Category Archives: Federal Bureau of Investigation

Three Louisiana Residents Indicted for Insider Trading in Connection with Shaw Group Acquisition

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Wednesday, July 12, 2017

BATON ROUGE, LA – Acting United States Attorney Corey Amundson announced today that three more individuals have been charged with insider trading in connection with the acquisition of the Shaw Group. A federal grand jury sitting in the Middle District of Louisiana has indicted KELLY LIU, age 31, SALVADOR RUSSO, III, age 34, both of Baton Rouge, Louisiana, and VICTORY HO, age 38, of Morgan City, Louisiana, with conspiracy to commit securities fraud (insider trading), in violation of Title 18, United States Code, Section 371, and securities fraud (insider trading), in violation of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-1. If convicted, each face significant incarceration, fines, restitution, and supervised release following imprisonment.

The Indictment alleges that from on or before July 18, 2012, and continuing to at least July 30, 2012, LIU and her boyfriend RUSSO, along with associate HO, engaged in a scheme to profit from inside information about the upcoming merger between The Shaw Group (“Shaw”) and Chicago Bridge and Iron Company (“CB&I”).

According to the allegations contained in the Indictment, which was returned by the grand jury earlier today, in mid-2012, Shaw was considering a potential merger opportunity. At the time, LIU was a Shaw employee working in the Financial Planning and Analysis Department. In late July 2012, Shaw and CB&I came to an agreement whereby CB&I acquired all outstanding shares of Shaw stock. The merger between the two companies was publicly announced on July 30, 2012 (“the public announcement”). As a result of the public announcement, Shaw’s stock price rose substantially.

The Indictment alleges that, prior to the public announcement and through her job at Shaw, LIU obtained inside information that Shaw was being acquired by another company and passed the inside information to HO, through another individual, and to RUSSO, for their use in trading Shaw securities. Thereafter, HO and RUSSO allegedly purchased Shaw securities before the public announcement. HO sold his Shaw securities after the public announcement had caused Shaw’s stock price to rise, while RUSSO held his Shaw securities, all at the expense of Shaw shareholders and potential Shaw shareholders who were not privy to the inside information. The Indictment also alleges that HO made over $294,000, and RUSSO over $2,500 in unrealized profits, from their illegal insider trading activities.

Prior to the Indictment announced today, three other individuals have been charged in the Middle and Western Districts of Louisiana with securities fraud offenses related to the Shaw merger. One defendant has pled guilty, and the remaining two are scheduled for trial.

Acting U.S. Attorney Amundson stated: “Insider trading undermines investor confidence in the fairness and integrity of the securities markets, and cheats those honest investors who play by the rules. My office will continue to work aggressively with our excellent partners with the FBI, IRS-Criminal Investigations, the U.S. Secret Service, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and others to pursue such important matters whenever merited.”

This matter is being handled by the U.S. Attorney’s Office for the Middle District of Louisiana and the Baton Rouge offices of the FBI, Secret Service, and IRS-Criminal Investigation. It is being prosecuted by Assistant United States Attorneys Chris Dippel, Patricia Jones, and Adam Ptashkin.

NOTE: An indictment is an accusation by the Grand Jury. A defendant is presumed innocent until and unless adjudicated guilty at trial or through a guilty plea.

As Part of National Health Care Fraud Takedown, Federal Prosecutors in Los Angeles Charge 14 Defendants in Fraud Schemes that Allegedly Cost Public Healthcare Programs nearly $150 Million

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Thursday, July 13, 2017

LOS ANGELES – In the largest-ever health care fraud enforcement action by federal prosecutors, 14 defendants – including doctors, nurses and other licensed medical professionals – have been charged in the Central District of California for allegedly participating in health care fraud schemes that caused approximately $147 million in losses.

The defendants charged locally are among hundreds of people charged across the United States in cases that cumulatively allege approximately $1.3 billion in false billings. The nationwide sweep includes charges against more than 120 defendants – some of whom are doctors – who allegedly prescribed and distributed opioids and other dangerous narcotics.

In the Central District of California, 14 defendants were charged for their roles in schemes to defraud health insurance programs such as Medicare. The cases allege health care fraud and kickback schemes involving compounded drugs, home health services, physical therapy, acupuncture, Medicare Part D prescription drugs, diagnostic sleep studies and hospice care.

“Health care fraud schemes such as these threaten the vital trust between a patient and his or her health care provider, undermine the integrity of our health care system, and cost all Americans billions of dollars,” said Acting United States Attorney Sandra R. Brown. “Today’s announcement serves as a clear warning that we will continue to work with our law enforcement partners to identify and hold accountable health care professionals who commit these crimes.”

The defendants charged locally include four physicians, including Dr. Jeffrey Olsen, who was charged with illegally prescribing controlled substances, including the opiate oxycodone.

The 57-year-old Olsen surrendered to authorities on Tuesday after being indicted last week by a federal grand jury on 34 counts of illegally prescribing controlled drugs, including oxycodone, and one count of false statement on a DEA registration application. Olsen, a resident of Laguna Beach, allegedly sold prescriptions to addicts and drug dealers in exchange for fixed cash fees, without any medical basis for the prescriptions.

During the investigation, Olsen also sold hundreds of prescriptions to addicts in other states, such as Oregon, without ever seeing the “patients” for an in-person examination. In text messages to these out-of-state customers, Olsen allegedly told customers that, in exchange for exorbitant fees as high as $3,000, he would write prescriptions for whatever drug they wanted, and that he would never check whether they were actually taking the prescribed drugs or whether they were getting additional narcotic prescriptions from other doctors. Olsen allegedly sold more than 1.2 million pills of narcotics, which were almost entirely at maximum strength, in addition to hundreds of thousands of pills of other controlled drugs such as the sedatives Xanax and Soma. The case against Olsen is being prosecuted by Assistant United States Attorneys Ben Barron and Bryant Yang.

In another local case involving a physician, Dr. Thomas S. Powers and Anthony Paduano were arrested Tuesday on healthcare fraud charges that allegedly bilked TRICARE.

The indictment in this case alleges that Powers, of Santa Ana, authorized prescriptions for compounded medications for patients he never examined. Under an agreement, Paduano, of Newport Beach, allegedly paid Powers $200 for each prescription. Paduano received approximately $1.2 million for referring the prescriptions to a local pharmacy that billed TRICARE more than $4.8 million and was paid more than $3.1 million. This case is being handled by Assistant United States Attorneys Mark Aveis, Paul Stern and Cassie Palmer.

“Americans already struggling with health care issues and rising premiums are further burdened with each dollar lost to fraud,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The losses estimated in Los Angeles for this operation alone are staggering as the abundance of health care fraud schemes in southern California adds considerably to this nationwide crime issue. By collaborating with our partners, we will continue to hold accountable those who get rich by targeting federal health care programs with fraud.”

“Those who would enrich themselves through healthcare fraud – including billing for unnecessary services, accepting kickbacks, and billing for prescriptions that were never provided – are putting profits over patients, stealing from government health programs and taxpayers alike,” said Special Agent in Charge Christian Schrank, of the U.S. Department of Health and Human Services Office of Inspector General. “These operations show yet again our commitment to working with our federal and state law enforcement partners. In fighting this epidemic, we must all stand together.”

“IRS Criminal Investigation will not stand still while criminals line their pockets with illicit proceeds obtained from publicly funded health care programs,” said IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “It depletes scarce taxpayer dollars and will not be tolerated. IRS Criminal Investigation will continue to work with our federal and state law enforcement partners to bring justice to those individuals who prey on the nation’s health care system for their own personal greed.”

“Our office, in partnership with our fellow investigative agencies, will continue to uncompromisingly investigate and bring to justice the people who perpetrate these criminal acts,” said Amtrak Inspector General Tom Howard. We will remain vigilant in protecting Amtrak employees, retirees, and their dependents, by ensuring our health care dollars are not wasted on fraudulent providers,”

“The Department of Labor – Employee Benefits Security Administration will continue to vigorously investigate wrongdoers committing health care fraud against employer sponsored health plans in Southern California which also impact TRICARE, Medicare, Medicaid” said Crisanta Johnson, DOL-EBSA’s Los Angeles Regional Office.

The other cases filed in federal court in Los Angeles as part of the nationwide sweep are:

  • Aniceto Baliton, of Diamond Bar, co-owner and managing employee of Bliss Hospice in Glendora, was charged yesterday with one count of conspiracy to pay and receive illegal remunerations for health care referrals. The charge stems from Baliton’s role in a fraud scheme to pay kickbacks in exchange for Medicare beneficiaries referred to Bliss and billed by Bliss for hospice services. As part of the fraud scheme, Baliton and the co-owners of the hospice also agreed to generate cash for the illegal kickbacks by disguising such monies as payroll expenses. Based on the referrals that Baliton and his co-conspirators obtained through illegal kickbacks, Bliss submitted claims to Medicare and was paid approximately $2.4 million. The case is being handled by DOJ Trial Attorney Claire Yan.
  • Aleksandr Suris and Maxim Sverdlov, co-owners and operators of Royal Care Pharmacy in Los Angeles, were arrested Monday on charges related to a scheme that allegedly brought in more than $41.5 million from Medicare and CIGNA. The indictment in this case charges Suris with two counts of conspiracy to commit health care fraud and 10 counts of health care fraud, and Sverdlov with one count of conspiracy to commit health care fraud and four counts of health care fraud. The defendants allegedly submitted fraudulent bills for prescription drugs that were never filled by the pharmacy or were not provided to the person to whom the drug was prescribed. The case is being handled by DOJ Trial Attorney Robyn N. Pullio.
  • Dr. Kanagasabai Kanakeswaran was indicted late last month on one count of conspiracy to pay and receive kickbacks for health care referrals and four counts of receiving kickbacks for health care referrals. The charges arise from a kickback conspiracy at a home health company called Star Home Health Resources. The owners and operators of Star allegedly paid kickbacks to referring physicians, including Dr. Kanakeswaran, in exchange for the physicians referring Medicare beneficiaries to receive home health services from Star. The indictment alleges that from May 2008 to May 2016, Star was paid $4,157,311 from Medicare based on home health services that Dr. Kanakeswaran referred to Star in exchange for illegal kickbacks. The case is being handled by Assistant United States Attorney Alex Porter and DOJ Trial Attorney Claire Yan.
  • Jamen Oliver Griffith and Damon Glover were charged late last month with conspiring to solicit, receive and pay illegal kickbacks for health care referrals. The charges stem from defendants’ role in a scheme involving undisclosed payments for generating and steering prescriptions of compounded drugs to Valley View Drugs, Inc., a pharmacy located in La Mirada. As set forth in plea agreements that have been filed in court, Griffith and Glover owned and operated Western Medical Solutions, a “marketing” company that paid non-employee “marketers” to generate compounded drug prescription referrals for Valley View. Commission payments to “marketers” for prescription referrals were based on a percentage of the amount insurance companies reimbursed Valley View. Health insurers ultimately reimbursed Valley View $13,860,083 for prescriptions generated by WMS-affiliated marketers. In turn, Valley View paid WMS approximately $7,622,864 for the prescription referrals. The case is being handled by Assistant United States Attorney Ashwin Janakiram.
  • Xiao “Kimi” Gudmundsen, a licensed acupuncturist and the owner of Healthy Life Acupuncture Center, Inc., which operated at two sites in Los Angeles and Riverside, was charged on June 22, with eight counts of health care fraud and three counts of money laundering. The charges arise from allegations that Gudmundsen recruited Amtrak employees to visit Healthy Life and then, among other things, billed the Amtrak health care plan for acupuncture and other services that were not actually provided. The indictment also charges that Gudmundsen laundered payments received from Amtrak for the false bills through various accounts, including accounts held in the names of relatives. Also charged in the indictment are Suzana Cortez, a Healthy Life employee (who faces five counts health care fraud) and Gladys Perez, an Amtrak employee (who faces two counts of health care fraud). This case is being handled by Assistant United States Attorney Poonam Kumar.
  • James Chen pleaded guilty on June 19 to a health care fraud charge related to his pharmacy processing and billing TRICARE for approximately $62 million for fraudulent prescriptions for compounded medications after Chen paid more than 50 percent in referral fees to marketers. The case is being handled by Assistant United States Attorneys Mark Aveis, Paul Stern and Cassie Palmer.

Indictments and criminal informations contain allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The cases from the Central District of California are the result of investigations conducted by the United States Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; the Defense Criminal Investigative Service; the Drug Enforcement Administration; IRS Criminal Investigation; the Office of Personnel Management, Office of Inspector General; the Veterans Administration, Office of the Inspector General; the Department of Labor – Employee Benefits Security Administration; the California Department of Insurance, Fraud Division; the United States Postal Service, Office of the Inspector General; Amtrak’s Office of the Inspector General; the California Board of Pharmacy; California’s Department of Health Care Services; and the California Department of Justice.

The local cases were filed by Assistant United States Attorneys and Trial Attorneys with the Justice Department’s Medicare Fraud Strike Force. The Strike Force operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Baton Rouge-Based Medicare Fraud Strike Force Announces Charges Against Four More Individuals For Health Care Fraud And Related Offenses

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Thursday, July 13, 2017

BATON ROUGE, LA – Acting United States Attorney Corey R. Amundson announced today the unsealing of two federal grand jury indictments charging four individuals with health care fraud and related offenses. The cases were unsealed as part of the 2017 National Health Care Fraud Takedown, during which federal, state, and local law enforcement partners announced charges of more than 400 defendants across 41 different federal judicial districts.

The Medicare Fraud Strike Force is part of the joint initiative announced in May 2009 between the U.S. Department of Justice and the U.S. Department of Health and Human Services to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. In December 2009, a Medicare Fraud Strike Force team was deployed in the U.S. Attorney’s Office in Baton Rouge, Louisiana. Strike Force teams bring together the resources of the U.S. Department of Health and Human Services—Office of Inspector General, the Federal Bureau of Investigation, the U.S. Department of Justice’s Criminal Division—Fraud Section, the U.S. Attorneys’ Offices, and other law enforcement agencies, including, in Baton Rouge, the Louisiana Attorney General’s Medicaid Fraud Control Unit. Over the past seven years, the team has continued working in Baton Rouge and expanded across southern Louisiana.

Louisiana Spine & Sports

In the first case, a federal grand jury has returned an indictment charging John Eastham CLARK, M.D., age 65, of Baton Rouge, Louisiana, and Charlene Anita SEVERIO, age 54, of Walker, Louisiana, with conspiracy to commit wire fraud and health care fraud. The charges stem from Dr. CLARK and SEVERIO’s role in a $4.4 million fraud scheme in which Dr. CLARK and SEVERIO allegedly submitted false claims to Medicare and private insurance companies on behalf of Louisiana Spine & Sports LLC, a pain management clinic in Baton Rouge co-owned by Dr. CLARK. Namely, according to the indictment, Dr. CLARK, and SEVERIO, his billing supervisor, falsified claims to indicate that certain minor surgical procedures occurred on separate days as patient visits, and then instructed employees to create false records substantiating those claims. The indictment also alleges that the defendants submitted false claims seeking reimbursement for medically unnecessary quantitative urinalysis tests. The indictment charges both defendants with two counts of conspiracy to commit wire fraud and health care fraud, and charges Dr. CLARK with an additional two counts of health care fraud. This ongoing investigation is being handled by Dustin Davis, who serves as Assistant Chief of the Department of Justice’s Criminal Division—Fraud Section, Assistant U.S. Attorney Adam Ptashkin, and Jared Hasten of the Fraud Section.

Express ACA

In the second case, a federal grand jury has returned an indictment charging Keaton L. COPELAND, age 32, of Miramar, Florida, and Dorothy V. DELIMA, a/k/a Dorothy V. Copeland, age 45, of Davie, Florida, with a scheme to submit fraudulent health insurance applications to Blue Cross/Blue Shield of Louisiana and other private insurers. According to the indictment, the defendants owned and operated Express ACA, LLC, a health insurance brokerage company in Florida, and they devised a scheme to submit fraudulent health insurance applications to various insurers for health insurance plans that would satisfy the Affordable Care Act’s “minimum essential coverage” requirement. Specifically, according to the indictment, the defendants submitted numerous fraudulent applications for so-called “bronze plans,” the premiums for which were fully subsidized by the U.S. Government, without the named applicants’ knowledge, consent, or authorization. The indictment charges both COPELAND and DELIMA with conspiracy to commit wire fraud and five counts of wire fraud, and the indictment also charges COPELAND with additional counts of wire fraud and aggravated identity theft. This ongoing investigation is being handled by Assistant United States Attorneys J. Brady Casey and Ryan R. Crosswell.

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Since its inception, the Baton Rouge-based Medicare Fraud Strike Force has charged more than 80 defendants with health care fraud and related offenses, achieving a 95% conviction rate and sending nearly 50 of those defendants to federal prison.

Acting U.S. Attorney Corey Amundson stated, “Our medical providers spend countless hours caring for our everyday ailments, improving and extending our lives, and often fighting for us in our most desperate hours. They are rightly viewed as some of the most trusted and respected members of our society. Too often, the few dishonest providers hijack this well-earned respect and trust to line their own pockets through fraud. My office, which has sent nearly 50 healthcare fraud defendants to federal prison since the inception of the Medicare Fraud Strike Force, will continue to work tirelessly with our outstanding federal, state, and local partners to root out these bad actors. I greatly appreciate all those who have contributed to this important and successful law enforcement effort.”

“The indictments returned in both of these cases affirm our commitment to protecting the integrity of our nation’s health insurance programs,” said Special Agent-in-Charge C.J. Porter of the United States Department of Health and Human Services, Office of Inspector General’s (OIG) Dallas Regional Office. “These investigations are also indicative of our continuing efforts to work closely with our Federal and State law enforcement partners to identify and bring to justice those who deliberately manipulate health insurance systems to fraudulently obtain money from Medicare, Medicaid and other federally funded health care programs.”

Jeffrey S. Sallet, the Special Agent-in-Charge of the New Orleans Division of the Federal Bureau of Investigation, stated, “Countless Americans rely on the Medicare and Medicaid programs for essential health coverage. The New Orleans Division of the FBI, along with its local, state and federal partners, will continue to identify and pursue any individuals or entities who would seek to harm and diminish these programs through fraud.”

Louisiana Attorney General Jeff Landry stated, “The success of this initiative shows that collaboration between law enforcement agencies at all levels combats crime. Our investigators work around the clock to fight waste, fraud, and abuse in Medicaid. My office and I are committed to doing all we can to save taxpayer money and protect this program for the people in our State that need it the most. I am proud of the results our team achieved during this operation and what we do daily to reduce Medicaid fraud.”

NOTE: An indictment is an accusation by the Grand Jury. The defendants are presumed innocent until and unless adjudicated guilty at trial or through a guilty plea.

Surgical Practice Office Manager’s Boyfriend Sentenced to Nearly 6 Years in Prison for Embezzlement Conspiracy

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Friday, July 14, 2017

BIRMINGHAM – A federal judge this week sentenced a Mississippi man to nearly six years in prison for conspiring with his girlfriend to steal more than $1 million from the Birmingham surgical practice where she worked, announced Acting U.S. Attorney Robert O. Posey and FBI Acting Special Agent in Charge David W. Archey.

U.S. District Court Judge Madeline Hughes Haikala sentenced ANTHONY T. MICHAEL, 43, of Jackson, Miss., to five years and 10 months in prison for conspiracy, bank fraud and aggravated identity theft. Michael pleaded guilty to the charges in March. The judge ordered him to pay $1.2 million in restitution and to forfeit the same amount to the government as proceeds of illegal activity.

Michael conspired with Anntwine Moss, 51, of Bessemer, to steal from Thoracic and Cardiovascular Surgery of Alabama between 2006 and 2013. Moss was office manager for the practice during that time and she and Michael were romantically involved.

U.S. District Court Judge Karon O. Bowdre sentenced Moss in May to three years and five months in prison on five counts of wire fraud and four counts of tax evasion in the case. The judge ordered Moss to pay $987,375 in restitution to the practice and to forfeit the same amount to the government.

According to court documents, Moss stole from the surgical practice by using her authority as office manager to write unauthorized checks to herself and to Michael, make unauthorized direct deposits into her account, and use the company’s credit cards for unauthorized personal purchases for herself and Michael. Moss had authority over several key functions at the surgical practice including payroll, accounting, bookkeeping and managing the office’s budget. She falsified her personal tax returns for several years by failing to report to the IRS the illicit income she stole from the practice.

The FBI and IRS investigated the case, which Assistant U.S. Attorney Xavier O. Carter Sr. prosecuted.

U.S. Attorney Charges NW Alabama Compounding Pharmacy Sales Representatives in Prescription Fraud Conspiracy

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Thursday, July 13, 2017

BIRMINGHAM – The U.S. Attorney’s Office on Wednesday charged two sales representatives for a Haleyville, Ala.,-based compounding pharmacy for participating in a conspiracy to generate prescriptions and defraud health care insurers and prescription drug administrators out of tens of millions of dollars in 2015.

Acting U.S. Attorney Robert O. Posey, FBI Acting Special Agent in Charge David W. Archey, U.S. Postal Inspector in Charge, Houston Division, Adrian Gonzalez, U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Derrick L. Jackson, Defense Criminal Investigative Service Special Agent in Charge John F. Khin, and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge James E. Dorsey announced the charges as part of a nationwide Department of Justice Health Care Fraud Takedown.

Attorney General Jeff Sessions and Department of Health and Human Services Secretary Tom Price, M.D., earlier today announced the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force, involving 412 charged defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals, for their alleged participation in health care fraud schemes involving about $1.3 billion in false billings. Of those charged, more than 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty state Medicaid Fraud Control Units also participated in today’s nationwide arrests. In addition, HHS has initiated suspension actions against 295 providers, including doctors, nurses and pharmacists.

In the Northern District of Alabama, the U.S. Attorney’s Office filed separate informations charging KELLEY NORRIS, also known as KELLEY NORRIS-HARTLEY, 41, of Tuscaloosa, and BRIDGET McCUNE, 41, of Destin, Fla., with conspiracy to commit health care fraud, wire fraud and mail fraud. McCune’s information also charges her with conspiring to solicit and receive kickbacks in return for referring prescriptions under Medicare and TRICARE, a U.S. Department of Defense health care program, and with money laundering for spending proceeds of the crimes. Both women face various counts of health care fraud for submitting fraudulent prescription reimbursement claims to Blue Cross Blue Shield of Alabama.

In conjunction with the charges, prosecutors also filed plea agreements with Norris and McCune.

“In this case, a pharmacy used a marketing scheme that increased sales of expensive medications without regard for patient need or medical necessity,” Posey said. “Schemes like this defraud Medicare and other health insurance systems by pushing unnecessary medications and driving up the costs of health care.”

Norris and McCune both worked for Northside Pharmacy, an Alabama company doing business as Global Compounding Pharmacy. Global’s compounding and shipping facility was in Haleyville. The pharmacy did its prescription processing, billing and customer service at its “call center” in Clearwater, Fla.

Global hired sales representatives, including Norris and McCune, who were located in various states and were responsible for generating prescriptions from physicians and other prescribers. To bill insurance providers, including Blue Cross Blue Shield of Alabama, Medicare and TRICARE, for these prescriptions, Global contracted to enter the pharmacy networks of their third-party administrators, known as “pharmacy benefit managers” or “PBMs. These PBMs included Prime Therapeutics, Express Scripts Incorporated and CVS/Caremark.

The court documents describe a conspiracy at Global that centered on generating and billing PBMs for fraudulent, often high-reimbursement prescriptions. To generate prescriptions, Global hired sales representatives who were married or related to doctors and other prescribers. Global also encouraged sales representatives to volunteer at doctors’ offices where they would review patient files and push Global’s products to patients. Global executives also frequently instructed employees to obtain high-reimbursing prescriptions that Global would fill and bill for reimbursement. Each of the plea agreements describes a Global executive instructing sales representatives to obtain certain prescriptions and, shortly after, Norris and McCune obtained those prescriptions for themselves and their dependents.

When billing, Global engaged in various fraudulent practices, including splitting drug quantities to evade PBM billing safeguards and automatically refilling and billing for prescriptions regardless of patient need. Global routinely waived co-pays to encourage patients to accept unnecessary medications and refills.

As part of their plea agreements, Norris and McCune agree to forfeit money to the government as proceeds of illegal activity. Norris agrees to forfeit $287,698 and McCune $401,628.

Global paid the defendants a base salary plus a monthly commission for prescriptions that they obtained, according to court documents.

Norris worked out of Tuscaloosa as a sales representative for Global’s Alabama region from August 2014 to July 2016. She was closely related to an Alabama physician. That relative and a second physician, described in her plea agreement as a family friend, wrote a significant number of the prescriptions Norris obtained for Global to fill.

McCune began as a sales representative for Global’s Florida region in September 2014, working from Destin. Global promoted her to national field trainer in January 2015, but she also continued to function as a sales representative until she left the company in July 2016. McCune had a “close familial relationship” with a Florida physician, according to her plea agreement. “The overwhelming majority of prescriptions she obtained” were issued under her family member’s signature, her plea agreement states.

The charges against Norris and McCune follow charges brought by the U.S. Attorney’s Office in May against Global sales representative Robin Gary Lowry, 49, of Columbus, Miss. Lowry was charged with conspiracy to defraud BCBS of Alabama and Prime Therapeutics. She also faced three counts of health care fraud for submitting fraudulent claims for payment to BCBS of Alabama.

Lowry pleaded guilty to the charges in June. She is scheduled for sentencing Nov. 7.

FBI, U.S. Postal Inspection Service, U.S. Department of Health and Human Services Office of Inspector General, U.S. Defense Criminal Investigative Service and Internal Revenue Service, Criminal Investigation investigated the cases, which Assistant U.S. Attorneys Chinelo Dike-Minor and Nicole Grosnoff are prosecuting.

Former Aurora Business Owner Indicted for $26 Million Fraud Schemes

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Thursday, July 13, 2017

SPRINGFIELD, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced today that a former Aurora, Mo., business owner has been indicted by a federal grand jury today for fraud schemes by which he stole more than $26 million, as well as money laundering and other charges.

Russell Grundy, 48, of Hilton Head Island, S. Carolina, formerly of Aurora, was charged in a 30-count indictment returned by a federal grand jury in Springfield, Mo., on Tuesday, July 11, 2017. Grundy was arrested today.

Grundy was the owner of several companies that focused on advanced technologies, ranging from software development to computer security to addressing the software and hardware technological needs of its clientele. Grundy’s companies included Innovative Objects, LLC, PILR Technology, LLC, Choice Technologies, LLC, Wyerless, LLC, and Audio Input, LLC.

Land O’Lakes/Nutra Blend Fraud Scheme

Grundy (through his company Innovative Objects) was contracted by Land O’Lakes, Inc., and its subsidiary, Nutra Blend, LLC, from January 2004 to Sept. 27, 2015, to create propriety software to inventory, track, and coordinate the disbursement of products. Grundy also contracted with Land O’Lakes and Nutra Blend to provide equipment and technical support for the use, upkeep and maintenance of the software.

The indictment alleges that Grundy falsely told Land O’Lakes and Nutra Blend that third party software programs were built into that proprietary software and were essential to the successful operation of the software. Grundy allegedly claimed that some of the payments made to Innovative Objects were remitted to third party license holders. In reality, the indictment says, there were no third party licensee fees; instead, Grundy kept those payments for his personal or unrelated expenses.

The indictment charges Grundy with six counts of wire fraud related to a series of payments from August 2013 to April 2015, totaling $862,856.

Miami Nations Enterprise Fraud Scheme

Grundy engaged Miami Nations Enterprise in negotiations to provide financial assistance in the form of loans, and for Miami Nations Enterprise to purchase a controlling interest in all of Grundy’s technology-based companies.

According to the indictment, Grundy falsely told Miami Nations Enterprise that his companies had been awarded a $3.5 million contract from Wal-Mart Stores, Inc., to develop and provide information technology services. Grundy allegedly presented numerous e-mails, invoices, conditional award letters and other documents to support his false claims. From May 19, 2014, to June 24, 2015, Miami Nations Enterprise loaned Grundy the money to cover the costs associated with software and hardware purchases and training necessary to obtain the $3.5 million Wal-Mart contract.

On Aug. 24, 2014, Miami Nations Enterprise paid an additional amount to purchase a 70 percent interest in Grundy’s companies.

Officials with Miami Nations Enterprise later discovered that neither Grundy nor any of his companies had been awarded any contract with Wal-Mart, and determined that the e-mails, conditional contract award, invoices and bank deposits Grundy had used to support his claims were fraudulently created.

The indictment charges Grundy with 10 counts of wire fraud related to a series of payments from May 19, 2014, to April 12, 2015, totaling $5,990,000.

Additional Charges

In addition to the wire fraud schemes, the indictment charges Grundy with four counts of making a false statement on a loan application. Grundy applied for three loans from UMB Bank on Oct. 17, 2014, totaling $11,390,800. Grundy applied for a $1,850,000 loan from the People’s Bank of Seneca on Aug. 27, 2015. Grundy allegedly made material false statements in each of those loan applications.

Grundy is also charged with 10 counts of money laundering.

The indictment also contains a forfeiture allegation, which would require Grundy to forfeit to the government any property obtained as a result of the alleged wire fraud violations, including a money judgment of at least $26,060,000.

Larson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt.

This case is being prosecuted by Assistant U.S. Attorneys Patrick Carney and Casey Clark. It was investigated by the FBI and IRS-Criminal Investigation.

Federal Grand Jury Indicts Union Official for Allegedly Extorting Cash Payments from Local Business

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Wednesday, July 12, 2017

CHICAGO — A high-ranking official in a Chicago-area labor union threatened a local business with economic loss if it didn’t pay him quarterly cash payments of $25,000, according to a federal indictment returned today.

JOHN T. COLI SR. used the threat of economic harm to extort quarterly payments of $25,000 from a local company, according to the indictment. The attempted extortion occurred from approximately October 2016 to April 2017, while Coli served as President of Teamsters Joint Council 25, a labor organization that represents more than 100,000 workers in the Chicago area and northwest Indiana. The organization has approximately 26 local union affiliates, including Teamsters Local Union 727, where Coli also served as Secretary-Treasurer during the time period referenced in the indictment.

The indictment was returned today in U.S. District Court in Chicago. It charges Coli, 57, of Chicago, with one count of attempted extortion and five counts of demanding and accepting a prohibited payment as a union official. The indictment seeks forfeiture from Coli of at least $100,000.

Arraignment in federal court in Chicago will be held at a future time to be set by the Court.

The indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation; and James Vanderberg, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago.

According to the charges, Coli accepted a $25,000 cash payment on July 7, 2016; two cash payments totaling $25,000 on Oct. 4, 2016, and Nov. 29, 2016; and $25,000 cash payments on Dec. 22, 2016, and April 4, 2017. The indictment does not identify the individual who made the payments nor the company Coli allegedly extorted.

Coli previously served as International Vice President of the Central Region of the International Brotherhood of Teamsters, the indictment states.

The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

Attempted extortion is punishable by a maximum penalty of 20 years in prison. Each count of demanding and accepting a prohibited payment is punishable by up to five years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.

The government is represented by Assistant U.S. Attorneys Amarjeet S. Bhachu and Abigail Peluso.

Indiana Livestock Broker Charged with Fraud, Money Laundering

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Thursday, July 13, 2017

CINCINNATI– A federal grand jury has charged Brian D. Jones, 38, of Vevay, Indiana with defrauding investors in his livestock brokerage business.

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Office, announced the indictment which was unsealed today.

The indictment alleges that Jones operated a business buying bull calves from dairy farms in Wisconsin and selling them to cattle ranches in Texas and Missouri. He began soliciting investors in 2015, promising sizable returns for the investments.

Rather than invest the funds, the indictment alleges, Jones used the funds for his personal benefit such as gambling at casinos. The indictment also alleges that Jones used the investment funds to pay “returns” back to earlier investors as if the funds had actually generated income through investment in his business. By the end of 2015, the indictment says, Jones had squandered funds from the cattle purchasers and was in debt with his suppliers and purchasers. Investigators are still calculating the number of investors and the amount of money involved in the alleged fraud.

“The indictment alleges that Jones fabricated bank documents to show that he had sizable business deposits that would soon be ‘released’ by the bank,” U.S. Attorney Glassman said. “He also allegedly sent checks to investors including some in the Southern District of Ohio for investment returns, only to have the checks bounce due to insufficient funds in his account.”

Jones faces four counts of wire fraud, each punishable by up to 20 years in prison and a $250,000 fine if he’s convicted. The indictment also charges him with four counts of money laundering. Three are punishable by up to ten years in prison. One money laundering charges carries a potential sentence of 20 years in prison. Two additional counts seek forfeiture of all property and proceeds of any crimes of which Jones is convicted.

FBI agents arrested Jones in southern Indiana today. Jones appeared U.S. Magistrate Judge Stephanie Bowman for an initial appearance and to schedule further court dates.

U.S. Attorney Glassman commended the investigation of this case by the FBI, as well as Assistant United States Attorney Timothy S. Mangan, who is prosecuting the case.

An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.

Drug Company Sales Rep Admits Role in Kickback Scheme Related to Fentanyl Spray Prescriptions

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Tuesday, July 11, 2017

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that NATALIE LEVINE, 33, of Scottsdale, Arizona, waived her right to be indicted and pleaded guilty today before U.S. District Judge Michael P. Shea in Hartford to one count of engaging in a kickback scheme that defrauded federal healthcare programs.

According to court documents and statements made in court, from approximately March 2013 to October 2014, LEVINE was employed by Insys Therapeutics, an Arizona-based pharmaceutical company that manufactured and sold Subsys, a fentanyl-based sublingual spray that was approved by the Food and Drug Administration solely for the management of breakthrough pain in cancer patients. LEVINE was a sales representative for the company and was responsible for covering the territories that included Connecticut, New Hampshire and Rhode Island.

In pleading guilty, LEVINE admitted that she induced certain medical practitioners, including an advanced practice registered nurse (APRN) in Connecticut, a physician’s assistant (PA) in New Hampshire, and a physician in Rhode Island, to prescribe Subsys by paying them to participate in hundreds of sham “Speaker Programs.” The Speaker Programs, which were typically held at high-end restaurants, were ostensibly designed to gather licensed healthcare professionals who had the capacity to prescribe Subsys and educate them about the drug. In truth, the events were usually just a gathering of friends and co-workers, most of whom did not have the ability to prescribe Subsys, and no educational component took place. “Speakers” were paid a fee that ranged from $1,000 to several thousand dollars for attending these dinners. At times, the sign-in sheets for the Speaker Programs were forged so as to make it appear that the programs had an appropriate audience of healthcare professionals.

The medical practitioners were paid thousands of dollars in illegal kickbacks in order to prescribe Subsys, and induce others to prescribe Subsys, over similar medications. Medicare Part D plans authorized payment for hundreds of Subsys prescriptions written by the three medical practitioners, resulting in a loss of approximately $4.5 million.

LEVINE pleaded guilty to one count of conspiracy to violate the anti-kickback law, an offense that carries a maximum term of imprisonment of five years and a fine of up to $250,000. Judge Shea scheduled sentencing for October 5, 2017.

This investigation is being conducted by the U.S. Department of Health and Human Services Office of the Inspector General and the Federal Bureau of Investigation, with the assistance of the Drug Enforcement Administration’s Tactical Diversion Squad. The case is being prosecuted by Assistant U.S. Attorneys Douglas P. Morabito and Richard M. Molot.

Several other individuals affiliated with Insys Therapeutics, and medical practitioners involved in this kickback scheme, have been charged in the District of Connecticut and in other Districts across the United States.

U.S. Attorney Daly encouraged individuals who suspect health care fraud to report it by calling the Health Care Fraud Task Force (203) 785-9270 or 1-800-HHS-TIPS.

SEC Announces Charges in Massive Telemarketing Boiler Room Scheme Targeting Seniors

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Washington D.C., July 12, 2017—

The Securities and Exchange Commission today brought fraud charges against 13 individuals allegedly involved in two Long Island-based cold calling scams that bilked more than one hundred victims out of more than $10 million through high-pressure sales tactics and lies about penny stocks.

The SEC alleges that the orchestrators of the scheme used boiler room-style call centers to make hundreds of thousands of cold calls that included the use of threatening and deceitful sales techniques to pressure victims – many of whom were senior citizens – into purchasing penny stocks.  For example, as part of one such scam, a boiler room salesman allegedly claimed that the Walt Disney Company was buying into a purported media and internet company and that would cause the penny stock’s price to increase substantially.

During these calls, victims were allegedly harassed and threatened by sales personnel.  When one victim complained about his losses, a sales representative allegedly said, “I am tired of hearing from you.  Do you have any rope at home?  If so tie a knot and hang yourself or get a gun and blow your head off.”  According to the SEC’s complaint, in a typical phone call, telemarketers would direct victims to place trades and tell them how many shares to purchase and at what price.  With this information about the victims’ trades, the orchestrators and the boiler room sales personnel allegedly placed opposing sell orders to dump their own shares, realizing more than $14 million in illegal proceeds while the victims lost millions of dollars, including retirement savings.

SEC investigators learned of the alleged scheme from investor complaints and used technological tools and innovative investigative approaches to build evidence – within a matter of months from receiving the complaints – against the defendants who went to great lengths to evade detection.

“These kinds of scams cause devastating harm to investors,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.  “Investors must beware of the sort of conduct alleged in our complaint – things like unsolicited calls, high-pressure sales tactics, and promises that a no-name stock is going to skyrocket.”

Scott W. Friestad, Associate Director of the SEC’s Enforcement Division, added, “The defendants allegedly used boiler rooms and high-pressure sales tactics to swindle seniors into investing their life savings in microcap securities they were secretly manipulating for their own profit.  But, through a combination of technology and innovative investigative approaches, we were able to unravel the alleged scheme and prevent further investor harm.”

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York announced criminal charges.

The SEC’s complaint, filed in federal district court in Brooklyn, N.Y., charges all defendants with fraud and nine with market manipulation.  The SEC is seeking permanent injunctions, disgorgement with interest, civil penalties, penny stock bars, and an officer-and-director bar from one of the orchestrators of the scheme.  The complaint also names 27 individuals and entities that received proceeds from the fraud, as relief defendants.

The SEC’s complaint also charges certain defendants with acting as unregistered brokers.  The SEC encourages investors to check the backgrounds of people selling them investments by using the SEC’s investor.gov website to quickly identify whether they are registered professionals.

The SEC’s investigation, which is continuing, has been conducted by Andrew Elliott and Cecilia Connor and assisted by Leigh Barrett.  The investigation was supervised by Scott Friestad and Amy Friedman.  The SEC’s litigation will be handled by Matthew Scarlato and James Smith and supervised by Jan Folena.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority, Federal Bureau of Investigation, U.S. Attorney’s Office for the Eastern District of New York, British Columbia Securities Commission, Ontario Securities Commission, and Oregon Division of Financial Regulation.

The SEC encourages victims of the alleged fraud to contact [email protected] .  The SEC’s Office of Investor Education and Advocacy previously issued an alert warning investors that aggressive stock promotion is a red flag of fraud.

“Investors should be skeptical anytime they receive an unsolicited communication promoting a stock – it could be a part of a boiler room scheme,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy.  “If you receive a phone call from a high-pressure salesperson who uses harassment and threats to get your business, hang up.”