Category Archives: Important Legal Filings

Settlement with Ash Grove Cement Company to Reduce Thousands of Tons of Air Emissions

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Ash Grove Cement Company has agreed to pay a $2.5 million penalty and invest approximately $30 million in pollution control technology at its nine Portland cement manufacturing plants to resolve alleged violations of the Clean Air Act, announced the Department of Justice and the U.S. Environmental Protection Agency (EPA).

Today’s agreement will reduce more than 17,000 tons of harmful nitrogen oxides (NOx) and sulfur dioxide (SO2) pollution each year across plants located in Foreman, Ark.; Inkom, Idaho; Chanute, Kan.; Clancy, Mont.; Louisville, Neb.; Durkee, Ore.; Leamington, Utah; Seattle, Wash.; and Midlothian, Texas.   “This significant settlement will achieve substantial reductions in air pollution from Ash Grove’s Portland cement manufacturing facilities and benefit the health of communities across the nation,” said Acting Assistant Attorney General Robert G. Dreher.  “The agreement reflects the Justice Department’s ongoing commitment to protecting public health and the environment   through enforcement of the nation’s Clean Air Act.”    “Today’s settlement will reduce air pollution that can harm human health and contribute to acid rain, haze, and smog,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “The new stringent limits on emissions will lead to less pollution and better air quality for communities across the country.”   In addition, Ash Grove has agreed to spend $750,000 to mitigate the effects of past excess emissions from several of its facilities.    The settlement requires Ash Grove to meet stringent emission limits and install and continuously operate modern technology to reduce NOx, SO2, and particulate matter (PM). Ash Grove is required to reduce NOx emissions at nine kilns, some of which will have the lowest emission limits of any retrofit control system in the country.  In addition, modern pollution controls must be installed on every kiln to reduce PM emissions, and on several kilns to reduce SO2 emissions.

In addition, at its Texas facility, Ash Grove will shut down two older, inefficient kilns, while a third will be replaced with a cleaner, newly reconstructed kiln.     Ash Grove will also spend $750,000 on a project to replace old diesel truck engines at its facilities in Kansas, Arkansas, and Texas, which are estimated to reduce smog-forming nitrogen oxides by approximately 27 tons per year.

The settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions, including portland cement manufacturing facilities. This is also the first settlement with a cement manufacturer that requires injunctive relief and emission limits for PM. SO2 and NOx, two key pollutants emitted from cement plants, can harm human health and are significant contributors to acid rain, smog, and haze. These pollutants are converted in the air into fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death.

Eight states and one local agency have joined the United States in the settlement, including: Arkansas, Idaho, Kansas, Montana, Nebraska, Oregon, Utah, Washington, and the Puget Sound Clean Air Agency.

The settlement was lodged today in the U.S. District Court for the District of Kansas and is subject to a 30-day public comment period and final court approval. It will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html.

NORTHERN CALIFORNIA REAL ESTATE INVESTOR AGREES TO PLEAD GUILTY TO BID RIGGING AT PUBLIC FORECLOSURE AUCTIONS

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A Northern California real estate investor has agreed to plead guilty  for his role in conspiracies to rig bids and commit mail fraud at public real  estate foreclosure auctions in Northern California, the Department of Justice  announced.

Felony charges were filed today in the U.S. District Court for the  Northern District of California in San Francisco against Robert Williams of Atherton,  Calif. Williams is the 31st individual to plead guilty or agree to  plead guilty as a result of the department’s ongoing antitrust  investigations into bid rigging and fraud at public real estate foreclosure  auctions in Northern California.

According to court documents, Williams conspired with  others not to bid against one another, but instead to designate a winning  bidder to obtain selected properties at public real estate foreclosure auctions  in San Mateo County, Calif. Williams was also charged with conspiring to use the mail to  carry out schemes to fraudulently acquire title to selected properties sold at public  auctions, to make and receive payoffs and to divert to co-conspirators money  that would have otherwise gone to mortgage holders and others.

The  department said Williams conspired with others to rig bids and commit mail  fraud at public real estate foreclosure auctions in San Mateo County beginning  as early as October 2009 and continuing until about December 2010.

“Collusion at these foreclosure auctions enabled the conspirators to  present the illusion of competition, when they were actually thwarting the  competitive process and profiting at the expense of lenders and distressed homeowners,”  said Bill Baer, Assistant Attorney General in charge of the Department of  Justice’s Antitrust Division. “The division remains committed to holding  accountable those who illegally subvert competition at real estate foreclosure  auctions across the country.”

The department said that the primary purpose of the  conspiracies was to suppress and restrain competition and to conceal payoffs in  order to obtain selected real estate offered at San Mateo County public  foreclosure auctions at non-competitive prices. When real estate properties are  sold at these auctions, the proceeds are used to pay off the mortgage and other  debt attached to the property, with remaining proceeds, if any, paid to the  homeowner.

“The legitimacy of an open, public real estate  foreclosure auction is compromised when an individual or group conspires to  commit criminal activity which impacts genuine intentions of good citizens,”  said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field  Office. “We are steadfast in our continued partnership with the Antitrust  Division in bringing those criminally responsible to justice.”

A violation of the Sherman Act carries a maximum penalty of  10 years in prison and a $1 million fine for individuals. The maximum fine for  the Sherman Act charge may be increased to twice the gain derived from the  crime or twice the loss suffered by the victims if either amount is greater  than $1 million. A count of conspiracy to commit mail fraud carries a maximum  sentence of 30 years in prison and a $1 million fine. The government can also  seek to forfeit the proceeds earned from participating in the conspiracy to  commit mail fraud.

The charges today are the latest filed by the department in  its ongoing investigation into bid rigging and fraud at public real estate  foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties,  Calif. These investigations are being conducted by the Antitrust Division’s San  Francisco Office and the FBI’s San Francisco office. Anyone with information  concerning bid rigging or fraud related to public real estate foreclosure  auctions should contact the Antitrust Division’s San Francisco Field Office at  415-436-6660, visit  www.justice.gov/atr/contact/newcase.htm, or call the FBI tip  line at 415-553-7400.

Today’s charges were  brought in connection with the President’s Financial Fraud Enforcement Task  Force. The task force was established to wage an aggressive, coordinated and  proactive effort to investigate and prosecute financial crimes. With more than  20 federal agencies, 94 U.S. attorneys’ offices and state and local partners,  it’s the broadest coalition of law enforcement, investigatory and regulatory  agencies ever assembled to combat fraud. Since its formation, the task force  has made great strides in facilitating increased investigation and prosecution  of financial crimes; enhancing coordination and cooperation among federal,  state and local authorities; addressing discrimination in the lending and  financial markets and conducting outreach to the public, victims, financial  institutions and other organizations. Over the past three fiscal years, the  Justice Department has filed nearly 10,000 financial fraud cases against nearly  15,000 defendants including more than 2,900 mortgage fraud defendants.

Owner of Louisiana-based Health Care Company Sentenced in Texas to 97 Months in Prison in Connection with $6.7 Million Medicare Fraud Scheme

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The owner and operator of a Louisiana-based durable medical equipment (DME) company was sentenced today to serve 97 months in prison for his role in a $6.7 million Medicare fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; and Special Agent in Charge Mike Fields of the Dallas Regional Office of the U.S. Department of Health and Human Service’s Office of the Inspector General (HHS-OIG).

Kenny Msiakii, 45, of Houston, was sentenced by U.S. District Judge Nancy Atlas in the Southern District of Texas.  In addition to his prison term, Msiakii was sentenced to serve three years of supervised release and ordered to pay $2.5 million in restitution.  On Dec. 13, 2012, a federal jury found Msiakii guilty of eight counts of health care fraud.

According to court documents, Msiakii was the owner and operator of Joy Supply and General Services, a company based in Shreveport, La., that purported to provide orthotics and other DME, including power wheelchairs, to Medicare beneficiaries.

Msiakii used Joy Supply’s Medicare provider number to submit claims to Medicare for DME, including orthotic devices, that were medically unnecessary and, in some cases, never provided.  Many of the orthotic devices were components of “arthritis kits” and purported to be for the treatment of arthritis-related conditions; however, the devices were neither medically necessary nor appropriate for such conditions.  The arthritis kit generally contained a number of orthotic devices including braces for both sides of the body and related accessories such as heat pads.

According to court documents, from November 2007 through September 2009, Msiakii submitted claims of approximately $6.7 million to Medicare and was paid approximately $3.6 million for devices that were not medically necessary and, in some cases, never provided.

This case is being prosecuted by Assistant Chief Laura M.K. Cordova of the Criminal Division’s Fraud Section.  The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and 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 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Axius CEO Roland Kaufmann Sentenced for Conspiracy to Pay Bribes in Stock Sales

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Roland Kaufmann, CEO of Axius Inc., was sentenced today to serve 16 months in prison for his role in a conspiracy to bribe purported stock brokers and manipulate the stock of a company he controlled, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of New York Loretta Lynch.

Kaufmann, 60, a Swiss citizen, was sentenced today by U.S. District Judge John Gleeson in the Eastern District of New York.  In addition to his prison term, Kaufmann was sentenced to serve three years of supervised release and ordered to pay a fine of $450,000.

Kaufmann pleaded guilty in January 2013 to one count of conspiracy to violate the Travel Act in connection with a scheme to bribe stock brokers to purchase the common stock of a company he controlled and to manipulate its stock price.  As part of his plea agreement, Kaufmann forfeited $298,740 gained through this crime.

According to court documents, Kaufmann controlled Axius, Inc., a purported holding company and business incubator located in Dubai.  As part of the scheme, the defendant and his co-conspirator, Jean Pierre Neuhaus, enlisted the assistance of an individual who they believed had access to a group of corrupt stock brokers, but who was, in fact, an undercover law enforcement agent.  Court documents reveal that they instructed the undercover agent to direct brokers to purchase Axius shares in return for a secret kickback of approximately 26 to 28 percent of the share price.  Kaufman and Neuhaus also instructed the undercover agent as to the price the brokers should pay for the stock and that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period.  By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock.

Jean Pierre Neuhaus has pleaded guilty and been sentenced for his role in the scheme.

The case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw, with assistance from Fraud Section Trial Attorney Nathan Dimock.  The case was investigated by the FBI New York Field Office and the Internal Revenue Service New York Field Office.  The Department also recognizes the substantial assistance of the U.S. Securities and Exchange Commission.

This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.

Former Security Contractor Executives Sentenced for Illegally Obtaining More Than $31 Million Intended for Disadvantaged Small Businesses

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Two executives at a Virginia-based security contracting firm were sentenced in the Eastern District of Virginia for their roles in using a front company to obtain more than $31 million intended for disadvantaged small businesses as part of the Small Business Administration’s (SBA) Section 8(a) program. This program allows qualified small businesses to receive sole-source and competitive-bid contracts set aside for minority-owned and disadvantaged small businesses.

 Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Neil H. MacBride of the Eastern District of Virginia; National Aeronautics and Space Administration (NASA) Inspector General Paul K. Martin; SBA Inspector General Peggy E. Gustafson; Defense Criminal Investigative Service (DCIS) Special Agent in Charge of Mid-Atlantic Field Office Robert E. Craig; General Services Administration (GSA) Inspector General Brian D. Miller; and Department of Homeland Security (DHS) Deputy Inspector General Charles K. Edwards made the announcement after sentencing by United States District Judge Leonie M. Brinkema.

Joseph Richards, 52, of Arlington, Va., and David Lux, 66, of Springfield, Va., were sentenced today to 27 and 15 months in prison, respectively, after pleading guilty in March 2013 to conspiracy to commit major government fraud. Both men were ordered to complete community service as part of their supervised release following their prison terms. Richards was ordered to pay $120,378 in restitution, and Lux was ordered to forfeit $115,556.

According to court documents, Richards and Lux were executives at an Arlington-based security contracting firm referred to as Company A in court records. In approximately 2001, Keith Hedman, 53, of Arlington, formed Company A, which was approved to participate in the 8(a) program based on the 8(a) eligibility of its listed president and CEO, an African-American female. When the listed president and CEO left Company A in 2003, Hedman became its sole owner, and the company was no longer 8(a)-eligible.

In 2003, Hedman created Company B, another Arlington-based security contractor, to ensure that he could continue to gain access to 8(a) contracting preferences for which Company A was no longer qualified. Prior to applying for Company B’s 8(a) status, Hedman selected an employee, Dawn Hamilton, 48, of Brownsville, Md., to serve as a figurehead owner based on her Portuguese heritage and history of social disadvantage. In reality, the new company was managed by Hedman and Company A senior leadership in violation of 8(a) rules and regulations. To deceive the SBA, the co-conspirators falsely claimed that Hamilton formed and founded the company and that she was the only member of the company’s management. Based on those misrepresentations, Company B obtained 8(a) status in 2004. From 2004 through February 2012, Hedman – not Hamilton – impermissibly exercised ultimate decision-making authority and control over Company B by directing its finances, allocation of personnel, and government contracting activities.

Richards and Lux joined the scheme in 2005 and 2008, respectively. Hedman offered Richards and Lux ownership stakes in Company B in exchange for their assistance in misleading the SBA and other U.S. government agencies, and both men accepted. Once they joined the conspiracy, Richards and Lux took a variety of actions to further the fraud against the United States. In 2008, for example, both Richards and Lux helped Company B overcome a protest by another company that accused Company A and Company B of improperly obtaining a $48 million Coast Guard contract.

From 2008 to 2010, Richards moved to Company B’s payroll to help Hedman illegally operate Company B. In 2010, Lux helped Hedman withdraw more than $1 million in cash from Company B’s accounts, which Hedman then disbursed to various conspirators, including $100,000 in cash to both Richards and Lux. Richards and Lux also assisted Hedman, Hamilton, and other co-conspirators prepare false documents, including annual reviews, to submit to SBA and other government agencies.

In total, the scheme netted government contracts valued at more than $153 million, from which Company B obtained more than $31 million in contract payments. The various conspirators netted more than $6.1 million that they were not entitled to receive from those payments.

Six other defendants have pleaded guilty in the scheme:

• Hedman is scheduled to be sentenced by U.S. District Judge Gerald Bruce Lee on June 21, 2013. • Hamilton is scheduled to be sentenced by U.S. District Judge T. S. Ellis, III on June 28, 2013. • David Sanborn, 60, of Lexington, S.C., Company A’s former president, is scheduled to be sentenced by U.S District Judge Claude M. Hilton on July 19, 2013. • John Hertogs, 42, of Winter Springs, Fl., Company B’s former director of operations, is scheduled to be sentenced by Judge Hilton on July 12, 2013, for submitting a fraudulent 8(a) application for a follow-on company that Hedman and Hamilton intended to use once Company B graduated from the 8(a) program. • Derek Matthews, 47, of Harwood, Md., former Regional Director for the National Capital Region of the Federal Protective Service, is scheduled to be sentenced by Judge Brinkema on July 19, 2013, for a related bribery scheme in which Hedman agreed to pay Matthews $50,000 and a percentage of new business in exchange for Matthews helping Company B obtain contracts. • Michael Dunkel, 59, of Merritt Island, Fl., is scheduled to be sentenced by Judge Lee on Oct. 4, 2013, for obtaining more than $4.4 million in payments by using Company B as a pass-through company on NASA contracts.

This case is being investigated by NASA Office of the Inspector General (OIG), the SBA -OIG, DCIS-OIG, GSA-OIG, and DHS-OIG, with assistance from the Defense Contract Audit Agency. Assistant U.S. Attorneys Chad Golder and Ryan Faulconer, a former Trial Attorney for the Criminal Division’s Fraud Section, are prosecuting the case on behalf of the United States.

Science Applications International Corporation Pays $11.75 Million to Settle False Claims Allegations

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The Justice Department and U.S. Attorney Kenneth J. Gonzales of the District of New Mexico announced today that Science Applications International Corporation (SAIC) has paid $11.75 million to settle allegations filed in the U.S. District Court for the District of New Mexico that it violated the False Claims Act by charging inflated prices under grants to train first responder personnel to prevent and respond to terrorism attacks.  SAIC provides scientific, engineering, and technical services to commercial and government customers and is headquartered in Northern Virginia.

Between 2002 and 2012, the New Mexico Institute of Mining and Technology (New Mexico Tech) received six federal grants from the Department of Justice, the Department of Homeland Security, and the Federal Emergency Management Agency to train first responder personnel to prevent and respond to terrorism events involving explosive devices.  New Mexico Tech awarded subgrants to SAIC to provide course management, development, and instruction.  The United States alleged that SAIC’s cost proposals falsely represented that SAIC would use far more expensive personnel to carry out its efforts than it intended to use and actually did use, resulting in inflated charges to the United States.

“To ensure that federal tax dollars are properly spent, federal grant recipients and contractors must provide cost proposals and estimates that reflect their honest judgment about project costs,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.  “We will continue to ensure that funds designated for vital programs such as this one are properly used for their intended purpose.”

The False Claims Act is sometimes referred to as “Lincoln’s Law” because it was enacted at the urging of President Lincoln to combat widespread fraud which was being perpetrated on the Union Army by Civil War defense contractors.  While originally enacted to combat defense contractor fraud, the False Claims Act has long been successfully employed to combat false claims against the United States in many other contexts, including healthcare fraud.  The Act prohibits the submission of false claims for government money or property and allows the United States to recover up to three times the actual damages and penalties for a violation.

The lawsuit against SAIC was originally filed under the whistleblower provisions of the False Claims Act by Richard Priem, SAIC’s former project manager for the first responder training program.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery, and the United States may elect to intervene and take over the case, as it did here.  Mr. Priem’s share has not yet been determined.

“The False Claims Act is a critical tool for weeding out fraud and protecting taxpayers,” said U.S. Attorney Kenneth J. Gonzales of the District of New Mexico.  “The Act provides an incentive for individuals with knowledge of fraud against the government to disclose that information.  When whistleblowers bring fraud allegations to the government’s attention and assist us in this public-private partnership to fight fraud, the public benefits and potential fraudsters are deterred.”

The case was jointly handled by Trial Attorneys Don Williamson and Daniel Hugo Fruchter of the Commercial Litigation Branch of the Justice Department’s Civil Division and Assistant U.S. Attorney Howard R. Thomas and Auditor Julie A. Ford of the U.S. Attorney’s Office for the District of New Mexico.  The claims resolved by this settlement are allegations only and there has been no determination of liability.  The case is United States ex rel. Priem v. SAIC, No-12-cv-148 (D.N.M.).

County Commissioner Sentenced for Attempted Extortion and Bribery

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Al J. Hurley, a former county commissioner in Sumter County, Ga., was sentenced today to 36 months in prison stemming from his acceptance of illicit payments in exchange for his official efforts to secure government contracts for a private contractor, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Middle District of Georgia U.S. Attorney Michael J. Moore announced.

Hurley, 55, of Americus, Ga., was sentenced today by U.S. District Judge W. Louis Sands.  On Dec. 3, 2012, a federal jury sitting in the Albany Division of the Middle District of Georgia found Hurley guilty of one count each of attempted extortion and federal program bribery.

Hurley was first elected to the five-member Sumter County board of commissioners in 1999.  As the primary governing body for the county, the board presided over a variety of official matters, including the bidding process for and award of various county contracts.

Evidence at trial showed that from September to December 2011, Hurley, in his capacity as a county commissioner, solicited and agreed to accept cash payments – including $5,000 on Oct. 23, 2011, and $15,000 on Dec. 19, 2011 – from a private contractor, in exchange for Hurley’s repeated promises to use official action and influence to help facilitate the award of county contracting work to the contractor.

In particular, Hurley told the contractor that he would help him win a $100,000 depot renovation contract in a city within Hurley’s district.  Trial testimony also established that, in order to drive up the bribe amount, Hurley invented two inside contacts that he claimed to have at a new racetrack project in his district, and claimed the contacts could influence the award of related contracting work in favor of the contractor.  Hurley, who testified, admitted the contacts did not exist.

This case was investigated by the FBI. This case was prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.

Former Congressman Richard G. Renzi Convicted of Extortion and Bribery in Illegal Federal Land Swap

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A former U.S. Congressman and a real-estate investor were convicted today by a federal jury in Tucson, Ariz., of conspiring together to extort and bribe individuals seeking a federal land exchange, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney John Leonardo of the District of Arizona and Special Agent in Charge Douglas F. Price of the FBI’s Phoenix Division.

Richard G. Renzi, 55, of Burke, Va., was found guilty of 17 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right, racketeering, money laundering and making false statements to insurance regulators.

James W. Sandlin, 62, of Sherman, Texas, was found guilty of 13 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right and money laundering.

Sentencing is set before U. S. District Judge David C. Bury on Aug. 19, 2013.

“Former Congressman Renzi’s streak of criminal activity was a betrayal of the public trust and abuse of the political process,” said Acting Assistant Attorney General Raman. “After years of misconduct as a businessman, political candidate and member of Congress, Mr. Renzi now faces the consequences for breaking the laws that he took an oath to support and defend.”

“Our democracy is undermined whenever our elected officials misuse the power entrusted to them by the voters to serve their own private interests rather than in the service of the public interest,” said U.S. Attorney Leonardo. “The jury’s verdict reinforces the fundamental principle that our society is governed by the rule of law, and that no citizen, including the most influential and powerful among us, is above the law.”

“Today’s conviction is a culmination of the investigative efforts of the FBI and IRS-Criminal Investigation over a period of several years,” said FBI Special Agent in Charge Price. “Public corruption is one of the top criminal priorities of the FBI, and it is imperative that elected public officials be held accountable to uphold the public’s trust.  The FBI remains committed to this criminal priority in combating public corruption at all levels.”

According to evidence at trial, Renzi, then a member of Congress from Arizona’s 1st Congressional District, promised in 2005 to use his legislative influence to profit from a federal land exchange that involved property owned by Sandlin, a real-estate investor.

At the time, Sandlin owed Renzi $700,000 in future payments from their business dealings, and Renzi threatened a proponent of the land exchange that he would not support it unless they purchased Sandlin’s property in Cochise County, Ariz.  When that individual refused, Renzi promised a second proponent of a land exchange that he would support the exchange if they purchased Sandlin’s property.  According to an agreement reached in May 2005, Sandlin was paid $1 million in earnest money, out of which he paid $200,000 to Renzi.  Just before Sandlin received the $1.6 million balance owed on the exchange, he paid an additional $533,000 to Renzi.

Evidence at trial further showed that from 2001 to 2003, Renzi engaged in insurance fraud by diverting his clients’ insurance premiums to fund his first campaign for Congress, and he provided false statements to various state regulators who were investigating his activities.

Renzi was indicted in February 2008, and in October 2008, Renzi moved to dismiss the indictment under his rights as a member of Congress under the Speech or Debate Clause. The court denied his motion in February 2010, and Renzi pursued an interlocutory appeal. After Renzi’s appeal was unsuccessful, trial was set for May 2013.

Honest services wire fraud, extortion under color of official right, concealment money laundering and racketeering each carry maximum penalties of 20 years in prison. Conspiracy carries a maximum penalty of five years in prison, and making false statements to insurance regulators and transactional money laundering each carry maximum penalties of 10 years in prison.

This case was investigated by the FBI and the Internal Revenue Service – Criminal Investigation.  The prosecution was handled by Trial Attorneys David Harbach and Sean Mulryne of the Department of Justice’s Public Integrity Section and Assistant U.S. Attorneys Gary Restaino and James Knapp of the District of Arizona.

GeyerGorey LLP first international law firm to beta test PerfectShield™

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GeyerGorey LLP first international law firm to beta test PerfectShield™

WASHINGTON — GeyerGorey LLP today announced that it had been chosen by FormerFeds LLC to be the first international law firm to beta test its revolutionary “PerfectShield™” Compliance system designed and deployed by former American fraud enforcers (a/k/a “FormerFeds”).  PerfectShield™ is the newest weapon in our arsenal

to provide a ‘redundant complex risk prevention array’ for clients that is affordable and provides automated and organized support for a company’s compliance operations overseen and administered by our law firm,” said firm partner Robert Zastrow.  “Because PerfectShield™ delivers the things we need most right now for our clients, we were happy to help FormerFeds LLC fine tune its compliance system to assist its other law firm clients later in the year.  We believe this gives GeyerGorey and its clients an advantage in our constant struggle to implement and maintain a vigilant compliance culture that innovates and reinforces productive corporate behavior moving forward.”

PerfectShield™ provides:

  • centralized, whole-of-business risk and compliance visibility and benchmarking
  • easy configuration to meet any regulatory environment in any sector
  • unique compliance portal for customized assessments and notifications
  • red flag generation and tracking system designed to protect privilege
  • cost effective, low-risk, pay-as-you-go pricing

“We were looking ‘software as a service’ (SAS) that provided an organizational ‘fire and forget’ system embedding compliance, transparency and corporate governance into one program solution,” stated Hays Gorey.  “FormerFedsCompliance™ developed its system across disciplines so that the wall that exists between various specialties within a law firm—for instance, cartel enforcement and FCPA, is rendered obsolete by PerfectShield™; efforts in each area informs the other area and efforts to embed compliance on the “sell” side of operations informs the “buy” side of operations capturing incremental improvements, innovating the program and constantly improving and solidifying the program on an affordable schedule that factors in legal counsel’s expert assessments regarding risk,” said Brad Geyer.

“It allows us to focus on the risk and emerging legal threats while PerfectShield™ gathers the information, red flags threats and channels those threats back to us in real time so that we can immediately follow through in a way that preserves the attorney client privilege.  Customized tracking and notification preferences allows inside compliance counsel, inside legal counsel and or management to track , statistically analyze performance and benchmark results moving forward,” said Geyer.  All the while, PerfectShield™ documents and records the performance and comprehensiveness of the compliance program for presentations to interested enforcement agencies, standards boards, acquisition candidates, large suppliers or large customers.

GeyerGorey LLP, with offices in Washington, New York, Boston and Philadelphia, provides international and inside-the-beltway experience to individuals and companies that have become — or wish to avoid becoming — the subject of federal law enforcement agency interest.

Four Former Wellcare Executives Found Guilty in Florida

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A federal jury in Tampa found four former executives of WellCare Health Plans Inc., a health maintenance organization (HMO) operator, guilty of various charges, including health care fraud, making false statements relating to health care matters and making false statements to a law enforcement officer, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Robert E. O’Neill of the Middle District of Florida and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office

Today, former WellCare Chief Executive Officer Todd S. Farha, 45, of Tampa, was convicted of two counts of health care fraud; former WellCare Chief Financial Officer Paul L. Behrens, 51, Odessa, Fla., was convicted of two counts of making false statements relating to health care matters and two counts of health care fraud; William L. Kale, 63, of Oldsmar, Fla., former vice president of Harmony Behavioral Health Inc. (a wholly-owned subsidiary of WellCare), was found guilty of two counts of health care fraud; and Peter E. Clay, 56, of Wellesley, Mass., former WellCare vice president of medical economics, was found guilty of making false statements to a law enforcement officer.

On March 2, 2011, a federal grand jury sitting in Tampa returned an indictment charging Farha, Behrens, Kale and Clay with various federal criminal violations related to a scheme to defraud the Florida Medicaid program, from the summer of 2003 through the fall of 2007, by making false and fraudulent statements relating to expenditure information for behavioral health care services.

WellCare operates HMOs in several states targeted for 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 which 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, the defendants falsely and fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA, in order to reduce the WellCare HMOs’ contractual payback obligations for behavioral health care services.

On May 5, 2009, the government filed related charges in an information and deferred prosecution agreement (DPA) against WellCare.  Under 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 May 2009, an information and plea agreement for Gregory West, 55, of Tampa, a former WellCare analyst, was unsealed.  In his plea agreement, West admitted to participating in the scheme to defraud the Medicaid program and agreed to cooperate in the government’s investigation.  At trial, West provided extensive and detailed testimony explaining the complex scheme.  Other former WellCare executives provided additional testimony about the four individuals’ roles in the scheme.

The maximum penalty for each of the health care fraud counts is 10 years in prison.  The maximum penalty for all other counts is five years in prison. A sentencing date has not yet been set.

Thaddeus M.S. Bereday, of Tampa, WellCare’s former general counsel, was severed from the trial in February of this year.  He will be tried separately, at a later date.  Defendants are presumed innocent until proven guilty in a court of law.

The jury returned not guilty verdicts with respect to several counts and was unable to reach a verdict on others.  The judge declared a mistrial as to those counts on which the jury was deadlocked.  The Justice Department will decide, at a later date, whether to retry the individuals on those charges.

This case was investigated by HHS-OIG, the FBI and the Florida Attorney General’s Medicaid Fraud Control Unit.  It was prosecuted by Senior Litigation Counsel John Michelich of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jay Trezevant and Cherie Krigsman of the Middle District of Florida and Special Assistant U.S. Attorney John Bowers.