Category Archives: Important Legal Filings

Former Chief Executive Officer of Lufthansa Subsidiary BizJet Pleads Guilty to Foreign Bribery Charges

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The former president and chief executive officer of BizJet International Sales and Support Inc., a U.S.-based subsidiary of Lufthansa Technik AG with headquarters in Tulsa, Oklahoma, that provides aircraft maintenance, repair and overhaul services, pleaded guilty today for his participation in a scheme to pay bribes to foreign government officials.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Danny C. Williams Sr., of the Northern District of Oklahoma and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
“The former CEO of BizJet, Bernd Kowalewski, has become the third and most senior Bizjet executive to plead guilty to bribing officials in Mexico and Panama to get contracts for aircraft services,” said Assistant Attorney General Caldwell.  “While Kowalewski and his fellow executives referred to the corrupt payments as ‘commissions’ and ‘incentives,’ they were bribes, plain and simple.  Though he was living abroad when the charges were unsealed, the reach of the law extends beyond U.S. borders, resulting in Kowalewski’s arrest in Amsterdam and his appearance in court today in the United States.  Today’s guilty plea is an example of our continued determination to hold corporate executives responsible for criminal wrongdoing whenever the evidence allows.”
“I commend the investigators and prosecutors who worked together across borders and jurisdictions to vigorously enforce the Foreign Corrupt Practices Act,” said U.S. Attorney Williams.  “Partnership is a necessity in all investigations. By forging and strengthening international partnerships to combat bribery, the Department of Justice is advancing its efforts to prevent crime and to protect citizens.”
Bernd Kowalewski, 57, the former President and CEO of BizJet, pleaded guilty today in federal court in Tulsa, Oklahoma, to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and a substantive violation of the FCPA in connection with a scheme to pay bribes to officials in Mexico and Panama in exchange for those officials’ assistance in securing contracts for BizJet to perform aircraft maintenance, repair and overhaul services.
Kowalewski was arrested on a provisional arrest warrant by authorities in Amsterdam on March 13, 2014, and waived extradition on June 20, 2014.    Kowalewski is the third BizJet executive to plead guilty in this case.    Peter DuBois, the former Vice President of Sales and Marketing, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA and a substantive violation of the FCPA and Neal Uhl, the former Vice President of Finance, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA.    Jald Jensen, the former sales manager at BizJet, has been indicted for conspiracy as well as substantive FCPA violations and money laundering and is believed to be living abroad.

Charges were unsealed against the four defendants on April 5, 2013.
According to court filings, Kowalewski and his co-conspirators paid bribes directly to foreign officials to secure aircraft maintenance repair and overhaul contracts, and in some instances, the defendants funneled bribes to foreign officials through a shell company owned and operated by Jensen.    The shell company, Avionica International & Associates Inc., operated under the pretense of providing aircraft maintenance brokerage services but in reality laundered money related to BizJet’s bribery scheme.    Bribes were paid to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil.
Further according to court filings, the co-conspirators discussed in e-mail correspondence and at corporate meetings the need to pay bribes, which they referred to internally as “commissions” or “incentives,” to officials employed by the foreign government agencies in order to secure the contracts.    At one meeting, for example, in response to a question about who the decision-maker was at a particular customer organization, DuBois stated that a director of maintenance or chief pilot was normally responsible for decisions on where an aircraft went for maintenance work.    Kowalewski then responded by explaining that the directors of maintenance and chief pilots in the past received “commissions” of $3,000 to $5,000 but were now demanding $30,000 to $40,000 in “commissions.” Similarly, in e-mail correspondence between Uhl, DuBois, Kowalewski, and several others, Uhl responded to a question about BizJet’s financial outlook if “incentives” paid to brokers, directors of maintenance, or chief pilots continued to increase industry wide, stating that they would “work to build these fees into the revenue as much as possible.    We must remain competitive in this respect to maintain and gain market share.”
On March 14, 2012, the department announced that it had entered into a deferred prosecution agreement with BizJet, requiring that BizJet pay an $11.8 million monetary penalty to resolve charges related to the corrupt conduct.    That agreement acknowledged BizJet’s voluntary disclosure, extraordinary cooperation, and extensive remediation in this case.    In addition, the department announced on March 14, 2012, that BizJet’s indirect parent company, Lufthansa Technik AG, entered into an agreement with the department in which the department agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years.
This case is being investigated by the FBI’s Washington Field Office with substantial assistance form the Oklahoma Field Office.    The department has worked closely with its law enforcement counterparts in Amsterdam, Mexico and Panama, and has received significant assistance from Germany and Uruguay.    The Criminal Division’s Office of International Affairs has also provided assistance.    This case is being prosecuted by Assistant Chief Daniel S. Kahn and Trial Attorney David Fuhr of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kevin Leitch of the Northern District of Oklahoma.

$80 Million Judgment Entered Against BNP Paribas for False Claims to the U.S. Department of Agriculture

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The Department of Justice announced today that an $80 million False Claims Act judgment was entered against BNP Paribas for submitting false claims for payment guarantees issued by the U.S. Department of Agriculture (USDA).  BNP Paribas is a global financial institution headquartered in Paris.

“We will not tolerate the misuse of taxpayer funded programs designed to help American businesses,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Companies that abuse these programs will be held accountable.”

The United States filed a lawsuit against BNP Paribas in connection with its receipt of payment guarantees under USDA’s Supplier Credit Guarantee (SCG) Program.  The program provided payment guarantees to U.S.-based exporters for their sales of grain and other agricultural commodities to importers in foreign countries.  The program encouraged American exporters to sell American agricultural commodities to foreign importers and covered part of the losses if the foreign importers failed to pay.  The SCG Program regulations provided that U.S. exporters were ineligible to participate in the SCG Program if the exporter and foreign importer were under common ownership or control.

The judgment entered by the court resolves the government’s allegations that, from 1998 to 2005, BNP Paribas participated in a sustained scheme to defraud the SCG Program.  In furtherance of the scheme, American exporters and Mexican importers who were under common control improperly obtained SCG Program export credit guarantees for transactions between the affiliated exporters and importers.  In some cases, the underlying transactions were shams and did not involve any real shipment of grain.  BNP Paribas accepted assignment of the credit guarantees from the American exporters, even though it knew that the affiliated exporters and importers were ineligible for SCG Program financing, and a BNP Paribas vice-president, Jerry Cruz, received bribes from the exporters.  Beginning in April 2005, when the Mexican importers began defaulting on their payment obligations, BNP Paribas submitted claims to the USDA for the resulting losses.

On Jan. 20, 2012, Cruz pleaded guilty to conspiracy to commit bank fraud, mail fraud and wire fraud, and conspiracy to commit money laundering.

“I would like to thank the Department of Justice and the USDA General Counsel’s office for their collaboration in recovering $80 million under this judgment,” said Administrator of USDA’s Foreign Agricultural Service Phil Karsting.  “This illustrates the importance USDA and this administration places on protecting the integrity of our programs.”

The resolution of this matter was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the USDA, the USDA Office of Inspector General, the U.S. Postal Inspection Service and the Internal Revenue Service Criminal Investigation.

The lawsuit is captioned United States v. BNP Paribas SA, et al., No. 4:11 cv 3718 (S.D. Tex.).

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Former Executive of French Power Company Subsidiary Pleads Guilty in Connection with Foreign Bribery Scheme

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A former senior executive of a subsidiary of Alstom SA, the French power and transportation company, pleaded guilty today for his participation in a scheme to pay bribes to foreign government officials.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
William Pomponi, a former vice president of regional sales at Alstom Power Inc., the Connecticut-based power subsidiary of Alstom, pleaded guilty today in federal court in New Haven, Connecticut, to a criminal information charging him with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) in connection with the awarding of the Tarahan power project in Indonesia.    Pomponi was charged in a second superseding indictment on July 30, 2013.    Pomponi is the fourth defendant to plead guilty to charges stemming from this investigation.    Frederic Pierucci, the vice president of global boiler sales at Alstom, pleaded guilty on July 29, 2013, to one count of conspiracy to violate the FCPA and one count of violating the FCPA; and, David Rothschild, a former vice president of regional sales at Alstom Power Inc., pleaded guilty to conspiring to violate the FCPA on Nov. 2, 2012.  Marubeni Corporation, Alstom’s consortium partner on the Tarahan project, pleaded guilty on March 19, 2014, to one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, and was sentenced to pay a criminal fine of $88 million.    FCPA and money laundering charges remain pending against Lawrence Hoskins, the former senior vice president for the Asia region for Alstom, and trial is scheduled for June 2, 2015.
“Three Alstom corporate executives and Marubeni, a major Japanese corporation, have now pleaded guilty to a seven-year scheme to pay bribes to Indonesian officials to secure a $118 million power contract,” said Assistant Attorney General Caldwell.  “The Criminal Division of the Department of Justice will follow evidence of corruption wherever it leads, including into corporate boardrooms and corner offices.  As this case demonstrates, we will hold both companies and their executives responsible for criminal conduct.”
According to the court filings, the defendants, together with others, paid bribes to officials in Indonesia, including a member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia, in exchange for assistance in securing a $118 million contract, known as the Tarahan project, to provide power-related services for the citizens of Indonesia from facilities in Tarahan.    To conceal the bribes, the defendants retained two consultants purportedly to provide legitimate consulting services on behalf of Alstom and Marubeni in connection with the Tarahan project.    In reality, the primary purpose for hiring the consultants was to use the consultants to pay bribes to Indonesian officials.
The first consultant retained by the defendants allegedly received hundreds of thousands of dollars in his Maryland bank account to be used to bribe the member of Parliament.    The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.    According to court documents, emails between Hoskins, Pomponi, Pierucci, Rothschild, and their co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.
However, in the fall of 2003, Hoskins, Pomponi, Pierucci and others determined that the first consultant was not effectively bribing key officials at PLN.    One email between Alstom employees described PLN officials’ “concern that if we have won the job, whether their rewards will still be satisfactory or this agent only give them pocket money and disappear.” In another email, an employee at Alstom’s subsidiary in Indonesia sent an email to Hoskins asserting that the first consultant “has no grip on the PLN Tender team at all” and “is more or less similar to [a] cashier which I feel we pay too much.”
As a result, the co-conspirators retained a second consultant to bribe PLN officials, according to the court documents.    The co-conspirators deviated from Alstom’s usual practice of paying consultants on a pro-rata basis in order to make a much larger up-front payment to the second consultant so that the consultant could “get the right influence.” An employee at Alstom’s subsidiary in Indonesia sent an email to Hoskins, Pomponi, Pierucci and others asking them to finalize the consultancy agreement with the front-loaded payments but stated that in the meantime the employee would give his word to a high-level official at PLN, according to the charges.    The defendants and their co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
The case is being investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad, with assistance from the Meriden, Connecticut, Resident Agency of the FBI.    Significant assistance was provided by the Criminal Division’s Office of International Affairs, and the department has also received substantial assistance from its law enforcement counterparts in Indonesia, Switzerland and Singapore and greatly appreciates their cooperation.    The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.

South Florida Man Sentenced to Prison for $10.5 Million Medicare Fraud Scheme

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A south Florida man was sentenced today in federal court in Tampa, Florida, to serve 48 months in prison in connection with a $10.5 million Medicare fraud scheme involving physical and occupational therapy services.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III for the Middle District of Florida, Acting Special Agent in Charge Ryan Lynch of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) region including all of Florida, and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.
Luis Alberto Garcia Perojo (Garcia), 43, previously pleaded guilty to an information charging him with conspiracy to commit health care fraud.    In addition to his prison term, he was sentenced to serve three years of supervised release and ordered to pay $6,248,056 in restitution, jointly and severally with his co-conspirators.
According to documents filed in the case, Garcia conspired with others to execute a health care fraud scheme through Renew Therapy Center of Port St. Lucie LLC (Renew Therapy), a comprehensive outpatient rehabilitation facility that he helped operate.    From November 2007 through August 2009, Renew Therapy submitted approximately $10,549,361 in fraudulent claims for reimbursement to Medicare for therapy services that were not legitimately prescribed and not legitimately provided to Medicare beneficiaries.    As a result of those fraudulent claims, Medicare deposited approximately $6,248,056 into a Renew Therapy bank account.    The fraud proceeds in that account were subsequently disbursed to various entities, including $1,847,222 to Ariguanabo Investment Group Inc. and IRE Diagnostic Center Inc.    Garcia was President of Ariguanabo Investment Group and had authority over bank accounts for Ariguanabo Investment Group and IRE Diagnostic Center, both of which were shell companies.    Garcia and others used this money from Renew Therapy for, among other purposes, paying kickbacks to obtain Medicare beneficiary identifying information that was used in Renew Therapy’s fraudulent reimbursement claims.

This case is being investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida.    This case is being prosecuted by Trial Attorney Christopher J. Hunter of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 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.

Two Former Chesapeake, Virginia, Subcontractors Sentenced for Bribery, Conspiracy

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Dwayne A. Hardman, 44, co-founder of two government contracting companies that sought business from the United States Navy Military Sealift Command (MSC), and Adam C. White, 40, former vice president and co-owner of one of Hardman’s government contracting companies, were sentenced for bribery and conspiracy.    On July 9, 2014, Hardman was sentenced to 96 months in prison, followed by three years of supervised release.    White was sentenced today to serve 24 months in prison, followed by three years of supervised release.    Hardman was ordered to forfeit $144,000, and White was ordered to forfeit $57,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente for the Eastern District of Virginia, Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Office, Acting Executive Assistant Director Charles T. May Jr. of the Naval Criminal Investigative Service (NCIS) and Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office made the announcement today after sentencing by United States Chief Judge Rebecca Beach Smith of the Eastern District of Virginia.
According to court documents, Hardman and White participated in a five-year bribery scheme in which they and several co-conspirators provided more than $265,000 in cash bribes, among other things, to two public officials working for MSC, in an illegal effort to influence those public officials to provide favorable treatment to Hardman and White’s companies in connection with United States government contracting work.
On Feb. 18, 2014, Hardman pleaded guilty to a criminal information charging him with bribery.    According to the plea documents, Hardman was the co-founder of two government contracting companies, referred to as Company A and Company B, located in Chesapeake, Virginia that sought contracting business from MSC, which is the leading provider of transportation for the United States Navy.  At his plea hearing, Hardman admitted that beginning in March 2005, he and other Company A employees, provided approximately $3,000 in cash bribes per month to two MSC public officials, Kenny E. Toy, the former Afloat Programs Manager for the MSC’s N6 Command, Control, Communication, and Computer Systems Directorate, and Scott B. Miserendino Sr., a former government contractor who performed work for the MSC.  Those Company A employees included Roderic J. Smith, the former president, co-owner and co-founder of Company A; Adam C. White, a former vice president and co-owner of Company A; and Michael P. McPhail a former project manager and co-owner of Company A.  Hardman also admitted that in May 2009, he and Timothy S. Miller, co-founder of Company B, provided $50,000 in cash bribes to Toy and Miserendino.    In addition to the cash bribes, Hardman stated that he and his co-conspirators provided Toy and Miserendino flat screen televisions, a paid vacation to Nags Head in North Carolina, a personal loan and installation of hardwood floors in Toy’s residence.
In exchange for these bribes, Toy and Miserendino provided favorable treatment in connection with MSC-related business to both Company A and Company B.  During the bribery scheme, Company A received approximately $3 million in MSC-related business, and Company B received approximately $2.4 million in MSC-related business.
As part of his guilty plea, Hardman also admitted that, in approximately November or December 2010, Hardman threatened to report the bribery activities to law enforcement authorities if his co-conspirators did not provide him money.    In total, Hardman admitted that he received approximately $85,000 from his co-conspirators, including Smith, Toy and Miserendino, in exchange for not reporting the bribery scheme to law enforcement authorities.
On April 4, 2014, White pleaded guilty to a criminal information charging him with conspiracy to commit bribery.    At his plea hearing, White admitted that from approximately April 2005 until approximately March 2006, he personally contributed approximately $26,000 in cash bribe payments for Toy and Miserendino, and White was aware that other co-conspirators, including Hardman, Smith and McPhail, were also contributing cash and other things of value to be provided to Toy and Miserendino in exchange for their official assistance in providing MSC-related business.
Earlier this year, three other individuals pleaded guilty in connection with the bribery scheme.    On Feb. 12, 2014, Toy, the former Afloat Programs Manager, pleaded guilty to accepting bribes from Hardman, White, and others.    On Feb. 19, 2014, McPhail pleaded guilty to conspiracy to commit bribery.    On March 5, 2014, Smith pleaded guilty to conspiracy to bribe public officials.
On June 23, 2014, United States District Judge Henry Coke Morgan of the Eastern District of Virginia sentenced Smith to 48 months in prison followed by 1 year of supervised release and ordered him to forfeit $175,000.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted Miserendino and Miller.    The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to commit obstruction of criminal investigations and to commit tampering with a witness, and one count of obstruction of criminal investigations.    The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery.    Trial is set for Sept. 30, 2014, before Chief Judge Rebecca Beach Smith of the Eastern District of Virginia.
The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by Special Agents of the FBI, NCIS, and DCIS.    The case is being prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the Eastern District of Virginia.

 

Four Patient Recruiters Plead Guilty in Miami for Roles in $20 Million Health Care Fraud Scheme

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Four patient recruiters pleaded guilty in connection with a $20 million health care fraud scheme involving Trust Care Health Services Inc. (Trust Care), a defunct home health care company.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.
At a hearing today before U.S. District Judge Darrin P. Gayles of the Southern District of Florida, Estrella Perez, 57, and Solchys Perez, 34, both pleaded guilty to conspiracy to commit health care fraud, and Abigail Aguila, 40, pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks.    Sentencing for all three defendants is set for Sept. 18, 2014 in front of Judge Gayles.    On June 17, 2014, another co-defendant, Monica Macias, 52, pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks before U.S. Magistrate Judge Chris M. McAliley of the Southern District of Florida.  Sentencing for Macias is set for Sept. 10, 2014 before Judge Gayles.
According to court documents, the defendants worked as patient recruiters for the owners and operators of Trust Care, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.    Trust Care was operated for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.
The defendants recruited patients for Trust Care and solicited and received kickbacks and bribes from the owners and operators of Trust Care in return for allowing the agency to bill the Medicare program on behalf of the recruited Medicare patients.    These Medicare beneficiaries were billed for home health care and therapy services that were not medically necessary and/or were not provided.
Estrella Perez and Solchys Perez also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for providing home health and therapy prescriptions, plans of care, and medical certifications for their recruited patients.    Co-conspirators at Trust Care then used these prescriptions, plans of care and medical certifications to fraudulently bill the Medicare program for home health care services.
From approximately March 2007 through at least January 2010, Trust Care submitted more than $20 million in claims for home health services.    Medicare paid Trust Care more than $15 million for these fraudulent claims.
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 Southern District of Florida.    This case is being prosecuted by Trial Attorneys A. Brendan Stewart and Anne P. McNamara of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 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.

Virginia-Based Move Management Company Pays More Than $500,000 to Settle Overbilling Claims in Connection with Transportation of Personal Property in Relocating Federal Employees

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Virginia-Based Move Management Company Pays More Than $500,000 to Settle Overbilling Claims in Connection with Transportation of Personal Property in Relocating Federal Employees

RE/MAX Allegiance Relocation Services, a Virginia-based move management company, has agreed to pay the government $509,807 to resolve allegations that it violated the False Claims Act by overbilling for transportation services, the Department of Justice announced today.

“Today’s settlement demonstrates our continuing vigilance to ensure that those doing business with the government do so legally and honestly and that taxpayer funds are not misused,” said Assistant Attorney General for the Civil Division Stuart F. Delery.  “Government contractors who seek to profit at the expense of taxpayers will be held accountable.”

 

The settlement relates to allegations involving contracts to transport personal property of federal employees relocating duty stations within the United States and between the United States and Canada.  The government alleged that the defendant charged for move management services that were not provided and overbilled agencies on other moves by charging inapplicable tariff rates.

 

“We encourage whistleblowers to provide us with useful information to help us combat all manners of fraud on the U.S. Government,” said U.S. Attorney for the Eastern District of Virginia Dana J. Boente.

“We will continue to investigate allegations of federal contractors fraudulently maximizing their profits at the expense of American taxpayers,” said U.S. General Services Administration Acting Inspector General Robert C. Erickson.

The settlement resolves allegations filed in a lawsuit by Michael Angel, a former employee of RE/MAX Allegiance Relocation Services, in federal court in Alexandria, Virginia.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in this case.  Angel will receive $86,667.

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Eastern District of Virginia, the General Services Administration Office of Inspector General, U.S. Department of Homeland Security Office of Inspector General, Department of Agriculture Office of Inspector General and NASA Office of Inspector General.

The case is captioned United States ex rel. Michael Angel v. Franconia Real Estate Services, Inc., d/b/a RE/MAX Allegiance Relocation Services; No. 1:12cv764 (E.D.Va.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Army National Guard Soldier Pleads Guilty in Connection with Bribery and Fraud Scheme

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To Date, 24 Individuals Have Pleaded Guilty in Ongoing Corruption Investigation.

A soldier of the U.S. Army National Guard pleaded guilty today for his role in a wide-ranging corruption scheme involving fraudulent recruiting bonuses from the Army National Guard Bureau.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas made the announcement.
Sergeant First Class Eduardo Ruesga-Larracilla, 41, of San Antonio, Texas, pleaded guilty today to one count of conspiracy to commit bribery and wire fraud, and one count of bribery of a public official.
The case against Ruesga arises from an investigation that has led to charges against 26 individuals, 24 of whom have pleaded guilty.
According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP).    The G-RAP was a recruiting program that offered monetary incentives to soldiers of the Army National Guard who referred others to join the National Guard.    Through this program, a participating soldier could receive up to $2,000 in bonus payments for a referral.    Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account.    To participate in the program, soldiers were required to create online recruiting assistant accounts.
Ruesga admitted that between approximately January 2010 and approximately October 2011, he conspired with a recruiter and paid him for the personal information of potential Army National Guard soldiers.    Ruesga further admitted that, in order to obtain fraudulent bonuses, he used the personal information for these potential soldiers fraudulently to claim that he was responsible for referring these soldiers for enlistment in the National Guard.
Ruesga is scheduled to be sentenced on Oct. 9, 2014 before U.S. District Judge Orlando L. Garcia in San Antonio, Texas.
This case is being investigated by the San Antonio Fraud Resident Agency of the Army Criminal Investigation Command’s Major Procurement Fraud Unit.    The case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch, and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section.

Former Chesapeake, Virginia Subcontractor Sentenced for Conspiracy to Commit Bribery

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Roderic J. Smith, 50, the co-founder and former president of a government contracting company, was sentenced yesterday to 48 months in prison, followed by one year of supervised release, for conspiracy to bribe public officials.    Smith was ordered to forfeit $175,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente, for the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May, Jr., of the Naval Criminal Investigative Service (NCIS) Atlantic Operations, and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by United States District Judge Henry Coke Morgan, Jr. of the Eastern District of Virginia.
On March 5, 2014, Smith pleaded guilty to a criminal information.    According to court documents, Smith was the co-founder and president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command.    In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public officials performing work for the Military Sealift Command, Kenny E. Toy and Scott B. Miserendino, Sr.    In exchange for the bribe payments, Smith’s business, referred to as Company A in court documents, received lucrative business from the Military Sealift Command that amounted to approximately $3 million in task orders during the time period of the conspiracy.
As part of his guilty plea, Smith also admitted to engaging in a scheme to conceal his criminal activity.    According to the plea agreement, Smith admitted to paying more than $85,000 to his business partner, Dwayne A. Hardman, in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.
Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme.    On Feb. 12, 2014, Kenny Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes from Smith and others.    On Feb. 18, 2014, Smith’s business partner, Dwayne A. Hardman, pleaded guilty to bribery.    On Feb. 19, 2014 and April 4, 2014, respectively, Smith’s associate, Michael P. McPhail, and another Smith associate, Adam C. White, pleaded guilty to conspiracy to commit bribery.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted two individuals in connection with the bribery scheme, Scott B. Miserendino, Sr., a former government contractor who performed work for the Military Sealift Command, and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command.    The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to obstruct a criminal investigation and to tamper with a witness, and one count of obstruction of a criminal investigation.    The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery.    The trial on these charges is scheduled to begin on Sept. 30, 2014, before Chief Judge Rebecca Beach Smith.    The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by the FBI, NCIS and DCIS.    The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the U.S. Attorney’s Office for the Eastern District of Virginia.

Owner of Home Health Company Pleads Guilty to Role in $6.5 Million Health Care Fraud Scheme

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The owner and operator of Nestor’s Health Services, Inc. (Nestor HH), a now-defunct Miami home health care agency, pleaded guilty today in connection with a $6.5 million health care fraud scheme.

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

Cruz Sonia Collado, 64, of Homestead, Florida, pleaded guiltybefore U.S. District Judge Robert N. Scola in the Southern District of Florida to one count of conspiracy to offer and pay health care kickbacks and to defraud the United States, and to one count of offering and paying health care kickbacks.

Collado was an owner and operator of Nestor HH, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.

According to court documents, Collado and her co-conspirators operated Nestor HH for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.   As the owner and operator of Nestor HH, Collado paid kickbacks and bribes to patient recruiters, in return for those recruiters providing patients to Nestor HH for home health care and therapy services that were not medically necessary, and in many instances, were not provided.  Collado would then fraudulently bill the Medicare program for home health care services on behalf of these recruited patients, which Collado knew was in violation of federal criminal laws.

From approximately March 2009 through at least January 2014, Nestor HH submitted more than $6.5 million in claims for home health services, and fraudulently obtained more than $6.1 million before the fraud was exposed.

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 Southern District of Florida.    This case is being prosecuted by Trial Attorneys Anne P. McNamara and A. Brendan Stewart of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.    In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, has removed over 17,000 providers from the Medicare program since 2011.