan. 16, 2014; Roche’s sentencing date has yet to be scheduled.  They each face a maximum penalty of 20 years in prison.

According to documents filed in the case, Roche, Remy and others conspired to engage in financial and monetary transactions of health care fraud proceeds from Renew Therapy Center of Port St. Lucie LLC (Renew Therapy), a comprehensive outpatient rehabilitation facility.  From November 2007 through August 2009, Renew Therapy submitted approximately $10,549,361 in fraudulent claims for reimbursement to Medicare for therapy services that were not legitimately prescribed and not legitimately provided to Medicare beneficiaries.  As a result of those fraudulent claims, Medicare deposited approximately $6,248,056 into a Renew Therapy bank account.  The fraud proceeds in that account were subsequently disbursed to various entities, including a combined total of $1,847,222 to Ariguanabo Investment Group Inc. and IRE Diagnostic Center Inc., shell companies that Roche and Remy controlled.

Court records indicate that more than $1.2 million was laundered through Ariguanabo Investment Group between Feb. 5, 2009, and Sep. 22, 2009.  The money was subsequently removed from the Ariguanabo Investment Group bank account to various individuals and entities, including to Ibiza Future Planning Inc., a shell company that Remy established and controlled.

More than $600,000 was laundered through IRE Diagnostic Center from Aug. 7, 2008, and Jan. 29, 2009.  The money was subsequently removed from the IRE Diagnostic Center bank account to various individuals and entities, including to A&R Medical Services of South Florida Inc., another shell company that Roche and Remy established and controlled.   This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Middle District of Florida.  This case is being prosecuted by Trial Attorney Christopher J. Hunter of the Criminal Division’s Fraud Section.

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, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Indictment Unsealed and “Wanted” Posters Issued for Fugitives Charged with Multimillion Dollar International Cyber Fraud Scheme

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Earlier today, charges were unsealed against Romanian fugitive Nicolae Popescu, the leader of an international organized crime syndicate that ran a multimillion dollar cyber fraud scheme, and six other fugitives charged with participating in the same scheme.  Interpol has issued red notices to foreign law enforcement partners seeking assistance in the apprehension of these fugitives, and the FBI has also released “Wanted” posters to facilitate their arrests.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, and Assistant Director in Charge George Venizelos of the FBI’s New York Office made the announcement.

“Today, we have unsealed charges – and issued “wanted” posters and Interpol red notices – for a band of dangerous cybercriminals who are alleged to have stolen millions of dollars from unsuspecting consumers around the globe,” said Acting Assistant Attorney General Raman.  “As described in the indictment, the leader of this band of thieves openly proclaimed that he is beyond the reach of the U.S. criminal justice system.  But with the help of our international partners, we will track down and capture every alleged member of this criminal syndicate, no matter where they are hiding.”

“Using forged documents and phony websites, for years Popescu and his criminal syndicate reached across the ocean to pick the pockets of hard working Americans looking to purchase cars,” said United States Attorney Lynch.  “They thought their distance would insulate them from law enforcement scrutiny.  They were wrong.  By now, Popescu and his band of fugitives have seen their co-conspirators brought here to account for their crimes.  Today’s actions place them squarely in the sights of our partners in international law enforcement. We will not stop in our efforts to find these fugitives and bring them to justice for the crimes they have allegedly committed against our citizens. ”

“As alleged, the defendants infiltrated the cyber marketplace with advertisements for high-value items that didn’t exist,” said FBI Assistant Director in Charge Venizelos.  “They siphoned funds from victims to fuel their greedy desires and created false identities, fake websites and counterfeit certificates of title in order to make the scheme more convincing.  Popescu and his co-conspirators were masters of illusion, but they can’t escape their ultimate reality.  With the help of our law enforcement partners at home and abroad, we will bring them to justice.”

Popescu, Romanian nationals Daniel Alexe, Dmitru Daniel Bosogioiu, Ovidiu Cristea, and Dragomir Razvan, and a defendant who goes by the names “George Skyper” and “Tudor Barbu Lautaru,” as well as Albanian national Fabjan Meme, were originally charged in a criminal complaint with six other defendants for their participation in a cyber-fraud conspiracy that targeted primarily American consumers on such U.S.-based websites as Cars.com and AutoTrader.com.  Their six co-defendants were arrested in a coordinated international takedown on Dec. 5, 2012, but Popescu, Alexe, Bosogioiu, Cristea, Razvan, and Meme have remained at large.

As alleged in the complaint and subsequent indictment, the defendants participated in a long-term conspiracy to saturate Internet marketplace websites including eBay, Cars.com, AutoTrader.com, and CycleTrader.com with detailed advertisements for cars, motorcycles, boats, and other high-value items – generally priced in the $10,000 to $45,000 range – that did not actually exist.  The defendants employed co-conspirators who corresponded with the victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money.  The defendants allegedly even pretended to sell cars from nonexistent auto dealerships in the United States and created phony websites for these fictitious dealerships.  As part of the scheme, the defendants produced and used high-quality fake passports to be used as identification by co-conspirators in the United States to open U.S. bank accounts.  After the “sellers” reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal, or other online payment services, with instructions to transfer the money to the U.S. bank accounts used by the defendants.  The defendants and their co-conspirators allegedly used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services.  The illicit proceeds were then withdrawn from the U.S. bank accounts and sent to the defendants in Europe by wire transfer and other methods.                The complaint and indictment describe the extent to which Popescu, in particular, led the conspiracy.  Among other things, Popescu coordinated the roles of the various participants in the scheme – he hired and fired passport makers based on the quality of the fake passports they produced, supervised co-conspirators who were responsible for placing the fraudulent ads and corresponding with the victims, and ensured that the illicit proceeds transferred to the U.S. bank accounts were quickly collected and transferred to himself and others acting on his behalf in Europe.  Popescu also allegedly directed Cristea to obtain and transfer luxury watches purchased using the illegal proceeds of the scheme, including three Audemars Piguet watches with a combined retail value of over $140,000, to his associates in Europe.  It is estimated that the defendants earned over $3 million from the fraudulent scheme.

According to the charging documents, Popescu and his close associate Bosogioiu demonstrated that they were aware of the risks of prosecution in the United States.  In a recorded conversation on Oct. 23, 2011, Bosogioiu asked about the difference between federal and state law in the United States and vowed to avoid the FBI.  Popescu, meanwhile, predicted on July 28, 2011, that “criminals will not be extradited from Romania to U.S.A….[I]t will never happen.”

The charges in the complaint and the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Cristina Posa, Nadia Shihata, and Claire Kedeshian of the U.S. Attorney’s Office for the Eastern District of New York.

The offices of the FBI Legal Attachés in Romania, the Czech Republic, the United Kingdom, Canada and Hungary were instrumental in coordinating efforts with the United States’ international partners, and the U.S. government thanks its partners in Romania, the Czech Republic, Hungary, the United Kingdom, Canada and Germany for their close cooperation throughout this investigation.  The Criminal Division’s Computer Crime and Intellectual Property Section, Office of International Affairs, and Asset Forfeiture and Money Laundering Section provided assistance with this investigation, as did the International Organized Crime Intelligence and Operations Center; the Internet Crime Complaint Center; the Costa Mesa, Calif., Police Department; the Orange County, Calif., District Attorney’s Office; and the New York City Police Department

Diebold Incorporated Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $25.2 Million Criminal Penalty

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Diebold Inc. (Diebold), the Ohio-based provider of integrated self-service delivery and security systems, including automated teller machines (ATMs), has agreed to pay a $25.2 million penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by bribing government officials in China and Indonesia and falsifying records in Russia in order to obtain and retain contracts to provide ATMs to state-owned and private banks in those countries.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio made the announcement.

The department today filed in U.S. District Court for the Northern District of Ohio a criminal information and a deferred prosecution agreement.  The two-count information charges Diebold with conspiring to violate the FCPA’s anti-bribery and books and records provisions and violating the FCPA’s books and records provisions.

“In China, Indonesia and Russia, Diebold chose to pay bribes for business and falsify documents to cover its tracks,” said Acting Assistant Attorney General Raman.  “Through its corrupt business practices, Diebold undermined the sense of fair play that is critical for the rule of law to prevail.  Today’s action – which holds Diebold accountable for its criminal conduct, while also recognizing its cooperation and voluntary disclosure to the government of its conduct – underscores that fighting global corruption is and will remain a mainstay of the Criminal Division’s mission.”

“Companies that pay bribes to public officials, whether those officials are in Cleveland, in Ohio or overseas, violate the law,” said U.S. Attorney Dettelbach.  “Corporate earnings cannot be placed above the rule of law, and today’s penalties – nearly $50 million in all – send the message again, loud and clear, that such conduct is unacceptable.  We hope that Diebold will use this opportunity, including the internal controls and compliance monitor required by today’s agreement, to turn the page to a newer and more ethical corporate culture.”

According to court documents, Diebold paid bribes and falsified documents in connection with the sale of ATMs to bank customers in China, Indonesia, and Russia.  With respect to China and Indonesia, the court documents allege that from 2005 to 2010, in order to secure and retain business with bank customers, including state-owned and -controlled banks, Diebold repeatedly provided things of value, including payments, gifts, and non-business travel for employees of the banks, totaling approximately $1.75 million.  Diebold attempted to disguise the payments and benefits through various means, including by making payments through third parties designated by the banks and by inaccurately recording leisure trips for bank employees as “training.”  The court documents also allege that from 2005 to 2009, Diebold created and entered into false contracts with a distributor in Russia for services that the distributor was not performing.  The distributor, in turn, used the money that Diebold paid to it, in part, to pay bribes to employees of Diebold’s privately-owned bank customers in Russia in order to obtain and retain ATM-related contracts with those customers.

In addition to the monetary penalty, Diebold agreed to implement rigorous internal controls, cooperate fully with the department, and retain a compliance monitor for at least 18 months.  The department agreed to defer prosecution for three years and, if Diebold abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires. The agreement acknowledges Diebold’s voluntary disclosure and extensive internal investigation and cooperation.

In a related matter, Diebold reached a settlement with the SEC and agreed to pay approximately $22.97 million in disgorgement and prejudgment interest.  The SEC settlement was filed today.

The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Justin J. Roberts of the Northern District of Ohio.  The case was investigated by the FBI’s Cleveland Field Office.  The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.