Category Archives: Criminal Division FRD

Detroit-Area Physician Pleads Guilty for Role in $5.7 Million Fraud Scheme

Posted on by

A Detroit-area medical doctor who prescribed unnecessary controlled substances and billed for unperformed office visits and diagnostic testing pleaded guilty today for his role in a $5.7 million health care fraud scheme.

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, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod J. Koopman of Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Laran Lerner, 59, of Northville, Michigan, pleaded guilty before U.S. District Judge Victoria A. Roberts of the Eastern District of Michigan to one count of health care fraud and one count of structuring cash transactions to avoid bank reporting requirements, as charged in a two-count information filed on Aug. 21, 2015.  Sentencing is set for Jan. 24, 2015.

According to admissions made as part of his plea agreement, Lerner lured patients into his clinic with prescriptions for unnecessary controlled substances.  Lerner admitted that he billed and caused Medicare to be billed for a variety of unnecessary prescriptions, tests and office visits to make it appear as though he was providing legitimate medical services instead of medically unnecessary controlled substances.  According to admissions made as part of his plea agreement, Medicare was billed $5,748,237.31, as a result of Lerner’s unnecessary prescriptions, office visits and diagnostic testing.

As part of the plea agreement, Lerner agreed to permanently surrender his Drug Enforcement Administration controlled substance registration and agreed not to re-apply in the future.

Lerner also pleaded guilty to structuring cash deposits he received as a result of his scheme to avoid triggering the requirement under federal law that domestic banks file a report – called a Currency Transaction Report – with the Secretary of Treasury for all transactions in currency over $10,000.  Lerner admitted that he knew about this requirement and caused his cash deposits to be structured in $5,000 increments on consecutive days at various branch locations in the Detroit area to avoid detection.  According to court documents, Lerner deposited $70,000 in cash in April 2013 alone by making deposits of $5,000 on fourteen different days.

The case was investigated by the FBI, HHS-OIG and IRS-CI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Eastern District of Michigan.  The case is being prosecuted by Trial Attorney Elizabeth Young of the Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 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.

Florida Businessman Sentenced to 17 Years in Prison for Conspiring to Defraud Investors

Posted on by

Dozens of Investors Lost More Than $13 Million in Scheme

A Florida businessman was sentenced today to 17 years in prison for his role in an investment fraud scheme resulting in over $13 million in losses to dozens of investors.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia and Special Agent in Charge Kimberly A. Lappin of the IRS-Criminal Investigation’s Tampa Field Office made the announcement.

Donovan G. Davis Jr., 34, of Palm Bay, Florida, was found guilty by a jury on May 14, 2015, of one count of conspiracy to commit mail/wire fraud, one count of mail fraud, six counts of wire fraud and eight counts of money laundering.  He was sentenced by U.S. District Judge Carlos E. Mendoza of the Middle District of Florida, who ordered him to pay $10,520,005 in restitution jointly and severally with his co-defendants.

“Donovan Davis Jr. and his co-conspirators lied to persuade victims to invest their retirement savings and children’s college funds, and then concealed the investment fund’s extreme losses so that the victims would stay invested,” said Assistant Attorney General Caldwell.  “The investors lost everything, while Davis and others running the scam looted the fund to pay their own six-figure salaries, purchase luxury cars and travel in private planes.  This sentence will help hold Davis accountable for his crimes, but the investors he deceived will suffer for decades because of his greed and deceit.”

“Dozens of investors and their families lost millions of dollars because they put their trust in an investment firm that lied about its performance,” said Acting U.S. Attorney Cohen.  “The deception of Donovan Davis Jr. and the others involved in this scheme caused great personal and financial harm to people, including many who lost their retirement savings.  Today’s sentence reflects the seriousness of the defendant’s greedy, deceptive conduct and underscores our commitment to prosecuting those who commit financial crimes.  I commend the prosecutors from here in D.C. who held these criminals accountable for their deception in a Florida courthouse.”

“Today’s sentencing demonstrates how federal law enforcement will band together to help put an end to the criminal behavior of those who prey on investors to unjustly enrich themselves,” said Special Agent in Charge Lappin.  “IRS Criminal investigation and our law enforcement partners will relentlessly pursue those who mastermind and perpetrate investment fraud schemes.”

According to evidence presented at trial, Davis was the managing member of Capital Blu Management LLC, a Florida-based corporation that purported to offer investment and managed account services for investors in the off-exchange foreign currency, or “forex,” marketplace.  In 2007 and 2008, Davis solicited relatives, friends and associates to invest in Capital Blu.

In or about September 2007, according to evidence presented at trial, Davis and his co-conspirators formed the CBM FX Fund LP, which pooled investors’ money into a common fund to be traded by Capital Blu Management.  Many of Capital Blu’s managed-account investors transferred their investments into the CBM FX Fund.

According to the evidence presented at trial, CBM FX Fund had sustained significant trading losses, resulting in large losses for its investors.  Nevertheless, the evidence demonstrated that Davis and his co-conspirators made a series of misrepresentations to the investors about Capital Blu’s trading performance, the value of the fund and the risks of the fund.

For example, according to the evidence presented at trial, the Davis and his co-conspirators informed CBM FX Fund’s investors of positive monthly returns from January through August of 2008, even though the fund and its investors had sustained net losses of millions of dollars.  In addition, they diverted investors’ money from the fund to pay for Capital Blu’s operational expenses and personal expenses, including their own six-figure salaries and payments for the use of private airplanes and luxury cars.

In or about September 2008, the National Futures Association, an independent self-regulatory organization that oversees commodities and futures trading in the United States, conducted a surprise audit of Capital Blu and suspended its operations.  As of September 2008, investors had invested over $16.9 million into the CBM FX Fund and lost over $13 million.

Co-defendant  Blayne S. Davis (no relation to Donovan Davis Jr.), 34, formerly of Naples, Florida, pleaded guilty in July 2014 to conspiracy to commit mail and wire fraud, and was sentenced to nine years in prison and ordered to pay $13,215,874 in restitution.  Co-defendant Damien L. Bromfield, 39, of Ocoee, Florida, pleaded guilty in November 2013 to conspiracy to commit wire fraud and is awaiting sentencing.

The case was investigated by a task force consisting of agents from the Internal Revenue Service-Criminal Investigation; U.S. Secret Service; Florida Department of Law Enforcement; and Brevard County, Florida, Sherriff’s Office.  Attorneys, agents and accountants from the U.S. Commodity Futures Trading Commission (CFTC), National Futures Association, Bureau of Prisons and U.S. Immigration and Customs Enforcement also provided assistance to the investigation.  A related civil litigation was pursued by the CFTC, which resulted in a civil judgment against the defendants after a trial in 2011.

The case was prosecuted by Trial Attorneys David M. Fuhr and Ephraim Wernick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jonathan P. Hooks of the District of Columbia.  Assistant U.S. Attorneys Catherine K. Connelly and Anthony Saler of the District of Columbia provided invaluable assistance on asset forfeiture matters.

Medical Director and Three Therapists Convicted in $63 Million Health Care Fraud Scheme

Posted on by

A federal jury in Miami late yesterday convicted the former medical director of, and three therapists employed by, a now-defunct health care provider of conspiracy to commit health care fraud and related charges for their roles in a scheme to fraudulently bill Medicare and Florida Medicaid more than $63 million.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon Richmond of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Roger Rousseau, 73, of Miami; Doris Crabtree, 62, of Miami; Angela Salafia, 68, of Miami Beach, Florida; and Liliana Marks, 48, of Homestead, Florida, were found guilty of conspiracy to commit health care fraud.  In addition, Rousseau was convicted of two counts of health care fraud.  Sentencing is scheduled for Nov. 6, 2015, before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida.

Rousseau was the former medical director of Health Care Solutions Network Inc. (HCSN), a now-defunct partial hospitalization program (PHP) that purported to provide intensive treatment for mental illness.  Crabtree, Salafia and Marks were therapists who worked for HCSN.

According to the evidence presented at trial, from approximately 2004 through 2011, HCSN billed Medicare and Medicaid for mental health services that were not medically necessary or never provided, and that HCSN paid kickbacks to assisted living facility owners and operators in Miami who, in exchange, referred beneficiaries to HCSN.

The trial evidence showed that Rousseau routinely signed what he knew to be fabricated and altered medical records without reviewing the substance of the records and, in most instances, without ever meeting with the patients.  The evidence at trial also demonstrated that Crabtree, Salafia and Marks fabricated medical records to support HCSN’s false and fraudulent claims for reimbursement for PHP services.

In total, HCSN submitted approximately $63.7 million in false and fraudulent claims to Medicare and Medicaid.  Medicare and Medicaid paid approximately $28 million on those claims.

In November 2014, following a jury trial, co-defendants Blanca Ruiz and Alina Fonts were convicted of conspiracy to commit health care fraud, and Fonts also was convicted of health care fraud.  In February 2015, both Ruiz and Fonts were sentenced to serve six years in prison.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case was prosecuted by Trial Attorneys Allan J. Medina, Lisa H. Miller and Bryan D. Fields 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 over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Ambulance Company Owner, Operator and Managers Found Guilty in Medicare Fraud Conspiracy

Posted on by

A federal jury in Los Angeles late yesterday convicted the former owner, operator and managers of a Southern California ambulance company of health care fraud charges in connection with a Medicare fraud scheme of at least $2.4 million.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Acting Special Agent in Charge Steve Ryan of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Los Angeles Region and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division made the announcement.

Yaroslav Proshak, aka Steven Proshak, 47, of Valley Village, California; Emilia Zverev, 58, of Van Nuys, California; and Sharetta Michelle Wallace, 37, of Inglewood, California, each were convicted of one count of conspiracy to commit health care fraud and five counts of health care fraud following a two-week trial.  Proshak’s sentencing is scheduled for Nov. 24, 2015, and Zverev’s and Wallace’s sentencing is scheduled for Nov. 30, 2015, all before U.S. District Judge S. James Otero of the Central District of California, who presided over the trial.

Proshak owned and operated ProMed Medical Transportation, an ambulance transportation company in the greater Los Angeles area that provided non-emergency ambulance transportation services to Medicare beneficiaries, many of whom were dialysis patients.  Zverev was the billing manager, and Wallace supervised ProMed’s emergency medical technicians (EMTs).

The evidence at trial demonstrated that, between May 2008, and October 2010, the defendants conspired to bill Medicare for ambulance transportation services for individuals whom the defendants knew did not need such services.  In addition, the evidence showed that the defendants instructed EMTs who worked at ProMed to conceal the true medical conditions of patients they were transporting by altering requisite paperwork and creating fraudulent documents to justify the transportation services.

According to evidence admitted at trial, during the course of the conspiracy, ProMed submitted at least $2.4 million in false and fraudulent claims to Medicare for medically unnecessary transportation services.  Medicare paid at least $1.2 million of those claims.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case was investigated by the FBI and HHS-OIG.  The case was prosecuted by Trial Attorneys Blanca Quintero, Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,300 defendants who have collectively billed the Medicare program for more than $7 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Thirteen U.S. Soldiers Sentenced for Roles in Fraudulent Military Recruiting Bonus Scheme

Posted on by

Thirteen members of the Texas Guard have received their sentences for their roles in wide-ranging bribery and fraud schemes that caused more than $170,000 in losses to the United States.  Seven of those members were sentenced this past week in Houston.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

  • Jammie Martin, 38, of Katy, Texas, and Michelle Davis, 34, of Houston, were convicted in February of this year after a five-day trial of conspiracy, bribery, wire fraud and aggravated identity theft.  Martin was sentenced to serve 102 months in prison and Davis was sentenced to serve 57 months in prison.
  • Vanessa Phillips, 37, of Houston, pleaded guilty to one count of conspiracy and one count of bribery and was sentenced to three years probation.
  • Zaunmine “Orlando” Duncan, 39, of Douglasville, Georgia, pleaded guilty to one count of conspiracy, one count of bribery and one count of aggravated identity theft.  He was sentenced to serve 70 months in prison.
  • Annika Chambers, 29, of Houston, and Lashae Hawkins, 29, of San Antonio, pleaded guilty to one count of conspiracy and one count of bribery.  Chambers was sentenced to serve six months in prison.  Hawkins received one year and one day in prison.
  • Christopher Renfro, 27, of Houston, pleaded guilty to one count of conspiracy, one count of bribery, one count of aggravated identity theft and two counts of wire fraud.  He was sentenced to serve 36 months in prison.

In June, six other members of the Texas Guard were sentenced for their roles in the scheme.

  • Michael Rambaran, 52, of Pearland, Texas, pleaded guilty to one count of conspiracy, one count of bribery and one count of aggravated identity theft.  He was sentenced to serve 60 months in prison.
  • Edia Antoine, 29, and Ernest A. Millien III, 51, both of Houston, and Melanie Moraida, 35, of Pearland, pleaded guilty to one count of conspiracy and one count of bribery.  Each received 12 months and one day in prison.

Elisha Ceja, 28, of Barboursville, West Virginia, and Kimberly Hartgraves, 30, of League City, Texas, pleaded guilty to one count of conspiracy and one count of bribery.  Ceja was sentenced to serve nine months in prison and Hartgraves received probation.

U.S. District Judge Lee H. Rosenthal in the Southern District of Texas imposed the prison terms and also ordered all 13 defendants to pay restitution.  One remaining defendant, Danielle Applin 29, of Harker Heights, Texas, who previously pleaded guilty to one count of conspiracy and one count of bribery, is scheduled to be sentenced on Sept. 2, 2015, in Houston.

In approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. to administer the Guard Recruiting Assistance Program (G-RAP).  Through this program, a participating soldier, known as a recruiting assistant, could receive bonus payments for referring another individual to join the National Guard.  Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account.  To participate in the program, recruiting assistants were required to create online accounts.

According to the evidence presented at trial and in connection with various guilty pleas, Phillips and Davis, both of whom participated in the G-RAP as recruiting assistants, conspired with Martin, a recruiter, to defraud the program by falsely claiming that they were responsible for referring potential soldiers to join the National Guard.  The trial evidence showed that Martin used his position to obtain the names and Social Security numbers of potential soldiers which he provided to recruiting assistants so that they could use the information to obtain fraudulent recruiting referral bonuses.  The evidence at trial showed that, in exchange for the information, Martin, who organized and led the scheme, personally received approximately $15,000 in payments from the recruiting assistants.  This scheme resulted in more than $30,000 in losses to the National Guard Bureau.

In a separate scheme that resulted in an additional $70,000 in losses, recruiting assistants Antoine, Millien, Moraida and Renfro admitted to paying Rambaran, a recruiter who organized and led the scheme, for the personal information of potential soldiers.  They then used that information to obtain fraudulent bonuses by falsely claiming they referred those individuals to join the National Guard.  Rambaran admitted that, in exchange for the recruit information, he personally received a total of approximately $29,000 in payments from the recruiting assistants.

In connection with his guilty plea in a scheme he organized and led, Duncan, a recruiter, admitted he personally received approximately $24,000 in payments from recruiting assistants in exchange for personal information of potential soldiers.  Those recruiting assistants – Ceja, Chambers, Hartgraves and Hawkins – admitted to paying Duncan for the information and using it to obtain fraudulent bonuses by falsely claiming they referred those individuals to join the National Guard.  This scheme resulted in another $70,000 in losses to the National Guard Bureau.

The cases were investigated by the San Antonio Fraud Resident Agency of Army Criminal Investigation Command’s Major Procurement Fraud Unit.  These cases are being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.

Miami-Area Pharmacy Owner Pleads Guilty to Role in $1.8 Million Medicare Fraud Scheme

Posted on by

A Miami-area pharmacy owner pleaded guilty today for his role in the submission of more than $1.8 million in fraudulent claims to Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Evelio Fernandez Penaranda, 47, of Miami, Florida, pleaded guilty before U.S. Magistrate Judge Chris M. McAliley of the Southern District of Florida to one count of health care fraud.  Sentencing has been scheduled for Oct. 8, 2015.

Penaranda owned Naranja Pharmacy Inc.  In connection with his guilty plea, Penaranda admitted that, between May 2013 and March 2014, Naranja Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries.  According to admissions made in connection with Penaranda’s guilty plea, Naranja Pharmacy submitted these false claims by obtaining and using the unique identifying information of Medicare beneficiaries and doctors without their consent.

Penaranda admitted that he controlled Naranja Pharmacy’s bank accounts, and that he transferred the payments received from Medicare to himself and his accomplices.  According to admissions made in connection with Penaranda’s plea, during the course of the scheme, Naranja Pharmacy submitted to Medicare over $1.8 million in false claims for prescription drugs, and Medicare paid 100 percent of the claims.

The case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case is being prosecuted by Trial Attorney Nicholas E. Surmacz 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 over 2,300 defendants who collectively have billed the Medicare program for over $7 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, go to: www.stopmedicarefraud.gov.

Fernandez Penaranda Plea Agreement

Investment Company Executives Indicted for $1.5 Billion Ponzi Scheme

Posted on by

The president and chief executive officer and two former Asia-based executives of a Las Vegas investment company were indicted today for their roles in an alleged $1.5 billion Ponzi scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Division made the announcement.

“The defendants allegedly preyed on thousands of unsuspecting Japanese victims to enrich themselves by operating a billion-plus dollar Ponzi scheme,” said Assistant Attorney General Caldwell.  “This prosecution shows that the Criminal Division will pursue not only those who victimize American citizens, but also those who use the U.S. as a home base to defraud victims abroad.”

“Investment fraud and other financial fraud cases are a high priority for the U.S. Attorney’s Office in Nevada,” said U.S. Attorney Bogden.  “These defendants are accused of using a Nevada corporation to conduct their $1.5 billion fraud scheme and falsely telling thousands of overseas victims that their investments would be safely held and managed by an independent, third-party escrow agent in Nevada.  Fraudulent ruses and schemes perpetrated by Nevadans using Nevada corporations and entities will continue to be addressed by this office.”

“These indictments are a reminder of the FBI’s determination to identify, investigate and bring to justice those who are committing financial crimes against innocent consumers,” said Special Agent in Charge Bucheit.  “We are appreciative of the continued support we receive from our international, federal, state and local law enforcement partners.”

Edwin Fujinaga, 68, of Las Vegas; Junzo Suzuki, 66, of Tokyo; and Paul Suzuki, 36, of Tokyo, were charged in an indictment with eight counts of mail fraud and nine counts of wire fraud.  Fujinaga also is charged with three counts of money laundering.  The indictment seeks from all three defendants forfeiture of the proceeds from the alleged crimes.

Fujinaga was the president and CEO of Las Vegas-based MRI International Inc. (MRI).  Junzo Suzuki previously was MRI’s executive vice president for Asia Pacific, and Paul Suzuki previously was the company’s general manager for Japan operations.  MRI purportedly specialized in “factoring,” whereby the company purchased accounts receivable from medical providers at a discount, and then attempted to recover the entire amount, or at least more than the discounted amount, from the debtor.

According to allegations in the indictment, from at least 2009 to 2013, Fujinaga and the Suzukis fraudulently solicited investments from thousands of Japanese residents, and MRI currently owes investors over $1.5 billion.  Specifically, the indictment alleges that Fujinaga and the Suzukis promised investors a series of interest payments that would accrue over the life of the investment and that would be paid out along with the face value of the investment at the conclusion of the investments’ duration.  The defendants allegedly solicited investments by, among other things, promising investors that their investments would be used only for the purchase of medical accounts receivable (MARS) and by representing that investors funds would be managed and safeguarded by an independent third-party escrow company.

The indictment further alleges that MRI operated as a Ponzi scheme, wherein the defendants used new investors’ money to pay prior investors’ maturing investments.  According to the indictment, the defendants also allegedly used investors’ funds for purposes other than the purchase of MARS, including paying themselves sales commissions, subsidizing gambling habits, funding personal travel by private jet, and other personal expenses.

The charges contained in an indictment are merely accusations.  A defendant is presumed innocent until and unless proven guilty.

This case is being investigated by the FBI’s Las Vegas Division.  Significant assistance was provided by the U.S. Securities and Exchange Commission, the Criminal Division’s Office of International Affairs and Japanese authorities.  This case is being prosecuted by Assistant Chief Albert B. Stieglitz Jr. and Trial Attorney Melissa Aoyagi of the Criminal Division’s Fraud Section and First Assistant U.S. Attorney Steven W. Myhre of the District of Nevada.

If you believe you are a victim of this offense, please click on the following link for more information: justice.gov/usao-nv/united-states-v-edwin-fujinaga-junzo-suzuki-and-paul-suzuki-mri.

 

Assistant Administrator of Riverside General Hospital Sentenced to 40 Years in Prison for $116 Million Medicare Fraud Scheme

Posted on by

The former assistant administrator of Riverside General Hospital was sentenced today to 40 years in prison for his role in a $116 million Medicare fraud scheme.  To date, 10 individuals have pleaded guilty or been convicted for their involvement in the scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

Mohammad Khan, 65, of Houston, the assistant administrator who oversaw many of the partial hospitalization programs (PHPs) at Riverside General Hospital, pleaded guilty in February 2012 to conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and paying illegal kickbacks.  He was sentenced by U.S. District Court Judge Sim Lake of the Southern District of Texas.  He was also ordered to pay restitution in the amount of $31,321,200.

According to admissions made in connection with his guilty plea, from January 2008 through February 2012, Khan and others at Riverside General Hospital operated a scheme to defraud Medicare by submitting claims for PHP services that were not medically necessary and, in some cases, never provided.  Prior to Khan’s arrest, Riverside submitted over $116 million in claims to Medicare for PHP services purportedly provided to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.  Khan also admitted that he and his co-conspirators paid kickbacks to patient recruiters and to owners and operators of group care homes in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs.

Others involved in the fraudulent scheme already have pleaded guilty and are awaiting sentencing.  Earnest Gibson III, the former president of Riverside; his son, Earnest Gibson IV, who operated a Riverside PHP; Regina Askew, a patient file auditor and group home operator; and Robert Crane, a patient recruiter, were all convicted after jury trial in November 2014 and await sentencing.  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 their roles in the scheme.

The case was investigated by the FBI, Internal Revenue Service Criminal Investigation and Texas Attorney General’s Medicaid Fraud Control Unit, with assistance from Health & Human Services’ Office of the Inspector General, Railroad Retirement Board’s Office of Inspector General and Office of Personnel Management’s Office of Inspector General.  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 Chief Laura M.K. Cordova 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’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.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to:www.stopmedicarefraud.gov.

Former ExIm Bank Officer Pleads to Accepting Over $78,000 in Bribes

Posted on by
The nation’s most experienced Export Import Bank Fraud prosecutors, Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section, continue in their efforts.

* * * * *

A former loan officer at the Export-Import Bank of the United States (Ex-Im Bank) pleaded guilty in federal court today for accepting more than $78,000 in bribes in return for recommending the approval of unqualified loan applications to the bank, among other misconduct.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Inspector General Michael T. McCarthy of the Export-Import Bank of the United States and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.

Johnny Gutierrez, 50, of Stafford, Virginia, pleaded guilty before U.S. District Judge Gladys Kessler of the District of Columbia to one count of bribery of a public official.  A sentencing hearing is scheduled for July 20, 2015.

“Gutierrez risked both taxpayer dollars and the integrity of the Ex-Im Bank for his personal financial gain,” said Assistant Attorney General Caldwell.  “Those charged with serving the public will be held accountable when they seek personal enrichment at the public’s expense.”

“Gutierrez betrayed the trust and confidence of the hardworking Ex-Im Bank employees and the U.S. taxpayers,” said Acting Inspector General McCarthy.  “The Office of Inspector General will continue to aggressively and diligently investigate all allegations of waste, fraud, and abuse related to Ex-Im Bank programs.”

“In his role as a loan officer, Gutierrez betrayed the trust that was placed in him by fellow citizens and took bribes in exchange for providing favorable action on loan applicants,” said Assistant Director in Charge McCabe.  “The FBI, with our partners, will continue to investigate and expose fraudulent schemes that tarnish the good and ethical work of the U.S. government.”

According to his plea agreement, Gutierrez was a loan officer for the Ex-Im Bank based in Washington, D.C.  The Ex-Im Bank is the federal agency responsible for promoting the export of U.S. goods to foreign countries through the guarantee of domestic loans to foreign buyers.  As an Ex-Im Bank loan officer, Gutierrez was responsible for conducting credit underwriting reviews for companies and lenders submitting financing applications to the Ex-Im Bank.

As part of his guilty plea, Gutierrez admitted that on 19 separate occasions between June 2006 and December 2013, he accepted bribes totaling more than $78,000 in return for recommending the approval of unqualified loan applications and improperly expediting other applications.

Specifically, Gutierrez admitted that he intentionally ignored the fact that one company had previously defaulted in 10 previous transactions guaranteed by the bank, causing the Ex-Im Bank to lose almost $20 million.  Despite these defaults, Gutierrez accepted bribes to continue to recommend the approval of the company’s loan applications.  Additionally, Gutierrez admitted that he accepted bribes from a financing broker to expedite applications submitted by the broker, and that he privately assisted the broker to improve its applications before submission to the bank.  In exchange, Gutierrez was to receive half of the broker’s profit on the transactions financed by the bank.  Further, Gutierrez disclosed to the broker inside information about financing applications submitted to the Ex-Im Bank, so that the broker could solicit the applicants as clients.

The case was investigated by the Inspector General of the Export-Import Bank of the United States and the FBI, with significant assistance provided by the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Washington Field Office.  The case is being prosecuted by Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section.

Former Trader Pleads Guilty for Scheme to Falsify Records

Posted on by

A former trader at ConvergEx Global Markets Limited (CGM Limited) pleaded guilty this morning in federal court in New Jersey for his role in a scheme to falsify the books and records of a registered U.S. broker-dealer.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Inspector in Charge Philip R. Bartlett of the U.S. Postal Inspection Service (USPIS) made the announcement.

Michael Craig Marshall, 47, of Bermuda, pleaded guilty before U.S. District Judge Jose L. Linares of the District of New Jersey, to one count of conspiracy to falsify the books and records of a broker-dealer.

According to court documents, CGM Limited and G-Trade Services, LLC (G-Trade) were both wholly owned subsidiaries of ConvergEx Group LLC (ConvergEx Group).  G-Trade was a registered U.S. broker-dealer.  As part of his plea today, Marshall admitted that clients placed orders to buy or sell securities with G-Trade, and G-Trade then routed the orders to CGM Limited.  Marshall further admitted that traders at CGM Limited regularly added a mark-up (an additional amount paid for the purchase of a security) or mark-down (a reduction of the amount received for the sale of a security) when executing the orders.  Employees of CGM Limited, G-Trade and other ConvergEx Group entities referred to mark-ups and mark-downs as “spread,” “trading profits” or “TP.”

At his plea hearing today, Marshall admitted that he and the other coconspirators falsified G-Trade’s books and records.  In particular, Marshall admitted that he reviewed falsified transaction reports for two trades executed in August 2009 to verify that the falsified data regarding the quantities, prices and times of the purchases reflected on the report matched actual trades that had been executed on the market on Aug. 7, 2009, by both G-Trade’s client and other market participants.  The reports hid the fact that spread had been taken on the brokerage orders, Marshall admitted.  These reports were later provided to G-Trade’s client.

On Dec. 18, 2013, Jonathan Daspin, the head trader at CGM Limited, Thomas Lekargeren, a sales trader at a different ConvergEx subsidiary, and CGM Limited each pleaded guilty to conspiracy to commit securities and wire fraud.  On the same day, ConvergEx Group entered into a deferred prosecution agreement.  Collectively, the two ConvergEx entities paid $43.8 million in criminal penalties and restitution.

The case is being investigated by the FBI’s Washington Field Office and the USPIS offices in Washington, D.C. and New York.  The case is being prosecuted by Senior Trial Attorneys Jason Linder and Patrick Pericak of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Leslie Schwartz of the District of New Jersey.  Fraud Section Assistant Chief Robert Zink and Trial Attorney Justin Goodyear also assisted with the investigation.  The Department appreciates the substantial assistance of the Securities and Exchange Commission.