Category Archives: Important Legal Filings

Former Employee of U.S. Contractor Pleads Guilty to Fraud Scheme

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A former employee of a U.S. contractor pleaded guilty today to conspiracy to defraud the United States in connection with a contract to provide reconstruction-related services in Afghanistan.
Acting Assistant Attorney General David O’Neil of the Justice Department’s Criminal Division and United States Attorney for the Middle District of Florida A. Lee Bentley made the announcement.
Alan D. Simmons pleaded guilty today before U.S. Magistrate Judge Patricia D. Barksdale in the Middle District of Florida.
According to court documents, Simmons worked in Afghanistan as a training program coordinator for PAE Inc.  PAE had a contract with the United States Department of State to train and supply uniforms to Afghan correctional officers.    Simmons was responsible for providing information to others at PAE as to the number and types of uniforms that were to be ordered and provided to the Afghan correctional officers upon their completion of the training program.
As alleged in court documents, Simmons and others created a company, Aminzian Logistics Services (Aminzian), ostensibly to provide uniforms to PAE as a subcontractor.    In fact, Aminzian would submit false and fraudulent invoices to PAE seeking payment for goods that were not in fact provided.    After Aminzian was paid, Simmons and his co-conspirators split the proceeds.    The United States reimbursed PAE for its payments to Aminzian and incurred a loss of over $120,000.
The case was investigated by the Department of State Office of Inspector General and the Special Inspector General for Afghanistan Reconstruction (SIGAR).    This case was prosecuted by Special Trial Attorney Mark H. Dubester, on detail from SIGAR, and Assistant U.S. Attorney Kevin C. Frein of the Middle District of Florida.

 

Navy Military Sealift Command Official and Businessman Charged with Bribery

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Scott B. Miserendino, Sr., 55, a former government contractor who performed work for the United States Navy Military Sealift Command , and Timothy S. Miller, 57, a businessman whose company sought contracting business from the Military Sealift Command, were indicted today on charges including conspiracy and bribery.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Acting U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service Mid-Atlantic Field Office (DCIS), 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.
A federal grand jury in the Eastern District of Virginia returned a six-count indictment today that 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 of a public official.
According to the indictment, Miserendino was a government contractor at the Military Sealift Command, the leading provider of transportation for the United States Navy.    The indictment alleges that Miserendino worked closely with another Military Sealift Command official, Kenny E. Toy, in managing telecommunications projects and in influencing the award of United States government contracts, subcontracts, and task orders.
The indictment alleges that Miserendino solicited and accepted bribes, in the form of cash, a flat screen plasma television, a wine refrigerator, and other items, in exchange for providing favorable treatment to two companies in connection with United States government contracts.
Between March 2005 and 2007, Miserendino allegedly accepted cash payments of approximately $3,000 per month from agents of Company A, a corporation that sought contracting business from the Military Sealift Command.    In total, Miserendino accepted approximately $100,000 in bribes from Company A’s agents.
In addition, the indictment alleges that, in February 2009, Miller and his business partner Dwayne A. Hardman established Company B, a government contracting corporation located in Chesapeake, Virginia, to provide support to the Military Sealift Command on various telecommunications projects.    Shortly thereafter, in May 2009, Miller and Hardman allegedly paid cash bribes totaling $50,000 to Miserendino and Toy in exchange for favorable treatment in connection with U.S. government contracts, subcontracts, and task orders.
In addition, as alleged in the indictment, Miserendino obstructed justice and tampered with a witness by causing $85,000 to be paid to Hardman in an attempt to prevent or delay him from reporting the bribery scheme to law enforcement authorities.
Prior to this indictment, five other individuals pleaded guilty in connection with the bribery scheme.    On Feb. 12, 2014, Kenny E. Toy, former Afloat Programs Manager for the Military Sealift Command N6 Command, Control, Communication and Computer Systems Directorate, pleaded guilty to bribery and admitted to receiving more than $100,000 in cash bribes in exchange for providing favorable treatment to two companies in connection with U.S. government contracts.    On Feb. 18, 2014, Dwayne A. Hardman, Miller’s business partner, pleaded guilty to bribery and admitted to providing more than $140,000 in cash bribes to Toy and Miserendino.    On Feb. 19, 2014, Michael P. McPhail pleaded guilty to conspiracy to commit bribery and agreed to forfeit $57,000.    On March 5, 2014, Roderic J. Smith pleaded guilty to conspiracy to commit bribery and agreed to forfeit $175,000.    On April 4, 2014, Adam C. White pleaded guilty to conspiracy to commit bribery and agreed to forfeit $57,000.
The case was investigated by the DCIS, NCIS and the FBI.    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.
The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 

 

Detroit-Area Home Health Agency Owner Sentenced to 72 Months in Prison for His Role in $13.8 Million Medicare Fraud Scheme

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The owner of a home health agency involved in a $13.8 million Medicare fraud scheme was sentenced today to serve 72 months in prison.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Paul M. Abbate of the FBI Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Detroit Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Zahir Yousafzai, 44, was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan.  In addition to his prison term, Yousafzai was sentenced to three years of supervised release and was ordered to pay $4,131,135 in restitution, jointly and severally with his co-defendants.
According to court records, in 2009, Yousafzai and his co-conspirators acquired beneficial ownership and control over two home health companies, First Care Home Health Care LLC and Moonlite Home Care Inc.  Yousafzai also assisted in the operation of two additional home health care agencies, Physicians Choice Home Health Care LLC and Quantum Home Care Inc., owned by co-conspirators.
Also according to court records, Yousafzai, a physical therapist assistant, paid and directed the payment of various medical professionals, including doctors, nurses, physical therapists and physical therapist assistants, to create fictitious patient files to document purported home health services that were never provided.
In addition, according to court records, Yousafzai paid and directed the payment of kickbacks to recruiters who obtained beneficiaries’ Medicare information that he used to submit claims for home health care that was never provided.  The beneficiaries sometimes pre-signed forms that were later falsified to indicate they received home health services, when they did not.  In other instances, the beneficiaries’ signatures were forged.    Yousafzai signed patient files falsely stating that physical therapy services were provided.
Additionally, according to court records, Yousafzai incorporated a shell company known as A-1 Nursing and Rehab Inc., through which he laundered the proceeds of the health care fraud.
Between July 2008 and September 2011, Medicare paid approximately $13.8 million in fraudulent home health claims submitted by the four home health agencies associated with Yousafzai.  Of this amount, Medicare paid more than $4 million to First Care and Moonlite, the companies that Yousafzai owned in whole or in part.
This case was investigated by the FBI and HHS-OIG and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section.  The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorney Matthew C. Thuesen 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 almost 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, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov .

 

Army Soldier Sentenced for Facilitating Thefts of Fuel in Afghanistan

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United States Army soldier Albert Kelly III of Fort Knox, Kentucky, was sentenced to serve 18 months in prison for his role in stealing fuel at Forward Operating Base (FOB) Salerno in Afghanistan.    In addition to his prison term, Kelly was sentenced to three years of supervised release and ordered to pay $100,000 in restitution.
Acting Assistant Attorney General David O’Neil of the Justice Department’s Criminal Division and U.S. Attorney David J. Hale of the Western District of Kentucky made the announcement after the sentence was imposed by Senior U.S. District Court Judge Charles R. Simpson III in the Western District of Kentucky.
According to court documents, from January 2011 to January 2012, Kelly was assigned to FOB Salerno, and for most of that time he served as a specialist.    Kelly’s duties included overseeing the delivery of fuel into FOB Salerno.  Typically, the fuel was brought into the base by Afghan trucking companies driven by Afghan nationals.    Kelly’s duties included verifying the amounts of the fuel that were delivered at FOB Salerno and preparing and certifying documents that accounted for the fuel that was delivered.
From in or about November 2011 through January 2012, Kelly diverted and permitted the diversion of fuel delivery trucks from FOB Salerno to other locations, where the diverted fuel would then be removed from the trucks and stolen.    To conceal this diversion, he falsely certified that the diverted fuel was in fact delivered at FOB Salerno.
Also according to court documents, in exchange for assisting in the theft of fuel as described, Kelly received approximately $57,000 from the Afghan trucking company.    He admitted the amount of fuel he permitted to be diverted amounted to approximately 25,000 gallons.    The United States Army paid approximately $4.00 per gallon for that fuel, and the loss to the government was approximately $100,000.
The case was investigated by the Special Inspector General for Afghanistan Reconstruction.    This case was handled by Special Trial Attorney Mark H. Dubester, on detail from the Special Inspector General for Afghanistan Reconstruction, and Assistant U.S. Attorney Michael Bennett of the Western District of Kentucky.

Owner and Recruiter for Louisiana and Texas Mental Health Clinics Convicted as Part of $258 Million Health Care Fraud Scheme in Baton Rouge, Louisiana

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An owner and operator of community mental health centers in Baton Rouge, Louisiana, as well as a patient recruiter for a related facility in Houston, Texas, were convicted on Wednesday, May 21, 2014, for their roles in a $258 million Medicare fraud scheme involving three facilities that filed fraudulent claims for psychiatric services that were unnecessary or never actually provided.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Walt Green for the Middle District of Louisiana, Special Agent in Charge Michael J. Anderson for the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields for the Dallas Region of the Department of Health and Human Services (HHS) Office of Inspector General and Louisiana State Attorney General James Buddy Caldwell made the announcement.
“These convictions resulted from a massive fraud involving thousands of false billings for mental health services that were either not needed or not given,” said Acting Assistant Attorney General O’Neil.  “It was a sophisticated scheme involving kickbacks, falsified medical records and false billings.  We will use all tools at our disposal – from data to traditional law enforcement techniques – to root out these schemes and bring the appropriate people to justice.”
“These significant convictions are the latest example of our ongoing commitment to rooting out health care fraud throughout our community,” said U.S. Attorney Green.    “We will use all of the tools and resources at our disposal to prosecute those who submit false information and false claims to Medicare – especially where, as in this case, those claims cost the United States tens of millions of dollars and were filed using the names and identities of Medicare beneficiaries who are particularly vulnerable.    I appreciate the tremendous assistance we received in this case, and in our other anti-health care fraud efforts, from the Department’s Criminal Division and our federal and state law enforcement partners.”
“The success of this broad sweeping, complex healthcare fraud investigation could not have been possible without the tremendous collaboration between all agencies involved,” said Special Agent in Charge Anderson.    “It clearly demonstrates how law enforcement can make such a significant community impact as a result of such strong partnerships.”
“Whenever Medicare providers are motivated by greed, our most vulnerable citizens, the elderly, are put at risk,” said Special Agent in Charge Fields.  “Our HHS-OIG agents will continue to work closely with our law enforcement partners to investigate providers who will stop at nothing to loot the Medicare Trust Fund.”
Roslyn F. Dogan, 53, of Baton Rouge, Louisiana, and James R. Hunter, 49, of Houston, Texas, were found guilty after a six-day jury trial before Chief U.S. District Judge Brian A. Jackson of the Middle District of Louisiana.    Dogan was convicted of conspiracy to commit health care fraud and two counts of health care fraud.    Hunter was convicted of conspiracy to commit health care fraud and conspiracy to pay and receive health care kickbacks.
The investigation into these three community mental health centers – Shifa Community Mental Health Center of Baton Rouge (Shifa Baton Rouge), Serenity Center of Baton Rouge (Serenity Center), and Shifa Community Mental Health Center of Texas (Shifa Texas) – has resulted in the convictions of 17 individuals employed by the facilities, including therapists, marketers, administrators, owners and the medical director.    The investigation is ongoing.
According to court documents, the companies billed Medicare more than $258 million over a period of seven years for partial hospitalization program services for the mentally ill that were unnecessary or never provided.
Further according to court documents, Dogan was part owner of Serenity Center as well as the marketer for Serenity Center and Shifa Baton Rouge.  As part of the scheme, Dogan would arrange for Medicare-eligible patients to be sent to Shifa Baton Rouge and Serenity Center and admitted to those facilities, regardless of whether the patients needed partial hospitalization program services.  In order to increase billings to Medicare, Dogan, along with others in management, instructed administrators and therapists to falsify patient treatment records for services that had not been provided.  Dogan also concealed the fraud at Shifa Baton Rouge and Serenity Center by directing that patient billing statements be intercepted from patients’ mail in order to prevent the patients from seeing the services that had been billed in their names, and by stealing incriminating documents seized pursuant to a search warrant from federal custody.
According to court documents, Hunter, a resident of Houston, was paid $1,500 per week in cash to direct patients to attend the partial hospitalization program at Shifa Texas.  Hunter, in turn, paid each patient $75 per week to attend the program.  In an effort to get patients admitted to Shifa Texas, Hunter instructed patients as to the types of symptoms and diagnoses to describe to physicians in order to be admitted to the program.
The individuals who have pleaded guilty in this case include:

  •          Dr. Zahid Imran  – Imran, a Baton Rouge area psychiatrist, served as Shifa’s medical director and co-owner of Serenity Center and Shifa Texas.  As part of the scheme, Imran would admit mentally ill patients to the facilities, some of whom were inappropriate for partial hospitalization.  Imran would then re-certify these patients’ appropriateness for the program, in an effort to continue to bill Medicare for services.  In order to support their fraudulent Medicare billing, Imran and others would falsify patient treatment records to reflect services on dates where no such services were provided.

 

  •          Hoor Naz Jafri – Jafri was an owner of all three facilities in Baton Rouge and Houston and a marketer for Shifa Baton Rouge and Serenity Center.  Jafri was also part owner of two affiliated residential facilities; patients who lived at these apartments were required to attend the programs at Shifa Baton Rouge and Serenity Center, regardless of whether these patients actually needed or desired the services.  As a marketer for Shifa Baton Rouge and Serenity Center, Jafri caused patients to be admitted to the facilities who were inappropriate for the services.  As management at all three facilities, Jafri directed administrators and therapists at these facilities to falsify records for treatment that patients did not in fact receive.

 

  •          Sedra Signater and Arthur Smith – Signater and Smith were the administrators of Shifa and Serenity Center, respectively.  At the direction of management, Signater and Smith fabricated and instructed other therapists at the facilities to fabricate patient treatment records to indicate therapy had been provided to patients, when in fact, no such therapy had been provided.  These fabricated records formed the basis of the fraudulent billings to Medicare.

 

  •          Erica Williams and Kyeiana Murray – Williams and Murray were office managers of Shifa Texas and Shifa Baton Rouge, respectively.  Williams also served as the admissions coordinator of Shifa Texas.  As the office managers at these facilities, Murray and Williams facilitated and coordinated the collection of the falsified patient treatment records and submitted these records for billing to Medicare.  Williams also directed therapists at Shifa Texas to falsify patient treatment records and coordinated the payment of kickbacks to patient recruiter James Hunter in Houston.

 

  •          Robert Booker, Teryl Vincent, Todd Ulmer, June Durio, Nancy Reed, Jason Myer, Anna Ngang and Patrick Wallace – Booker, Vincent, Ulmer, Durio, Reed and Myer, therapists at Shifa Baton Rouge and Serenity Center, and Anna Ngang and Patrick Wallace, therapists at Shifa Texas, were directed by Signater, Smith, and Williams to falsify patient treatment records for group therapy sessions they had not conducted.

The case was investigated by HHS-OIG, the FBI, and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section.  This case is being prosecuted by Trial Attorneys Abigail Taylor and Dustin Davis of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shubhra Shivpuri of the Middle District of Louisiana.
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 almost $6 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .

Japanese Automotive Parts Manufacturer Executive Indicted for Role in Conspiracy to Fix Prices and for Obstruction of Justice

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A Detroit federal grand jury returned a two-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of heater control panels and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hitoshi Hirano with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of heater control panels sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. (collectively, Toyota) for installation in vehicles manufactured and sold in the United States and elsewhere.    Hirano, who served as an executive managing director at Tokai Rika Co. Ltd., was also charged with knowingly and corruptly persuading, and attempting to persuade, executives of Tokai Rika to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.

“The Antitrust Division will not tolerate executives directing their subordinates to engage in illegal cartels and conspiracies,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.    “Attempts to then obstruct justice and destroy evidence will give rise to additional charges.”

The indictment alleges, among other things, that from at least as early as October 2003 and continuing until at least February 2010, Hirano and others attended conspiratorial meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices for heater control panels sold to Toyota.    According to the indictment, Hirano participated directly in the conspiratorial conduct, and directed, authorized and consented to his subordinates’ participation.    In addition, the indictment charges that in February 2010, after Hirano learned that the FBI had searched Tokai Rika’s U.S. subsidiary, he knowingly and corruptly persuaded employees at Tokai Rika to destroy paper documents and delete electronic data intending to prevent the grand jury from obtaining evidence of antitrust crimes.

Tokai Rika is a manufacturer of automotive parts, including heater control panels, based in Nagoya, Japan.    Tokai Rika pleaded guilty on Dec. 12, 2012, for its role in the conspiracy and to obstruction of justice, and was sentenced to pay a $17.7 million criminal fine.

Heater control panels are located in the center console of an automobile and control the temperature of the passenger compartment of a vehicle.    Heater control panels differ by function and design for a particular vehicle model.    Examples include automatic heater control panels, which maintain the temperature within the vehicle to a designated temperature point, and manual heater control panels, which regulate the temperature through manual controls operated by vehicle occupants.

Including Hirano, 34 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry, 24 of whom have pleaded guilty or agreed to plead guilty.    Of those, 22 have been sentenced to serve prison terms ranging from a year and one day to two years. Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.3 billion in fines.

Hirano is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.    The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.    The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.

Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI.    Today’s charges were brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.    Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

19 Arrested in International Round Up on Federal Fraud Charges

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Fifteen individuals were arrested today in South Africa, Canada, California, Wisconsin and Indiana, pursuant to an eight-count federal indictment on fraud charges filed in the Southern District of Mississippi.  A total of 19 individuals were arrested across the United States and internationally on charges brought by federal prosecutors in Mississippi, South Carolina and Georgia.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Gregory K. Davis for the Southern District of Mississippi, Raymond Parmer Jr., Special Agent in Charge of Immigration Customs Enforcement (ICE), Homeland Security Investigations (HSI) in New Orleans and Robert Wemyss, U.S. Postal Inspection Service Inspector in Charge made the announcement.
Another individual was arrested today in New York on a related Southern District of Mississippi complaint.    Three defendants in South Carolina were arrested in Charleston, pursuant to a nine-count indictment, and the U.S. Attorney’s Office for the Northern District of Georgia has filed related criminal complaints in Atlanta against two additional defendants.    All of the indictments and complaints were unsealed yesterday.
The indictments allege the involvement of a West African transnational organized crime enterprise engaged in numerous complex financial fraud schemes over the internet.    This mass marketing fraud includes romance scams, re-shipping scams, fraudulent check scams and work-at-home scams, along with bank, financial and credit card account take-overs.
The investigation was initiated in October 2011, by HSI agents in Gulfport, Mississippi, after U.S. law enforcement officers were contacted by a female victim who was the victim of a sweetheart scam.    The victim received a package in the mail requesting that she reship the merchandise to an address in Pretoria, South Africa.  The investigation later revealed that the merchandise was purchased using stolen personal identity information and fraudulent credit card information of persons in the United States.  Investigators have identified hundreds of victims of this scam in the United States, resulting in the loss of millions of U.S. dollars.
Today’s arrests were the result of an investigation led by the HSI Gulfport office in partnership with the U.S. Postal Inspection Service, South African Police Service, Toronto Police, HSI Cyber Crimes Center, Treasury Executive Office of Asset Forfeiture, HSI Ontario, HSI Charleston, Interpol South Africa, HSI Pretoria and HSI Atlanta.
The Department of Justice Office of International Affairs assisted in the provisional arrests of ten defendants in Pretoria, South Africa.    Another defendant was arrested in Toronto, Canada, and the remaining defendants were arrested in the United States.
The case in Mississippi will be prosecuted by Assistant U.S. Attorneys Annette Williams and Scott Gilbert, and will be scheduled for trial after extradition of the defendants to Mississippi.    The South Carolina prosecution will be handled by Department of Justice Organized Crime and Gang Section trial attorneys Leshia Lee-Dixon and Robert Tully.    The Georgia cases will be prosecuted by Assistant U.S. Attorney Shanya J. Dingle of the Northern District of Georgia.
An indictment is a formal charge against a defendant.    Under the law, an indictment is merely an accusation and a defendant is presumed innocent until proven guilty.

 

 

 

 

 

 

 

U.S. Navy Petty Officer Based in Japan Pleads Guilty in International Bribery Scandal

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U.S. Navy Petty Officer First Class Daniel Layug pleaded guilty in the Southern District of California today to accepting more than $10,000 in cash, consumer electronics and travel expenses from a foreign defense contractor in exchange for classified and internal Navy information.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement.

Layug, 27, entered his plea before U.S. Magistrate Judge Karen S. Crawford to one count of conspiracy to commit bribery.  He is the sixth defendant charged – and the third to plead guilty – in the alleged bribery scheme involving Singapore-based defense contractor Glenn Defense Marine Asia (GDMA), which provided port services to U.S. Navy ships in the Asia Pacific region.

“Today, U.S. Navy Petty Officer First Class Dan Layug admitted that he swapped classified U.S. Navy information for cash, luxury travel perks and electronic gadgets from a defense contractor,” said Acting Assistant Attorney General O’Neil.  “In taking these under-the-table bribes, Layug put his own financial interests above those of the Navy and the country he vowed to serve.  The Criminal Division, with our law enforcement partners, is committed to holding responsible those who were part of this massive fraud and bribery scheme that cost the U.S. Navy more than $20 million.”

“Every service member is entrusted with the enormous responsibility of protecting this country at all costs,” said U.S. Attorney Duffy.  “Because of greed, Daniel Layug fell woefully short of that high calling, and this guilty plea holds him accountable for a painful betrayal.”

“The guilty plea of U.S. Navy Petty Officer First Class Dan Layug is part of an ongoing effort by the Defense Criminal Investigative Service and its law enforcement partners to bring to justice individuals who seek to enrich themselves at the expense of U.S. taxpayers,” said Deputy Inspector General Burch.  “While the conduct of the vast majority of service members is beyond reproach, Defense Criminal Investigative Service will vigorously pursue individuals who betray the trust bestowed upon them.”

“Petty Officer Layug sold sensitive Navy information for monetary gain,” said NCIS Director Traver.  “In doing so, he compromised the integrity of his position and the safety of his shipmates. NCIS will continue to work with DCIS and the U.S. Attorney’s Office in investigating and prosecuting these crimes to the fullest extent possible.”

According to allegations in court documents, GDMA owner and CEO Leonard Glenn Francis and his cousin, GDMA executive Alex Wisidigama, enlisted the clandestine assistance of Navy personnel – including Layug, Commander Michael Vannak Khem Misiewicz, Commander Jose Luis Sanchez, and Naval Criminal Investigative Service Special Agent John Beliveau – to provide classified ship schedules and other sensitive U.S. Navy information in exchange for cash, travel expenses, and consumer electronics.   GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for more than $20 million in port services.

Court records state that Layug worked secretly on behalf of GDMA, using his position as a logistics specialist at a U.S. Navy facility in Yokosuka, Japan, to gain access to classified U.S. Navy ship schedules and then provided this information to GDMA’s vice president of global operations.  Layug admitted he also provided pricing information from one of GDMA’s competitors.

In return, according to the plea agreement, GDMA gave Layug envelopes of cash on a regular basis.  Layug admitted that he accepted a $1,000 monthly allowance from GDMA.   On May 21, 2012, GDMA’s vice president of global operations instructed a GDMA accountant that “at the end of each month, we will be providing an allowance to Mr. Dan Layug. Total of US $1,000. You may pay him the equivalent in Yen.  He will come by the office at the end of each month to see you.”    Layug also admitted that he received luxury hotel stays for himself and others in Malaysia, Singapore, Indonesia, Hong Kong and Thailand.

Further according to the plea agreement, Layug asked GDMA for consumer electronics.  In an email on March 9, 2012, Layug asked the vice president of global operations, “What are the chances of getting the new iPad 3? Please let me know.”  In the plea agreement, Layug admitted that GDMA then provided him with an iPad 3.

In another email exchange on May 28, 2013, Layug asked the vice president of global operations for a “bucket list” of items including a high end camera, an iPhone5 cellular phone, a Samsung S4 cellular phone, and an iPad Mini.  Shortly after sending his “bucket list” to the vice president of global operations, Layug stated in an email that “the camera is awesome bro! Thanks a lot! Been a while since I had a new gadget!”

Francis was previously charged with conspiring to bribe U.S. Navy officials.  Wisidagama pleaded guilty on March 18, 2014, to defrauding the U.S. Navy.

Two other senior Navy officials – Commander Michael Vannak Khem Misiewicz, 46, and Commander Jose Luis Sanchez, 41 – have been charged separately with bribery conspiracies involving GDMA.  On Dec. 17, 2013, NCIS Supervisory Special Agent John Bertrand Beliveau II, 44, pleaded guilty to conspiracy and bribery charges for regularly tipping off Francis to the status of the government’s investigation into GDMA.

The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

The case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Trial Attorneys Brian Young and Wade Weems of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert Huie of the Southern District of California.

Former Wellcare Chief Executive Sentenced for Health Care Fraud

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Former WellCare Chief Executive Officer Todd S. Farha, 45, of Tampa, Florida, was sentenced today in the Middle District of Florida to serve 36 months in prison for defrauding the Florida Medicaid program.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and United States Attorney A. Lee Bentley III of the Middle District of Florida made the announcement after Farha was sentenced by U.S. District Judge James S. Moody Jr.
Farha was convicted by a federal jury in the Middle District of Florida on June 10, 2013, of two counts of health care fraud.
According to court records and evidence at trial, Farha and others orchestrated a scheme to defraud the Florida Medicaid program from the summer of 2003 through the fall of 2007 by making fraudulent statements relating to expenditures for behavioral health care services.
WellCare operates health maintenance organizations (HMOs) in several states providing services through government-sponsored health care benefit programs like Medicaid.  Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (AHCA), the Florida agency that administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, Farha and others fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA to reduce the WellCare HMOs’ contractual repayment obligations for behavioral health care services.
On May 5, 2009 the government filed related charges in an information and a deferred prosecution agreement (DPA) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States and cooperate with the government’s criminal investigation.  The company complied with all of the requirements of the DPA.    As a result, the information was later dismissed by the court following a government motion.    In a related civil qui tam case, Wellcare agreed to pay $137.5 million in civil fines and penalties.
This case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and the Florida Attorney General’s Medicaid Fraud Control Unit.  The case was prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jay Trezevant and Cherie Krigsman and Special Assistant United States Attorney John Bowers of the Middle District of Florida

Trustbusters Targeting Cartels Abroad Reined in by U.S. Judges

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Trustbusters Targeting Cartels Abroad Reined in by U.S. Judges
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“The ruling opens the doors to foreign cartels to shield themselves from U.S. law by selling to a third party instead of directly into the U.S., said Robert Connolly, a lawyer at GeyerGorey LLP and a former prosecutor with the Justice Department’s antitrust division.

‘No Difference’

‘People can fix prices and then use a middleman,’ he said. ‘From an American consumer point of view, there’s really no difference.'”

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