Monthly Archives: May 2014

Executive Pleads Guilty for Role in Bid Rigging Scheme at Municipal Tax Lien Auctions

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Investigation Has Yielded 15 Guilty Pleas to Date
A former New York-based tax liens company executive pleaded guilty today for his role in a conspiracy to rig bids at auctions conducted by New Jersey municipalities for the sale of tax liens, the Department of Justice announced.

Vinaya K. Jessani, of New York City, entered a guilty plea in the U.S. District Court for the District of New Jersey in Newark to felony charges filed today.   Under the plea agreement, Jessani has agreed to cooperate with the department’s ongoing investigation.

According to the charge, from at least as early as 1994 until as late as February 2009, Jessani, a former senior vice president who supervised the purchasing of municipal tax liens at auctions in New Jersey for the company he worked for, participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to, and instructing others to, allocate among certain bidders which liens each would bid on.  The department said that Jessani and those under his supervision submitted bids in accordance with the agreements and purchased tax liens at collusive and non-competitive interest rates.

“Today’s guilty plea demonstrates the Antitrust Division’s continuing effort to prosecute those who manipulate the competitive process in order to harm home and property owners,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “The division will continue to be vigilant in rooting out conspiracies that harm already distressed property owners.”

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.  New Jersey 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.

According to court documents, the conspiracy permitted the conspirators to purchase tax liens with limited competition and 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.

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 victims if either amount is greater than the $1 million statutory maximum.

Today’s plea is the 15th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions.  Including Jessani, 12 individuals and three companies have pleaded guilty.  Additionally, four individuals and two entities have been indicted for their roles in the conspiracy to rig bids at tax lien auctions.

 

Today’s case was done in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants.

Former Chief Executive Officer of Oil Services Company Indicted in New Jersey on Foreign Bribery and Kickback Charges

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The former co-chief executive officer (CEO) of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – was indicted today for his role in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA) and to defraud PetroTiger.

Acting Principal Deputy Assistant Attorney General Marshall Miller of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement.

Joseph Sigelman, 43, of Miami and the Philippines, was indicted today by a federal grand jury in the District of New Jersey and charged with conspiracy to violate the FCPA and to commit wire fraud, conspiracy to launder money, and substantive FCPA and money laundering violations.    Gregory Weisman, 42, of Moorestown, New Jersey, the former general counsel of PetroTiger, pleaded guilty on Nov. 8, 2013, to conspiracy to violate the FCPA and to commit wire fraud.    Sigelman’s co-CEO, Knut Hammarskjold, 42, of Greenville, South Carolina, pleaded guilty to the same charge on Feb. 18, 2014.

According to court records, Sigelman and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million.    To conceal the bribes, they first attempted to make the payments to a bank account in the name of the foreign official’s wife for purported consulting services she did not perform.  Sigelman and Hammarskjold provided Weisman invoices, including her bank account information.    The conspirators made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.    Sigelman and his conspirators then took steps to conceal the bribe payments from PetroTiger’s board members.

In addition, court documents allege that Sigelman and others attempted to secure kickback payments while negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition.    In exchange for negotiating more favorable terms for the owners of the target company, two of the owners agreed to kick back to the conspirators a portion of the increased purchase price.    To conceal the kickback payments, Sigelman and others had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments and used the code name “Manila Split” to refer to the payments amongst themselves.
Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013.    Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport.    Sigelman was arrested on Jan. 3, 2014, in the Philippines.    The charges against Sigelman, Hammarskjold and Weisman were unsealed on Jan. 6, 2014.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case was brought to the attention of the department through a voluntary disclosure by PetroTiger, which cooperated with the department’s investigation.    The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter.    The department also thanks the Republic of the Philippines, including the Bureau of Immigration, and the Republic of Panama for their assistance in this matter.    Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s Newark Division.    The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Zach Intrater of the District of New Jersey.

House Republicans Say Comcast Merger Risks Undue Sway on Channels

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House Republicans Say Comcast Merger Risks Undue Sway on Channels

New Your Times

“Allen P. Grunes, a partner at GeyerGorey and a former Justice Department antitrust lawyer, said Comcast and Time Warner do compete in the sale of local cable advertising, which takes up two to three minutes of every hour of cable programming.

“If the merger is consummated, the merged firm would likely have the power to increase prices in the spot cable advertising market through its control over a large number of subscribers and key market gateways,” Mr. Grunes said.”

Philly.Com: Comcast-TWC Back on Capitol Hill for Deal Scrutiny Read

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“Comcast executive vice president David Cohen testified for the company, and his voice grew hoarse over time.

The strongest comments against the deal came from Allen P. Grunes, a former federal antitrust investigator and now a Washington, D.C., attorney. He said the Clayton Antitrust Act of 1914 says a deal would be anti-competitive if it “may substantially lessen competition or tend to create a monopoly.”

A merged Comcast and Time Warner Cable could thwart online video competition because of its large share of the residential broadband market, Grunes said. He also was concerned about Comcast/Time Warner Cable’s economic power in local cable-TV advertising markets and regional sports networks that could be used as leverage against pay-TV competitors.”


Read more at http://www.philly.com/philly/business/20140509_Before_a_House_committee__Comcast_exec_fields_more_questions_on_Time_Warner_merger.html#8mSQgBfTjUyS2Hj3.99

Comcast-TWC Back on Capitol Hill for Deal Scrutiny Read more at http://www.philly.com/philly/business/20140509_Before_a_House_committee__Comcast_exec_fields_more_questions_on_Time_Warner_merger.html#8mSQgBfTjUyS2Hj3.99

Washington Post: Three things expected from Comcast-TWC merger hearing

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The Washington Post

“Three things to expect from Thursday’s Comcast-TWC merger hearing” by Brian Fung

#3:
Revisiting the NBC Universal merger: Allen Grunes, a former Justice Department antitrust lawyer, is expected to say that the conditions that applied to Comcast’s acquisition of NBC Universal — such as a commitment to respect net neutrality and to help promote media diversity — won’t be enough to ensure adequate competition in a Comcast deal. “The most comprehensive study to date has shown that merger-specific regulation, like regulation as a whole, often does not work,” Grunes says in his prepared testimony.

Former Executive Director of Virgin Islands Legislature Charged with Bribery and Extortion in Award of Government Contracts

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The former executive director of the Legislature of the Virgin Islands was indicted today by a federal grand jury in the Virgin Islands for accepting bribes and engaging in extortion in the award of contracts with the Legislature, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Ronald W. Sharpe for the District of the Virgin Islands.
The indictment charges Louis “Lolo” Willis, 56, of St. Thomas, Virgin Islands, with three counts of federal programs bribery and three counts of extortion under color of official right.
According to the indictment, Willis was the executive director of the Legislature between 2009 and 2012.  One of his responsibilities included oversight of the renovation of the Legislature building, which included awarding and entering into contracts on behalf of the Legislature.    These contracts included contracts for general construction, air-conditioning services and carpentry, which were not publicly bid.  Willis was also responsible for paying the contractors for their work.    As alleged in the indictment, Willis accepted payments, including, among other things, thousands of dollars in cash, from three contractors in exchange for using his official position to secure contracting work for the contractors and to ensure they received payment upon completion.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case was investigated by the FBI’s San Juan Division, the Office of the Virgin Islands Inspector General and the Internal Revenue Service – Criminal Investigation.    The case is being prosecuted by Trial Attorneys Peter Mason and Jennifer Blackwell of the Criminal Division’s Public Integrity Section and First Assistant U.S. Attorney Thomas Anderson of the District of the Virgin Islands.

 

Link to Comcast House Judiciary Hearing with GGLLP’s Allen Grunes Airing Now

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For Comcast House Judiciary Hearing:  Click Here

Today 9:30 am: Allen Grunes Testimony Before House Judiciary Committee, Subcommittee on Regulatory Reform, Commercial and Antitrust Law: Oversight Hearing on “Competition in the Video and Broadband Markets: The Proposed Merger of Comcast and Time Warner Cable”

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Allen Grunes to Testify Before House Judiciary Committee, Subcommittee on Regulatory Reform, Commercial and Antitrust Law:  Oversight Hearing on “Competition in the Video and Broadband Markets:  The Proposed Merger of Comcast and Time Warner Cable.”

Hearing date:  May 8, 2014 9:30 am

Link to live hearing: http://judiciary.house.gov/index.cfm/live-video-feed

More information here: http://judiciary.house.gov/index.cfm/hearings?ID=301C520F-5B9E-4E43-B2B5-B131B3B88951

Businessman Sentenced for Overseas Bank Account

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(Ed.:We have found it increasingly difficult to track the development of reciprocity agreements between the US Government and what used to be considered foreign tax havens.)  

Robert C. Sathre was sentenced today to serve 36 months in federal prison for tax evasion by U.S. District Judge Alan B. Johnson in Cheyenne, Wyoming, the Justice Department and Internal Revenue Service (IRS) announced.  Sathre was also ordered to pay $3,113,882 in restitution to the IRS and to serve three years of supervised release.  Sathre pleaded guilty on Feb. 26, 2014, to willfully evading the payment of his 1995 and 1996 tax liability.

According to court documents and proceedings, Sathre sold a Minnesota business and received installment payments in 1995 and 1996 of more than $3 million.  Sathre concealed his income by filing a 1995 tax return in which he reported only $64,928 in total income.  Sathre then purchased land and set up another business, a gas station and convenience store in Sheridan, Wyoming, known as the Rock Stop.

According to court documents and proceedings, Sathre concealed assets by opening a foreign bank account in the Caribbean island of Nevis and by using purported trusts.  In a 10 month period spanning from 2005 through 2006, Sathre sent over $500,000 to the account in Nevis to keep the funds out of reach from the IRS.  When Sathre sold the Rock Stop in 2007, he wired over $1,250,000 from the sale proceeds to the trust account of a Wyoming law firm.  He later directed the law firm to wire $900,000 from the trust account to his account at the Bank of Nevis.  Sathre also provided a false declaration and false promissory note to the Bank of Nevis to conceal the source of this transfer and obtained a debit card linked to the foreign account to access funds locally.  In addition, Sathre provided the Bank of Sheridan with an IRS form on which he falsely claimed that he was neither a citizen nor a resident of the United States.

This case was investigated by special agents of IRS – Criminal Investigation.  Trial Attorneys Ellen Quattrucci and Ignacio Perez de la Cruz of the Justice Department’s Tax Division

Government Settles False Claims Act Allegations Against Florida-Based Baptist Health System for $2.5 Million

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Baptist Health System Inc. (Baptist Health), the parent company for a network of affiliated hospitals and medical providers in the Jacksonville, Florida, area, has agreed to pay $2.5 million to settle allegations that its subsidiaries violated the False Claims Act by submitting claims to federal health care programs for medically unnecessary services and drugs, the Department of Justice announced today.  The alleged misconduct involved Medicare, Medicaid, TRICARE and the Federal Employee Health Benefits Program.

“Providers that bill for unnecessary services and drugs contribute to the soaring cost of health care,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Providers must deal fairly and honestly with federal health care programs, and the Justice Department will investigate aggressively and hold accountable those who do not.”

This settlement resolves allegations that, from September 2009 to October 2011, two neurologists in the Baptist Health network misdiagnosed patients with various neurological disorders, such as multiple sclerosis, which caused Baptist Health to bill for medically unnecessary services.  Although Baptist Health placed one of the physicians at issue on administrative leave in October 2011, it did not disclose any misdiagnoses to the government until September 2012.

“This settlement sends a clear message that health care fraud will not be tolerated in our district, particularly when there is the potential for harm to patients,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.

The improper conduct at issue in this case included Medicaid patients.  Medicaid is funded jointly by the states and the federal government.  The state of Florida, which paid for some of the Medicaid claims at issue, will receive $19,024 of the settlement amount.

“ Health care providers will not be permitted to provide patients unnecessary medical services and drugs and then pocket the improper payments they receive as a result,” said Acting Special Agent in Charge Brian Martens, U.S. Department of Health and Human Services Office of Inspector General.  “Our agency is dedicated to investigating health care fraud schemes that divert scarce taxpayer funds meant to provide for legitimate patient care.” 

The government’s investigation was initiated by a qui tam,or whistleblower, lawsuit filed under the False Claims Act by Verchetta Wells, a former Baptist Health employee.  The act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery.  Wells will receive $424,155. 

“These health care providers did not only violate the laws of the United States – they violated the trust placed in them by their patients,” said Inspector General of the U.S. Office of Personnel Management Patrick E. McFarland.  “Federal employees deserve health care providers, including hospitals, that meet the highest standards of ethical and professional behavior.  Today’s settlement reminds all providers that they must observe those standards and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that may put the health and well-being of their patients at risk.” 

This 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 Secretary of Health and Human Services 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 a total of more than $19.1 billion through False Claims Act cases, with more than $13.6 billion of that amount recovered in cases involving fraud against federal health care programs. 

This settlement is the result of a coordinated effort among the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, the U.S. Department of Health and Human Services Office of Inspector General, the Defense Health Agency Program Integrity Office and the Office of Personnel Management Office of Inspector General. 

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit against Baptist Health was filed in the U.S. District Court for the Middle District of Florida and is captioned United States ex rel. Wells v. Baptist Health System Inc. et al.