A Detroit-area medical biller was sentenced today to 50 months in prison for her role in a $7.3 million Medicare and Medicaid fraud scheme involving medical services that were billed to Medicare and Medicaid but not rendered as billed.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division, and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office, made the announcement.
Dawn Bentley, 56, of Oakland County, Michigan, was sentenced by U.S. District Judge Sean F. Cox of the Eastern District of Michigan, who also ordered Bentley to pay $3,253,107 in restitution jointly and severally with her co-defendants. After a one-week jury trial in January 2017, Bentley was convicted of one count of conspiracy to commit health care fraud, wire fraud and mail fraud, as well as one count of mail fraud. Bentley was sentenced to 50 months in prison on each of the two counts, to run concurrently, followed by one year of supervised release.
According to the evidence presented at trial, from June 2014 through June 2015, Bentley knowingly submitted fraudulent bills on behalf of a co-conspirator physician for services she knew could not have been rendered, and for services she knew had not been rendered as billed. In exchange, Bentley was paid 6% of the total billings paid to the physician from Medicare, the evidence showed. Bentley’s largest client was Waseem Alam, who pleaded guilty to a $33 million Medicare fraud scheme in March 2016. Bentley billed $1.9 million of this fraud from June 2014 to June 2015, and was paid 6% of Alam’s receipts for the fraudulent billings, the evidence showed. Bentley’s company received over $100,000 from Alam’s practices between June 2014 and June 2015, the evidence showed.
The FBI and HHS-OIG investigated the case, which 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 Michigan. Fraud Section Trial Attorneys Tom Tynan and Jessica Collins prosecuted the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,000 defendants who have collectively billed the Medicare program for more than $11 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
A former Audi manager has been charged via criminal complaint for his role in the long-running conspiracy to defraud U.S. regulators and customers by implementing software specifically designed to cheat U.S. emissions tests in thousands of Audi “clean diesel” vehicles.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Jean E. Williams of the Department of Justice’s Environment and Natural Resources Division, and Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan made the announcement.
Giovanni Pamio, 60, an Italian citizen, is charged with conspiracy to defraud the U.S., wire fraud, and violation of the Clean Air Act. Pamio was formerly head of Thermodynamics within Audi’s Diesel Engine Development Department in Neckarsulm, Germany. According to the complaint, from in or about 2006 until in or about November 2015, Pamio led a team of engineers responsible for designing emissions control systems to meet emissions standards, including for nitrogen oxides (“NOx”), for diesel vehicles in the U.S.
According to the complaint, after Pamio and coconspirators realized that it was impossible to calibrate a diesel engine that would meet NOx emissions standards within the design constraints imposed by other departments at the company, Pamio directed Audi employees to design and implement software functions to cheat the standard U.S. emissions tests. Pamio and coconspirators deliberately failed to disclose the software functions, and they knowingly misrepresented that the vehicles complied with U.S. NOx emissions standards, the complaint alleges.
Audi’s parent company, Volkswagen AG (VW), previously pleaded guilty to three felony counts connected to cheating U.S. emissions standards. The company was ordered to pay a $2.8 billion criminal fine at its sentencing on April 21, 2017.
A complaint is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The FBI and EPA-CID investigated the case. This case is being prosecuted by Securities and Financial Fraud Chief Benjamin D. Singer and Trial Attorneys David Fuhr and Christopher Fenton of the Criminal Division’s Fraud Section, Senior Trial Attorney Jennifer Blackwell and Trial Attorney Joel La Bissonniere of the Environment and Natural Resources Division’s Environmental Crime Section, and White Collar Crime Unit Chief John K. Neal and Assistant United States Attorney Timothy J. Wyse of the U.S. Attorney’s Office for the Eastern District of Michigan. The Criminal Division’s Office of International Affairs also assisted in the case.
In case you’ve forgotten, on June 8, 2017 the Senate Judiciary Committee voted overwhelmingly in favor of the nomination of Makan Delrahim, President Donald Trump’s pick to be the Assistant Attorney General in charge of the Antitrust Division of the USDOJ. The committee approved Mr. Delrahim’s nomination by a vote of 19-1. Once approved by the committee, the nomination should go before the full Senate. But, Mr. Delrahim still has not been brought up for a confirmation vote in the Senate. Sad.
This is a very unfortunate situation for the nations’ top competition law enforcement body. The work of the Division goes on as staffs continue investigations and time sensitive decisions are still made. But, it is an added stress and drain on morale to lack leadership; especially when the leadership will likely be enthusiastically received by at least most staff members. And, not just Mr. Delrahim awaits getting on board; the new Assistant Attorney General will bring in his team to fill out the “front office.”
The delay in confirming Mr. Delrahim has been lamented in two recent articles. In a June 25, 2017 opinion article in The Hill, DC attorney David Balto wrote:
Delrahim is not controversial and is regarded by both Republicans and Democrats to be perfect for the job. He has a strong reputation as a pragmatist with real world experience to guide the tough enforcement decisions the division faces. Time to get Trump’s new Antitrust Cop on the Beat
Another article referred to the fact that until Mr. Delrahim is appointed and able to fill out his staff, the direction and priorities of the Antitrust Division under Trump are not known. In a June 30, 2017 BNA Law article Liz Crampton notes:
The long-term agenda of the Justice Department remains unknown as Makan Delrahim, nominee to lead the division, is still awaiting Senate confirmation three months after President Donald Trump named him. Justice Dept. Antitrust Division Treads Lightly Absent Leader
Mr. Delrahim can provide the kind of guidance the business community counts on, but is currently lacking.
Here’s hoping something as non-controversial but important as Mr. Delrahim’s confirmation vote can dodge through the dysfunction in DC and get taken care of very soon.
If you get lost, sometimes you must go back and start again from the beginning. I’ve been a bit lost on whether the Sherman Act is unconstitutional as a criminal statute. It is well accepted that per se violations of the Sherman Act can be prosecuted criminally. An individual can be sentenced to up to ten years in prison. But, is the accepted learning on this issue wrong? I think I’ve found my way to the Sherman Act being unconstitutional as a criminal statute.[1]
Forget everything you know about Supreme Court jurisprudence involving the criminal application of the Sherman Act (that was easy for me). Take a look at the statute:
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.
Can you advise your client what exactly is declared to be illegal? And watch his face show even more alarm when you explain that whatever it is that he can’t do, if he does do it, the penalty is up to 10 years in prison.[2] The Sherman Act is void for vagueness. Justice Sutherland explained the void for vagueness doctrine in Connally v. General Construction Co, 269 U.S. 385, 391 (1926):
The terms of a penal statute…must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to its penalties….and a statue which either forbids or requires the doing of an act so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law.
The Sherman Act does not sufficiently inform business people (including foreigners) what conduct can land them in jail or on a Red Notice. This must be true because even the Supreme Court has said the Sherman Act cannot possibly mean what it says because every contract is in restraint of trade, and every contract cannot be illegal. Thus, the first Supreme Court triage on the Sherman Act was that only “unreasonable restraints” of trade were prohibited.[3] But, that doesn’t clear things up too much—What is an unreasonable restraint of trade? Under the Rule of Reason, a restraint is unlawful only, if after an inquiry to balance the pro-competitive benefits of the agreement versus its anticompetitive effects, the agreement is found to unreasonably restrain trade. But can you find someone guilty of a crime after weighing the pro-competitive and anticompetitive effects of the agreement? That doesn’t seem like the notice required by due process either. Further Supreme Court surgery on the Sherman Act separated out per se violations–restraints of trade that are so highly unlikely to have any redeeming competitive benefits, that the restraints (price-fixing, bid rigging and customer/market allocation) are per se illegal. As a result, juries are charged in a criminal antitrust case that they do not need to find that the restraint was unreasonable, but simply that the defendant(s) entered into an agreement to fix prices, which, by judicial fiat, is per se unreasonable.
Does the per se rule solve the void for vagueness problem? The conventional wisdom is that it has. But changed circumstances sometimes compel a “fresh look” at accepted wisdom. It is time for that fresh look. The changed circumstance that comes to mind is that the Sherman Act is no longer a misdemeanor. It is not a “gentlemen’s crime” meriting a slap on the wrist with a mild scolding from the judge.[4] The Sherman Act, as a criminal statute, provides for an individual to be sentenced to up to 10 years in jail. And the ten years is not just theoretical; the Antitrust Division sought a 10-year prison sentence for the CEO of AU Optronics after his conviction. While the ten-year sentence was not achieved, the record prison sentence for a criminal antitrust violation is now 5 years. [5]
I am not a constitutional scholar, but I do have a blog so I’ll opine what I think is wrong with the Sherman Act as a criminal statute.[6] First, the Supreme Court cannot save a criminal statute by grafting on elements such as condemning only “unreasonable” restraints of trade, and further holding that only certain types of agreements are per se unreasonable. But even if the Supreme Court could address the void for vagueness doctrine by holding that only certain restraints are per se illegal, this violates another constitutional tenet; the Supreme Court takes away the issue from the jury with an unrebuttable presumption. Charles D. Heller has written on this subject and argued that the current practice of instructing the jury that price-fixing is per se illegal, i.e., presumptively unreasonable, is unconstitutional. The jury should be the fact-finder of whether a restraint is unreasonable.[7] Finally, the definition of a per se offense is that the restraint (price-fixing for e.g.) is so highly likely to be anticompetitive that there is no inquiry as to whether the actual restraint the defendant is charged with was anticompetitive. This may be fine for a civil case, but in a criminal case the defendant must be allowed to argue that the charged restraint was the exception to the rule. Instead, in a criminal case the jury may be charged:
It is not a defense that the parties may have acted with good motives, or may have thought that what they were doing was legal, or that the conspiracy may have had some good results.
This seems like a very odd jury instruction for a crime that carries a ten-year maximum prison sentence, especially when one considers that many of the defendants in criminal antitrust indictments are foreigners.[8]
In short, the Sherman Act is void for vagueness. But, if the Act does pass the void for vagueness hurdle by grafting on the per se rule, juries should decide whether the restraint in question is unreasonable, and that inquiry should not be contained by a presumption the restraint was per se unreasonable if it was price-fixing, bid rigging or market allocation. If these standards were applied, however, the Sherman Act would be unworkable. If juries decided, in an after the fact deliberation, whether a restraint was unreasonable, the void for vagueness doctrine would trump a conviction. Sad. Very sad.
My solution to the problem, if there really is a problem, will come as soon as I figure it out—but no later than next week– in Part II.
Thanks for reading. Comments would be much appreciated, but maybe hold your fire until after Part II?
[1] I am not the first to reach this conclusion. The work of several other authors who find likewise is mentioned in the post.
[2] Maybe this language that is in Sherman Act indictments will clear things up: “For the purpose of forming and carrying out the charged combination and conspiracy, the defendant and his co-conspirators did those things that they combined and conspired to do.” To be fair, the indictments then “bullet point” a list of acts the defendant(s) engaged in to carry out the conspiracy.
[3] Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911).
[4] I was a brand new Antitrust Division attorney in one trial where we obtained convictions not too long after Sherman Act had been made a felony. At sentencing, the first convicted defendant got a wicked tongue lashing, but the judge said that, due to his youth and relative inexperience, he would not be sentenced to prison. The next defendant—ditto on the tongue lashing—but the judge found he should not be sentenced to prison because he was elderly and now retired.
“[C]ircuit courts are mired in an abiding difference of opinion concerning the appropriate interpretation of the summary judgment paradigm in cases brought under Section 1 of the Sherman Act as applied to circumstantial evidence.”
The professors are going to bat for plaintiff Evergreen, which had its group boycott claimed dismissed on summary judgment. The amicus brief argues that the First Circuit incorrectly applied the Matsushita standard that requires the plaintiff to produce evidence that “tends to exclude the possibility of independent conduct.” The brief goes on to argue say this strict standard should only be applied where the defendants’ conduct is arguably pro-competitive (like the price cutting in Matsushita). In this case, the brief argues, the correct standard, is found in Eastman Kodak Industry Co. v. Image Technical Services Inc.,: whether the plaintiff has produced evidence that the defendants’ conduct is unreasonable.
From the brief:
The Second, Third, Fifth, Sixth, Seventh, Ninth, and Tenth Circuits “have narrowed the application of Matsushita’s “tends to exclude the possibility of independent conduct” test to situations where the plaintiff ’s theory: (1) is implausible; and (2) challenges pro-competitive conduct….The First, Fourth, Eighth, and Eleventh Circuits, however, do not interpret Kodak as a limitation on Matsushita’s “tends to exclude” test. These courts universally apply the test to all motions seeking entry of summary judgment on a conspiracy claim under Section 1, regardless of whether plaintiff’s theory makes economic sense or there is little or no risk of chilling pro-competitive behavior.”
The brief notes that Judge Posner has been critical of the Matsushita “tends to exclude the possibility of independent conduct” standard for requiring the plaintiffs to disprove the defendants’ case with a “sweeping negative.” Richard Posner, Antitrust Law, 100 (2d ed. 2001). The brief also quotes a Judge Posner opinion:
“That would imply that the plaintiff in an antitrust case must prove a violation of the antitrust laws not by a preponderance of the evidence, not even by proof beyond a reasonable doubt (as indeed is required in criminal antitrust cases), but to a 100 percent certainty, since any lesser degree of certitude would leave a possibility that the defendant was innocent.”
In re Brand Name Prescription Drugs Antitrust Litig., 186 F.3d 781, 787 (7th Cir. 1999) (Posner, C.J.).
The brief concludes:
“In sum, the decision below illustrates and intensifies confusion among the lower courts about the Matsushita standard for Section 1 antitrust claims at summary judgment. The question is critical; private enforcement is essential to maintaining the correct balance between under and over deterrence to foster healthy competition. But when it comes to Matsushita, inconsistency in its application is now the rule, rather than the exception. For these reasons, the Court should clarify the standard, resolve the circuit split, and emphasize that the correct interplay between Matsushita and Kodak properly limits the “tends to exclude” summary judgment standard to cases where the alleged conspiracy is economically irrational and the conduct is pro-competitive.”
Whichever side of the “v.” you are on [plaintiff or defendant] the brief is a useful read for the discussion of the differences among the circuits on the proper standard for summary judgment.
Evergreen is represented by Richard Wolfram who earlier had filed a petition for certiorari with Supreme Court. A copy of the petition can be found here.
PAMC Ltd., and Pacific Alliance Medical Center Inc., which together own and operate Pacific Alliance Medical Center, an acute care hospital located in Los Angeles, California, have agreed to pay $42 million to settle allegations that they violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today. Of the total settlement amount, $31.9 million will be paid to the Federal Government, and $10 million will be paid to the State of California.
The settlement announced today resolves allegations brought in a whistleblower lawsuit that the defendants submitted false claims to the Medicare and MediCal Programs for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of (1) arrangements under which the defendants allegedly paid above-market rates to rent office space in physicians’ offices, and (2) marketing arrangements that allegedly provided undue benefit to physicians’ practices. The lawsuit alleged that these relationships violated the Anti-Kickback Statute and the Stark Law, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.
“This is another example of how the False Claims Act whistleblower provisions can help protect the public fisc,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers.”
The lawsuit was filed by Paul Chan, who was employed as a manager by one of the defendants, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. The United States may intervene in the lawsuit, or, as in this case, the whistleblower may pursue the action. Mr. Chan will receive over $9.2 million as his share of the federal recovery.
“Federal law prohibits improper financial relationships between hospitals that receive federal health care funds and medical professionals – this is to protect the doctor-patient relationship and to ensure the quality of care provided,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “Patients deserve to know their doctors are making health care decisions based solely on medical need and not for any potential financial benefit.”
“This settlement is a warning to health care companies that think they can boost their profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to crack down on such deals, which work to undermine impartial medical judgement, drive up health care costs, and corrode the public’s trust in the health care system.”
The case, United States ex rel. Chan v. PAMC, Ltd., et al., Case No. 13-cv-4273 (C.D. Cal.), was monitored by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Outbreak Was the Largest Public Health Crisis Ever Caused by a Pharmaceutical Product
The owner and head pharmacist of New England Compounding Center (NECC) was sentenced today to nine years in prison in connection with the 2012 nationwide fungal meningitis outbreak, the Department of Justice announced today.
Barry Cadden, 50, of Wrentham, Massachusetts, was sentenced by U.S. District Court Judge Richard G. Stearns to serve 108 months in prison and three years of supervised release, and forfeiture and restitution in an amount to be determined later. In March 2017, Cadden was convicted by a federal jury of racketeering, racketeering conspiracy, mail fraud and introduction of misbranded drugs into interstate commerce with the intent to defraud and mislead.
“Barry Cadden put profits ahead of patients,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Under his direction, employees assured customers that they were getting safe drugs, while Cadden ignored grave environmental failures, used expired active ingredients, and took innumerable other production shortcuts that led to numerous, entirely preventable deaths. As Cadden’s sentence reflects, the Justice Department’s Consumer Protection Branch is committed to prosecuting those who put the health of Americans at risk.”
“Barry Cadden put profits over patients,” said Acting U.S. Attorney William D. Weinreb for the District of Massachusetts. “He used NECC to perpetrate a massive fraud that harmed hundreds of people. Mr. Cadden knew that he was running his business dishonestly, but he kept doing it anyway to make sure the payments kept rolling in. Now he will have to pay for his crimes.”
“Protecting Americans from unsafe and contaminated drugs is at the core of our mission,” said FDA Commissioner Scott Gottlieb, M.D. “Patients should not have to worry about the safety and sterility of the drugs they are prescribed. Since this tragedy, Congress has given the FDA important new authorities, and the agency has implemented key policies, all to provide a greater assurance of safety over compounded medicines. As part of these efforts, we will continue to hold accountable those who violate the law and put patients at risk.”
“Today, Barry Cadden was held responsible for one of the worst public health crises in this country’s history, and the lives of those impacted because of his greed, will never be the same,” said Special Agent in Charge Harold H. Shaw of the FBI, Boston Field Division. “This deadly outbreak was truly a life-changing event for hundreds of victims, and the FBI is grateful to have played a role, alongside our law enforcement partners, in bringing this man to justice.”
In 2012, 753 patients in 20 states were diagnosed with a fungal infection after receiving injections of preservative-free methylprednisolone acetate (MPA) manufactured by NECC. Of those 753 patients, the U.S. Centers for Disease Control and Prevention (CDC) reported that 64 patients in nine states died. The outbreak was the largest public health crisis ever caused by a pharmaceutical product.
Specifically, Cadden directed and authorized the shipping of contaminated MPA to NECC customers nationwide. In addition, he authorized the shipping of drugs before test results confirming their sterility were returned, never notified customers of nonsterile results, and compounded drugs with expired ingredients. Furthermore, certain batches of drugs were manufactured, in part, by an unlicensed pharmacy technician at NECC. Cadden also repeatedly took steps to shield NECC’s operations from regulatory oversight by the FDA by claiming to be a pharmacy dispensing drugs pursuant to valid, patient-specific prescriptions. In fact, NECC routinely dispensed drugs in bulk without valid prescriptions. NECC even used fictional and celebrity names on fake prescriptions to dispense drugs, such as “Michael Jackson,” “Freddie Mae” and “Diana Ross.”
“Today’s sentencing demonstrates the ongoing commitment of the Defense Criminal Investigative Service (DCIS) to protect the integrity of TRICARE, the U.S. Defense Department’s health care program,” stated Special Agent in Charge Leigh-Alistair Barzey of DCIS, Northeast Field Office. “DCIS will continue to work with its law enforcement partners to identify and investigate individuals who disregard pharmaceutical and drug regulations and endanger the health and safety of U.S. military members and their families.”
“No veterans receiving VA care were harmed by the fungal meningitis outbreak,” said Special Agent in Charge Donna L. Neves for the Department of Veterans Affairs, Office of Inspector General (VA-OIG). “The VA Office of Inspector General, together with its law enforcement partners, will persist in working drug adulteration cases to ensure veterans continue to receive safe and effective medications for the purpose of healing their ailments.”
“Today’s sentencing is an example of the dedicated work of law enforcement, along with the U.S. Attorney’s Office Health Care Fraud Unit in their steadfast pursuit of justice in the largest public health crisis caused by a pharmaceutical product in this nation’s history,” said Inspector in Charge Shelly Binkowski of the U.S. Postal Inspection Service. “The U.S. Postal Inspection Service will continue to be vigilant in investigating cases where the U.S. mail is used to put our nation’s citizens at risk.”
Assistant U.S. Attorneys George P. Varghese and Amanda P.M. Strachan of Weinreb’s Health Care Fraud Unit and Trial Attorney John W.M. Claud of the Justice Department’s Consumer Protection Branch prosecuted the case.
Eleven Executives and Four Companies Have Been Charged in Ocean Shipping Investigation
An indictment of three shipping executives was unsealed in U.S. District Court in Baltimore, the Department of Justice announced today.
Anders Boman, Arild Iversen, and Kai Kraass have been charged with participating in a long-running conspiracy to allocate certain customers and routes, rig bids, and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. A federal grand jury returned the indictment in November 2016.
Boman, a citizen of Sweden, and Iversen, a Norwegian citizen, are former executives of Wallenius Wilhelmsen Logistics AS (WWL). Kraass, a German citizen, is a current WWL executive. Including the charges announced today, eleven executives have been charged in the investigation to date. Four have pleaded guilty and been sentenced to serve prison terms. Others remain international fugitives. WWL has pleaded guilty and been sentenced to pay a $98.9 million fine. Three other companies have also pleaded guilty, resulting in total collective criminal fines over $230 million.
The indictment alleges that Boman, Iversen, and Kraass conspired with their competitors to allocate certain customers and routes for the shipment of cars and trucks, as well as construction and agricultural equipment. The defendants accomplished their scheme by, among other things, attending meetings in Baltimore County and elsewhere during which they agreed not to compete against each other, by refraining from bidding or by agreeing on the prices they would bid for certain customers and routes. In addition, Boman, Iversen, and Kraass agreed with competitors to fix, stabilize, and maintain rates charged to customers of international ocean shipping services. The customers affected by the conspiracy included U.S. companies.
“The indictment unsealed today is yet another step in the Division’s efforts to restore competition in the shipping industry,” said Acting Assistant Attorney General Andrew Finch of the Justice Department’s Antitrust Division. “WWL has pleaded guilty. Now we are working to ensure that its executives who conspired to suppress competition at the expense of American consumers will be held accountable.”
“These indictments are the continuation of a long-term effort by the FBI’s Baltimore Field Office to secure our nation’s economy against collusion in the shipping industry, to ensure competition in the market place and to protect US companies from these deceptive practices.” said Special Agent in Charge Gordon B. Johnson.
Today’s announcement is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.
I have written often about the need to reform the Sentencing Guideline for antitrust violations. U.S.S.G. 2R1.1. (here)(here)(here). My major beef is that the antitrust guideline measures culpability primarily by the volume of commerce subject to the agreement, to the exclusion of many other very relevant factors. The cartel boss who engages the firm in the illegal conduct is tagged with the same volume of commerce as the employee who is assigned the task of going to cartel meetings to work out the details.
Sally Q. Yates served in the Justice Department from 1989 to 2017 as an assistant U.S. attorney, U.S. attorney, deputy attorney general and, briefly this year, as acting attorney general. Ms. Yates described the problem with overweighting a quantifiable factor better than I ever have, though in a slightly different context:
“But there’s a big difference between a cartel boss and a low-level courier. As the Sentencing Commission found, part of the problem with harsh mandatory-minimum laws passed a generation ago is that they use the weight of the drugs involved in the offense as a proxy for seriousness of the crime — to the exclusion of virtually all other considerations, including the dangerousness of the offender.”
For the record, the issue of mandatory minimums is a far more serious issue than the problem of sentencing individual criminal antitrust offenders. While I hope for antitrust sentencing reform, it is not really a “need.” The antitrust sentencing guidelines are so divorced from actual culpability that virtually no individual–even a cartel boss–is sentenced to a guideline range term of imprisonment.
Despite what you hear about United States withdrawal from the Paris accords and increased grant enforcement from Inspector Generals at the EPA, Department of Energy, and NASA, government and corporate action and funding continues to coalesce around this issue cluster and that is not likely to change quickly if at all, even as the U.S. government reduces its “green” footprint.
However quickly you dismiss the political fight’s effect on the ultimate outcome of the war that is currently raging between global warming advocates and global warming deniers, you should not dismiss the effects this battle has on the risk profile of current government contractors and government grantees. In short, pushback by the current administration policy against “green” initiatives increase the perceived value of these grant fraud cases to enforcers.
Why? Cases against grantees that received money under the last Administration’s priorities helps undermine the moral case for global warming. In fact, undermining the case for global warming through the development of “green” grant fraud cases is a smaller mountain to climb than having to disprove the so-called scientific consensus which, from their vantage point, was created through government grant funding. While it is hard to “prove the negative” (that man-made CO2 has no effect on temperature) it is easier to show that “green” research and development was subject to fraud, waste and abuse. Once the case is made that “green” grants involved fraud, waste and abuse, it is but a small step to establish in public opinion that the “green” technologies themselves are fraudulent.
The Trump Administration can pursue a blue print in the current struggle that was drafted by the Iraq anti-war movement that many believe adversely impacted what was then called the “War on Terror” resulting in what may be viewed as hasty withdrawal from Iraq. In 2005-2006, media accounts began circulating about fraud, waste and abuse in the “war zone.” In October 2006, the National Procurement Fraud Task Force was formed to marshal the efforts by agents and prosecutors. A similar effort involving Grant Fraud has already started today. In January 2007, there were perhaps a half-dozen “war-zone” cases filed. Within three years, there were over 100 warzone cases filed. The vast increase spilled over into fraud generally and in 2010 there had been perhaps 700 cases filed across the Department of Justice involving procurement fraud and grant fraud. There were probably ten to twenty times that number of inquiries, investigations, and qui tam suits filed.
Although it is impossible to factor the effect the public perceptions of fraud and corruption had on public opinion regarding the War in Iraq, no one can argue that its effect was negligible. Here the current Administration wants to undermine resolve in continuing to fight the “War Against a Heating Planet” so prosecutors looking to advance their careers under the new Administration already have begun beating the investigative bushes to see what complainants, informers, complaints and investigations are coming into the “green” fraud enforcement pipeline.
