Category Archives: Criminal Division

Three Subsidiaries of Weatherford International Limited Agree to Plead Guilty to FCPA and Export Control Violations;

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Three subsidiaries of Weatherford International Limited (Weatherford International), a Swiss oil services company that trades on the New York Stock Exchange, have agreed to plead guilty to anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and export controls violations under  the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA).  Weatherford International and its subsidiaries have also  agreed to pay more than $252 million in penalties and fines.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.        Weatherford Services Limited (Weatherford Services), a subsidiary of Weatherford International, today agreed to plead guilty to violating the anti-bribery provisions of the FCPA.   As part of a coordinated FCPA resolution, the department today also filed a criminal information in U.S. District Court for the Southern District of Texas charging Weatherford International with one count of violating the internal controls provisions of the FCPA.    To resolve the charge, Weatherford International has agreed to pay an $87.2 million criminal penalty as part of a deferred prosecution agreement with the department.
“Effective internal accounting controls are not only good policy, they are required by law for publicly traded companies – and for good reason,” said Acting Assistant Attorney General Raman.  “This case demonstrates how loose controls and an anemic compliance environment can foster foreign bribery and fraud by a company’s subsidiaries around the globe.  Although Weatherford’s extensive remediation and its efforts to improve its compliance functions are positive signs, the corrupt conduct of Weatherford International’s subsidiaries allowed it to earn millions of dollars in illicit profits, for which it is now paying a significant price.”

“When business executives engage in bribery and pay-offs in order to obtain contracts, an uneven marketplace is created and honest competitor companies are put at a disadvantage,” said Assistant Director in Charge Parlave.  “The FBI is committed to investigating corrupt backroom deals that influence contract procurement and threaten our global commerce.”
In a separate matter, Weatherford International and four of its subsidiaries today agreed to pay a combined $100 million to resolve a criminal and administrative export controls investigation conducted by the U.S. Attorney’s Office for the Southern District of Texas, the Department of Commerce’s Bureau of Industry and Security, and the Department of the Treasury’s Office of Foreign Assets Control.    As part of the resolution of that investigation, Weatherford International has agreed to enter into a deferred prosecution agreement for a term of two years and two of its subsidiaries have agreed to plead guilty to export controls charges.
“The resolution today of these criminal charges represents the seriousness that our office and the Department of Justice puts on enforcing the export control and sanctions laws,” said U.S. Attorney Magidson.
In a related FCPA matter, the U.S. Securities and Exchange Commission (  SEC) filed a settlement today in which Weatherford International consented to the entry of a permanent injunction against FCPA violations and agreed to pay $65,612,360 in disgorgement, prejudgment interest, and civil penalties.    Weatherford International also agreed with the SEC to comply with certain undertakings regarding its FCPA compliance program, including the retention of an independent corporate compliance monitor.
The combined investigations resulted in the conviction of three Weatherford subsidiaries, the entry by Weatherford International into two deferred prosecution agreements and a civil settlement, and the payment of a total of $252,690,606 in penalties and fines.
FCPA Violations According to court documents filed by the department, prior to 2008, Weatherford International knowingly failed to establish an effective system of internal accounting controls designed to detect and prevent corruption, including FCPA violations.   The company failed to implement these internal controls despite operating in an industry with a substantial corruption risk profile and despite growing its global footprint in large part by purchasing existing companies, often themselves in countries with high corruption risks.    As a result, a permissive and uncontrolled environment existed within which employees of certain of Weatherford International’s wholly owned subsidiaries in Africa and the Middle East were able to engage in corrupt conduct over the course of many years, including both bribery of foreign officials and fraudulent misuse of the United Nations’ Oil for Food Program.
Court documents state that Weatherford Services employees established and operated a joint venture in Africa with two local entities controlled by foreign officials and their relatives from 2004 through at least 2008.    The foreign officials selected the entities with which Weatherford Services would partner, and Weatherford Services and Weatherford International employees knew that the members of the local entities included foreign officials’ relatives and associates.    Notwithstanding the fact that the local entities did not contribute capital, expertise or labor to the joint venture, neither Weatherford Services nor Weatherford International investigated why the local entities were involved in the joint venture.    The sole purpose of those local entities, in fact, was to serve as conduits through which Weatherford Services funneled hundreds of thousands of dollars in payments to the foreign officials controlling them.    In exchange for the payments they received from Weatherford Services through the joint venture, the foreign officials awarded the joint venture lucrative contracts, gave Weatherford Services inside information about competitors’ pricing, and took contracts away from Weatherford Services’ competitors and awarded them to the joint venture.
Additionally, Weatherford Services employees in Africa bribed a foreign official so that he would approve the renewal of an oil services contract, according to court documents.    Weatherford Services funneled bribery payments to the foreign official through a freight forwarding agent it retained via a consultancy agreement in July 2006.    Weatherford Services generated sham purchase orders for consulting services the freight forwarding agent never performed, and the freight forwarding agent, in turn, generated sham invoices for those same nonexistent services.    When paid for those invoices, the freight forwarding agent passed at least some of those monies on to the foreign official with the authority to approve Weatherford Services’ contract renewal.    In exchange for these payments, the foreign official awarded the renewal contract to Weatherford Services in 2006.
Further, according to court documents, in a third scheme in the Middle East, from 2005 through 2011, employees of Weatherford Oil Tools Middle East Limited (WOTME), another Weatherford International subsidiary, awarded improper “volume discounts” to a distributor who supplied Weatherford International products to a government-owned national oil company, believing that those discounts were being used to create a slush fund with which to make bribe payments to decision-makers at the national oil company.    Between 2005 and 2011, WOTME paid approximately $15 million in volume discounts to the distributor.
Weatherford International’s failure to implement effective internal accounting controls also permitted corrupt conduct relating to the United Nations’ Oil for Food Program to occur, according to court documents.    Between in or about February 2002 and in or about July 2002, WOTME paid approximately $1,470,128 in kickbacks to the government of Iraq on nine contracts with Iraq’s Ministry of Oil, as well as other ministries, to provide oil drilling and refining equipment.    WOTME falsely recorded these kickbacks as other, seemingly legitimate, types of costs and fees.    Further, WOTME concealed the kickbacks from the U.N. by inflating contract prices by 10 percent.
According to court documents, these corrupt transactions in Africa and the Middle East earned Weatherford International profits of $54,486,410, which were included in the consolidated financial statements that Weatherford International filed with the SEC  .
In addition to the guilty plea by Weatherford Services, the deferred prosecution agreement entered into by Weatherford International and the Department requires the company to cooperate with law enforcement, retain an independent corporate compliance monitor for at least 18 months, and continue to implement an enhanced compliance program and internal controls designed to prevent and detect future FCPA violations.    The agreement acknowledges Weatherford International’s cooperation in this matter, including conducting a thorough internal investigation into bribery and related misconduct, and its extensive remediation and compliance improvement efforts.
Export Control Violations
According to court documents filed today in a separate matter, between 1998 and 2007, Weatherford International and some its subsidiaries engaged in conduct that violated various U.S. export control and sanctions laws by exporting or re-exporting oil and gas drilling equipment to, and conducting Weatherford business operations in, sanctioned countries without the required U.S. Government authorization.    In addition to the involvement of employees of several Weatherford International subsidiaries, some Weatherford International executives, managers, or employees on multiple occasions participated in, directed, approved, and facilitated the transactions and the conduct of its various subsidiaries.
This conduct involved persons within the U.S.-based management structure of Weatherford International participating in conduct by Weatherford International foreign subsidiaries, and the unlicensed export or re-export of U.S.-origin goods to Cuba, Iran, Sudan, and Syria. Weatherford subsidiaries Precision Energy Services Colombia Ltd. (PESC) and Precision Energy Services Ltd. (PESL), both headquartered in Canada, conducted business in the country of Cuba.    Weatherford’s subsidiary Weatherford Oil Tools Middle East (WOTME), headquartered in the United Arab Emirates (UAE), conducted business in the countries of Iran, Sudan, and Syria.    Weatherford’s subsidiary Weatherford Production Optimisation f/k/a eProduction Solutions U.K. Ltd. (eProd-U.K.), headquartered in the United Kingdom, conducted business in the country of Iran. Weatherford generated approximately $110 million in revenue from its illegal transactions in Cuba, Iran, Syria and Sudan.      To resolve these charges, Weatherford and its subsidiaries will pay a total penalty of $100 million, with a $48 million monetary penalty paid pursuant to a deferred prosecution agreement, $2 million paid in criminal fines pursuant to the two guilty pleas, and a $50 million civil penalty paid pursuant to a Department of Commerce settlement agreement to resolve 174 violations charged by Commerce’s Bureau of Industry and Security.    Weatherford International and certain of its affiliates are also signing a $91 million settlement agreement with the Department of the Treasury to resolve their civil liability arising out of the same underlying course of conduct, which will be deemed satisfied by the payments above.
The FCPA case was investigated by the FBI’s Washington Field Office and its team of special agents dedicated to the investigation of foreign bribery cases.    The case is being prosecuted by Trial Attorney Jason Linder of the Criminal Division’s Fraud Section, with the assistance of Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas.   The case was previously investigated by Fraud Section Trial Attorneys Kathleen Hamann and Allan Medina, with assistance from the Criminal Division’s Asset Forfeiture and Money Laundering Section.   The Justice Department also acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s FCPA Unit.
The export case was investigated by the Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement, and the Department of the Treasury’s Office of Foreign Assets Control.    The case is being prosecuted by Assistant U.S. Attorney S. Mark McIntyre and was previously investigated by Assistant U.S. Attorney Jeff Vaden.

High-Ranking Bank Official at Venezuelan State Development Bank Pleads Guilty to Participating in Bribery Scheme

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A senior official in Venezuela’s state economic development bank has pleaded guilty in New York federal court to accepting bribes from agents and employees of a New York-based broker-dealer (Broker-Dealer) in exchange for directing her bank’s security-trading business to the Broker-Dealer.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York, and Assistant Director in Charge George Venizelos of the New York Office of the FBI made the announcement.

Maria De Los Angeles Gonzalez De Hernandez, 55, pleaded guilty today before U.S. District Judge Paul A. Engelmayer in the Southern District of New York to conspiring to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses.  Sentencing for Gonzalez is scheduled for Aug. 15, 2014, before Judge Engelmayer.

At all times relevant to the charges, Banco de Desarrollo Económico y Social de Venezuela (BANDES) was a state-run economic development bank in Venezuela.  The Venezuelan government had a majority ownership interest in BANDES and provided it with substantial funding.

According to court records, Gonzalez was an official at BANDES and oversaw the development bank’s overseas trading activity.  At her direction, BANDES conducted substantial trading through the Broker-Dealer.  Most of the trades executed by the Broker-Dealer on behalf of BANDES involved fixed income investments for which the Broker-Dealer charged the bank a mark-up on purchases and a mark-down on sales.

From early 2009 through 2012, Gonzalez participated in a bribery scheme in which she directed trading business she controlled at BANDES to the Broker-Dealer and, in return, agents and employees of the Broker-Dealer shared the revenue the Broker-Dealer generated from this trading business with Gonzalez.  During this time period, the Broker-Dealer generated over $60 million in mark-ups and mark-downs from trades with BANDES.  Agents and employees of the Broker-Dealer devised a split with Gonzalez of the commissions paid by BANDES to the Broker-Dealer.  Emails, account records, and other documents collected from the Broker-Dealer and other sources reveal that Gonzalez received a substantial share of the revenue generated by the Broker-Dealer for BANDES-related trades.  Specifically, Gonzalez received millions in bribe payments from Broker-Dealer agents and employees.

Additionally, Gonzalez paid a portion of the bribe payments she received to another BANDES employee who was also involved in the scheme.

To further conceal the scheme, the kickbacks to Gonzalez were often paid using intermediary corporations and offshore accounts that Gonzalez and others held in Switzerland, among other places.

Previously, three former employees of the Broker-Dealer – Ernesto Lujan, Jose Alejandro Hurtado, and Tomas Alberto Clarke Bethancourt – each pleaded guilty in New York federal court to conspiring to violate the Foreign Corrupt Practices Act (FCPA), to violate the Travel Act and to commit money laundering, as well as substantive counts of these offenses, relating, among other things, to the scheme involving bribe payments to Gonzalez.  Sentencing for Lujan and Clarke is scheduled for Feb. 11, 2014, before U.S. District Judge Paul G. Gardephe.  Hurtado is scheduled for sentencing before U.S. District Judge Harold Baer Jr. on March 6, 2014.

This ongoing investigation is being conducted by the FBI, with assistance from the SEC and the Justice Department’s Office of International Affairs. Assistant Chief James Koukios and Trial Attorneys Maria Gonzalez Calvet and Aisling O’Shea of the Criminal Division’s Fraud Section and Assistant United States Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York’s Securities and Commodities Fraud Task Force are in charge of the prosecution.  Assistant United States Attorney Carolina Fornos is also responsible for the forfeiture aspects of the case.

 

Department of Defense Employee Pleads Guilty to Submitting False Claim for Housing Allowance

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A Department of Defense (DOD) employee has pleaded guilty to filing a false claim with the DOD while stationed in the Republic of Korea (ROK) to fraudulently obtain $64,000 in housing allowance, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

Patrick Y. Kim, 56, of Reno, Nev., pleaded guilty today before U.S. District Judge Howard D. McKibben in the District of Nevada in Reno to one count of making a false claim.  Kim faces a maximum penalty of five years in prison when he is sentenced on Feb. 12, 2014.  As part of his plea agreement, Kim has agreed to pay full restitution to the DOD in the amount of $64,000.

The former chief of the Furniture Branch at the United States Army Garrison in Daegu, ROK, Kim admitted that he submitted a fraudulent lease to the housing office to obtain a living quarters allowance (LQA) that he was not entitled to receive.  Kim began working at Daegu Garrison in or about October 2002, and, as a DOD civilian employee working in the ROK, he was entitled to receive certain housing allowances, including LQA under certain circumstances.  To receive LQA, Kim was required to submit a copy of a housing lease in support of his application and acknowledge that the LQA payments were exclusively for the payment of rent and not for the payment of refundable security deposits or “key money” leases.  Key money leases – sums of money paid to a lessor in lieu of rent, which are returned to the lessee at the end of the lease – are common in the ROK; however, they are prohibited by State Department regulations.

Kim admitted that in September 2008, he was looking for a new apartment as the lease for his current apartment was about to expire.  He and his wife located a residence at an apartment complex; however, the owners of the apartments did not offer traditional rental leases – only key money leases and purchases.  On or about Sept. 8, 2008, Kim’s wife entered into a key money lease for one of the apartments.  Kim admitted that he knew that State Department regulations prohibited him from receiving LQA to pay for the key money lease signed by his wife.  On or about Sept. 9, 2008, Kim created a fake rental lease for the subject property and submitted it to the housing office at Daegu Garrison in support of his request for LQA.  The fake lease for the apartment purported to be a two-year lease with a total cost of $64,000.  Kim admitted receiving $64,000 in LQA, which is non-taxable, and also admitted that he used the money to pay for a portion of the key money lease entered into by his wife.

Kim also admitted that he created a fake receipt for the purported $64,000 rental payment and submitted it to the housing office at Daegu Garrison to justify his receipt of the LQA.  He received the $64,000 back at the end of the key money lease in 2010, and he used it for the purchase of a new residence in the ROK.

The case is being investigated by the U.S. Army Criminal Investigation Division and the FBI.  The case is being prosecuted by Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Sue P. Fahami of the District of Nevada.

Brooklyn Clinic Owner Sentenced for Role in $77 Million Medicare Fraud Scheme

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The owner of a Brooklyn medical clinic was sentenced today to serve 15 years in prison for her leading role in a $77 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Irina Shelikhova, 50, of Brooklyn, was sentenced by U.S. District Judge Nina Gershon of the Eastern District of New York.  In addition to her prison term, Shelikhova was sentenced to serve three years of supervised release with a concurrent exclusion from Medicare, Medicaid and all Federal health programs, ordered to forfeit $36,241,545 and ordered to pay $50,943,386 in restitution.  Shelikhova has been in custody since her arrest at the John F. Kennedy International Airport on June 15, 2012, after living as a fugitive in Ukraine for nearly two years.  After serving her sentence, Shelikhova faces deportation from the United States.

Shelikhova pleaded guilty on Dec. 18, 2012, to one count of conspiracy to commit money laundering.  Including Shelikhova, 13 individuals have been convicted in this case.

Court documents state that from 2005 to 2010, Shelikhova owned and operated a clinic in Brooklyn that billed Medicare under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (collectively, Bay Medical clinic).  Shelikhova and her employees at the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary or never provided.  The defendants billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.

According to trial testimony, Shelikhova masterminded the health care fraud at the Bay Medical clinic, which included hiring a medically unlicensed co-defendant to impersonate the clinic’s doctor and render medical care to patients.  Shelikhova also directed employees to create phony medical notes in an attempt to back up the false billing and to forge doctors’ names on prescriptions and charts.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, which showed conspirators paying cash kickbacks to corrupt Medicare beneficiaries.  The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010.  This room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, Shelikhova directed the recruitment and operations of a network of external money launderers who cashed checks for the clinic.  Shelikhova wrote clinic checks payable to various shell companies controlled by the money launderers.  These checks did not represent payment for any legitimate service at or for the Bay Medical clinic, but rather were written to launder the clinic’s fraudulently obtained health care proceeds.  The money launderers cashed these checks and provided the cash back to the clinic.  Shelikhova used the cash to pay illegal cash kickbacks to the Bay Medical clinic’s purported patients.

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 for the Eastern District of New York.  This case is being prosecuted by Trial Attorney Sarah M. Hall of the Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $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.

Former Defense Contractor Employee and Wife Plead Guilty to Conspiring to Defraud Millions in Scheme Involving Supplies to Afghan National Army

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Keith Johnson, 46, and his wife, Angela Johnson, 44, of Maryville, Tenn., pleaded guilty today to their roles in a $9.7 million procurement fraud scheme.

Mythili Raman, Acting Assistant Attorney General of the Justice Department’s Criminal Division; Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia; Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office; Robert E. Craig, Defense Criminal Investigative Service (DCIS) Special Agent in Charge of Mid-Atlantic Field Office; John Sopko, Special Inspector General for Afghanistan Reconstruction (SIGAR); and Frank Robey, Director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU), made the announcement after the pleas were accepted by U.S. District Judge Leonie M. Brinkema of the Eastern District of Virginia.

The Johnsons were indicted on July 16, 2013, by a federal grand jury on conspiracy to commit wire fraud and wire fraud charges.  Keith Johnson faces a maximum penalty of 20 years in prison, and Angela Johnson faces a maximum penalty of five years in prison when they are sentenced on Feb. 14, 2014.

In a statement of facts filed with the plea agreement, Keith Johnson admitted to serving as the program manager for a Department of Defense contractor that operated a central maintenance facility (CMF) in Kabul, Afghanistan, and other facilities in that country to maintain and repair vehicles used by the Afghan National Army.  In his position during 2007 to 2008, Keith Johnson was involved in purchasing vehicle parts from vendors.  The Johnsons formed a company in Tennessee, Military Logistics Support (MLS), and listed only the names of relatives as officials in the documents filed.  Angela Johnson operated the company.  When Keith Johnson’s company solicited quotes for different vehicle parts that were needed, Angela Johnson, using her maiden name of “Angela Gregory” to conceal her relationship to Keith Johnson, responded with quotes based on parts that she was able to purchase from other vendors of vehicle parts.  Keith Johnson used his position as program manager to write letters justifying awards of purchase orders for parts to MLS without seeking competitive quotes, and in instances in which there had been competitive quotes, approving recommendations that the awards be made to MLS.

The Johnsons also conspired with John Eisner and Jerry Kieffer, two individuals who worked at the CMF as subcontractors to Keith Johnson’s company, to have Keith Johnson similarly steer purchase orders for other types of vehicle parts to Eisner’s and Kieffer’s separate company, Taurus Holdings.  Eisner submitted the quotes for Taurus using a fake name to conceal his connection to the subcontractor.  Eisner and Kieffer paid kickbacks to the Johnsons and on occasion engaged in collusive bidding with the Johnsons so that MLS could win competitions for certain purchase orders.  Eisner and Kieffer previously pleaded guilty to conspiracy and will be sentenced on Dec. 18, 2013.

As a result of the scheme, Keith Johnson’s company awarded MLS at least $9.7 million worth of purchase orders for vehicle parts by Keith Johnson’s company.

This case was investigated by DCIS, FBI, SIGAR and Army MPFU.  Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jack Hanly and Ryan Faulconer of the Eastern District of Virginia are prosecuting the case on behalf of the United States.

Home Health Agency Owner Sentenced for Role in $13.8 Million Medicare Fraud Scheme

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Detroit-area resident Javed Rehman was sentenced to serve 60 months in prison today for his role in a $13.8 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman 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, and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations’ Detroit Office made the announcement.
Rehman, 50, of Farmington Hills, Mich., was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan.  In addition to his prison term, Rehman was sentenced to serve two years of supervised release and was ordered to pay $1,734,801 in restitution, jointly and severally with his co-defendants.  Rehman pleaded guilty on July 12, 2013, before Judge Rosen to one count of conspiracy to commit health care fraud.
According to court records, in or around May 2009, Rehman purchased Quantum Home Care Inc. with co-conspirators Tausif Rahman and Muhammad Ahmad.  Rehman paid kickbacks to recruiters to obtain Medicare beneficiary information used to bill Medicare for home health services – including physical therapy and skilled nursing services – that were never rendered.  Rehman was the administrator of Quantum and was responsible for the submission of false and fraudulent claims to Medicare based on falsified files created by the co-conspirators.
Medicare paid approximately $1.7 million to Quantum for physical therapy and skilled nursing services that Quantum purported to render between approximately June 2009 and September 2011.  According to court documents, between 2008 and 2009, Rehman’s co-conspirators acquired control of three other home health care companies.  The four companies, including Quantum, received approximately $13.8 million from Medicare in the course of the conspiracy.
Rahman pleaded guilty on Jan. 5, 2012, to one count of conspiracy to commit health care fraud and one count of money laundering and is scheduled for sentencing on May 21, 2014.  Ahmad pleaded guilty on Aug. 28, 2012, to one count of conspiracy to commit health care fraud and is scheduled for sentencing on May 14, 2014.
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 Eastern District of Michigan.  The case is being prosecuted by Assistant Chief Catherine K. Dick 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 1,500 defendants who have collectively billed the Medicare program for more than $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.

Detroit-Area Home Health Care Agency Owner Sentenced for Role in $2.2 Million Medicare Fraud Scheme

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The owner of a Detroit-area home health care agency was sentenced today to serve 65 months in prison for her leading role in a $2.2 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman 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, and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations’ Detroit Office made the announcement.
Mehran Javidan, 51, was sentenced by U.S. District Judge Denise Page Hood in the Eastern District of Michigan. In addition to her prison term, Javidan was sentenced to serve three years of supervised release and was ordered to pay $2.2 million in restitution, jointly and severally with her co-defendants.
Javidan was convicted by a federal jury on April 2, 2013, of one count of conspiracy to commit health care fraud, three counts of health care fraud, three counts of making false statements related to health care matters and one count of conspiracy to solicit or pay health care kickbacks in exchange for referrals of patients to home health care company Acure Home Care Inc. (Acure).  The jury found Javidan not guilty of one count of making false statements and one count of health care fraud and did not reach a verdict on one additional count of health care fraud.
Javidan was initially charged along with two other defendants in an indictment unsealed on Feb. 17, 2011, as part of a nationwide Medicare fraud takedown.  One co-defendant was also convicted on April 2, 2013, while the other remains a fugitive.
According to evidence presented at trial, Javidan owned and operated Acure, a home health care company in Oak Park, Mich., and later Troy, Mich.  Javidan paid doctors to refer non-homebound patients for physical therapy treatment that was medically unnecessary.  The evidence showed that she also paid patient recruiters to obtain Medicare information and pre-signed physical therapy documents from Medicare beneficiaries.  The recruiters for Acure obtained the Medicare information and pre-signed forms by paying patients in cash and by promising that the referring doctors would prescribe them narcotic prescriptions.
Evidence presented at trial established that Javidan paid physical therapists and physical therapy assistants employed by Acure to create false and fraudulent physical therapy files using the blank, pre-signed forms to make it appear as if physical therapy services were actually rendered, when in fact, the services had not been rendered.
Javidan then directed the submission of Acure’s falsified billing to Medicare.  Acure was paid more than $2.2 million from Medicare between December 2008 and November 2010.
The investigation was led by the FBI and HHS-OIG and was brought by 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.  The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorney Niall M. O’Donnell of the Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in Chicago and eight other cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $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.

Patient Broker of South Florida Psychiatric Hospital Sentenced for Role in $67 Million Health Care Fraud Scheme

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A patient broker of a South Florida psychiatric hospital was sentenced today to serve 24 months in prison followed by three years of supervised release for her participation in a $67 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 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.
Gloria Himmons, 54, of Union Springs, Ala., was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida.  In March 2013, Himmons pleaded guilty to one count of conspiracy to receive health care kickbacks and one count of receiving a health care kickback.  In addition to her prison term, Himmons was ordered to pay $14 million in restitution, joint and severally with her co-defendants.
According to court documents, Himmons was a patient broker at Hollywood Pavilion LLC (HP), a state-licensed psychiatric hospital in South Florida that purported to offer both inpatient and outpatient mental health services.  Himmons would provide Medicare beneficiaries to HP in exchange for bribes and kickbacks, and she knew that the patients she provided to HP were not appropriate for inpatient psychiatric hospitalization or for outpatient mental health treatment.  The patients she provided to HP included those who were not severely mentally ill, as well as substance abusers looking for rehabilitation programs.  The patients did not have legitimate referrals from hospitals or doctors who had been treating acute-phase, severe mental illness.
From at least 2005 through September 2012, in exchange for bribes and kickbacks, Himmons knowingly and willfully provided to HP Medicare beneficiaries who did not need inpatient or outpatient psychiatric treatment.  As a result of Himmons’s participation in this scheme, HP was improperly paid more than $7 million by Medicare.  From at least 2003 through at least August 2012, HP billed Medicare approximately $67 million for services that were not properly rendered, for patients that did not qualify for the services being billed, and for claims for patients who were procured through bribes and kickbacks.  Medicare reimbursed HP on approximately $40 million of those claims.
On Sept. 10, 2013, co-defendants Karen Kallen-Zury, Daisy Miller and Christian Coloma were sentenced on their June 2013 jury convictions.  Kallen-Zury, the chief executive officer of HP, and Miller and Coloma were convicted on all counts at trial and sentenced to 300 months, 180 months and 144 months, respectively.  Kallen-Zury and Miller were ordered to pay, jointly and severally with their co-defendants, nearly $40 million in restitution.  Coloma was ordered to pay, jointly and severally, more than $20 million in restitution.
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 Miami.  This case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorneys Andrew H. Warren and Anne McNamara of the Fraud Section.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $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.

New York Check Cashing Company and Owner Plead Guilty for Roles in $19 Million Scheme

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Belair Payroll Services Inc. (Belair), a multi-branch check cashing company in Flushing, N.Y., and its owner, Craig Panzera, 47, pleaded guilty today for failing to follow reporting and anti-money laundering requirements for more than $19 million in transactions, in violation of the Bank Secrecy Act (BSA).   Panzera also pleaded guilty to conspiring to defraud the United States by willfully failing to pay income and payroll taxes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE), and Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

As part of the guilty plea, Belair will forfeit $3,267,252.10, and Panzera will pay restitution in the amount of $946,841.17 to the IRS.  Sentencing for Belair and Panzera will be determined at a later date.

According to court records, from in or about June 2009 through June 2011, certain individuals presented to Belair’s manager and other employees checks to be cashed at Belair.  The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business.  The shell corporations and their corresponding bank accounts on which the checks were written were established in the names of foreign nationals, many of whom were no longer in the United States.

Belair accepted these checks and provided cash in excess of $10,000 to the individuals. Panzera and others at Belair never obtained any identification documents or information from those individuals.  Belair filed currency transaction reports (CTRs) that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair failed to indicate the full amount of cash provided to the individuals.  The individuals cashed more than $19 million through Belair during the course of the scheme.  Panzera and Belair willfully failed to maintain an effective anti-money laundering program by cashing these checks.

The charges in the indictment against Panzera’s and Belair’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

The cases are being investigated by agents from ICE Homeland Security Investigations and IRS-CI.  These cases are being prosecuted by Trial Attorneys Claiborne W. Porter and Kevin G. Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section’s (AFMLS) Money Laundering and Bank Integrity Unit, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit, and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The Unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.

Former Veterans Affairs Psychiatrist Pleads Guilty to Medicare Fraud

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Dr. Mikhail L. Presman, a licensed psychiatrist employed by the Department of Veterans Affairs (VA), pleaded guilty today to health care fraud for falsely billing Medicare for home medical treatment to Medicare beneficiaries and agreed to forfeit more than $1.2 million in illegal profits.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

According to court documents, from Jan. 1, 2006, through May 10, 2013, Presman submitted approximately $4 million in Medicare claims for home treatment of Medicare beneficiaries notwithstanding his full-time, salaried position as a psychiatrist at the VA hospital in Brooklyn.  Contrary to his representations, Presman did not provide any treatment to a substantial number of the beneficiaries he claimed to have treated.  For example, Presman submitted claims to Medicare for home medical visits at locations within New York City even though he was physically located in China at the time of these purported home visits.  Additionally, Presman submitted claims to Medicare for 55 home medical visits to beneficiaries who were hospitalized on the date of the purported visits.

Presman is scheduled to be sentenced by U.S. District Judge I. Leo Glasser of the Eastern District of New York on Feb. 13, 2014, and faces a maximum sentence of 10 years in prison.

The case was investigated by the HHS-OIG, with assistance from the Department of Veterans Affairs Office of Inspector General, and 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 New York.  The case is being prosecuted by Trial Attorney Bryan D. Fields of the Fraud Section and Assistant U.S. Attorney Patricia E. Notopoulos of the Eastern District of New York.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $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.