Category Archives: Office of Inspector general

Security Contractors Plead Guilty in Virginia to Illegally Obtaining $31 Million from Contracts Intended for Disadvantaged Small Businesses

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Executives at two Arlington, Va.-based businesses have pleaded guilty to fraudulently obtaining more than $31 million in government contract payments that should have gone to disadvantaged small businesses.

 The guilty pleas were announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and NASA Inspector General Paul K. Martin.

“These executives used their knowledge and experience to abuse a program created to ensure minority small business owners could compete for government contracts,” said U.S. Attorney MacBride. “They not only illegally obtained millions from the United States, they also victimized legitimate minority owners who didn’t get the bids.”

“Keith Hedman and his co-conspirators fraudulently obtained valuable government contracts intended for minority-owned small businesses, and pocketed millions of dollars for themselves,” said Acting Assistant Attorney General Raman.  “They abused an important government program, and will now face the consequences.”

“This investigation confirmed that these executives repeatedly took actions that gave them a fraudulent advantage in the contracting process,” said NASA Inspector General Martin.  “I commend the outstanding efforts of our agents and our law enforcement partners involved in this case in protecting the integrity of the 8(a) program.”

According to court documents, Keith Hedman, 53, of Arlington, formed an Arlington-based security service consulting company in approximately 2001.  Hedman formed the company, listed as Company A in court filings, with an African-American woman who was listed as its president and CEO to enable the company to participate in the Small Business Administration’s (SBA) Section 8(a) program, which enables certain small businesses to receive sole-source and competitive-bid contracts set aside for minority-owned and disadvantaged small businesses.  In 2001, Hedman’s company received approval to participate in the 8(a) program on the basis of the African-American president and CEO’s listed role, but when she left the company in 2003, Hedman became its sole owner and the company was no longer 8(a)-eligible.

Hedman admitted that in 2003 he created a shell company, listed as Company B in court records, to ensure he could continue to gain access to 8(a) contracting preferences for which Company A was not qualified.  Prior to applying for the shell company’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, when in reality the new company would be managed by Hedman and senior leadership at Company A.  To deceive the SBA, they falsely claimed that Hamilton formed and founded the company and that she was the only member of the company’s management.  They continued to mislead the SBA through 2012, even lying to the SBA to overcome a protest filed by another company accusing Hedman’s former company and the shell company of being inappropriately affiliated.

From Company B’s creation through February 2012, Hedman – not Hamilton – exercised ultimate decision-making authority and control over the company by controlling its finances, allocation of personnel and government contracting activities.  Hedman nonetheless maintained the impression that Hamilton was leading the company, including through forgeries of signatures by Hamilton to documents she had not seen or drafted.  Hedman also retained ultimate control over the shell business’s bank accounts throughout its existence.  In 2011, Hedman withdrew $1 million in cash from Company B’s accounts and gave the funds in cash to Hamilton and three other co-conspirators. In total, Hedman and Hamilton secured through the shell company more than $31 million in government contract payments, which generated more than $6 million in salary and payments for the conspirators that they were not entitled to receive.

In addition, Hedman admitted that he agreed to pay a $50,000 bribe through the shell business to a U.S. government contracting official for the official’s help in securing contracts for Company B.

Hedman and Hamilton pleaded guilty on March 13 and March 15, 2013, respectively, in U.S. District Court for the Eastern District of Virginia to major government fraud and face a maximum penalty of 10 years in prison and a multimillion-dollar fine for that charge. Hedman also pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison.  Hedman agreed to forfeit more than $6.3 million, and Hamilton agreed to forfeit more than $1.2 million.  Hedman is scheduled to be sentenced on June 21, 2013, before U.S. District Judge Gerald Bruce Lee.  Hamilton’s sentencing is scheduled for June 21, 2013, before U.S. District Judge T. S. Ellis, III.

In addition, the following individuals have also pleaded guilty to major fraud or conspiracy to commit major fraud:

• David George Lux, 62, of Springfield, Va., pleaded guilty today before U.S. District Judge Leonie M. Brinkema.  Lux served as the chief financial officer at Company A from 2007 through February 2012 and performed work for Company B throughout that time while officially on Company A’s payroll.  He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.

• Joseph Richards, 51, of Arlington, pleaded guilty on March 14, 2013, before U.S. District Judge Brinkema in the Eastern District of Virginia.  Richards served as the chief operating officer and chief of staff for Company A from 2005 through 2008 and then vice president from 2010 through February 2012.  He also served as Company B’s chief of staff from 2008 through 2010.  According to court documents, Richards performed work for Company B throughout his time at both companies. He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.

• David Sanborn, 60, of Lexington, S.C., pleaded guilty on March 13, 2013, before U.S. District Judge Claude M. Hilton in the Eastern District of Virginia.  Sanborn served as vice president at Company A from 2001 through 2009 and the company’s president from 2010 through February 2012.  According to court documents, Sanborn performed work for Company B from its inception while on Company A’s payroll.  He is scheduled to be sentenced on June 28, 2013, by Judge Hilton.

This case was investigated by the NASA Office of the Inspector General (OIG), the SBA OIG, the Defense Criminal Investigative Service, the General Services Administration OIG and the Department of Homeland Security OIG.  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.

Former U.S. Army Corps Of Engineers Employee Sentenced To 13 Years In Prison For Multimillion-Dollar Bribery, Kickback Scheme

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At Least $50 Million in Iraq Construction Contracts Involved

NEWARK, N.J. – A former U.S. Army Corps of Engineers (USACE) Project Engineer deployed to Tikrit, Iraq, during Operation Iraqi Freedom was sentenced today to 156 months in prison for taking at least $3.7 million in bribes and kickbacks in connection with more than $50 million in USACE contracts awarded to foreign companies in Gulf Region North, Iraq, New Jersey U.S. Attorney Paul J. Fishman announced.

Egyptian-born U.S. citizen John Alfy Salama Markus, 40, of Nazareth, Pa., previously pleaded guilty before U.S. District Judge Jose L. Linares to three counts of a 54-count Indictment returned in July 2011 charging him with wire fraud, conspiracy to commit bribery and to defraud the U.S. government, money laundering and tax offenses. Two other USACE employees and two foreign contractors also were charged in the July 2011 Indictment. Judge Linares imposed the sentence today in Newark federal court.

“The Court’s lengthy sentence recognizes the significant harm Salama Markus caused when he corrupted tens of millions in Iraq construction contracts by treating projects to secure safe access to fuel, electricity, education and medical treatment as opportunities for illegally amassing personal wealth,” U.S. Attorney Fishman said. “Bribes should not be the cost of doing business with the United States. They violate our laws and unfairly tarnish those who serve our country with honor.”

“By accepting bribes and corrupting the acquisition process while deployed to a combat theater, Mr. Salama Markus failed in his duty to his country and betrayed his position of trust for personal greed, depriving the U.S. taxpayers of his honest service,” Acting Special Agent in Charge Craig W. Rupert, DCIS Northeast Field Office, said. “The Defense Criminal Investigative Service continues to aggressively root out corruption and fraud impacting our warfighters and to safeguard the proper use of U.S. taxpayer dollars.”

“Today’s sentencing of Salama Markus is a direct result of the excellent relationship IRS has with our law enforcement partners in combating violations of federal law,” Shantelle P. Kitchen, Acting Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office, said. “This sentence should send a clear message: illegally lining your own pocket for personal financial gain will not be tolerated, and individuals like Mr. Markus will be punished for their crimes.”

According to documents filed in this case and statements made in court:

From July 2007 to June 2008, Salama Markus accepted at least $3.7 million in bribe and kickback payments in connection with USACE contracts awarded to multiple companies associated with two foreign contractors named in the Indictment – Ahmed Nouri, a/k/a “Ahmed Bahjat,” 42, a citizen of Great Britain residing in Greece and Iraq and the former vice president of Operations for Iraqi Consultants & Construction Bureau (“ICCB”); and Mithaq Al-Fahal, a/k/a “Mithaq Mahmood Al-Fahal,” 38, an Iraqi citizen who was a senior project manager at Sakar Al-Fahal and controlled Dar Al Jubori Co. From September 2005 to July 2008, Salama Markus was assigned to Tikrit as a project engineer, where he and his co-worker, Onisem Gomez, were involved in the review and award process for contractors seeking lucrative USACE contracts in Gulf Region North, Iraq, as well as the administration, oversight and modification of such contracts, post-award.

Salama Markus admitted that he devised a scheme to provide favorable official action and assistance to co-conspirators Nouri and Al-Fahal for the benefit of their associated companies, including obtaining and disseminating confidential bid and internal USACE pricing information to individuals seeking the award of USACE contracts to their companies, and approving lucrative payments to these companies. All of these actions were taken in exchange for bribes and kickbacks that Salama Markus accepted from foreign contractors. Salama Markus also admitted paying more than $100,000 in bribe money received by Gomez.

Salama Markus opened or established control over multiple foreign bank accounts in Jordan and Egypt to receive illegal bribe and kickback payments that he took from foreign contractors in connection with USACE contracts awarded. With respect to some of these USACE contracts, Salama Markus created, maintained and sent via email to foreign contractors spreadsheets and other records detailing: (a) the value of USACE contracts awarded; (b) the percentage of those contracts that Salama Markus solicited and demanded; (c) the payments – whether by installment or lump sum – made to Salama Markus by foreign contractors in connection with the award of USACE contracts; and (d) in some cases, the date on which these illegal payments were accepted in cash or deposited into Salama Markus’ foreign bank accounts. A single page of one spreadsheet created by Salama Markus in July 2008 reflected his demand and acceptance of bribe payments totaling $1,958,500, or 10 percent of the contract value, from co-conspirator Al-Fahal in connection with the award to companies associated with Al-Fahal of $19,580,000 in contracts for the construction of segments of the Baghdad to Bayji Pipeline.

Salama Markus used the foreign bank accounts under his control to receive and transfer bribe and kickback payments from foreign contractors to at least 11 bank accounts opened, established and controlled by Salama Markus in New Jersey and Pennsylvania. Salama Markus also transferred bribe and kickback money to co-conspirator Gomez.

Salama Markus admitted that with the proceeds of his wire fraud scheme and bribery offenses he paid for the construction of a custom-built home in Nazareth, which was worth $1.1 million. He admitted that on Oct. 16, 2008, the date of settlement, he obtained a cashier’s check drawn on a Bank of America account for $850,807.54 made out to a title company in connection with the construction of the Nazareth home.

Salama Markus also admitted that, for calendar year 2009, he failed to file with the U.S. Department of Treasury a Report of Foreign Bank and Financial Accounts (FBAR), disclosing that he had a financial interest in, and signature and other authority over, certain financial accounts in foreign countries, including Jordan.

Salama Markus agreed to the entry of a forfeiture money judgment in the amount of at least $3.7 million, a portion of which will be satisfied by his forfeiture of the Nazareth residence, as well as his forfeiture of five vehicles and two motorcycles.

In addition to the prison term, Judge Linares sentenced Salama Markus to three years of supervised release, fined him $75,000 and ordered him to cooperate with the IRS concerning the payment of taxes and penalties.

U.S. Attorney Fishman credited special agents of DCIS, under the direction of Special Agent in Charge Craig W. Rupert, Acting Special Agent-in-Charge of the Northeast Field Office of the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service; IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen with the investigation leading to today’s sentence. He also thanked special agents of the U.S. Department of Homeland Security, Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Special Agent in Charge Andrew McLees; and the U.S. Army Criminal Investigation Command, Mid-Atlantic Fraud Field Office, under the direction of Special Agent in Charge William J. Stakes Jr., for their work in the ongoing investigation.

The government is represented by Assistant U.S. Attorneys Sandra L. Moser and Vikas Khanna of the U.S. Attorney’s Office Special Prosecutions Division in Newark.

CIA Contractors Settle False Claims Act and Kickback Allegations for $3 Million United States Alleges Companies Provided Government Employees with Meals and Entertainment to Steer Contract Award

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The Justice Department announced today that American Systems Corporation,  International Inc., and Corning Cable Systems LLC have agreed to pay the United States $3 million to settle allegations that they violated the False Claims Act and the Anti-Kickback Act in bidding on a contract with the CIA.

The settlement announced today resolves claims against these contractors related to a CIA contract awarded to American Systems in early 2009 to provide supplies and services.  American Systems teamed with Anixter to bid on the contract with Corning as a supplier.   The United States alleged that American Systems, Anixter and Corning provided gratuities, including meals, entertainment, gifts and tickets to sporting and other events, to CIA employees and outside consultants in order to influence contract specifications that would favor the three companies in the award of the contract. The settlement also resolves allegations that the three companies improperly received source selection information from a CIA employee to whom they had provided gratuities, and that they had concealed the gratuities prior to award.

“This settlement shows that the United States will protect the integrity of the federal procurement process from the wrongful activities of unscrupulous contractors,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice, Civil Division.   “Plying government officials with meals and entertainment to gain favorable treatment in the award of federal contracts corrupts the procurement process and will not be allowed.”  

 “Improper gifts and gratuities paid to government officials are a corrupting influence on government contracts. Combating this type of conduct is a high priority in the Eastern District of Virginia,” said U.S. Attorney for the Eastern District of Virginia Neil MacBride.

“This case clearly reflects that the CIA will respond effectively to allegations of fraud affecting agency programs,” said CIA Inspector General David B. Buckley. “My office treats contract fraud and related employee misconduct as one of our top investigative priorities, and we work closely with agency employees and the Department of Justice to ensure that illegal acts are addressed in an effective manner.”

The allegations resolved by the settlement were initiated by a lawsuit filed in the Eastern District of Virginia under the qui tam, or whistleblower, provisions of the False Claims Act by former Anixter sales representative, William Jones. Under the False Claims Act, private citizens may sue on behalf of the United States for false claims and share in any recovery obtained by the government. Jones will receive $585,000 as his share of the government’s recovery.

This settlement was the result of a coordinated effort by the United States Attorney’s Office for the Eastern District of Virginia; the Department of Justice, Civil Division, Commercial Litigation Branch; and the CIA, Office of Inspector General. The claims settled by this agreement are allegations only; there has been no determination of liability.

South Carolina Ambulance Company to Pay U.S $800,000 to Resolve False Claims Allegations

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Monday, February 25, 2013
Williston Rescue Squad Inc. has agreed to pay the United States $800,000 to resolve allegations that it violated the False Claims Act by making false claims for payment to Medicare for ambulance transports, the Justice Department announced today.  Williston, based in Williston, S.C., provides ambulance transport services in the southwestern part of South Carolina.

 

Medicare is a federally-funded health care program that is intended to provide basic medical insurance to people over the age of 65.  Medicare reimburses providers only for non-emergency ambulance transports if the patient transported is bed-confined or has a medical condition that requires ambulance transportation.  The settlement resolves allegations that Williston billed Medicare for routine, non-emergency ambulance transports that were not medically necessary and that Williston created false documents to make the transports appear to meet the Medicare requirements.

“Billing Medicare for unnecessary ambulance transports contributes to the soaring costs of health care,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division.  “The Department of Justice is committed to pursuing companies that waste limited Medicare funds.”

 

“Medicare fraud is stealing, and it is crippling America’s health care system.  We have doubled the number of attorneys working these cases in South Carolina.  Take notice, if you are bilking the Medicare system designed to support our elders, we are working to find you.  For the honest service providers, which is a greater majority of the community, you can report fraud at  1-800-MEDICARE,” said William N. Nettles, U.S. Attorney for the District of South Carolina.

 

The settlement resolves a lawsuit filed by Sandra McKee under the qui tam, or whistleblower provisions, of the False Claims Act.  McKee is a clinical social worker at a facility that regularly received patients transported by Williston’s ambulances.  Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery.  Ms. McKee will receive $160,000 as her share of the government’s recovery.

 

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.

 

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

 

The United States’ investigation was conducted by the U.S. Attorney’s Office for the District of South Carolina, the Justice Department’s Civil Division, and the U.S. Department of Health and Human Services, Office of the Inspector General.  The claims settled by this agreement are allegations only; there has been no determination of liability.

 

The False Claims Act suit was filed in the U.S. District Court for the District of South Carolina and is captioned United States ex rel. McKee v. Williston Rescue Squad, Inc., No.  11-CV-00186 (D.S.C.).

Illegal Marketer of Medicare Information Admits Role in Detroit-area Home Health Care Fraud Scheme

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Friday, February 22, 2013
A health care worker who sold Medicare beneficiary information to Detroit-area home health agency operators as part of a $24.7 million home health care fraud conspiracy pleaded guilty today for his role in the scheme, which sought to profit by billing for home healthcare services that were medically unnecessary and not provided.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.

Clarence Cooper, 54, of Detroit, pleaded guilty before U.S. District Judge Victoria A. Roberts in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.

According to court documents, Cooper and others conspired to defraud Medicare through purported home health care companies operating in the Detroit area, including now-defunct First Choice Home Health Care Services Inc. and Reliance Home Care, LLC.  Cooper admitted that he sold Medicare information he obtained from Detroit-area Medicare beneficiaries to other conspirators at these and other health care companies, knowing that it was to be used to submit claims to Medicare for home health services that were not medically necessary and/or not provided.  According to court documents, from 2008 through May 2012, Cooper sold co-conspirators the Medicare information of hundreds of Medicare beneficiaries, at $200 to $300 per beneficiary, and this Medicare information was used at these companies to bill Medicare for nearly $1 million in home health care services.

Court documents show that the larger scheme in which Cooper participated resulted in more than $24.7 million in claims to Medicare for the cost of home health services, psychotherapy and other medical services.

Cooper faces a maximum potential penalty of 10 years in prison and a $250,000 fine.  Sentencing is currently scheduled for July 23, 2013.

This case is being prosecuted by Trial Attorney William G. Kanellis and Assistant Chief Gejaa Gobena of the Criminal Division’s Fraud Section.  It was investigated by the FBI and HHS-OIG, and 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 Eastern District of Michigan.

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.

Former U.S. Army Staff Sergeant Pleads Guilty in Tennessee to Bribery Scheme

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A former U.S. Army staff sergeant pleaded guilty today to accepting thousands of dollars in bribes from contractors while he was deployed to Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of Tennessee William C. Killian.

Richard A. Gilliland, 44, of Fayetteville, Tenn., pleaded guilty before U.S. Magistrate Judge Susan K. Lee in the Eastern District of Tennessee to a criminal information charging him with one count of conspiracy to accept illegal bribes.

According to court documents, from October 2007 until November 2008, Gilliland was a U.S. Army staff sergeant who worked with the Civil Affairs Unit at Camp Victory in Iraq and also was assigned as a pay agent responsible for U.S. government funds.  As a pay agent, Gilliland was responsible for paying contractors to perform work in accordance with civil development objectives set forth by U.S. Army commanders in furtherance of the strategic mission of Coalition Forces in Iraq.

While deployed to Iraq in October 2007, Gilliland worked closely with two Iraqi contracting companies and their American representatives.  Gilliland admitted to receiving approximately $27,200 and a laptop in bribes from American representatives of the contracting companies in return for his attempt to influence contracts for the Iraqi-based contractors and his assistance in acquiring used and non-working generators from the Defense Reutilization and Marketing Office.  After receiving the bribes, Gilliland wired the cash payments he received back to the United States.

The case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and Assistant U.S. Attorney John MacCoon of the Eastern District of Tennessee.  The case was investigated by SIGIR.

Georgia Man Admits Taking Bribes to Allow $1 Million Theft of Government Equipment from Marine Base

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A retired employee of the Marine Corps Logistics Base Albany (MCLB-Albany) pleaded guilty today to receiving bribes in exchange for allowing heavy equipment to be stolen from the base for resale, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

Shelby C. Janes, 67, of Albany, Ga., pleaded guilty before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of bribery of a public official.

During his guilty plea, Janes, the former civilian inventory control manager of the distribution management center at MCLB-Albany, admitted to participating in a scheme in which he assisted an individual, referred to in court documents as “Person A,” in stealing heavy equipment – such as cranes, bulldozers and front-end loaders – from the base.  Person A, the owner of a commercial trucking business that was routinely contracted by the MCLB’s Defense Logistics Agency, then arranged to sell the equipment to private purchasers.

According to court documents, while working at the distribution management center, Janes was responsible for supervising a number of employees in the inventorying of obsolete equipment returning from the Fleet Marine Corps.  This equipment was sent to MCLB-Albany for one of two purposes: to be demilitarized and disposed of through eventual sale or destruction, or to be rehabilitated, repaired and redistributed to the Fleet Marine Corps.  To accomplish the theft scheme, Janes and one of his employees, referred to in court documents as “Public Official A,” facilitated the theft of the equipment, including by letting the equipment be driven off the base.  Janes admitted that to facilitate the unlawful removal of the equipment, he typically prepared a false DD Form 1348 authorizing the Defense Logistics Agency to release the equipment to Person A, and that the equipment was then sold to private purchasers for tens of thousands of dollars.

Janes also admitted that he received payments from Person A after the sale of the stolen equipment, often delivered to him by Public Official A on behalf of Person A in the form of a check or cash, totaling approximately $98,500 during the approximately 15-month scheme.  Janes admitted that the total loss to the Department of Defense from the theft of government equipment was approximately $1,075,000.

At sentencing, Janes faces a maximum potential penalty of 15 years in prison and a fine of twice the gain or loss from the offense.  As part of his plea agreement with the United States, Janes agreed to forfeit the bribe proceeds he received from the scheme, as well as to pay full restitution to the Department of Defense.  A sentencing date has not yet been set.

The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Justice Department’s Criminal Division Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.  The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit and the Department of Defense, Office of Inspector General Defense Criminal Investigative Service.

Financial Consultant Extradited to the United States for Alleged Scheme to Defraud the U.S. Export-import Ban

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Manuel Ernesto Ortiz-Barraza, an independent financial consultant, was extradited to the United States today for his alleged role in a scheme to defraud the Export-Import Bank of the United States (Ex-Im Bank) of over $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Texas Robert Pitman and Osvaldo L. Gratacos, Inspector General of the Ex-Im Bank.

Ortiz-Barraza, 56, was charged in an indictment unsealed on Oct. 19, 2011, in the Western District of Texas with one count of conspiracy to commit wire and bank fraud, three counts of wire fraud and one count of bank fraud for his alleged role in a scheme with several others to defraud the Ex-Im Bank.  Based on a provisional arrest warrant, Mexican authorities arrested Ortiz-Barraza in Mexico on Feb. 13, 2012, and he has been awaiting extradition to the United States, a process which was recently finalized by the Mexican courts.

According to the U.S. indictment and court documents, Ortiz-Barraza and his co-conspirators allegedly conspired to obtain Ex-Im Bank guaranteed loans through banks by creating false loan applications, false financial statements and other documents purportedly for the purchase and export of U.S. goods into Mexico.  Ortiz-Barraza and his co-conspirators allegedly falsified shipping records to support their claims of doing legitimate business and did not ship the goods that were guaranteed by the Ex-Im Bank.  After the loan proceeds were received, Ortiz-Barraza and his co-conspirators allegedly split the loan proceeds among themselves.  As a result of the alleged fraud, the conspirators’ loans defaulted, causing the Ex-Im Bank to pay claims to lending banks on a loss of over $2.5 million.

The charges and allegations contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.

The Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing.  The Ex-Im Bank provides a variety of financing mechanisms to help foreign buyers purchase U.S. goods and services.

The case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorney William Bowne of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Spitzer of the Western District of Texas, El Paso Division.  The case was investigated by the Ex-Im Bank Office of Inspector General, Homeland Security Investigations in El Paso, under the leadership of Acting Special Agent in Charge Dennis Ulrich; Internal Revenue Service-Criminal Investigation in Washington, D.C., under the leadership of Special Agent in Charge Rick A. Raven; and the U.S. Postal Inspection Service in Washington, D.C., under the leadership of Inspector in Charge Daniel S. Cortez.  Substantial assistance was provided by the U.S. Marshals Service and the Criminal Division’s Office of International Affairs in Washington, D.C.  The Department of Justice is particularly grateful to the government of Mexico for their assistance in this matter.

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.

Georgia Men Plead Guilty to Bribing Official to Secure Government Contracts Defendants Admit to Overcharging Defense Department More Than $900,000

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WASHINGTON – Two men employed by a machine products vendor in Albany, Ga., have pleaded guilty to bribing a public official working for a military organization at the Marine Corps Logistics Base Albany (MCLB-Albany) to secure contracts for machine products, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

Thomas J. Cole Jr., 43, and Fredrick W. Simon, 55, both of Albany, each pleaded guilty before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of bribery of a public official.

During their guilty pleas, Cole, the general manager of an Albany-based machine products vendor, and Simon, an employee responsible for processing sales orders, admitted to participating in a scheme to secure sales order contracts from the Maintenance Center Albany (MCA) at MCLB-Albany by subverting a competitive bid process.  The MCA is responsible for rebuilding and repairing ground combat and combat support equipment, much of which has been utilized in military missions in Afghanistan and Iraq, as well as other parts of the world.  To accomplish the scheme, Cole and Simon bribed a MCA purchase tech responsible for placing machine product orders.  Cole and Simon admitted to participating in the scheme at the purchase tech’s suggestion, after Simon had spoken with the purchase tech about how his company could obtain business from the MCA.  Cole and Simon admitted that, at the purchase tech’s request, they paid the purchase tech a bribe of at least $75 for each of the more than 1,000 sales orders MCA placed with their company.  According to court documents, the purchase tech would transmit sales bids to Simon and then communicate privately to him exactly how much money the company should bid for each particular order.  Cole and Simon admitted that these orders were extremely profitable, often times exceeding the fair market value of the machine products, sometimes by as much as 1,000 percent.

Cole and Simon further admitted that, at the purchase tech’s urging, in 2011 they began routing some orders through a second company, owned by Cole, because the volume of orders MCA placed with the first company was so high.  They also admitted that the purchase tech increased the bribe required for orders as the scheme progressed.  Cole and Simon admitted to paying the purchase tech approximately $161,000 in bribes during the nearly two-year scheme.  Cole admitted to personally receiving approximately $209,000 in proceeds from the scheme; Simon admitted to personally receiving approximately $74,500.  Both admitted that the total loss to the Department of Defense from overcharges associated with the machine product orders placed during the scheme was approximately $907,000.

At sentencing, Cole and Simon each face a maximum penalty of 15 years in prison and a fine of not more than twice the pecuniary loss to the government.  As part of their plea agreements with the United States, Cole and Simon both agreed to forfeit the proceeds they received from the scheme, as well as to pay full restitution to the Department of Defense.  Sentencing has not yet been scheduled.

The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.  The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit and the Defense Criminal Investigative Service.