Category Archives: Important Legal Filings

FormerFeds LLC selects GeyerGorey LLP to Beta Test Compliance system

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FormerFeds LLC selects GeyerGoreyLLP to beta test Compliance system

WASHINGTON — FormerFeds LLC today announced chosen GeyerGorey LLP to beta test its revolutionary Compliance system designed and deployed by former American fraud enforcers (a/k/a “FormerFeds”).  The FormerFedsCompliance.Com compliance solution is the newest weapon in the legal community’s arsenal  that seeks to help the legal community 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 inside legal counsel or alliance law firms.

The FormerFeds LLC compliance assessment solution (FormerFedsCompliance.Com) is designed to be administered by inside legal counsel or outside law firms like GeyerGorey LLP to maximize attorney client privilege protections.
The FormerFedsCompliance.Com Compliance Assessment solution will provide:

  • immediate assessment and gap analysis
  • 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

FormerFedsCompliance.Com has developed a ‘software as a service’ compliance assessment solution that our customers can ‘fire and forget’ system that melds compliance, transparency and corporate governance into one program solution.  With the legal assistance of GeyerGorey LLP, FormerFedsCompliance.Com is developing its compliance assessment system across disciplines so that there will be no wall between various specialties within a law firm—for instance, cartel enforcement and FCPA.

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.

FormerFeds LLC is headquartered in Cinnaminson, NJ and can be reached at [email protected] or at (609) 291-0881.

FormerFeds LLC
Suite 303
141 i Route 130 South
Cinnaminson, NJ 08077

Four Sentenced to Prison in Florida Community Mental Health Center Case

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The owners of three Miami-area assisted living facilities and an affiliated psychologist were sentenced to prison today in connection with a health care fraud scheme, involving now-defunct Miami-area health provider Health Care Solutions Network Inc. (HCSN), in which Medicare was billed for mental health treatments that were unnecessary or not provided.

The sentences were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent in Charge of the FBI’s Miami Field Office; 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.

U.S. District Judge Cecilia M. Altonaga sentenced Serena Joslin, 32, of Looneyville, W.Va., to 63 months in prison, following her previous guilty plea to conspiracy to commit health care fraud.  Raymond Rivero, 55, Daniel Martinez, 46, and Ivon Perez, 50, all of Miami, were each sentenced to 28 months in prison.  All three had previously pleaded guilty to conspiracy to violate the anti-kickback statute.

According to court documents, HCSN operated community mental health centers both in Miami and North Carolina, including partial hospitalization programs (PHP) – a form of intensive treatment for severe mental illness.  HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not provided.

In Miami, HCSN obtained beneficiaries by paying kickbacks to owners and operators of assisted living facilities (ALF) or by otherwise recruiting them from the facilities and from nursing homes.  Rivero, Martinez and Perez admitted during their guilty pleas to referring Medicare beneficiaries to HCSN in exchange for cash bribes.  Rivero, former owner of Miami-based God Is First ALF; Martinez, former owner of Homestead, Fla.-based Mi Renacer ALF; and Perez, former owner of Homestead-based Kayleen and Denis Care Corp., are no longer permitted to operate such facilities as a condition of their guilty pleas.

According to court documents, ALF residents referred to HCSN by Rivero, Martinez and Perez were not qualified to be placed in PHP and were only selected because they had Medicare or state of Florida Medicaid benefits.  In some cases, ALF patients suffered from dementia, Alzheimer’s disease or mental retardation, or were otherwise unable to benefit from mental health services.

According to court documents, Joslin, a licensed psychologist, was hired by HCSN in North Carolina in April of 2010 as a clinical coordinator and later promoted to clinical director. In those roles, she conspired with other HCSN employees to fabricate medical documents to substantiate alleged PHP treatment that was medically unnecessary and, in many instances, not even provided to the beneficiaries.  Joslin admitted that many of the HCSN patients were unqualified for the PHP program because they suffered from conditions such as mental retardation and dementia, and that she directed therapists to fabricate medical records to support HCSN’s fraudulent billing to the Medicare program.  Joslin was also required to surrender her North Carolina license to provide mental health treatment as part of her plea agreement.

According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.

In addition to the prison terms, Judge Altonaga sentenced Joslin, Rivero, Martinez and Perez each to serve three years of supervised release, and ordered them to pay $4,464,728; $90,896; $76,358; and $89,245 in restitution, respectively.

The cases are being prosecuted by Special Trial Attorney William Parente and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section.  The cases were investigated by the FBI and HHS-OIG and were brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 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.

Former Miami Clinic Director Sentenced to 70 Months in Prison for Role in HIV Infusion Fraud Scheme

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A former Miami HIV infusion clinic director was sentenced today to serve 70 months in prison for his role in a $26.2 million HIV infusion fraud scheme, announced Assistant Attorney General Lanny Breuer of the Criminal Division, U.S. Wifredo A. Ferrer of the Southern District of Florida, Acting Special Agent in Charge  Michael B. Steinbach of the FBI’s Miami Field Office 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.
Enrique Gonzalez, 67, formerly of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida.  In addition to his prison term, Judge Altonaga sentenced Gonzalez to serve three years of supervised release and ordered him to pay $17,590,896 in restitution to HHS.

On Nov. 13, 2012, Gonzalez pleaded guilty to one count of conspiracy to defraud the United States, to cause the submission of false claims, and to pay health care kickbacks, and one count of conspiracy to commit health care fraud.

Gonzalez admitted that between August 2002 and March 2004, he conspired with co-defendant Ronald Harris, a Miami physician, and alleged co-conspirators to operate Physicians Med-Care and Physicians Health (together the “Physicians Clinics”), two Miami HIV infusion clinics.  According to court documents, the Physicians Clinics were owned and controlled by alleged co-conspirators Carlos Benitez and his brother Luis Benitez.  The Physicians Clinics purported to specialize in treating patients with HIV, but were operated for the sole purpose of committing Medicare fraud, according to court documents.  Gonzalez was a director of Physicians Med-Care and, at the direction of his co-conspirators, was responsible for the finances of the Physicians Clinics.

Gonzalez admitted that he agreed with his co-conspirators to handle the finances for the Physicians Clinics, moving the money paid by the Medicare program out of the Physicians Clinics’ accounts and into accounts owned and controlled by his co-conspirators.  According to court documents, Harris signed blank checks that Gonzalez used to transfer funds to various Benitez-owned entities and others, as directed by his co-conspirators.  In addition, Gonzalez agreed to provide cash to various co-conspirators at the Physicians Clinics to be used to pay bribes and kickbacks to the Medicare beneficiaries in return for those beneficiaries allowing the Physicians Clinics to bill the Medicare program for HIV infusion services that were not medically necessary and often not provided.

Gonzalez admitted that during his association with Physicians Med-Care, the clinic billed the Medicare program approximately $24.5 million in HIV infusion therapy claims, for which the clinic received $16.7 million in payments.  Gonzalez also admitted that during his time with Physicians Health, the clinic billed Medicare approximately $1.7 million and received approximately $800,000 in payment from the Medicare program for fraudulent services.

Gonzalez was a fugitive from justice from the time of his indictment in 2008, until he was located and detained in Peru in late 2011.  Gonzalez was extradited to the United States in July of 2012.  Gonzalez’ daughter, Carmen Gonzalez, was indicted in a related case and is currently a fugitive.

Co-defendant Harris pleaded guilty on Aug. 26, 2008, to one count of conspiracy to defraud the United States, to cause the submission of false claims and to pay health care kickbacks; one count of conspiracy to commit health care fraud; and three counts of submitting false claims to the Medicare program.  Harris pleaded guilty in connection with his role as the medical director for the Physicians Clinics.  On Nov. 4, 2008, Harris was sentenced to serve 84 months in prison for his role in the scheme.

Carlos and Luis Benitez and Thomas McKenzie were charged separately with health care fraud and money laundering crimes in an indictment unsealed on June 11, 2008.  According to the separate indictment, the defendants provided the money and staff necessary to open the Physicians Clinics, the Medicare patients that the clinics needed to bill the Medicare program and transportation for the HIV patients who visited the clinics.  Carlos and Luis Benitez and McKenzie were charged for their role in committing approximately $109 million in HIV infusion fraud and money laundering through the Physicians Clinics and nine other HIV infusion clinics.

On Sept. 18, 2008, McKenzie pleaded guilty to one count of conspiracy to commit health care fraud and one count of submitting false claims to the Medicare program, and admitted to his role in a $119 million HIV infusion fraud scheme.  On Dec. 18, 2008, McKenzie was sentenced to serve 14 years in prison.

Carlos and Luis Benitez are also fugitives.  Anyone with information regarding the whereabouts of the fugitives is urged to contact HHS-OIG fugitive reporting phone line at 888-476-4453.

The defendants who have not been convicted are presumed innocent unless and until proven guilty.

The Physicians Med-Care and Physicians Health case is being prosecuted by Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section.  The case was investigated by the FBI and the DHS Office of Inspector General.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  The Department also thanks the Peruvian National Police Interpol Unit for their assistance.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 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.

Owner of Texas Durable Medical Equipment Companies Convicted in Fraud Scheme

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A Texas federal judge convicted the owner of two Texas-based durable medical equipment companies today on multiple health care fraud charges following a five-day bench trial, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Hugh Marion Willet, 69, of Fort Worth, Texas, was found guilty by U.S. District Judge Jane J. Boyle in the Northern District of Texas on all seven counts of the June 2012 second superseding indictment: one count of conspiracy to commit health care fraud and six counts of health care fraud stemming from a durable medical equipment (DME) fraud scheme.  Willett?s wife, Jean Willett, previously pleaded guilty to the same charges and was sentenced in September 2012 to serve 50 months in prison.

The evidence at trial showed that between 2006 and 2010, the Willets co-owned and operated JS&H Orthopedic Supply LLC and Texas Orthotic and Prosthetic Systems Inc., which claimed to provide orthotics and other DME to beneficiaries of Medicare and private insurance benefit programs including Aetna, Blue Cross Blue Shield and CIGNA.

Evidence presented in court proved that both of these companies intentionally submitted claims to Medicare and other insurers for products that were materially different from and more expensive than what was actually provided, and that Hugh Marion Willett was a knowing and willing participant in the fraud.

At sentencing, currently scheduled for April 18, 2013, Hugh Marion Willett faces a maximum potential penalty of 10 years in prison and a $250,000 fine on each count.

The case is being prosecuted by Fraud Section Trial Attorney Ben O’Neil and Deputy Chief Sam Sheldon of the Justice Department?s Criminal Division.  The case was investigated by the FBI and the Department of Health and Human Services Office of Inspector General (HHS-OIG) and brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.

Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 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.

Seven Arrested, Charged with $22 Million Detroit-area Home Health Care Fraud Scheme

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Six Detroit-area residents and one Chicago-area resident were arrested today by federal agents on charges arising from the ongoing investigation into an alleged $22 million home health care fraud scheme.  The indictment was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; Special Agent in Charge Lamont Pugh III of the Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office; and Special Agent in Charge Erick Martinez of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office.

According to the 18-count indictment returned Jan. 15, 2013, and unsealed today, the seven individuals allegedly participated in a Medicare fraud scheme operating out of four Oakland County, Mich., home health agencies claiming to provide in-home health services: Royal Home Health Care Inc., Prestige Home Health Services Inc., Platinum Home Health Services Inc. and Empirical Home Health Care Inc.  The indictment alleges Medicare paid the agencies approximately $22 million for fraudulently reported services since August 2008.

In addition to the arrests, law enforcement agents suspended Medicare payments to four health care companies associated with the alleged scheme.

Muhammad Aamir, 42; Usman Butt, 39; Hemal Bhagat, 31; Syed Shah, 50; Tariq Tahir, 46; and Raquel Ellington, 56, of the Detroit area; and Tayyab Aziz, 43, from the Chicago area, each are charged with conspiracy to commit health care fraud.  All but Aziz are also charged with health care fraud and with conspiracy to violate the Anti-Kickback Statute.  Butt, Bhagat, Shah and Aziz are additionally charged with conspiracy to commit money laundering.

According to the indictment, Aamir and Butt owned and operated Prestige; Butt, Bhagat and Shah owned and operated Royal; and Aamir owned and operated Platinum and Empirical – all of which allegedly claimed to provide home health therapy services to Medicare beneficiaries that were unnecessary and/or were never performed.  The indictment alleges Tahir and Ellington recruited Medicare beneficiaries, paying them kickbacks for their Medicare information and signatures on documents that detailed physical therapy and/or skilled nursing services that were either never rendered or not medically necessary.  Aamir, Butt, Bhagat, Shah, Tahir and Ellington are also charged with conspiring to pay kickbacks to Tahir and Ellington for their recruiting work.  Butt, Bhagat, Shah and Aziz allegedly conspired to launder the proceeds of the scheme.

The charges of health care fraud conspiracy and health care fraud each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.  The charge of conspiracy to violate the Anti-Kickback Statute carries a maximum potential penalty of five years in prison and a $25,000 fine.  The charge of conspiracy to commit money laundering carries a maximum potential penalty of 20 years in prison and a $500,000 fine.

An indictment is merely a charge and defendants are presumed innocent unless nad until proven guilty.

The case is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section.  The investigation is conducted jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, and IRS-CI, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since their inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have falsely billed the Medicare program for more than $4.8 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.

Hudson County, N.J., Pediatrician Charged With Fraudulently Billing Medicaid For Nearly $1 Million

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NEWARK, N.J. – A Hudson County, N.J., pediatrician was arrested at his home this morning for fraudulently billing Medicaid $900,000 for wound-repair treatments on children that were never rendered, U.S. Attorney Paul J. Fishman announced.

Badawy M. Badawy, M.D., 50, of Bayonne, N.J., a licensed pediatrician who owns and operates Sinai Medical Center of Jersey City LLC, a medical practice focusing primarily on pediatrics and family medicine, billed Medicaid thousands of times for nearly $900,000 worth of wound repairs on children and adolescents. He was charged by Complaint with healthcare fraud and is scheduled to make his initial court appearance later today before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.

According to the Complaint:

From January 2004 through December 2008, Badawy billed Medicaid, through its managed care companies, for certain wound repairs more frequently than any other service provider in the State of New Jersey. His claims for these supposed treatments represented a strong majority of all such claims submitted to Medicaid by all New Jersey medical providers during this time period, including 99.4 percent of all claims for the suturing or stapling of facial wounds larger than 30 centimeters.

Virtually all of these claims, which were submitted for supposed wound repairs on children, were fraudulent. Badawy’s patient charts for a large sample of these children who supposedly received treatment revealed no entry, notation, or other evidence, such as suturing or other closing methods, to support his claims that these procedures were actually performed.

The Complaint also identifies by initials 10 children whom Badawy claimed to have treated for wound repairs on numerous occasions.

∙ From April 2004 through June 2007, Badawy purportedly treated three children on 28 separate occasions for a total of 49 procedures involving some type of wound repair. According to the children’s mother, none of these children has ever had a cut that required stitches or other methods of wound closure.

∙ From March 2006 through February 2007, Badawy submitted eight claims for facial wound repairs, including two 30-centimeter facial wound repairs, on a single teenager during four different visits. According to the teenager, he had never seen Badawy for wounds to his face or other body parts.

∙ From July 2005 through July 2007, Dr. Badawy supposedly performed 15 wound repairs, including six 30-centimeter facial wound repairs, on a boy on eight separate occasions. According to the boy, he was never treated for a cut to his face.

The charge of health care fraud carries a maximum potential penalty of up to 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss resulting from the crime.

U.S. Attorney Fishman credited special agents of the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Thomas O’Donnell, and the FBI, under the direction of Acting Special Agent in Charge David Velazquez, with the investigation leading to today’s arrest.
The government is represented by Scott B. McBride of the U.S. Attorney’s Health Care and Government Fraud Unit.

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Defense counsel: Michael J. Keating Esq., Cranford, N.J.

Former FEMA Executive Pleads Guilty to Federal Conflict of Interest Charge Defendant Sought Job From Company That Did Work for FEMA

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WASHINGTON—Timothy W. Cannon, 63, the former director of human resources at the Federal Emergency Management Agency (FEMA), pleaded guilty today to a charge of conflict of interest for negotiating employment with a polling and consulting services company that had a multi-million-dollar contract with FEMA, supervised by Cannon.

The plea occurred before the Honorable Amy Berman Jackson of the U.S. District Court for the District of Columbia. Sentencing is scheduled for April 9, 2013. The charge carries a statutory maximum of five years in prison.

The guilty plea was announced by Ronald C. Machen, Jr., U.S. Attorney for the District of Columbia; Assistant Attorney General Lanny A. Breuer of the U.S. Department of Justice’s Criminal Division; Debra Evans Smith, Acting Assistant Director in Charge of the FBI’s Washington Field Office; Christopher Cherry, Special Agent in Charge of the General Services Administration Office of Inspector General for the National Capital Region; and Mike Dawson, Special Agent in Charge of the U.S. Department of Homeland Security Office of Inspector General’s Washington Field Office.

According to the government’s evidence, from July 2007 through February 2009, Cannon was the director of FEMA’s Human Capital Division. In 2007, Cannon had discussions with a firm, identified in court papers as “Company A,” about FEMA hiring the firm to provide consulting services on human resources matters at FEMA. The work would be done through a project that would eventually be called the “BEST Workforce Initiative.”

In March 2008, the chief executive officer of Company A e-mailed another Company A employee, stating Cannon “said he has done everything to get a job at [Company A] because he believes so much in our products…said he wants to do a real good job at FEMA and that mabye [sic] he would try again….” On April 22, 2008, Company A’s CEO e-mailed another Company A employee that “…if [Cannon] gets us a big deal at FEMA…i [sic] think we should hire him…because he will be a ‘client’ hire…which might be good[.]” Later in the same e-mail chain, Company A’s CEO asked, “[I]s the ink dry yet on our deal with fema [sic] [?]” The Company A employee replied, “[N]o might be mid-May.” Company A’s CEO then stated, “[W]e should wait of course to see if we win a big quality deal here[.]”

On August 12, 2008, Company A was hired to administer the BEST Workforce Initiative at FEMA. The contract was valued at approximately $6 million over five years.

On November 18, 2008, a Company A employee advised Company A’s CEO in an e-mail, “I talked to Tim today. He asked for a job.” Company A’s CEO then stated, “What about ethics…are we okay with all of that…he is a significant client…am sure you know the rules…gee he seems like a winner to me…I don’t think these guys are as expensive as one might think…and he has a military background[.]”

In December 2008 and January 2009, Cannon requested additional funding for the BEST Workforce Initiative. On January 6, 2009, in an e-mail to a Company A employee, Cannon stated, “[A]h yes, I got another 500k put on the contract. Cool huh?”

On January 12, 2009, Cannon had an employment interview with Company A in Washington, D.C. On February 9, 2009, Company A sent an employment offer letter by e-mail to Cannon. The letter offered Cannon “the opportunity to join [Company A] as a Partner with our Government Division in Washington, D.C.” and guaranteed him a minimum annual salary of $175,000 for the first two years of employment. Cannon responded to the e-mail the same day, stating, “I am very excited about joining [Company A] and I look forward to working with you….” Following Cannon’s acceptance of Company A’s employment offer, Cannon continued to oversee and work on the BEST Workforce Initiative at FEMA.

Cannon retired from FEMA effective on February 27, 2009. On his public financial disclosure report, known as Form SF-278, Cannon indicated that he did not have any agreements or arrangements for “future employment” and he specifically did not list his future employment with Company A. On February 27, 2009, Cannon requested that Company A provide him with an offer letter dated after February 27, 2009, so that it would falsely appear that Cannon received Company A’s employment offer after he had resigned from FEMA. On March 2, 2009, Company A sent an updated version of the offer letter, with the new date of March 2, 2009, to Cannon. Cannon signed this updated version of the offer letter on March 3, 2009, and returned it to Company A.

In March 2009, a Company A employee voiced concerns internally about Cannon’s hiring. In addition, on March 25, 2009, a Company A employee stated in an e-mail to another Company A employee, “Well, I just got a call from and am getting more red flags about Tim Cannon. Apparently, word is getting around about his departure and joining [Company A]. There is speculation among is [sic] co-workers that this is improper. They are pretty mad. This may get in the way of future business with FEMA….This, plus the bankruptcy, plus appearance of ethics violations, both on [Company A] and FEMA side. This is not good….I think we are getting too many sign[s], and I do not think this will work.” On March 26, 2009, Company A informed Cannon that Company A’s offer of employment was being withdrawn. Company A told Cannon that he did not meet the background check requirements.

Later, on September 17, 2009, Cannon sent an e-mail to Company A’s CEO advising that Cannon had joined a consulting firm and asking to have lunch. Company A’s CEO forwarded that e-mail to other Company A employees stating, “This is a guy that was our sponsor at FEMA…he is so [Company A] gung ho…when he was applying we broke some of the rules of the U.S. Gov on the ‘how’ we do it…so we had to let him go….”

In announcing the guilty plea, U.S. Attorney Machen, Assistant Attorney General Breuer, Acting Assistant Director in Charge Smith, Special Agent in Charge Cherry, and Special Agent in Charge Dawson commended the outstanding investigative work of agents of the FBI’s Washington Field Office, Assistant Special Agent in Charge Floyd Martinez of the GSA OIG and agents of the DHS OIG, as well as agents and auditors of other federal investigative agencies that assisted with this case. They also praised the efforts of members of the U.S. Attorney’s Office and the Criminal Division Fraud Section, including Paralegal Specialists Diane Hayes and Nicole Wattelet; Legal Assistant Jamasee Lucas; Information Technology Specialist Joshua Ellen; forensic accountants in the Fraud and Public Corruption Section; and Assistant U.S. Attorney David Johnson, Trial Attorney Brian Young, and former Trial Attorney James Graham, who have prosecuted the case.

Former Member of Port Authority Board Sentenced to 57 Months in Prison

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Robert M. Peto, a former member of the Cleveland-Cuyahoga County Port Authority, was sentenced to more than four years in prison today after previously pleading guilty to violating the Hobbs Act, law enforcement officials said today.

Peto, 58, lives in Gates Mills, Ohio. He served as a member of the Port Authority Board between December 2004 through in or around August 2012, according to court documents.

Peto obtained property not due to him or his Port Authority office including free and discounted home improvements and materials, entertainment, and a financial benefit related to a vehicle acquisition, according to court documents.

The property and objects were provided by Michael Forlani and/or Doan Pyramid LLC and Neteam, AVI, companies in which Forlani had an ownership interest, according to court documents.

“This sentence shows the high cost to those who would violate the public’s trust in exchange for personal gain,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Field Office. “Corruption—in this case taking bribes and utilizing his position as a board member for the Port Authority—will not be tolerated.”

The conduct took place between 2004 and October 2, 2007, according to court documents.

The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Nancy L. Kelley following an investigation by the Federal Bureau of Investigation, the Department of Labor, and Internal Revenue Service–Criminal Investigation.

11/3/1998 EDPA Historical Society Celebration of 50 Years of Antitrust Enforcement by the Philadelphia Field Office of the Antitrust Division

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Later this month, four Antitrust Division field offices in Atlanta, Cleveland, Dallas and Philadelphia close their doors for good.  The link below hearkens back to happier day on November 3, 1998, when the Historical Society of the Eastern District of Pennsylvania honored and celebrated the Philadelphia Field Office’s 50th year of cartel enforcement

Please click the link below:

Historical Society Celebrates Philadelphia Field Office of the Antitrust Division

 

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Former Law Firm IT Chief and Contract Employee Vendor Indicted in $4.8 Million Billing Fraud and Kick-back Scheme

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FOR IMMEDIATE RELEASE January 11, 2013

CHICAGO — The former chief information officer of a Chicago-based international law firm who was charged previously, and the president of a company that provided contract technology workers who was charged for the first time and arrested today, were indicted for allegedly engaging in a fraudulent billing and kickback scheme that netted each of them more than $2 million. NICHOLAS DEMARS, the president of NS Mater, a defunct firm that provided contract employees and technology to assist in office automation, web and database development, and general information technology, was arrested today and indicted with DAVID TRESCH, the former law firm officer who supervised the work and billing related to the contract employees.

For the first six years of the scheme that began in 2004, Demars allegedly paid Tresch a portion of the profits that NS Mater made from work its contract employees performed at the victim law firm. During the last two years ending in June 2012, Tresch allegedly received kickbacks totaling nearly all of the false billings that the law firm paid NS Mater for work that was not performed.

Tresch, 51, and Demars, 57, both of Itasca, were each charged with 10 counts of mail fraud in an indictment that was returned by a federal grand jury yesterday and unsealed today after Demars was arrested. Demars was released on bond after appearing this morning before U.S. Magistrate Judge Sidney Schenkier in U.S. District Court. Tresch, who was released on bond after he was arrested in August, will be arraigned at a later date in Federal Court.

The indictment also seeks forfeiture of $4,819,253 representing the combined net proceeds that both men allegedly obtained from the scheme, as well as their respective homes, Demars’ condominium in Chicago, and a residence in Lake Geneva, Wis., and more than $225,000 that was seized from Tresch along with his camping trailer, a van, and a luxury automobile.

The charges were announced by Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois, and Thomas R. Trautmann, Acting Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.

According to the initial complaint, the victim law firm, which was not identified by name, reported Tresch’s alleged criminal activity and cooperated in the investigation. The firm, which has offices worldwide, hired Tresch in May 2004 and he held several positions in the information technology department before he was promoted in July 2011 to chief information officer.

The indictment alleges that between November 2004 and March 2011, the law firm issued checks totaling approximately $7.68 million to NS Mater, and Demars, in turn, kicked back $1.14 million to Tresch. In 2004 and 2005, Demars allegedly paid kickbacks directly to Tresch after paying legitimate NS Mater contract employees and payroll administrators for work they had performed for the law firm. Beginning in April 2006, allegedly to conceal the kickbacks, Demars began paying Tresch by issuing checks to Tresch’s wife and treating her as an employee of NS Mater, even though both defendants knew that she was not an employee and had not performed any work, according to the indictment. Tresch’s wife is not a defendant.

Subsequently, in late 2010, Tresch learned that that the law firm would soon stop using NS Mater contract employees, and, in February 2011, the firm directed Tresch to no longer permit NS Mater to provide personnel for the information technology department. Between November 2011 and June 2012, Demars allegedly continued submitting invoices to Tresch totaling more than $1.1 million, falsely representing that NS Mater performed work that both defendants knew was not performed. Tresch submitted the false invoices, which the firm paid, and of the $1.1 million paid during this period, Demars kicked back approximately $970,000 to Tresch, while retaining the remainder for himself, the indictment alleges.

Each count of mail fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The Court may impose an alternative fine totaling twice the loss to the victim or twice the gain to the defendant, whichever is greater. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines.

The government is being represented by Assistant U.S. Attorney Terra Reynolds.

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