| WASHINGTON — The heads of the antitrust agencies of the United States, Canada and Mexico met today in Mexico City to discuss their ongoing work to ensure effective antitrust enforcement cooperation in our increasingly interconnected markets.The meetings were held among Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division, Chairwoman Edith Ramirez of the Federal Trade Commission, Canadian Commissioner of Competition John Pecman and President Alejandra Palacios Prieto of the Mexican Federal Economic Competition Commission.The discussions covered a wide range of topics, including implementation of Mexico’s new competition law, enforcement cooperation among the three countries’ antitrust agencies, approaches to innovative and disruptive technologies and current enforcement priorities.
“We value our close relationships with our antitrust partners north and south of the border,” said Assistant Attorney General Baer. “Our shared enforcement interests and tradition of cooperating when investigating mergers and cartels ensure that North American markets remain competitive. These annual ‘trilateral’ meetings give us a chance to review and improve our enforcement cooperation and to engage in policy dialogue on emerging topics of common interest.” “These meetings are an important element in building and maintaining the strong relationships that help us meet enforcement and policy challenges in all three countries,” said Chairwoman Ramirez. “The need to cooperate across our borders increases every year, and we are working together to meet that challenge.” The four agency heads also spoke at a public conference organized by the Mexican agency, which included remarks by Assistant Attorney General Baer on the importance of anti-cartel enforcement and the role of criminal sanctions in the United States. The meetings build on the foundations laid by the 1995 antitrust cooperation agreement between the United States and Canada, the 2000 agreement between the United States and Mexico and the 2001 agreement between Canada and Mexico. The agreements commit the antitrust agencies to cooperate and coordinate with each other to make their antitrust policies and enforcement as consistent and effective as possible. |
Author Archives: Brad Geyer
Detroit-Area Neurosurgeon Admits Causing Serious Bodily Injury to Patients in $11 Million Health Care Fraud Scheme
A Detroit-area neurosurgeon pleaded guilty today in two separate criminal cases that resulted in serious bodily injury to his patients and more than $11 million in Medicare, Medicaid and private insurance companies.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service Office of Inspector General (HHS-OIG), Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Special Agent in Charge Marlon Miller of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Detroit Field Office made the announcement.
“Disregarding his Hippocratic oath to do no harm, Dr. Sabit enriched himself by performing unnecessary, invasive spinal surgeries and implanting costly and unnecessary medical devices, all at the expense of his patients’ health and welfare,” said Assistant Attorney General Caldwell. “Doctors who sell their medical judgment and ethics for personal profit endanger the lives and safety of vulnerable patients who count on their advice to make life-altering decisions. The Criminal Division of the Department of Justice will continue to prioritize the prosecution of doctors whose criminal behavior puts patients at risk.”
“This case of health care fraud is particularly egregious because Dr. Sabit caused serious bodily injury to his patients by acting out of his own greed instead of the best interests of his patients,” said U.S. Attorney McQuade. “Not only did he steal $11 million in insurance proceeds, but he also betrayed his trust to patients by lying to them about the procedures that were medically necessary and that were actually performed.”
Aria O. Sabit, M.D., 39, of Birmingham, Michigan, entered his guilty pleas in both criminal cases at a hearing before U.S. District Judge Paul D. Borman of the Eastern District of Michigan. Sabit pleaded guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance, resulting in losses to Medicare, Medicaid and various private insurance companies. A sentencing hearing is scheduled for Sept. 15, 2015.
According to court documents, Sabit was a licensed neurosurgeon who owned and operated the Michigan Brain and Spine Physicians Group with various locations in the Eastern District of Michigan, including Southfield, Michigan, Clinton Township, Michigan, and Dearborn, Michigan, which opened in approximately April 2011.
During his guilty plea today, Sabit admitted that he derived significant profits by convincing patients to undergo spinal fusion surgeries with instrumentation (meaning specific medical devices designed to stabilize and strengthen the spine), which he never rendered, and subsequently billing public and private healthcare benefit programs for those fraudulent services.
Sabit further admitted he operated on patients and dictated in his operative reports—that he knew would later be used to support his fraudulent insurance claims—that he had performed spinal fusion with instrumentation, which he never performed. This invasive surgery caused serious bodily injury to the patients. Sabit admitted that his operative reports and treatment records contained false statements about the procedures performed, and the instrumentation used in the procedures. Sabit also admitted that, on occasion, he would implant cortical bone dowels and falsely dictate in his operative reports that he had implanted instrumentation. Sabit, then fraudulently billed public and private health care programs for instrumentation, when in fact the implants were tissue. Sabit admitted he failed to render services in relation to lumbar and thoracic fusion surgeries, including in certain instances, billing for implants that were not provided.
Sabit also admitted that, prior to moving to Michigan, he was a resident of Ventura, California, and a licensed neurosurgeon in California. He admitted that in approximately February 2010, he became involved with Apex Medical Technologies LLC (Apex) while he was on the staff of a California hospital.
Apex was owned by another neurosurgeon and three non-physicians who operated Apex as a physician-owned distributorship and paid neurosurgeons lucrative illegal kickbacks tied directly to the volume and complexity of the surgeries that the surgeons performed, and the number of Apex spinal implant devices the surgeons used in their spine surgeries.
In exchange for the opportunity to invest in Apex and share in its profits, Sabit admitted that he agreed to convince his hospital to buy spinal implant devices from Apex and use a sufficient number of Apex spinal implant devices in his spine surgeries. Sabit further admitted that he and Apex’s co-owners used Apex to operate an illegal kickback scheme. In doing so, they concealed Sabit’s involvement in Apex from outsiders. Sabit then required the hospitals and surgical centers where he and his fellow neurosurgeon performed surgeries to purchase spinal implant devices from Apex.
Sabit admitted that his involvement in Apex, and the financial incentives provided to him by Apex and his co-conspirators, caused him to compromise his medical judgment and cause serious bodily injury to his patients by performing medically unnecessary spine surgeries on some of the patients in whom he implanted Apex spinal implant devices. Sabit admitted that on a few occasions, the money he made from using Apex spinal implant devices motivated him either to refer patients in for spine surgery who did not medically need surgery or refer his patients for more complex surgeries, such as multi-level spine fusions, that they did not need.
Sabit also admitted that the financial incentives provided to him by Apex and his co-conspirators caused him to “over instrument” his patients (meaning Sabit used more spinal implant devices than were medically necessary to treat his patients) in order to generate more sales revenue for Apex, which resulted in serious bodily injury to his patients.
The Michigan case was investigated by the FBI, HHS-OIG and ICE. The California case—which was subsequently transferred to the Eastern District of Michigan—was investigated by the FBI and HHS-OIG. The Michigan case is being prosecuted by Assistant U.S. Attorneys Regina R. McCullough and Philip A. Ross of the Eastern District of Michigan. The California case 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 of the Eastern District of Michigan, and is being prosecuted by Senior Trial Attorney Jonathan T. Baum and Trial Attorneys Dustin Davis and Blanca Quintero of the Criminal Division’s Fraud Section.
Sabit is also a defendant in two civil False Claims Act cases brought by the Department of Justice in the U.S. District Court of the Central District of California.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
United States Settles Kickback Allegations with Georgia Hospital
The Department of Justice announced today that the United States has settled a False Claims Act lawsuit with Health Management Associates (HMA) and Clearview Regional Medical Center for $595,155. The lawsuit filed in the Middle District of Georgia alleged that from 2008 to 2009 the hospital paid kickbacks to an obstetric clinic that served primarily undocumented Hispanic women, in return for referral of those patients for labor and delivery at the hospital. The hospital then billed the Medicaid program in Georgia for the services provided to the referred patients. Clearview, located in Monroe, Georgia, was named Walton Regional Medical Center and was owned by hospital operator HMA during the time period relevant to the lawsuit. Clearview is now owned by Community Health Systems (CHS), which purchased HMA in January 2014.
“This resolution illustrates our commitment to ensuring that health care providers who pay kickbacks in return for patient referrals are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients.”
“The Medicaid program is a vital part of the government’s efforts to make sure that everyone has access to health care,” said U.S. Attorney Georgia Michael J. Moore of the Middle District of Georgia. “Instead of providing health care services to expectant mothers in its area and receiving payment for those services from Medicaid, the hospital participated in a scheme to pay kickbacks in exchange for having pregnant women from outside its market funneled to its facility with the goal of increasing the amount of Medicaid money the hospital could claim.”
The United States’ complaint alleges that HMA’s Walton Regional Medical Center paid kickbacks to Hispanic Medical Management doing business as Clinica de la Mama (Clinica) and related entities, in return for Clinica’s agreement to send pregnant women to Walton Regional for deliveries paid for by Medicaid, in violation of the federal Anti-Kickback Statute. The kickbacks were disguised as payments for a variety of services allegedly provided by Clinica.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“Hospitals that pay kickbacks to clinics for referrals of undocumented pregnant patients are taking advantage of both these vulnerable women and the taxpayer-funded Medicaid program,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Atlanta Regional Office. “Our agency is dedicated to investigating such corrosive kickback schemes, which undermine the public’s trust in medical institutions and the financial health of government health care programs.”
“The FBI is proud of the role it played in bringing forward today’s settlement, said Special Agent in Charge J. Britt Johnson of the FBI Atlanta Field Office. “The FBI will continue to provide significant investigative assets and resources to ensure that the integrity of federally funded health care programs such as Medicaid are protected from providers who would abuse them.”
As part of the settlement, HMA and Clearview will pay the State of Georgia an additional $396,770 to settle Georgia’s claims under the Georgia False Medicaid Claims Act. The Medicaid program is a jointly funded federal-state program that provides health care to the poor and disabled. Although undocumented aliens are not eligible for regular Medicaid coverage, the Medicaid program provides coverage for emergency conditions, including childbirth, for undocumented aliens.
The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case against Walton Regional, as well as several other defendants, including Clinica de la Mama and four hospitals owned by Tenet Healthcare Corporation. The litigation against the non-settling defendants is ongoing. The relator, Ralph D. Williams, the chief financial officer of Walton Regional from April 2009 to October 2009, will receive $119,031 from the United States’ portion of the settlement.
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 the Attorney General and the Secretary of Health and Human Services. 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 $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices for the Middle and Northern Districts of Georgia, HHS-OIG, FBI and the Office of the Attorney General for the State of Georgia.
The case is captioned United States ex rel. Williams v. Health Mgmt. Assocs. Inc., et al., No. 3:09-CV-130 (M.D. Ga.).
The claims resolved by this settlement are allegations only and there has been no determination of liability.
Alabama Woman Pleads Guilty for Involvement in Stolen Identity Refund Fraud Ring
A Phenix City, Alabama, resident pleaded guilty today in the Middle District of Alabama for her role in a stolen identity refund fraud (SIRF) scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.
According to court documents, between March 2011 and May 2014, Teresa Floyd conspired with her daughter, Lasondra Miles Davis, and others to defraud the United States by filing false federal income tax returns using stolen identities. Miles Davis obtained the means of identification of individuals without their authorization and provided the stolen identities to Floyd. Floyd and her co-conspirators obtained Electronic Filing Identification Numbers (EFINs) from the Internal Revenue Service (IRS) in the names of tax preparation businesses, which Floyd then used to file false tax returns with the stolen identities. All of the false returns included fraudulent claims for tax refunds. Floyd, Miles Davis and others cashed the refund checks at several companies in Alabama and Georgia, and Floyd deposited refund checks into her bank account.
Floyd faces a mandatory statutory sentence of two years in prison for the aggravated identity theft count and an additional statutory maximum sentence of 10 years in prison for the conspiracy count. Both counts include a statutory maximum fine of $250,000. Miles Davis pleaded guilty on April 10 to one count of aggravated identity theft and is scheduled to be sentenced on Aug. 12.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Michael P. Hatzimichalis of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Former President of Riverside General Hospital Sentenced to 45 Years in Prison in $158 Million Medicare Fraud Scheme
The former president of a Houston hospital, his son and a co-conspirator were sentenced today to 45 years, 20 years and 12 years in prison, respectively, for their roles in a $158 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service Criminal Investigation’s (IRS-CI) Houston Field Office, the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Special Agent in Charge Mike Fields of the U.S. Department of Health & Human Services-Office of the Inspector General (HHS-OIG) Dallas Regional Office, Special Agent in Charge Joseph J. Del Favero of the Railroad Retirement Board-Office of Inspector General (RRB-OIG) and Inspector General Patrick E. McFarland of the Office of Personnel Management-Office of Inspector General (OPM-OIG) made the announcement.
“The former President of Houston’s Riverside hospital, his son and their co-conspirators saw mentally ill, elderly and disabled Medicare beneficiaries as commodities to be turned into profit centers – not as vulnerable individuals in need of health care,” said Assistant Attorney General Caldwell. “Rather than providing needed medical care to a historically underserved community, the defendants ran a longstanding hospital into the ground through their greed and fraud. According to the evidence presented at trial, the defendants had patients sit around the facility watching movies while they received no treatment. Meanwhile, the defendants billed Medicare more than $158 million for care that was never provided. This brazen fraud cannot and will not be tolerated.”
Earnest Gibson III, 70, the former president of Riverside General Hospital, Earnest Gibson IV, 37, the operator of Devotions Care Solutions, a satellite psychiatric facility of Riverside General Hospital, and Regina Askew, 50, the owner of Safe and Sound group home, were sentenced by U.S. District Judge Lee H. Rosenthal of the Southern District of Texas. In addition to the significant terms of imprisonment, Earnest Gibson III was ordered to pay restitution in the amount of $46,753,180, Earnest Gibson IV was ordered to pay restitution in the amount of $7,518,480, and Regina Askew was ordered to pay restitution in the amount of $46,255,893.
Following a five-week jury trial, on Oct. 20, 2014, Earnest Gibson III, Earnest Gibson IV and Regina Askew each were convicted of conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks, as well as related counts of paying or receiving illegal kickbacks. Earnest Gibson III and Earnest Gibson IV also were convicted of conspiracy to commit money laundering. Co-defendant Robert Crane, a patient recruiter, also was convicted of conspiracy to pay and receive kickbacks, and is scheduled to be sentenced on Dec. 9, 2015.
According to evidence presented at trial, from 2005 until June 2012, the defendants and others engaged in a scheme to defraud Medicare by submitting to Medicare, through Riverside and its satellite locations, approximately $158 million in false and fraudulent claims for partial hospitalization program (PHP) services. A PHP is a form of intensive outpatient treatment for severe mental illness.
Specifically, evidence at trial demonstrated that the Medicare beneficiaries for whom the hospital billed Medicare did not qualify for or need PHP services. Moreover, the evidence showed that Medicare beneficiaries rarely saw a psychiatrist and did not receive intensive psychiatric treatment. In fact, some of the beneficiaries were suffering from Alzheimer’s and could not actively participate in the treatment for which Medicare was billed.
Evidence presented at trial also showed that Earnest Gibson III paid kickbacks to patient recruiters and to owners and operators of group care homes, including Regina Askew, in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs. Earnest Gibson IV also paid patient recruiters, including Robert Crane and others, to deliver ineligible Medicare beneficiaries to the specific PHP operated by Earnest Gibson IV.
To date, six other individuals either have pleaded guilty based on their involvement in the scheme. Mohammad Khan, an assistant administrator at Riverside, who managed many of the hospital’s PHPs, pleaded guilty to conspiracy to commit health care fraud, conspiracy to defraud the United States and to pay illegal kickbacks, and five counts of paying illegal kickbacks; on May 21, 2015, Mohammad Khan was sentenced by U.S. District Judge Sim Lake of the Southern District of Texas to 40 years in prison for his role in the scheme. William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie and Sharonda Holmes, who were involved in paying or receiving kickbacks, also have pleaded guilty to participating in the scheme and await sentencing.
The case was investigated by the FBI, IRS-CI, Texas MFCU, HHS-OIG, RRB-OIG and OPM-OIG. The case 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 of the Southern District of Texas. The case is being prosecuted by Assistant Chiefs Laura M.K. Cordova and Jennifer L. Saulino and Trial Attorney Ashlee C. McFarlane of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who collectively have billed the Medicare program for more than $6.5 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.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
CCC’s: Supreme Court Declines to Take up FTAIA Appeals
The Supreme Court has declined to hear the appeal from the Ninth Circuit decision affirming the convictions of AU Optronics and its executives in the TFT-LCD price-fixing cartel. The Court also declined to review the Seventh Circuit case of Motorola Mobility where the Seventh Circuit dismissed civil damages claims for price-fixing purchases made by Motorola’s foreign subsidiaries from the same cartel. Reuters story here.
In an April 9th blog post, I had opined that the Supreme Court would not hear either of the appeals because a): each case was decided correctly, and b) there was no conflict between the Ninth and Seventh Circuits on the application of the FTAIA. (here). On May 15th, the DOJ filed a brief opposing the cert. petitions of AU Optronics and Motorola. (here)
I have no doubt that the Supreme Court will eventually be addressing the FTAIA. But, neither of these cases were the appropriate vehicle to do so.
Three People Arrested in Puerto Rico in a Contractor Major Scheme to Defraud the U.S. Department Of Veterans Affairs
On June 3, 2015, a federal grand jury in the District of Puerto Rico returned a five count indictment charging Jose A. Rosa-Colon, his brother and business partner, Ivan Rosa-Colon and Louis Enrique Torres with a multi-million dollar Service-Disabled Veteran-Owned Small Business (SDVOSB) scheme to defraud the U.S. Department of Veteran Affairs. The charges include major fraud against the United States and wire fraud. This investigation was conducted by Special Agents from the U.S. Department of Veteran Affairs, Office of Inspector General, Criminal Investigations Division.
The indictment unsealed in federal court today alleges that from on or about 2007 to 2014, Ivan Rosa-Colon, Jose Rosa-Colon and Torres conspired to use Jose Rosa-Colon’s service-disabled veteran status to create BELKRO General Contractors, which was a pass- through or front company for Ivan Rosa-Colon’s other business, IRC Air Contractors.
The indictment alleges that Ivan Rosa-Colon and Louis Torres used Jose Rosa-Colon’s service-disabled veteran status to certify and register BELKRO General Contractors in various government databases as a SDVOSB after Ivan Rosa- Colon learned that President George W. Bush would be signing a government stimulus package encouraging the use of SDVOSB. The stimulus package would allow for government agencies to award non-competitive, set-aside or sole-source government contracts to SDVOSB like BELKRO General Contractors.
The indictment further alleges that Jose Rosa-Colon, owner of BELKRO General Contractors, was employed as a full-time U.S. Postal Service Carrier; he was not in charge of the day to day operations of BELKRO General Contractors. Jose Rosa-Colon was simply a figurehead or “rent-a-vet”, who was being used for his service-disabled veteran status to obtain contracts for his brother Ivan Rosa-Colon’s company. As a result of the scheme, BELKRO General Contractors unlawfully received set-aside and/or sole-source SDVOSB contracts from the U.S. Department of Veterans Affairs, including contracts involving American Recovery and Reinvestment Act (ARRA) funds.
If convicted, they face a term of 20 years in prison as to each wire fraud charge and up to ten years in prison for the charges of major fraud against the United States. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count.
This indictment was announced today by U.S. Attorney Rosa Emilia Rodríguez-Vélez for the District of Puerto Rico, Special Agent in Charge Monty Stokes for the Southeast Field Office, Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division and Acting Special Agent in Charge Sharon Johnson for the Eastern Regional Office, Small Business Administration, Office of Inspector General. The government is represented by Assistant U.S. Attorney Julia Diaz-Rex.
Members of the public are reminded that an indictment constitutes only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.
Two Individuals Plead Guilty to Conspiring to Defraud Consumers through Fraudulent Debt Relief Services Firms
Two individuals pleaded guilty today for their roles at fraudulent debt relief services companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service (USPIS) announced.
Athena Maldonado, 30, and Christopher Harati, 31, both of Orange County, California, pleaded guilty to a one-count information alleging conspiracy in connection with debt relief companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter). According to the information filed in the case, the defendants and their co-conspirators portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. The companies instead took an amount equal to at least 15 percent of clients’ total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.
“Debt relief service scams prey on vulnerable consumers trying to climb out of tough financial situations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Justice Department will aggressively pursue the criminals who operate these schemes.”
Maldonado admitted that she acted as the “legal department” for both companies, and used multiple aliases when responding to complaints submitted by state attorney general offices, the Better Business Bureau and private attorneys. Maldonado admitted that, after Nelson Gamble changed its name to Jackson Hunter, she responded to consumer complaints by falsely stating, among other things, that the two companies were not related and that Jackson Hunter could not refund money paid to Nelson Gamble.
Harati admitted that he worked as a client relations manager for the companies and handled complaint calls from clients. He admitted he told customers that Nelson Gamble and Jackson Hunter were separate companies, falsely stated that Jackson Hunter was a nationwide law firm with years of experience and made other misrepresentations designed to convince customers to stay with the company.
The defendants each face a statutory maximum sentence of five years in prison and a $250,000 fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, along with mandatory restitution. Their sentencing dates have not been set.
On Dec. 3, 2014, a grand jury in Santa Ana, California, returned a 22-count indictment charging Jeremy Nelson, Elias Ponce and John Vartanian, all of Orange County, for mail fraud, wire fraud, and conspiracy to commit mail and wire fraud in the same fraudulent scheme. The trial in that case is scheduled to begin on Feb. 16, 2016, in Los Angeles.
The Federal Trade Commission (FTC) brought a civil case against Nelson Gamble, Jackson Hunter and other defendants in September 2012, alleging that the defendants falsely claimed they would reduce consumers’ unsecured debt by 50 percent or more, made unauthorized charges to their bank accounts and called phone numbers listed on the National Do Not Call Registry. For more information about debt relief firms, the FTC encourages consumers to review this page on their website.
Principal Deputy Assistant Attorney General Mizer commended the USPIS team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts, and thanked the U.S. Attorney’s Office of the Central District of California for their contributions to the case. The case is being prosecuted by Trial Attorney Alan Phelps of the Consumer Protection Branch.
Current and Former Executives of an Automotive Parts Manufacturer Indicted for Roles in Conspiracy to Fix Prices – Investigation Has Resulted in Charges Against 90 Individuals and Corporations
A Detroit federal grand jury returned a one-count indictment against two executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Norio Teranishi, formerly of NGK Spark Plug Co. Ltd., and Hisashi Nakanishi of NGK Spark Plug, with conspiring to fix the prices of spark plugs, standard oxygen sensors, and air fuel ratio sensors, sold to DaimlerChrysler AG, Ford Motor Company, Fuji Heavy Industries (Subaru), General Motors Company, Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corporation, and certain of their U.S. subsidiaries.
Teranishi is the former General Manager of Sales and Vice-Head of the Automotive Component Group at NGK Spark Plug. During the alleged conspiracy, Nakanishi served as the Managing Director of NGK Spark Plug Europe.
The indictment alleges, among other things, that beginning at least as early as January 2000 and continuing until at least July 2011, Teranishi and Nakanishi, and their co-conspirators participated in, and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply, and fix the price of spark plugs, standard oxygen sensors, and air fuel ratio sensors sold to certain automobile manufacturers, in the United States and elsewhere.
“As a result of Antitrust Division’s automotive parts investigation, more than 50 individuals have been held accountable for corrupting the competitive process in this important global market,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program. “The Antitrust Division will continue to vigorously prosecute those individuals who engaged in criminal antitrust violations in this vital market.”
“The criminal manipulation of the global automotive parts market through price fixing and bid rigging is a serious offense,” stated Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office. “The FBI, together with the Department of Justice Antitrust Division, will continue to aggressively pursue those who seek to commit criminal antitrust violations in order to gain a competitive advantage through corruption of the global marketplace.”
NGK Spark Plug is a corporation organized and existing under the laws of Japan with its principal place of business in Nagoya, Japan. On Oct. 8, 2014, NGK Spark Plug pleaded guilty and agreed to pay a $52.1 million criminal fine for its role in the conspiracy.
Including Teranishi and Nakanishi, 55 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry. Additionally, 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.
Teranishi and Nakanishi are charged with price fixing and bid rigging in 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 for an individual 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.
Today’s indictment is 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 the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. 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, visitwww.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Kentucky Businessman Sentenced in New York Federal Court for $53 Million Tax Scheme and Massive Fraud that Involved Bribery of Bank Officials
Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney Preet Bharara of the Southern District of New York announced that a Kentucky businessman was sentenced today to serve 12 years in prison.
Wilbur Anthony Huff, 53, of Caneyville and Louisville, Kentucky, was also ordered to pay more than $108 million in restitution for committing various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators and an investment bank. In December 2014, Huff pleaded guilty before U.S. District Judge Noemi Reice Buchwald of the Southern District of New York, who imposed today’s sentence.
“The department is committed to vigorously pursuing and prosecuting those individuals who violate the employment tax laws of the United States,” said Acting Assistant Attorney General Ciraolo. “Today’s significant prison sentence sends a loud and clear message to those engaged in such criminal conduct, including owners and operators of professional employer organizations like Mr. Huff, who steal employment taxes collected from their business clients to line their own pockets, instead of paying over those funds to the IRS.”
“Anthony Huff and his co-conspirators stole millions of dollars from taxpayers and engaged in extensive frauds, all in the pursuit of additional property, luxury cars and the like,” said U.S. Attorney Bharara. “His crimes have earned him 12 years in prison. I would like to thank our law enforcement partners for their assistance on this case.”
According to the information, plea agreement, sentencing submissions and statements made during court proceedings:
Huff was a businessman who controlled numerous entities located throughout the United States (Huff-Controlled Entities). Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS and other schemes that spanned four states, involving tax violations, bank bribery, fraud on bank regulators and the fraudulent purchase of an insurance company. As part of his crimes, Huff concealed his control of the Huff-Controlled Entities by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors, or officers. Huff also maintained a corrupt relationship with Park Avenue Bank and Charles J. Antonucci Sr., the bank’s president and chief executive officer, and Matthew L. Morris, the bank’s senior vice president.
Tax Crimes
From 2008 to 2010, HUFF controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida. Like other PEOs, O2HR was paid to manage the payroll, tax and workers’ compensation insurance obligations of its client companies. However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS and $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an insurance company based in Oklahoma – for workers’ compensation coverage expenses for O2HR clients, Huff stole the money that his client companies had paid O2HR for those purposes. Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures and pay his family members’ personal expenses. The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry and luxury cars.
Conspiracy to Commit Bank Bribery, Defraud Bank Regulators and Fraudulently Purchase an Oklahoma Insurance Company
From 2007 through 2010, Huff engaged in a massive multi-faceted conspiracy in which he schemed to bribe executives of Park Avenue Bank, defraud bank regulators and the board and shareholders of a publicly-traded company, and fraudulently purchase an Oklahoma insurance company. As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci in exchange for their favorable treatment at Park Avenue Bank.
As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci and others conspired to defraud various entities and regulators during the relevant time period. Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds.
Huff further conspired with Morris, Antonucci and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an insurance company based in Oklahoma that provided workers’ compensation insurance for O2HR’s clients and to whom O2HR owed a significant debt.
Bribery of Park Avenue Bank Executives
From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay $1.75 million to an investor in one of Huff’s businesses if Huff failed to pay the investor back himself; allowed the Huff-Controlled Entities to accrue $9 million in overdrafts; facilitated intra-bank transfers in furtherance of Huff’s fraud; and fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-Controlled Entities.
Fraud on Bank Regulators and a Publicly-Traded Company
From 2008 to 2009, Huff, Morris and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions and that would subject the bank to a range of potential enforcement actions by regulators. Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital. Huff, Morris and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci. This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so that the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program. To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned. Huff, Morris and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.
Fraud on Insurance Regulators and the Investment Firm
From July 2008 to November 2009, Huff, Morris, Antonucci and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York City (the Investment Firm), conspired to defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C and defraud the Investment Firm into providing a $30 million loan to finance the purchase. Specifically, Huff and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan. However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci and Reichman made and conspired to make a number of material misstatements and material omissions to the Investment Firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C. Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the Investment Firm – was funding the purchase of Providence P&C.
After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients. Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris and Antonucci had pilfered its remaining assets.
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In addition to his prison sentence, Huff was sentenced to three years of supervised release, and ordered to forfeit $10.8 million to the United States and pay a total of more than $108 million in restitution to victims of his crimes, including, among others, the Federal Deposit Insurance Corporation (FDIC) and the IRS.
In imposing today’s sentence, Judge Buchwald said Huff’s crimes were “truly staggering” and “eye popping.” Judge Buchwald described Huff’s conduct, which was preceded by a federal conviction and failure to pay millions in civil judgments, as “a living example” of “chutzpah,” which she defined as “shameless audacity and unmitigated gall.”
Morris and Reichman pleaded guilty for their roles in the above-described offenses on Oct. 17, 2013, and Feb. 20, 2015, respectively. Reichman is scheduled to be sentenced before Judge Buchwald on July 15, and Morris is scheduled to be sentenced before Judge Buchwald on Aug. 19.
Antonucci pleaded guilty to his role in the crimes described above on Oct. 8, 2010, and is scheduled to be sentenced on Aug. 20, also before Judge Buchwald.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Bharara thanked the Special Inspector General for the Troubled Asset Relief Program, the FBI, IRS-Criminal Investigation, the New York State Department of Financial Services, Immigration and Customs Enforcement’s Homeland Security Investigations, and the Office of Inspector General of the FDIC, for their work in the investigation, and the Tax Division and the U.S. Attorney’s Office of the Southern District of Florida, for their assistance in the prosecution.
Today’s announcement is part of efforts underway by 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. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
The case is being handled by the U.S. Attorney’s Office of the Southern District of New York Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella of the Tax Division are in charge of the criminal case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.