Monthly Archives: November 2013

TWO EXECUTIVES INDICTED FOR ROLES IN FIXING PRICES ON AUTOMOBILE PARTS SOLD TO TOYOTA TO BE INSTALLED IN U.S. CARS

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WASHINGTON — A Cleveland federal  grand jury returned an indictment against two executives of a Japanese  automotive supplier for their roles in an international conspiracy to fix  prices of automotive anti-vibration rubber parts sold to Toyota and installed  in U.S. cars, the Department of Justice announced today.

The indictment,  filed yesterday in U.S. District Court for the Northern District of Ohio in  Toledo, charges Masao Hayashi and Kenya Nonoyama, both Japanese nationals, with  participating in a conspiracy to suppress and eliminate competition in the  automotive parts industry by agreeing to allocate the supply of, to rig bids  for and to fix, raise and maintain the prices of anti-vibration rubber parts  sold to Toyota Motor Corp., Toyota Motor Engineering & Manufacturing North  America Inc. and affiliated companies (collectively Toyota) for installation in  automobiles manufactured and sold in the United States and elsewhere.

Automotive  anti-vibration rubber products are comprised primarily of rubber and metal, and  include engine mounts and suspension bushings.  They are installed in automobiles for the  purpose of reducing road and engine vibration.

The indictment alleges, among other things, that from as early as March  1996 until at least December 2008, Hayashi and Nonoyama and their co-conspirators  conducted meetings and communications in Japan to reach collusive agreements.  The indictment alleges that the conspiracy  involved agreements affecting the Toyota Corolla, Avalon, Tacoma, Camry,  Tundra, Sequoia, Rav4, Sienna, Venza and Highlander.

“Today’s  indictment reaffirms the Antitrust Division’s commitment to hold executives  accountable for actions that corrupt the competitive landscape and harm  consumers,” said Renata B. Hesse, Deputy Assistant Attorney General for the  Department of Justice’s Antitrust Division.  “The Antitrust Division continues to work  closely with its fellow competition enforcers abroad to ensure that there are  no safe harbors for executives who engage in international cartel crimes.”

Hayashi and  Nonoyama are charged with a violation of the Sherman Act, which carries a  maximum penalty of 10 years in prison and a $1 million criminal fine for  individuals.  The maximum fine may be  increased to twice the gain derived from the crime or twice the loss suffered  by the victims of the crime, if either of those amounts is greater than the  statutory maximum fine.

Including Hayashi  and Nonoyama, 21 companies and 26 executives have been charged in the Justice  Department’s ongoing investigation into the automotive parts industry.  To date, more than $1.6 billion in criminal  fines have been obtained and seventeen of the charged executives have been  sentenced to serve time in U.S. prisons or have entered into plea agreements  calling for significant prison sentences.

The charges are  the result of an ongoing federal antitrust investigation into price fixing, bid  rigging and other anticompetitive conduct in the automotive parts industry,  which is being conducted by each of the Antitrust Division’s criminal  enforcement sections and the FBI.  Today’s  charges were brought by the Antitrust Division’s Chicago Office and the FBI’s  Cleveland Field Office, with the assistance of the FBI headquarters’  International Corruption Unit and the U.S. Attorney’s Office for the Northern  District of Ohio.  Anyone with  information on price fixing, bid rigging and other anticompetitive conduct  related to other products in the automotive parts industry should contact the  Antitrust Division’s Citizen Complaint Center at (888) 647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Cleveland Field Office at (216) 522-1400.

AAI Event with Susan Crawford, Allen Grunes, Bert Foer and Don Resnikoff discussing telecom competition (November 22, 2013)

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The American Antitrust Institute, in cooperation with co-sponsor Antitrust and Consumer Law Section of the District of Columbia Bar, presents Susan Crawford discusses telecom competition and her book Captive Audience with Bert Foer, Allen Grunes, and Don Resnikoff

Event Details:

  • Friday, November 22, 12:15 to 1:15 PM
  • Register by sending an email to programinfodonresnikofflaw@mail.com
  • Call in information for the teleconference will be e-mailed to you.
  • There is no charge.

About Susan Crawford:
Susan Crawford is a professor at the Benjamin N. Cardozo School of Law, a fellow at the Roosevelt Institute, and a co-director of the Berkman Center. She is the author of Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, and a contributor to Bloomberg View and Wired. Don Resnikoff’s review of Captive Audience is available here. An excerpt from the review is at the end of this notice.

The American Antitrust Institute, in cooperation with co-sponsor Antitrust and Consumer Law Section of the District of Columbia Bar, presents
Susan Crawford discusses telecom competition and her book Captive
Audience with Bert Foer, Allen Grunes, and Don Resnikoff

About Bert Foer:
Albert A. (“Bert”) Foer is President and Founder of the American Antitrust Institute. His career has included private law practice in Washington, DC); the Federal Senior Executive Service (as Assistant Director and Acting Deputy Director of the Federal Trade Commission’s Bureau of Competition). He has published numerous articles, book chapters, and reviews relating to competition policy.

About Allen Grunes:
Allen Grunes is a member of AAI’s Advisory Board. He is a partner at GeyerGorey LLP, a firm started one year ago by three former DOJ Antitrust Division lawyers. Allen spent more than a decade at the Antitrust Division, where he led many merger and civil nonmerger investigations in radio, television, newspapers, motion pictures, and other industries. He and fellow AAI Advisory Board member Maurice Stucke have coauthored several articles on media and telecom, including “Antitrust and the Marketplace of Ideas” (Antitrust Law Journal), “Antitrust Analysis of the AT&T/T-Mobile Transaction” (Federal Communications Law Journal) and “Why More Antitrust Immunity for the Media is a Bad Idea” (Northwestern Law Review). His practice includes advising clients on mergers and acquisitions, providing counseling on non-merger matters, and representing clients in federal court, before the federal antitrust agencies and before Congress. His extensive experience includes media and entertainment, telecommunications, and the high-tech sector. He was named as a “Washington D.C. Super Lawyer” for 2013. 

About Don Resnikoff:
Don Resnikoff is a member of AAI’s Advisory Board, and the organizer of this program. He is currently in private practice in the District of Columbia. He previously was a Senior Assistant Attorney General for the District of Columbia. Before that he served for more than twenty years as an antitrust litigator with the Antitrust Division, United States Department of Justice. His experience also includes private practice corporate litigation as a partner with a New York City firm, recent Of Counsel experience, and service as an Assistant United States Attorney in New Jersey.

From the Resnikoff Review of “Captive Audience:”
Susan Crawford’s bottom-line observations are straightforward: For internet service customers, there are only a few companies from which to buy. Of those, a small number of large companies provide internet service by a cabled wire or fiber-optic connection. Comcast is the most important. Comcast and other cable companies each dominate large geographic regions with little competition. Each can raise prices for fast internet access without significant constraints.

A small number of large companies provides internet service using wireless radio technology instead of cabled wire or fiber-optic connections. Wireless internet access is dominated by AT&T and Verizon. Crawford explains that wireless internet transmission is in a separate market from wired because
wireless transmission of digital signals is too slow to compete with internet service delivered by wire or fiber-optic cable. The wired and wireless products are complementary, not competitive.

To make matters worse, government approval of the Comcast merger with content provider NBC Universal has reinforced a situation where cable companies that dominate distribution of digital signals also control important content. The consequence is that Comcast, the largest high-speed internet distribution company, is in a position to throttle independent providers of television content such as movies and sports.

Nursing Home Operator to Pay $48 Million to Resolve Allegations That Six California Facilities Billed for Unnecessary Therapy

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The Ensign Group Inc., a skilled nursing provider based in Mission Viejo, Calif., that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services, the Justice Department announced today.  Six of Ensign’s skilled nursing facilities in California allegedly submitted the false claims:  Atlantic Memorial Healthcare Center, located in Long Beach; Panorama Gardens, located in Panorama City; The Orchard Post-Acute Care (a.k.a. Royal Court), located in Whittier; Sea Cliff Healthcare Center, located in Huntington Beach; Southland, located in Norwalk; and Victoria Care Center, located in Ventura.

  “Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

Between January 1, 1999, and August 31, 2011, these six Ensign skilled nursing facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary.  Specifically, Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare.  The government further alleged that Ensign created a corporate culture that improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue.  These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels.  The government also alleged that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions.

“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said U.S. Attorney for the Central District of California André Birotte Jr.  “This settlement – one of the largest Medicare fraud cases against a nursing home chain in U.S. history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”

In addition to paying the settlement amount, Ensign also agreed that each of its skilled nursing facilities across the nation would be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG).

“Billing Medicare for costly, unnecessary skilled nursing services — as the government alleged here — inflates health care costs borne by taxpayers,” said Special Agent in Charge for the Los Angeles Region of the HHS-OIG Glenn R. Ferry.  “This settlement again puts on notice those who would consider defrauding federally funded health care programs.”

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The allegations settled today arose from lawsuits filed by two former Ensign therapists under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery.  The dollar amount that the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive has not been determined.  The lawsuits are captioned as United States of America ex rel. Gloria Patterson v. Ensign Group Inc., Case No. SACV 06-6956 CJC (ANx) (C.D. Calif.) and United States of America ex rel. Carol Sanchez v. Ensign Group Inc., Case No. SACV 06-0643 CJC (ANx) (C.D. Calif.).

The case was handled by the U.S. Attorney’s Office for the Central District of California, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General.   This action was supported by the Elder Justice and Nursing Home Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs.

SIX INVESTORS INDICTED FOR THEIR ROLES IN BID RIGGING SCHEME AT MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

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Investigation Has Yielded 20 Charges to Date

WASHINGTON — A federal grand jury in Newark,  N.J., returned an indictment against six investors for their roles in a  conspiracy to rig bids at auctions conducted by New Jersey municipalities for  the sale of tax liens, the Department of Justice announced.

The indictment, filed today in U.S.  District Court for the District of New Jersey in Newark, charges four  individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New  Jersey.  According to the indictment, from at least as early as 1998 and continuing until as late as February 2009,  the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain  bidders which liens each would bid on.  The  indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

Joseph Wolfson, of Margate, N.J., was  a part-owner of two entities that invested in municipal tax liens, Betty Simon  Trustee and Richard Simon Trustee, both of Northfield, N.J.  Gregg Gehring, of Newton, N.J., was employed  by a major tax lien investment company as a vice president.  James Jeffers Jr., of Burlington, N.J., was a  bidder for Crusader Servicing Corp., which pleaded guilty to its role in the  conspiracy in September 2012, and also a bidder for Crusader’s successor  corporation. Robert Jeffrey, of  Bradenton, Fla., was a bidder for both Crusader and its successor corporation.

“The individuals and entities  charged today demonstrated a blatant disregard for the competitive process by  allocating the purchase of certain municipal tax liens by, from time to time,  flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,”  said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust  Division.  “The Antitrust Division  remains committed to prosecuting those who thwart the competitive bidding  process.”

The department said that the  primary purpose of the conspiracy was to suppress and restrain competition in  order to obtain selected municipal tax liens offered at public auctions at  non-competitive interest rates.  When the  owner of real property fails to pay taxes on that property, the municipality in  which the property is located may attach a lien for the amount of the unpaid  taxes.  If the taxes remain unpaid after  a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest  rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest  and, through a competitive bidding process, can be driven down to zero percent.   If a lien remains unpaid after a certain  period of time, the investor who purchased the lien may begin foreclosure  proceedings against the property to which the lien is attached.  Since the conspiracy permitted the  conspirators to purchase tax liens with limited competition, each conspirator  was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay  higher interest on their tax debts than they would have paid had their liens  been purchased in open and honest competition, the department said.

The indictment alleges, among other  things, that from at least as early as 1998 and continuing until as late as  February 2009, prior to the commencement of certain tax lien auctions in New  Jersey, the investors and their co-conspirators agreed not to compete for the  purchase of certain municipal tax liens.

A violation of the Sherman Act  carries a maximum penalty of 10 years in prison and a $1 million fine for  individuals.  The maximum fine for a  Sherman Act violation may be increased to twice the gain derived from the crime  or twice the loss suffered by the victim if either amount is greater than the  $1 million statutory maximum.

Including today’s charges, 20  individuals and entities have been charged as part of an ongoing investigation  into bid rigging or fraud related to municipal tax lien auctions in New Jersey.   To date, 11 individuals – Isadore H.  May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M.  Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick,  Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD  LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty aspart of this investigation.

Today’s charge is part of efforts  underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF)  which was created in November  2009 to wage an aggressive, coordinated and proactive effort to investigate and  prosecute financial crimes.  With more  than 20 federal agencies, 94 U.S. attorneys’ offices and state and local  partners, it’s the broadest coalition of law enforcement, investigatory and  regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made  great strides in facilitating increased investigation and prosecution of  financial crimes; enhancing coordination and cooperation among federal, state  and local authorities; addressing discrimination in the lending and financial  markets; and conducting outreach to the public, victims, financial institutions  and other organizations.  Over the past  three fiscal years, the Justice Department has filed more than 10,000 financial  fraud cases against nearly 15,000 defendants, including more than 2,700  mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

This ongoing investigation is being conducted by the Antitrust  Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging  or fraud related to municipal tax lien auctions should contact the  Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm  or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

Antitrust Division Tax Lien Initiative Continues…

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SIX INVESTORS INDICTED FOR THEIR ROLES IN BID RIGGING SCHEME AT
MUNICIPAL TAX LIEN AUCTIONS IN NEW JERSEY

Investigation Has Yielded 20 Charges to Date

WASHINGTON — A federal grand jury in Newark, N.J., returned an indictment against six investors for their roles in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.

The indictment, filed today in U.S. District Court for the District of New Jersey in Newark, charges four individuals, Joseph Wolfson, Gregg Gehring, James Jeffers Jr. and Robert Jeffrey, and two entities, Betty Simon Trustee LLC and Richard Simon Trustee, with participating in a conspiracy to rig bids at tax lien auctions in New Jersey.  According to the indictment, from at least as early as 1998 and continuing until as late as February 2009, the investors participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders which liens each would bid on.  The indictment alleges that the investors proceeded to submit bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

Joseph Wolfson, of Margate, N.J., was a part-owner of two entities that invested in municipal tax liens, Betty Simon Trustee and Richard Simon Trustee, both of Northfield, N.J.  Gregg Gehring, of Newton, N.J., was employed by a major tax lien investment company as a vice president.  James Jeffers Jr., of Burlington, N.J., was a bidder for Crusader Servicing Corp., which pleaded guilty to its role in the conspiracy in September 2012, and also a bidder for Crusader’s successor corporation. Robert Jeffrey, of Bradenton, Fla., was a bidder for both Crusader and its successor corporation.

“The individuals and entities charged today demonstrated a blatant disregard for the competitive process by allocating the purchase of certain municipal tax liens by, from time to time, flipping a coin, drawing numbers out of a hat or drawing from a deck of cards,” said Leslie C. Overton, Deputy Assistant Attorney General for the Antitrust Division.  “The Antitrust Division remains committed to prosecuting those who thwart the competitive bidding process.”

The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates.  When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes.  If the taxes remain unpaid after a waiting period, the lien may be sold at auction.  State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption.  By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent.  If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.  Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate.  Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.

The indictment alleges, among other things, that from at least as early as 1998 and continuing until as late as February 2009, prior to the commencement of certain tax lien auctions in New Jersey, the investors and their co-conspirators agreed not to compete for the purchase of certain municipal tax liens.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

Including today’s charges, 20 individuals and entities have been charged as part of an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions in New Jersey.  To date, 11 individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby, David Butler, Norman T. Remick, Robert U. Del Vecchio Sr., and Michael Mastellone – and three companies, DSBD LLC, Crusader Servicing Corp., and Mercer S.M.E. Inc., have pleaded guilty aspart of this investigation.

Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit www.stopfraud.gov.

This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office.  Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.

 

High-Ranking Bank Official at Venezuelan State Development Bank Pleads Guilty to Participating in Bribery Scheme

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A senior official in Venezuela’s state economic development bank has pleaded guilty in New York federal court to accepting bribes from agents and employees of a New York-based broker-dealer (Broker-Dealer) in exchange for directing her bank’s security-trading business to the Broker-Dealer.

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

Maria De Los Angeles Gonzalez De Hernandez, 55, pleaded guilty today before U.S. District Judge Paul A. Engelmayer in the Southern District of New York to conspiring to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses.  Sentencing for Gonzalez is scheduled for Aug. 15, 2014, before Judge Engelmayer.

At all times relevant to the charges, Banco de Desarrollo Económico y Social de Venezuela (BANDES) was a state-run economic development bank in Venezuela.  The Venezuelan government had a majority ownership interest in BANDES and provided it with substantial funding.

According to court records, Gonzalez was an official at BANDES and oversaw the development bank’s overseas trading activity.  At her direction, BANDES conducted substantial trading through the Broker-Dealer.  Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a mark-up on purchases and a mark-down on sales.

From early 2009 through 2012, Gonzalez participated in a bribery scheme in which she directed trading business she controlled at BANDES to the Broker-Dealer and, in return, agents and employees of the Broker-Dealer shared the revenue the Broker-Dealer generated from this trading business with Gonzalez.  During this time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from trades with BANDES.  Agents and employees of the Broker-Dealer devised a split with Gonzalez of the commissions paid by BANDES to the Broker-Dealer.  Emails, account records, and other documents collected from the Broker-Dealer and other sources reveal that Gonzalez received a substantial share of the revenue generated by the Broker-Dealer for BANDES-related trades.  Specifically, Gonzalez received millions in bribe payments from Broker-Dealer agents and employees.

Additionally, Gonzalez paid a portion of the bribe payments she received to another BANDES employee who was also involved in the scheme.

To further conceal the scheme, the kickbacks to Gonzalez were often paid using intermediary corporations and offshore accounts that Gonzalez and others held in Switzerland, among other places.

Previously, three former employees of the Broker-Dealer – Ernesto Lujan, Jose Alejandro Hurtado, and Tomas Alberto Clarke Bethancourt – each pleaded guilty in New York federal court to conspiring to violate the Foreign Corrupt Practices Act (FCPA), to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses, relating, among other things, to the scheme involving bribe payments to Gonzalez.  Sentencing for Lujan and Clarke is scheduled for Feb. 11, 2014, before U.S. District Judge Paul G. Gardephe.  Hurtado is scheduled for sentencing before U.S. District Judge Harold Baer Jr. on March 6, 2014.

This ongoing investigation is being conducted by the FBI, with assistance from the SEC and the Justice Department’s Office of International Affairs. Assistant Chief James Koukios and Trial Attorneys Maria Gonzalez Calvet and Aisling O’Shea of the Criminal Division’s Fraud Section and Assistant United States Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York’s Securities and Commodities Fraud Task Force are in charge of the prosecution.  Assistant United States Attorney Carolina Fornos is also responsible for the forfeiture aspects of the case.

 

Interview with Susan Crawford on Telecom Competition and her book ‘Captive Audience’

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Interview with Susan Crawford on Telecom Competition and her book ‘Captive Audience’

 

 

Start: November 22, 2013 Friday 12:15 PM
End: November 22, 2013 Friday 1:15 PM

Description
free event, registration is required.Please RSVP to [email protected].

Please note: You are not providing your information to the D.C. Bar, but to an organizer for this program.

Professor Susan Crawford and an expert panel will discuss her book, “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age.” The book describes an internet service market with Comcast and a handful of other cable companies each dominating large geographic regions for wired service and with AT&T and Verizon dominating wireless service. Dominant cable companies also control important content, so there is potential to throttle independent providers of television content such as movies and sports.

 

 

This teleconference is sponsored by the Antitrust and Consumer Law Section, in cosponsorship with the American Antitrust Institute.

**This program is offered in a live teleconference format.

Please note: Teleconference information will be e-mailed to registrants 24 hours prior to the event.

 

Location
Teleconference Only
Washington DC 20005
Contact
Sections Office 202-626-3463
Speakers
Susan Crawford, Professor, Benjamin N. Cardozo School of Law, Fellow, Roosevelt Institute, co-director, Berkman Center
Bert Foer, President and Founder, American Antitrust Institute
Allen Grunes, Partner, Geyer Gorey LLP, Washington, DC
Don Resnikoff, Attorney, Law Offices of Don Resnikoff, Washington, DC
CLE Credit
No
Cost
**This is a free event, see above for RSVP $0.00

http://mobile.dcbar.org/courses/details.cfm?eventCD=021407GEN&position=5-19

Department of Defense Employee Pleads Guilty to Submitting False Claim for Housing Allowance

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A Department of Defense (DOD) employee has pleaded guilty to filing a false claim with the DOD while stationed in the Republic of Korea (ROK) to fraudulently obtain $64,000 in housing allowance, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

Patrick Y. Kim, 56, of Reno, Nev., pleaded guilty today before U.S. District Judge Howard D. McKibben in the District of Nevada in Reno to one count of making a false claim.  Kim faces a maximum penalty of five years in prison when he is sentenced on Feb. 12, 2014.  As part of his plea agreement, Kim has agreed to pay full restitution to the DOD in the amount of $64,000.

The former chief of the Furniture Branch at the United States Army Garrison in Daegu, ROK, Kim admitted that he submitted a fraudulent lease to the housing office to obtain a living quarters allowance (LQA) that he was not entitled to receive.  Kim began working at Daegu Garrison in or about October 2002, and, as a DOD civilian employee working in the ROK, he was entitled to receive certain housing allowances, including LQA under certain circumstances.  To receive LQA, Kim was required to submit a copy of a housing lease in support of his application and acknowledge that the LQA payments were exclusively for the payment of rent and not for the payment of refundable security deposits or “key money” leases.  Key money leases – sums of money paid to a lessor in lieu of rent, which are returned to the lessee at the end of the lease – are common in the ROK; however, they are prohibited by State Department regulations.

Kim admitted that in September 2008, he was looking for a new apartment as the lease for his current apartment was about to expire.  He and his wife located a residence at an apartment complex; however, the owners of the apartments did not offer traditional rental leases – only key money leases and purchases.  On or about Sept. 8, 2008, Kim’s wife entered into a key money lease for one of the apartments.  Kim admitted that he knew that State Department regulations prohibited him from receiving LQA to pay for the key money lease signed by his wife.  On or about Sept. 9, 2008, Kim created a fake rental lease for the subject property and submitted it to the housing office at Daegu Garrison in support of his request for LQA.  The fake lease for the apartment purported to be a two-year lease with a total cost of $64,000.  Kim admitted receiving $64,000 in LQA, which is non-taxable, and also admitted that he used the money to pay for a portion of the key money lease entered into by his wife.

Kim also admitted that he created a fake receipt for the purported $64,000 rental payment and submitted it to the housing office at Daegu Garrison to justify his receipt of the LQA.  He received the $64,000 back at the end of the key money lease in 2010, and he used it for the purchase of a new residence in the ROK.

The case is being investigated by the U.S. Army Criminal Investigation Division and the FBI.  The case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Sue P. Fahami of the District of Nevada.

Experts See Inconsistencies in DOJ’s Merger Deal with Airlines

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GeyerGorey LLP’s Maurice Stucke provides analysis of Airlines Merger challenge with the Wall Street Journal:

Experts See Inconsistencies in DOJ’s Merger Deal with Airlines

Brooklyn Clinic Owner Sentenced for Role in $77 Million Medicare Fraud Scheme

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The owner of a Brooklyn medical clinic was sentenced today to serve 15 years in prison for her leading role in a $77 million Medicare fraud scheme.

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

Irina Shelikhova, 50, of Brooklyn, was sentenced by U.S. District Judge Nina Gershon of the Eastern District of New York.  In addition to her prison term, Shelikhova was sentenced to serve three years of supervised release with a concurrent exclusion from Medicare, Medicaid and all Federal health programs, ordered to forfeit $36,241,545 and ordered to pay $50,943,386 in restitution.  Shelikhova has been in custody since her arrest at the John F. Kennedy International Airport on June 15, 2012, after living as a fugitive in Ukraine for nearly two years.  After serving her sentence, Shelikhova faces deportation from the United States.

Shelikhova pleaded guilty on Dec. 18, 2012, to one count of conspiracy to commit money laundering.  Including Shelikhova, 13 individuals have been convicted in this case.

Court documents state that from 2005 to 2010, Shelikhova owned and operated a clinic in Brooklyn that billed Medicare under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (collectively, Bay Medical clinic).  Shelikhova and her employees at the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary or never provided.  The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

According to trial testimony, Shelikhova masterminded the health care fraud at the Bay Medical clinic, which included hiring a medically unlicensed co-defendant to impersonate the clinic’s doctor and render medical care to patients.  Shelikhova also directed employees to create phony medical notes in an attempt to back up the false billing and to forge doctors’ names on prescriptions and charts.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, which showed conspirators paying cash kickbacks to corrupt Medicare beneficiaries.  The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010.  This room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, Shelikhova directed the recruitment and operations of a network of external money launderers who cashed checks for the clinic.  Shelikhova wrote clinic checks payable to various shell companies controlled by the money launderers.  These checks did not represent payment for any legitimate service at or for the Bay Medical clinic, but rather were written to launder the clinic’s fraudulently obtained health care proceeds.  The money launderers cashed these checks and provided the cash back to the clinic.  Shelikhova used the cash to pay illegal cash kickbacks to the Bay Medical clinic’s purported patients.

The case was 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 the U.S. Attorney’s Office for the Eastern District of New York.  This case is being prosecuted by Trial Attorney Sarah M. Hall of the Fraud Section and Assistant U.S. Attorney Shannon Jones 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.