Category Archives: Criminal Division

Medicare Fraud Strike Force Set Record Numbers for Health Care Fraud Prosecutions

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The Justice Department’s Medicare Fraud Strike Force has set record numbers for health care prosecutions in Fiscal Year 2013, demonstrating the targeted and coordinated approach remains strong as the strike force enters its eighth year of fighting fraud against the government’s health care programs.
“These record results underscore our determination to hold accountable those who take advantage of vulnerable populations, commit fraud on federal health care programs, and place the safety of others at risk for illicit financial gain,” said Attorney General Eric Holder.   “By targeting our enforcement efforts to ‘hot spots’ in nine cities, the Medicare Fraud Strike Force is allowing us to fight back more effectively than ever before.”
“The Medicare Fraud Strike Force is one of this country’s most productive investments,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.   “We are not only putting hundreds of criminals who steal from Medicare in prison, but also stopping their theft in its tracks, recovering millions of dollars for taxpayers, and deterring potential criminals who ultimately decide the crime isn’t worth it.”
“Those perpetrating Medicare fraud cheat both taxpayers and vulnerable patients, and our Strike Forces are successfully fighting back – holding criminals accountable and recovering stolen dollars,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services.   “Our joint commitment to bring the fight against fraud to criminal hotspots around the country is steadfast.”
Under the supervision of the Criminal Division and U.S. Attorney’s Offices, the Medicare Fraud Strike Force is formed by coordinated teams of investigators and prosecutors – including personnel from the Justice Department, the U.S. Department of Health and Human Services and the FBI – who analyze Medicare claims data to target specific geographic areas showing unusually high levels of Medicare billing.
By focusing on the worst offenders engaged in current fraud schemes in the highest intensity regions, the strike force seeks to deter fraud in the target community and prevent it from spreading to other areas.   The strike force is currently operating in nine cities: Baton Rouge, La.; Brooklyn, N.Y.; Chicago; Dallas; Detroit; Houston; Los Angeles; Miami and Tampa, Fla.   S ince its inception in March 2007, strike force prosecutors have charged more than 1,700 defendants who have collectively billed the Medicare program more than $5.5 billion.
In Fiscal Year 2013, the strike force set records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (46).   In addition, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007.
According to a recent report by the Inspector General for the U.S. Department of Health and Human Services, for every dollar the Departments of Justice and Health and Human Services have spent fighting health care fraud, they have returned an average of nearly eight dollars to the U.S. Treasury, the Medicare Trust Fund and others.
The Medicare Fraud Strike Force is part of an unprecedented partnership between the Departments of Justice and Health and Human Services called HEAT (Health care Enforcement and Prevention Action Team).   Formed in May 2009, this partnership brings together high-level leaders from both departments to share information, spot trends, coordinate strategy and strengthen our fraud prevention efforts.

Disbarred Attorney Pleads Guilty for Role in $28.3 Million Medicare Fraud Scheme

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A North Carolina woman has pleaded guilty for her involvement in a $28.3 million Medicare fraud scheme involving physical and occupational therapy services.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Special Agent in Charge Christopher Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
Margarita M. Grishkoff, 59, of Charlotte, N.C., and formerly of southwest Florida, pleaded guilty today in the U.S. District Court for the Middle District of Florida to conspiracy to commit health care fraud.   Her sentencing date will be set by the court.    She faces a maximum penalty of 10 years in prison.
According to documents filed in the case, Grishkoff and her co-conspirators used various physical therapy clinics and other business entities throughout Florida and elsewhere to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009.    Medicare paid approximately $14.4 million on those claims.
Grishkoff, a former attorney who was disbarred in 1997, was vice president, director and registered agent in Florida for a Delaware holding company known as Ulysses Acquisitions Inc.    Grishkoff and co-conspirators used Ulysses Acquisitions to purchase comprehensive outpatient rehabilitation facilities and outpatient physical therapy providers, including West Coast Rehab Inc. in Fort Myers, Fla.; Rehab Dynamics Inc. in Venice, Fla.; Polk Rehabilitation Inc. in Lake Wales, Fla.; and Renew Therapy Center of Port St. Lucie LLC in Port St. Lucie, Fla., to gain control of these clinics’ Medicare provider numbers.
Working with co-conspirators in Miami and elsewhere, Grishkoff and her co-conspirators obtained identifying information of Medicare beneficiaries through paying kickbacks.    They also obtained unique identifying information of physicians.   Grishkoff and her co-conspirators then used this information to create and submit false claims to Medicare through the clinics Ulysses Acquisitions purchased.    These claims sought reimbursement for therapy services that were not legitimately prescribed and not actually provided.
Grishkoff and co-conspirators also paid kickbacks to co-conspirators who owned other therapy clinics that were used to further the fraud scheme.    For example, Grishkoff and co-conspirators used the clinics they controlled to submit false reimbursement claims to Medicare on behalf of Miami-based therapy clinics such as Hallandale Rehabilitation Inc., Tropical Physical Therapy Corporation, American Wellness Centers Inc., and West Regional Center Inc.    Grishkoff and co-conspirators would retain approximately 20 percent of the money Medicare paid on these claims and pay the other 80 percent of the fraud proceeds to the co-conspirator clinic owners.
When Grishkoff and her co-conspirators were done using the clinics they acquired through Ulysses Acquisitions, they engaged in sham sales of the clinics to nominee or straw owners, all of whom were recent immigrants to the United States with no background or experience in the health care industry.    Grishkoff and others did this in an effort to try to disassociate themselves from the fraudulent operations of their clinics.
This 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 for the Middle District of Florida.    This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.    In addition, the HHS 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.

Home Health Agency Owner Sentenced for Role in $11 Million Detroit Medicare Fraud Scheme

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A home health agency owner who participated in a Medicare fraud scheme that totaled almost $11 million was sentenced in Detroit today to serve 120 months in prison.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and 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 made the announcement.
Chiradeep Gupta, 39, was sentenced by U.S. District Judge Denise Page Hood in the Eastern District of Michigan.  In addition to his prison term, Gupta was sentenced to serve three years of supervised release and was ordered to pay more than $10 million in restitution, jointly and severally with his co-defendants.
On Oct. 26, 2012,  Gupta, a physical therapist and part-owner of All American, a home health care company located in Oak Park, Mich., was found guilty at trial of one count of conspiracy to commit health care fraud, one count of conspiracy to commit money laundering and three substantive counts of money laundering.
According to evidence presented at trial, Gupta and his co-conspirators caused the submission of false and fraudulent claims to Medicare through All American and Patient Choice, another Oak Park-based home health care company, which purported to provide skilled nursing and physical therapy services to Medicare beneficiaries in the greater Detroit area.
The evidence showed that Gupta and his co-conspirators used patient recruiters, who paid Medicare beneficiaries to sign blank documents for physical therapy services that were never provided and/or medically unnecessary.  The owners of Patient Choice and All American paid physicians to sign referrals and other therapy documents necessary to bill Medicare.  Physical therapists and physical therapist assistants provided through contractors, including two owned by Gupta, would then create fake medical records using the blank, pre-signed forms obtained by the patient recruiters to make it appear as if physical therapy services had actually been rendered, when, in fact, the services had not been rendered.
According to evidence presented at trial, Gupta provided to Patient Choice and All American physical therapists and physical therapist assistants who created fake patient files using blank, pre-signed forms obtained by patient recruiters to make it appear as if the physical therapy services billed to Medicare had actually been provided.  Gupta also doctored and directed the doctoring of fake patient files.  The evidence at trial showed that Gupta laundered the proceeds of the fraud through multiple shell companies.
This case was investigated by the FBI, HHS-OIG and the Internal Revenue Service and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case was prosecuted by Deputy Chief Gejaa Gobena, Assistant Chief Catherine Dick and Trial Attorney Niall O’Donnell 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 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Owner of Houston Medical Equipment Companies Indicted for $3.4 Million Medicare Fraud Scheme

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Huey P. Williams Jr., the owner and operator of two durable medical equipment (DME) companies, was arrested yesterday for his alleged role in a $3.4 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office, Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG), and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.
The indictment charges Williams, 44, of Katy, Texas, with one count of health care fraud, which carries a maximum penalty of 10 years in prison upon conviction.   Williams is expected to make his initial appearance in U.S. District Court for the Southern District of Texas in Houston.
According to the indictment, Williams orchestrated and executed a scheme to defraud Medicare beginning in 2006 and continuing until July 2010.   Williams allegedly submitted false and fraudulent claims to Medicare through his Houston-area DME companies – Hermann Medical Supplies Inc. and Hermann Medical Supplies II (Hermann Medical) – which purported to provide orthotics and other DME to Medicare beneficiaries.
Hermann Medical allegedly submitted claims to Medicare for DME, including orthotic devices, which were medically unnecessary and/or never provided.   Many of the orthotic devices were components of an arthritis kit and were purported to be for the treatment of arthritis-related conditions.   From December 2006 through July 2010, Williams submitted claims of approximately $3.4 million to Medicare.
An indictment is merely a formal accusation.   Defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI, HHS-OIG and MFCU and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.   The case is being prosecuted by Trial Attorney Ashlee Caligone McFarlane 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 more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Miami Patient Recruiter Pleads Guilty for Role in $190 Million Medicare Fraud Scheme

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A patient recruiter for a fraudulent Miami-area mental health company, American Therapeutic Corporation (ATC), pleaded guilty today for her participation in a $190 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.
Miami resident Mayelin Santoyo, 28, pleaded guilty before U.S. District Judge K. Michael Moore in the Southern District of Florida to one count of conspiracy to receive health care kickbacks.   Sentencing has been scheduled for March 28, 2014.    On Nov. 25, 2013, co-defendant Jose Martin Olivares, 36, also a Miami resident and patient recruiter, pleaded guilty to one count of conspiracy to receive health care kickbacks before U.S. District Judge Donald L. Graham for his role in this scheme.   Olivares’s sentencing is set for Feb. 4, 2014.
According to court documents, Santoyo was a patient recruiter for the now-defunct ATC.   ATC and its management company, Medlink Professional Management Group Inc., were Florida corporations headquartered in Miami.   ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando.
Santoyo recruited Medicare beneficiaries to attend ATC’s PHP program in exchange for kickbacks in the form of checks and cash.   The amounts of the kickbacks were based on the number of days each recruited patient spent at ATC.   Santoyo knew that the patients she recruited for ATC were not qualified to receive PHP treatment.
ATC’s owners and operators paid millions of dollars in kickbacks to the owners and operators of various assisted living facilities and halfway houses, as well as to patient recruiters, like Santoyo, in exchange for delivering ineligible patients to ATC.   According to court documents, to obtain the cash required to support the kickbacks to recruiters such as Santoyo, the co-conspirators laundered millions of dollars of payments from Medicare.
In related cases, ATC, Medlink and various owners, managers, doctors, therapists and patient recruiters of ATC and Medlink have already pleaded guilty or have been convicted at trial.    In September 2011, ATC’s owner, Lawrence Duran, was sentenced to 50 years in prison for his role in orchestrating and executing the scheme to defraud Medicare.
This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.   The case was prosecuted by Assistant Chief Robert A. Zink and Trial Attorney Anne P. McNamara 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 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

 

THREE FORMER RABOBANK TRADERS CHARGED WITH MANIPULATING YEN LIBOR

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WASHINGTON — Two former Coöperatieve Centrale  Raiffeisen-Boerenleenbank B.A. (Rabobank) Japanese Yen derivatives traders and  the trader responsible for setting Rabobank’s Yen London InterBank Offered Rate  (LIBOR) were charged as part of the ongoing criminal investigation into the  manipulation of LIBOR.

Acting Assistant Attorney General Mythili Raman of the  Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent  Snyder of the Justice Department’s Antitrust Division and Assistant Director in  Charge Valerie Parlave of the FBI’s Washington Field Office made the  announcement.

Earlier today, a U.S. Magistrate  Judge sitting in the Southern District of New York signed a criminal complaint  charging Paul Robson of the United Kingdom, Paul Thompson of Australia, and Tetsuya  Motomura of Japan with conspiracy to commit wire fraud and bank fraud as well  as substantive counts of wire fraud.  All  are former employees of Rabobank, which on Oct. 29, 2013, entered into a  deferred prosecution agreement with the Department of Justice as part of the  department’s LIBOR investigation and agreed to pay a $325 million penalty.  Each defendant faces up to 30 years in prison  for each count upon conviction.

“Today, less than three months  after Rabobank admitted its involvement in the manipulation of LIBOR, we have charged  three of its senior traders with participating in this global fraud scheme,”  said Acting Assistant Attorney General Raman.  “As alleged, these three  traders – working from Japan, Singapore and the U.K. – deliberately submitted  what they called ‘obscenely high’ or ‘silly low’ LIBOR rates in order to  benefit their own trading positions.  The illegal  manipulation of this cornerstone benchmark rate undermines the integrity  of the markets; it harms those who are relying on what they expect to be an  honest benchmark; and it has ripple effects that extend far beyond the trading  at issue here.  The Justice Department has now charged eight individuals  and reached resolutions with four multi-national banks as part of our ongoing  and industry-wide LIBOR probe and, alongside our law enforcement and regulatory  partners both here and abroad, we remain committed to continuing to root out  this misconduct.”

“The  conspirators charged today conspired to rig the interest rates used by  derivative products throughout the financial industry to benefit their own  trading books,” said Deputy Assistant Attorney General Snyder. “Today’s charges  demonstrate the department’s commitment to hold individuals accountable for  schemes that undermine the integrity of markets that rely on competition to  flourish.”

“Manipulation  of benchmark rates that are routinely referenced by financial products around  the world erodes the integrity of our financial markets,” said Assistant  Director in Charge Parlave.  “The charges  against these individuals represent another step in our ongoing efforts to find  and stop those who hide behind complex corporate and securities fraud schemes.  I commend the Special Agents, forensic  accountants and analysts as well as the prosecutors for the significant time  and resources they committed to investigating this case.”

According to the complaint,  LIBOR is an average interest rate, calculated based on submissions from leading  banks around the world, reflecting the rates those banks believe they would be  charged if borrowing from other banks.   LIBOR is published by the British Bankers’ Association (BBA), a trade  association based in London.  At the time  relevant to the criminal complaint, LIBOR was calculated for 10 currencies at  15 borrowing periods, known as maturities, ranging from overnight to one  year.  The published LIBOR “fix” for Yen  LIBOR at a specific maturity is the result of a calculation based upon  submissions from a panel of 16 banks, including Rabobank.

LIBOR serves as the primary  benchmark for short-term interest rates globally and is used as a reference  rate for many interest rate contracts, mortgages, credit cards, student loans  and other consumer lending products.  The  Bank of International Settlements estimated that as of the second half of 2009,  outstanding interest rate contracts were valued at approximately $450 trillion.

According to allegations in the complaint,  all three defendants traded in derivative products that referenced Yen  LIBOR.  Robson worked  as a senior trader at Rabobank’s Money Markets and Short Term Forwards desk in  London; Thompson was Rabobank’s head of Money Market and Derivatives Trading  Northeast Asia and worked in Singapore; and Motomura was a senior trader at  Rabobank’s Tokyo desk who supervised money market and derivative traders employed  at Rabobank’s Tokyo desk.  In addition to  trading derivative products that referenced Yen LIBOR, Robson also served as  Rabobank’s primary submitter of Yen LIBOR to the BBA.

Robson, Thompson and Motomura  each entered into derivatives contracts containing Yen LIBOR as a price  component.  The  profit and loss that flowed from those contracts was directly affected by the  relevant Yen LIBOR on certain dates.  If  the relevant Yen LIBOR moved in the direction favorable to the defendants’  positions, Rabobank and the defendants benefitted at the expense of the  counterparties.   When LIBOR moved in the opposite direction, the defendants and  Rabobank stood to lose money to their counterparties.

The complaint alleges that from about May 2006 to at least  January 2011, Robson, Thompson, Motomura and others agreed to make false and  fraudulent Yen LIBOR submissions for the benefit of their trading positions.  According to the allegations, sometimes  Robson submitted rates at a specific level requested by a co-defendant and  consistent with the co-defendant’s trading positions.  Other times, Robson made a higher or lower  Yen LIBOR submission consistent with the direction requested by a co-defendant  and consistent with the co-defendant’s trading positions.  On those occasions, Robson’s manipulated Yen  LIBOR submissions were to the detriment of, among others, Rabobank’s  counterparties to derivative contracts.

In addition to allegedly manipulating Rabobank’s Yen LIBOR  submissions, Robson, on occasion and on behalf of one or more co-defendants,  coordinated his Yen LIBOR submission with the trader responsible for making Yen  LIBOR submissions at another Yen LIBOR panel bank.  At times, Robson allegedly submitted Yen  LIBOR at a level requested by the other trader, and, at other times, that trader  submitted Yen LIBOR at a level requested by Robson.

As alleged  in the complaint, Thompson, Motomura and another Rabobank trader described in  the complaint as Trader-R made requests of Robson for Yen LIBOR submissions  through electronic chats and email exchanges.   For example, on May 19, 2006, after Thompson informed Robson that his  net exposure for his 3-month fixes was 125 billion Yen, he requested by email  that Robson “sneak your 3m libor down a cheeky 1 or 2 bp” because “it will make  a bit of diff for me.”  On or about May  19, 2006, Robson responded: “No prob mate I mark it low.”

On Sept. 21, 2007, Trader-R  asked Robson by email, “where do you think today’s libors are?  If you can I would like 1mth higher  today.”  Robson responded, “bookies  reckon .85,” to which Trader-R replied, “I have some fixings in 1mth so would  appreciate if you can put it higher mate.”   Robson answered, “no prob mate let me know your level.”  After Trader-R asked for “0.90% for 1mth,”  Robson confirmed, “sure no prob[ ] I’ll probably get a few phone calls but no  worries mate… there’s bigger crooks in the market than us guys!”

As another example, on Aug. 4,  2008, in a Bloomberg chat, Motomura asked Robson, “Please set today’s 6mth  LIBOR at 0.96 I have chunky fixing.”  To this, Robson responded, “no  worries mate.”
The complaint alleges that  Robson accommodated the requests of his co-defendants.  For example, on Sept. 21, 2007, after Robson  received a request from Trader-R for a high 1 month Yen LIBOR, Rabobank  submitted a 1-month Yen LIBOR rate of 0.90, which was 7 basis points higher  than the previous day and 5 basis points above where Robson said that “bookies”  predicted it, and which moved Rabobank’s submission from the middle to the  highest of the panel.

According  to court documents, the defendants were also aware that they were making false  or fraudulent Yen LIBOR submissions.  For  example, on May 10, 2006, Robson admitted in an email that “it must be pretty  embarrasing to set such a low libor.  I  was very embarrased to set my 6 mth – but wanted to help thomo [Thompson].  tomorrow it will be more like 33 from  me.”  At times, Robson referred to the  submissions that he submitted on behalf of his co-defendants as “ridiculously  high” and “obscenely high,” and acknowledged that his submissions would be so  out of line with the other Yen LIBOR panel banks that he might receive a phone  call about them from the BBA or Thomson Reuters.

A criminal complaint is a formal  accusation of criminal conduct, not evidence.   A defendant is presumed innocent unless and until convicted.

The investigation is being  conducted by special agents, forensic accountants, and intelligence analysts in  the FBI’s Washington Field Office.  The  prosecution is being handled by Trial Attorneys Carol L. Sipperly, Brian Young  and Alexander H. Berlin of the Criminal Division’s Fraud Section, and Trial  Attorneys Ludovic C. Ghesquiere and Michael T. Koenig of the Antitrust  Division.  Former Deputy Chief Glenn Leon  and Senior Counsel Rebecca Rohr of the Criminal Division’s Fraud Section, along  with Assistant Chief Elizabeth Prewitt and Trial Attorneys Eric Schleef and  Richard Powers of the Antitrust Division, have also provided valuable  assistance.  The Criminal Division’s  Office of International Affairs has provided assistance in this matter as well.

The broader investigation  relating to LIBOR and other benchmark rates has required, and has greatly  benefited from, a diligent and wide-ranging cooperative effort among various  enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and  expresses its deep appreciation for this assistance.  In particular, the Commodity Futures Trading  Commission’s Division of Enforcement referred this matter to the department  and, along with the U.K. Financial Conduct Authority, has played a major role  in the LIBOR investigation.  The department  has worked closely with the Dutch Public Prosecution Service and the Dutch  Central Bank in the investigation of Rabobank.   Various agencies and enforcement authorities from other nations are also  participating in different aspects of the broader investigation relating to  LIBOR and other benchmark rates, and the department is grateful for their  cooperation and assistance.  In  particular, the Securities and Exchange Commission has played a significant  role in the LIBOR series of investigations, and the department expresses its  appreciation to the United Kingdom’s Serious Fraud Office for its assistance  and ongoing cooperation.

This prosecution is  part of efforts underway by President Barack Obama’s Financial Fraud  Enforcement Task Force.  President Obama established the interagency  Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and  proactive effort to investigate and prosecute financial crimes.  The task  force includes representatives from a broad range of federal agencies,  regulatory authorities, inspectors general and state and local law enforcement  who, working together, bring to bear a powerful array of criminal and civil  enforcement resources.  The task force is working to improve efforts  across the federal executive branch, and with state and local partners, to  investigate and prosecute significant financial crimes, ensure just and  effective punishment for those who perpetrate financial crimes, combat  discrimination in the lending and financial markets and recover proceeds for  victims of financial crimes.  For more  information about the task force visit: www.stopfraud.gov.

Florida Couple Sentenced for Roles in Procurement Contract Bribery Scheme

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A Florida man was sentenced to serve 15 months in prison, and his wife was sentenced to 24 months of probation, for their roles in a bribery and fraud scheme involving federal procurement contracts, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.
On Feb. 26, 2013, Sylvester Zugrav, 70, of Sarasota, Fla., pleaded guilty to conspiracy to commit bribery and procurement fraud, and his wife, Maria Zugrav, 67, also of Sarasota, pleaded guilty to misprision of a felony related to her efforts to conceal the conspiracy.
The Zugravs were charged in an October 2011 indictment along with Jose Mendez, 51, of Farr West, Utah.   Mendez, a procurement program manager for the U.S. Air Force Foreign Materials Acquisition Support Office (FMASO) at Hill Air Force Base, in Ogden, Utah, was charged in the indictment with conspiracy, bribery and procurement fraud, and has since pleaded guilty to all charges and agreed to forfeit more than $180,000 he received as part of the bribery scheme.   Sentencing for Mendez is scheduled for Jan. 29, 2014.
According to court documents, the Zugravs owned Atlas International Trading Company, a business that contracted to provide foreign military materials to the U.S. government through FMASO.
In his plea agreement, Sylvester Zugrav admitted that, from 2008 through August 2011, he gave Mendez more than $180,000 in bribe payments and offered Mendez more than $1 million in additional bribe payments contingent upon Atlas’s receipt of future contracts with FMASO.   In exchange for Sylvester Zugrav’s bribe payments and offers, Mendez ensured that Atlas and Sylvester Zugrav received favorable treatment in connection with procurement contracts by, among other things, assisting Atlas in obtaining and maintaining procurement contracts; assisting Atlas in receiving payments on such contracts; and providing Atlas with contract bid or proposal information or source selection information before the award of procurement contracts.   In her plea agreement, Maria Zugrav admitted that she was aware of Sylvester Zugrav’s bribe payments to Mendez and assisted with concealing the crime.
According to court records, Sylvester Zugrav provided bribe payments to Mendez in three ways: cash payments via Federal Express to Mendez’s residential address; in-person payments of cash and other things of value; and electronic wire transfers to a bank account in Mexico opened by and in the name of Mendez’s cousin.   Between November 2009 and August 2011, Sylvester Zugrav sent nine FedEx packages to Mendez’s home address.   Each package contained $5,000 in cash, except the last package, which contained $3,000 and was seized by law enforcement.   Maria Zugrav assisted her husband and Mendez’s bribe scheme by limiting cash withdrawals from Atlas’s bank account to not more than $5,000 to avoid scrutiny by banking officials and law enforcement.
According to the plea documents, on multiple occasions when Sylvester Zugrav and Mendez traveled to the same location, Sylvester Zugrav would give Mendez cash payments and other things of value.   From 2008 through August 2011, Sylvester Zugrav gave Mendez seven in-person cash payments ranging from $500 to $10,000 and purchased for him[?] a laptop computer and software package worth over $2,900.
During the course of the corrupt scheme, Mendez opened a foreign bank account so that Sylvester Zugrav could pay Mendez larger bribe payments.   Mendez asked his cousin in Mexico to open an account there.   After the account was opened by Mendez’s cousin, Maria Zugrav made wire transfers to the bank account located in the name of Mendez’s cousin to avoid detection of the larger bribe payments by law enforcement.   From 2008 through August 2011, Maria Zugrav sent to the Mexico account 10 wire transfers ranging from $350 to $26,700.
Court records also describe additional steps taken to conceal the bribery scheme, including creating and using covert e-mail accounts, using encrypted documents, adopting false names and using code words.   For instance, to avoid detection of their e-mail communications, Sylvester Zugrav and Mendez established e-mail accounts to be used only to communicate requests and offers for bribe payments.   Sylvester Zugrav and Mendez also created password-protected documents for e-mail communications and used code words and false names.   Within the encrypted documents, Mendez adopted the moniker “Chuco” and Sylvester Zugrav used the codename “Jugo.”   They referred to cash as “literature.”
The case was investigated by the FBI and the Air Force Office of Special Investigations.   The case is being prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section, Assistant U.S. Attorney Carlos A. Esqueda of the District of Utah, and Trial Attorney Deborah Curtis of the National Security Division’s Counterespionage Section.

 

Medical Clinic Owner Pleads Guilty in Miami for Role in Multiple Health Care Fraud Schemes Totaling Over $20 Million

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The owner and operator of a Miami medical clinic pleaded guilty today in connection with multiple health care fraud schemes involving the defunct clinic Merfi Corp.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office, and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office made the announcement.
Isabel Medina, 49, of Miami, pleaded guilty before U.S. District Judge Ursula Ungaro of the Southern District of Florida to conspiracy to commit health care fraud, which carries a maximum penalty of 10 years in prison.   Sentencing has been scheduled for March 14, 2014.
According to court documents, Medina was an owner and operator of Merfi, a Miami medical clinic which employed physicians, physician assistants and other medical professionals who were authorized by law to dispense prescriptions for home health care services.   Through Merfi, Medina and her co-conspirators provided fraudulent home health and therapy prescriptions and other medical documentation to the owners and operators of Flores Home Health Care Inc. and other home health care agencies, as well as to patient recruiters, in return for kickbacks and bribes.
Flores Home Health and these other home health care agencies purported to provide home health and therapy services to Medicare beneficiaries, but were in fact operated for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or not provided.
Medina has acknowledged that her involvement in fraudulent schemes at multiple home health care companies, including Flores Home Health, resulted in losses to the Medicare Program exceeding $20 million.
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 for the Southern District of Florida.   This case is being prosecuted by Trial Attorney A. Brendan Stewart 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 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with 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 .

Medical Clinic Owner and Other Patient Recruiters Plead Guilty in Miami for Roles in $8 Million Health Care Fraud Scheme

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Several patient recruiters, including a medical clinic owner, pleaded guilty today in connection with a health care fraud scheme involving Flores Home Health Care Inc., a defunct home health care company.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office, and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office made the announcement.
At a hearing held before U.S. District Judge Ursula Ungaro of the Southern District of Florida, Lerida Labrada, 59, of Miami, pleaded guilty to conspiracy to commit health care fraud, which carries a maximum penalty of 10 years in prison, and Mayra Flores, 49, and German Martinez, 36, both of Miami, pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks, which carries a maximum penalty of five years in prison.   Sentencing has been scheduled for March 14, 2014.
According to court documents, the defendants worked as patient recruiters for the owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.   Labrada also owned and operated a Miami medical clinic that provided fraudulent prescriptions to patient recruiters and to the owners and operators of Flores Home Health.
Flores Home Health was operated for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.
The defendants would recruit patients for Flores Home Health and would solicit and receive kickbacks and bribes from the owners and operators of Flores Home Health in return for allowing the agency to bill the Medicare program on behalf of the recruited Medicare patients. These Medicare beneficiaries were billed for home health care and therapy services that were not medically necessary and/or not provided.
From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services.
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 for the Southern District of Florida.   This case is being prosecuted by Trial Attorney A. Brendan Stewart 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 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with 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 .

FCPA Charges Unsealed Against Former Chief Executive Officers of Oil Services Company

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Two former chief executive officers of PetroTiger Ltd. – a British Virgin Islands oil and gas company with operations in Colombia and offices in New Jersey – have been charged for their alleged participation in a scheme to pay bribes to foreign government officials in violation of the Foreign Corrupt Practices Act (FCPA), to defraud PetroTiger, and to launder proceeds of those crimes.   In addition, PetroTiger’s former general counsel pleaded guilty to bribery and fraud charges in connection with the same scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Aaron T. Ford of the FBI’s Newark Division made the announcement after the charges and guilty plea were unsealed today.

“We have said – repeatedly and emphatically – that foreign corruption, whether committed by companies or by the individuals entrusted to run those companies, will not be tolerated.   And, our track record in vigorously enforcing the FCPA has shown that message to be undeniably true,” said Acting Assistant Attorney General Raman.   “The charges unsealed today against two former CEOs of PetroTiger and the guilty plea announced today of the former General Counsel reaffirm our clear message that we will prosecute corruption and fraud wherever we find it.  Bribery distorts what should be a level playing field and deprives corporations and governments of funds that should instead be used to strengthen those institutions.   Today’s announcement should be a reminder to CEOs and other executives who seek to corrupt the system at the expense of honest businesses:   we are not going away.”

“Bribery of public officials, whether at home or abroad, corrupts business opportunity and undermines trust in government,” said U.S. Attorney Fishman.  “The under-the-table deals alleged in today’s charges are not an acceptable way of doing business.”

“The FBI is committed to pursuing those who disrupt the level playing field to which companies in the U.S. and around the world are entitled,” said FBI Special Agent in Charge Ford.   “We will continue to investigate these matters by working with law enforcement agencies, both foreign and domestic, to ensure that both corporations and executives who bribe foreign officials for lucrative contracts are punished.”

According to the charges, former co-CEOs of PetroTiger Joseph Sigelman, 42, formerly of Miami and the Philippines, and Knut Hammarskjold, 42, of Greenville, S.C.; former general counsel Gregory Weisman, 42, of Moorestown, N.J., and others allegedly paid bribes to an official in Colombia in exchange for the official’s assistance in securing approval for an oil services contract worth roughly $39 million.

Hammarskjold was arrested Nov. 20, 2013, at Newark Liberty International Airport.   Sigelman was arrested on Jan. 3, 2014, in the Philippines and appeared this afternoon (ChST) in Guam before U.S. Magistrate Judge Joaquin V.E. Manibusan III.   Sigelman will have an initial appearance in New Jersey federal court on a date to be determined.   Sigelman and Hammarskjold were charged by sealed complaints filed in the District of New Jersey on Nov. 8, 2013, with conspiracy to commit wire fraud, conspiracy to violate the FCPA, conspiracy to launder money and substantive violations of the FCPA.

Weisman pleaded guilty on Nov. 8, 2013, to a criminal information charging one count of conspiracy to violate the FCPA and to commit wire fraud.   The charges and guilty plea were also unsealed today.

The charges allege the defendants made three separate payments from PetroTiger’s bank account in the United States to the official’s bank account in Colombia to secure approval from Colombia’s state-owned and state-controlled oil company for a lucrative oil services contract in the country.   According to the charges, to conceal the bribes, the defendants first attempted to make the payments to a bank account in the name of the foreign official’s wife, for purported consulting services she did not perform.   The charges allege that Sigelman and Hammarskjold provided Weisman invoices including her bank account information.   The defendants made the payments directly to the official’s bank account when attempts to transfer the money to his wife’s account failed.

In addition, court documents allege that the defendants attempted to secure kickback payments at the expense of PetroTiger’s board members.   According to the criminal charges, the defendants were negotiating an acquisition of another company on behalf of PetroTiger, including on behalf of several members of PetroTiger’s board of directors who were helping to fund the acquisition.   In exchange for negotiating a higher purchase price for the acquisition, two of the owners of the target company agreed to kick back to the defendants a portion of the increased purchase price.   According to the charges, to conceal the kickback payments, the defendants had the payments deposited into Sigelman’s bank account in the Philippines, created a “side letter” to falsely justify the payments, and used the code name “Manila Split” to refer to the payments amongst themselves.

The conspiracy to commit wire fraud count carries a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost.   The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost.   The FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost.   The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.

The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The department has worked closely with and has received significant assistance from its law enforcement counterparts in the Republic of Colombia and greatly appreciates their assistance in this matter.   The department also thanks the Republic of the Philippines, including the Bureau of Immigration, for its assistance in this matter.   Significant assistance was also provided by the Criminal Division’s Office of International Affairs.

The case is being investigated by the FBI’s Newark Division.   The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Aaron Mendelsohn of the District of New Jersey.