Tag Archives: Eric Holder

Justice Department Recovers $3.8 Billion from False Claims Act Cases in Fiscal Year 2013

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The Justice Department secured $3. 8 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2013, Assistant Attorney General for the Civil Division Stuart F. Delery announced today.    This dollar amount, which is the second largest annual recovery of its type in history, brings total recoveries under the False Claims Act since January 2009 to $ 17 billion – nearly half the total recoveries since the Act was amended 27 years ago in 1986.

The Justice Department’s fiscal year 2013 efforts recovered more than $3 billion for the fourth year in a row and are surpassed only by last year’s nearly $5 billion in recoveries.    As in previous years, the largest recoveries related to health care fraud, which reached $2. 6  billion.    Procurement fraud (related primarily to defense contracts) accounted for another $ 890  million – a record in that area.

“It has been another banner year for civil fraud recoveries, but more importantly, it has been a great year for the taxpayer and for the millions of Americans, state agencies and organizations that benefit from government programs and contracts,” said Assistant Attorney General Delery.    “The $3. 8 billion in federal False Claims Act recoveries in fiscal year 2013, plus another $443 million in recoveries for state Medicaid programs, restores scarce taxpayer dollars to federal and state governments.    The government’s success in these cases is also a strong deterrent to others who would misuse public funds, which means government programs designed to keep us safer, healthier and economically more prosperous can do so without the corrosive effects of fraud and false claims.”

The False Claims Act is the government’s primary civil remedy to redress false claims for government funds and property under government contracts, including national security and defense contracts, as well as under government programs as varied as Medicare, veterans benefits, federally insured loans and mortgages, transportation and research grants, agricultural supports, school lunches and disaster assistance.    In 1986, Congress strengthened the Act by amending it to increase incentives for whistleblowers to file lawsuits on behalf of the government, which has led to more investigations and greater recoveries.

Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions, which allow private citizens to file lawsuits alleging false claims on behalf of the government.  If the government prevails in the action, the whistleblower, known as a relator, receives up to 30 perc  ent of the recovery.    The number of qui tam suits filed in fiscal year 2013 soared to 752 –100 more than the record set the previous fiscal year.    Recoveries in qui tam cases during fiscal year 2013 totaled $2. 9 billion , with whistleblowers recovering $345 million.

Health Care Fraud

The $2. 6 billion in health care fraud recoveries in fiscal year 2013 marks four straight years the department has recovered more than $2 billion in cases involving health care fraud.    This steady, significant and continuing success can be attributed to the high priority the Obama Administration has placed on fighting health care fraud.    In 2009, Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the creation of an interagency task force, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to increase coordination and optimize criminal and civil enforcement.    This coordination has yielded historic results:   From January 2009 through the end of the 2013 fiscal year, the department used the False Claims Act to recover $12 .1 billion in federal health care dollars.    Most of these recoveries relate to fraud against Medicare and Medicaid.    Additional information on the government’s efforts in this area is available at StopMedicareFraud.gov, a webpage jointly established by the Departments of Justice and Health and Human Services.

Some of the largest recoveries this past fiscal year involved allegations of fraud and false claims in the pharmaceutical and medical device industries.    Of the $2. 6 billion in federal health care fraud recoveries, $1.8 billion were from alleged false claims for drugs and medical devices under federally insured health programs that, in addition to Medicare and Medicaid, include TRICARE, which provides benefits for military personnel and their families, veterans’ health care programs and the Federal Employees Health Benefits Program.    The department recovered an additional $443 million for state Medicaid programs.

Many of these settlements involved allegations that pharmaceutical manufacturers improperly promoted their drugs for uses not approved by the Food and Drug Administration (FDA) – a practice known as “off-label marketing.”    For example, drug manufacturer Abbott Laboratories Inc. paid $1.5 billion to resolve allegations that it illegally promoted the drug Depakote to treat agitation and aggression in elderly dementia patients and schizophrenia when neither of these uses was approved as safe and effective by the FDA.    This landmark $1.5 billion settlement included $575 million in federal civil recoveries, $225 million in state civil recoveries and nearly $700 million in criminal fines and forfeitures.    In another major pharmaceutical case, biotech giant Amgen Inc. paid the government $762 million, including $598.5 million in False Claims Act recoveries, to settle allegations that included its illegal promotion of Aranesp, a drug used to treat anemia, in doses not approved by the FDA and for off-label use to treat non-anemia-related conditions.  For details, see Abbott, Abbott sentencing, and Amgen.

The department also settled allegations relating to the manufacture and distribution of adulterated drugs.    For example, generic drug manufacturer Ranbaxy USA Inc. paid $505 million to settle allegations of false claims to federal and state health care programs for adulterated drugs distributed from its facilities in India.  The settlement included $237 million in federal civil claims, $118 million in state civil claims and $150 million in criminal fines and forfeitures.    For details, see Ranbaxy.

Adding to its successes under the False Claims Act, the Civil Division’s Consumer Protection Branch, together with U.S. Attorneys across the country, obtained 16 criminal convictions and more than $1. 3 billion in criminal fines, forfeitures and disgorgement under the Federal Food, Drug and Cosmetic Act (FDCA).  The FDCA protects the health and safety of the public by ensuring, among other things, that drugs intended for use in humans are safe and effective for their intended uses and that the labeling of such drugs bears true, complete and accurate information.

In other areas of health care fraud, the department obtained a $237 million judgment against South Carolina-based Tuomey Healthcare System Inc., after a four-week trial, for violating the Stark Law and the False Claims Act.  The Stark Law prohibits hospitals from submitting claims to Medicare for patients referred to the hospital by physicians who have a prohibited financial relationship with the hospital.    Tuomey’s appeal of the $237 million judgment is pending.  If the judgment is affirmed on appeal, this will be the largest judgment in the history of the Stark Law.    For the court’s opinion, see Tuomey.

The department also recovered $26.3 million in a settlement with Steven J. Wasserman M.D., a dermatologist practicing in Florida, to resolve allegations that he entered into an illegal kickback arrangement with Tampa Pathology Laboratory that resulted in increased claims to Medicare.    Tampa Pathology Laboratory previously paid the government $950,000 for its role in the alleged scheme.    The $26.3 million settlement is one of the largest with an individual in the history of the False Claims Act.    For details, see Wasserman.

Procurement Fraud

Fiscal year 2013 was a record year for procurement fraud matters.    The department secured more than $887 million in settlements and judgments based on allegations of false claims and corruption involving government contracts.  Prominent among these successes was the department’s $664 million judgment against Connecticut-based defense contractor United Technologies Corp. (UTC).    A federal court found UTC liable for making false statements to the Air Force in negotiating the price of a contract for fighter jet engines.    In 2004, the department had won a smaller judgment after a three-month trial.  Both sides appealed, but the government’s arguments prevailed, resulting in the case being returned to the trial court to reassess damages.   The $664 million judgment, which UTC has appealed, is the largest judgment in the history of the False Claims Act and, if the appellate court affirms, will be the largest procurement recovery in history.    For details, see UTC.

The department also settled allegations of false claims with two companies in connection with their contracts with the General Services Administration (GSA) to market their products through the Multiple Award Schedule (MAS) program.    To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must provide GSA with complete, accurate and current information about their commercial sales practices, including discounts afforded to their commercial customers.    The government alleged that W.W. Grainger Inc., a national hardware distributor headquartered in Illinois, and Ohio-based RPM International Inc. and its subsidiary, Tremco Inc., a roofing supplies and services firm, failed to disclose discounts given to their commercial customers, which resulted in government customers paying higher prices.  The department recovered $70 million from W.W. Grainger in a settlement that also included allegations relating to a U.S. Postal Services contract and $61 million from RPM International Inc. and Tremco.  For details, see Grainger, RPM/Tremco.

Other Fraud Recoveries

A $45 million settlement with Japan-based Toyo Ink S.C. Holdings Co. Ltd. and its Japanese and United States affiliates (collectively Toyo) demonstrates the breadth of cases the department pursues.  This settlement resolved allegations that Toyo misrepresented the country of origin on documents presented to the Department of Homeland Security’s U.S. Customs and Border Protection to evade antidumping and countervailing duties on imports of the colorant carbazole violet pigment into the United States.    These duties protect U.S. businesses by offsetting unfair foreign pricing and foreign government subsidies.    For details, see Toyo.

The False Claims Act also is used to redress grant fraud.    In a significant case involving a grant from the Department of Education, Education Holdings Inc. (formerly The Princeton Review Inc.) paid $10 million to resolve allegations that the company fabricated attendance records for thousands of hours of afterschool tutoring of students that was funded by the federal grant.  For details, see Education Holdings.

Recoveries in Whistleblower Suits

Of the $3. 8 billion the department recovered in fiscal year 2013, $2. 9 billion related to lawsuits filed under the qui tam provisions of the False Claims Act.    During the same period, the department paid out more than $345 million to the courageous individuals who exposed fraud and false claims by filing a qui tam complaint.    (The average share paid to whistleblowers in fiscal year 2013 cannot be determined from these numbers because the awards paid to whistleblowers in one fiscal year do not always coincide with the fiscal year in which the case was resolved, and the fiscal year’s recoveries may include amounts to settle allegations outside the whistleblower’s complaint.)

Whistleblower lawsuits were in the range of three to four hundred per year from 2000 to 2009, when they began their climb from 433 lawsuits in fiscal year 2009 to 752  lawsuits in fiscal year 2013.    Due to the complexity of fraud investigations generally, the outcomes of many of the qui tam cases filed this past fiscal year are not yet known, but the growing number of lawsuits filed since 2009 have led to increased recoveries.    Qui tam recoveries exceeded $2 billion for the first time in fiscal year 2010 and have continued to exceed that amount every year since.    Qui tam recoveries this past fiscal year bring the department’s totals since January 2009 to $13.4 billion.    During the same period, the department paid out $1.98 billion in whistleblower awards.

“These recoveries would not have been possible without the brave contributions made by ordinary men and women who made extraordinary sacrifices to expose fraud and corruption in government programs,” said Assistant Attorney General Delery.    “We are also grateful to Congress and its continued support of strengthening the False Claims Act, including its qui tam provisions, giving the department the tools necessary to pursue false claims.”

In 1986, Senator Charles Grassley and Representative Howard Berman led successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud.  In 2009, Senator Patrick J. Leahy, along with Senator Grassley and Representative Berman, championed the Fraud Enforcement and Recovery Act of 2009, which made additional improvements to the False Claims Act and other fraud statutes.    And in 2010, the passage of the Affordable Care Act provided additional inducements and protections for whistleblowers and strengthened the provisions of the federal health care Anti-Kickback Statute.

Assistant Attorney General Delery also expressed his deep appreciation for the dedicated public servants who investigated and pursued these cases.    These individuals include attorneys, investigators, auditors and other agency personnel throughout the Justice Department’s Civil Division, the U.S. Attorneys’ Offices, the Departments of Defense and Health and Human Services, the various Offices of Inspector General and the many other federal and state agencies that contributed to the department’s recoveries this past fiscal year.

“The department’s continued success in recovering fraudulent claims for taxpayer money this past fiscal year is a product of the tremendous skill and dedication of the people who worked on these cases and investigations and continue to work hard to protect against the misuse of taxpayer dollars,” said Delery.

Government Intervenes in False Claims Lawsuit Against Ipc the Hospitalist Co. Inc. Alleging Overbilling of Physician Services

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The government has intervened in a lawsuit against IPC The Hospitalist Co. Inc., and its subsidiaries (IPC), alleging that IPC submitted false claims to federal health care programs, the Justice Department announced today.  IPC, based in North Hollywood, Calif., is one of the largest providers of hospitalist services in the United States, employing physicians and other health care providers who work in more than 1,300 facilities in 28 states.  Hospitalists are physicians who work only in hospitals and other long-term care facilities, overseeing and coordinating inpatient care from admission to discharge.

The lawsuit alleges that IPC physicians sought payment for higher and more expensive levels of medical service than were actually performed – a practice commonly referred to as “upcoding.”  Specifically, the lawsuit alleges that IPC encouraged its physicians to bill at the highest levels regardless of the level of service provided, trained physicians to use higher level codes and encouraged physicians with lower billing levels to “catch up” to their peers.

“We continue to be vigilant in our enforcement efforts to ensure that health care programs funded by the taxpayers pay only for appropriate costs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.

The lawsuit was filed by Dr. Bijan Oughatiyan, a former IPC physician, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue for false claims on behalf of the government and to share in any recovery.  The Act also allows the government to intervene or take over the lawsuit, as it has done in this case, and to recover three times its damages plus civil penalties.  The government has asked the U.S. District Court in Chicago for 120 days to file its own complaint stating its allegations.

This intervention illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  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 this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $17 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case was investigated by the Commercial Litigation Branch, Civil Division, U.S. Department of Justice and the U.S. Attorney’s Office for the Northern District of Illinois, with assistance from the Department of Health and Human Services Office of Inspector General. The case is captioned United States ex rel. Oughatiyan v. IPC The Hospitalist Company Inc., et al., Civ. No. 09 C 5418 (N.D. Ill.).  The claims asserted against IPC are allegations only; there has been no determination of liability.

Nursing Home Operator to Pay $48 Million to Resolve Allegations That Six California Facilities Billed for Unnecessary Therapy

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The Ensign Group Inc., a skilled nursing provider based in Mission Viejo, Calif., that operates nursing homes across the western U.S. has agreed to pay $48 million to resolve allegations that it knowingly submitted to Medicare false claims for medically unnecessary rehabilitation therapy services, the Justice Department announced today.  Six of Ensign’s skilled nursing facilities in California allegedly submitted the false claims:  Atlantic Memorial Healthcare Center, located in Long Beach; Panorama Gardens, located in Panorama City; The Orchard Post-Acute Care (a.k.a. Royal Court), located in Whittier; Sea Cliff Healthcare Center, located in Huntington Beach; Southland, located in Norwalk; and Victoria Care Center, located in Ventura.

  “Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

Between January 1, 1999, and August 31, 2011, these six Ensign skilled nursing facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary.  Specifically, Ensign provided therapy to patients whose conditions and diagnoses did not warrant it, solely to increase its reimbursement from Medicare.  The government further alleged that Ensign created a corporate culture that improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue.  These targets were set without regard to patients’ individual therapy needs and could only be achieved by billing at the highest reimbursement levels.  The government also alleged that Ensign billed for inflated amounts of therapy it had not provided and that certain patients were kept in these facilities for periods of time exceeding what was medically necessary for treatment of their conditions.

“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said U.S. Attorney for the Central District of California André Birotte Jr.  “This settlement – one of the largest Medicare fraud cases against a nursing home chain in U.S. history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”

In addition to paying the settlement amount, Ensign also agreed that each of its skilled nursing facilities across the nation would be bound by the terms of a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG).

“Billing Medicare for costly, unnecessary skilled nursing services — as the government alleged here — inflates health care costs borne by taxpayers,” said Special Agent in Charge for the Los Angeles Region of the HHS-OIG Glenn R. Ferry.  “This settlement again puts on notice those who would consider defrauding federally funded health care programs.”

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  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 this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The allegations settled today arose from lawsuits filed by two former Ensign therapists under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and to share in any recovery.  The dollar amount that the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive has not been determined.  The lawsuits are captioned as United States of America ex rel. Gloria Patterson v. Ensign Group Inc., Case No. SACV 06-6956 CJC (ANx) (C.D. Calif.) and United States of America ex rel. Carol Sanchez v. Ensign Group Inc., Case No. SACV 06-0643 CJC (ANx) (C.D. Calif.).

The case was handled by the U.S. Attorney’s Office for the Central District of California, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice and the U.S. Department of Health and Human Services Office of Inspector General.   This action was supported by the Elder Justice and Nursing Home Initiative, which coordinates the department’s activities combating elder abuse, neglect and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid and other federal health care programs.

JUSTICE DEPARTMENT REQUIRES US AIRWAYS AND AMERICAN AIRLINES TO DIVEST FACILITIES AT SEVEN KEY AIRPORTS TO ENHANCE SYSTEM-WIDE COMPETITION AND SETTLE MERGER CHALLENGE

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Divestitures at Airports in Boston, Chicago, Dallas, Los Angeles, Miami, New York and Near Washington, D.C. Opens Door for Low Cost Carriers to Compete Resulting in More Choices and More Competitive Airfares for Consumers

WASHINGTON — The  Department of Justice today announced that it is requiring US Airways Group Inc. and American  Airlines’ parent corporation, AMR Corp. to divest slots and gates at key  constrained airports across the country to low cost carrier airlines (LCCs) in  order to enhance system-wide competition in the airline industry resulting in  more choices and more competitive airfares for consumers.

The  department said the proposed settlement will increase the presence of the LCCs  at Boston Logan International, Chicago O’Hare International, Dallas Love Field,  Los Angeles International, Miami International, New York LaGuardia  International and Ronald Reagan Washington National.  Providing the LCCs with the incentive and  ability to invest in new capacity and permitting them to compete more  extensively nationwide will enhance meaningful competition in the industry and  benefit airline travelers.

“This  agreement has the potential to shift the landscape of the airline industry. By  guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this  settlement ensures airline passengers will see more competition on nonstop and  connecting routes throughout the country,” said Attorney General Eric Holder.  “The department’s ultimate goal has remained steadfast throughout this process  – to ensure vigorous competition in airline travel. This is vital to millions  of consumers who will benefit from both more competitive prices and enhanced  travel options.”

Six  state attorneys general–Arizona, Florida, Pennsylvania, Michigan, Tennessee and  Virginia–and the District of Columbia joined in the department’s proposed  settlement, which was filed in the U.S. District Court for the District of  Columbia.  If approved by the court, the  settlement will resolve the department’s competitive concerns and the  lawsuit.

“The  extensive slot and gate divestitures at these key airports are groundbreaking  and they will dramatically enhance the ability of LCCs to compete system-wide,”  said Assistant Attorney General Bill Baer of the Department of Justice’s  Antitrust Division.  “This settlement  will disrupt the cozy relationships among the incumbent legacy carriers,  increase access to key congested airports and provide consumers with more  choices and more competitive airfares on flights all across the country.”

On  Aug. 13, 2013, the department, six state attorneys general and the District of  Columbia filed an antitrust lawsuit against US Airways and American alleging  that US Airway’s $11 billion acquisition of American would have substantially  lessened competition for commercial air travel in local markets throughout the  United States.  The department alleged  that the transaction would result in passengers paying higher airfares and  receiving less service.  In addition, the  department alleged that the transaction would entrench the merged airline as  the dominant carrier at Reagan National, where it would control 69 percent of  take-off and landing slots, thus effectively foreclosing entry or expansion by  competing airlines.

The  settlement requires US Airways and American to divest slots, gates and ground  facilities at key airports around the country.   Specifically, the settlement requires the companies to divest or  transfer to low cost carrier purchasers approved by the department:

All  104 air carrier slots (i.e. slots not reserved for use only by smaller,  commuter planes) at Reagan National and rights and interest in other facilities  at the airport necessary to support the use of the slots;

Thirty-four  slots at LaGuardia and rights and interest in other facilities at the airport  necessary to support the use of the slots; and

Rights  and interests to two airport gates and associated ground facilities at each  of  Boston Logan, Chicago O’Hare, Dallas  Love Field, Los Angeles International and Miami International.

The  Reagan National and LaGuardia slots will be sold under procedures approved by  the department.  Under the terms of the  settlement, JetBlue at Reagan National and Southwest at LaGuardia will be given  the opportunity to acquire the slots they currently lease from American.  The remaining 88 slots at Reagan National and  24 slots at LaGuardia plus any JetBlue or Southwest decline to acquire will be  grouped into bundles, taking into account specific slot times to ensure  commercially viable and competitive patterns of service for the recipients of  the divested slots.  The parties will  divest these slot bundles and all rights and interests in any gates and other  ground facilities (e.g., ticket counters, baggage handling facilities, office  space and loading bridges) as necessary to support the use of the purchased  slots.

The  gates at the five airports will be transferred on commercially reasonable terms  to the new acquirers.  The acquirers of  the slot and gate divestitures also require approval of the department.  Preference will be given to airlines at each  airport that do not currently operate a large share of slots or gates.

The  proposed settlement allows the department to appoint a monitoring trustee to  oversee the divestitures or transfers of the slots and gates. The settlement  also prohibits the merged company from reacquiring an ownership interest in the  divested slots or gates during the term of the settlement.  The companies must also provide advance  notice of any future slot acquisition at Reagan National regardless of whether  or not it is a reportable transaction under the premerger notification law and  further provides for waiting periods and opportunities for the department to  obtain additional information in order to review the transaction.

AMR  is a Delaware corporation with its principal place of business in Fort Worth,  Texas.  AMR is the parent company of  American Airlines.  Last year American  flew more than 80 million passengers to more than 250 destinations worldwide  and took in more than $24 billion in revenue.   In November 2011, American filed for bankruptcy reorganization.

US Airways is a Delaware  corporation with its principal place of business in Tempe, Ariz.  Last year US Airways flew more than 50  million passengers to more than 200 destinations worldwide and took in more  than $13 billion in revenue.

NINE AUTOMOBILE PARTS MANUFACTURERS AND TWO EXECUTIVES AGREE TO PLEAD GUILTY TO FIXING PRICES ON AUTOMOBILE PARTS SOLD TO U.S. CAR MANUFACTURERS AND INSTALLED IN U.S. CARS

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WASHINGTON — Nine Japan-based companies and two executives have agreed to  plead guilty and to pay a total of more than $740 million in criminal fines for  their roles in separate conspiracies to fix the prices of more than 30 different  products sold to U.S. car manufacturers and installed in cars sold in the  United States and elsewhere, the Department of Justice announced today.  The department said that price-fixed automobile  parts were sold to Chrysler, Ford and General Motors, as well as to the  U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota and Fuji Heavy  Industries–more commonly known by its brand name, Subaru.

“These international price-fixing conspiracies affected more  than $5 billion in automobile parts sold to U.S. car manufacturers, and more  than 25 million cars purchased by American consumers were affected by the  illegal conduct,” said Attorney General Eric Holder.  “The Department of Justice will continue to  crack down on cartel behavior that causes American consumers and businesses to  pay higher prices for the products and services they rely upon in their  everyday lives.”

“Some of the price-fixing conspiracies  lasted for a decade or longer, and many car models were fitted with multiple  parts that were fixed by the auto parts suppliers,” said Scott D. Hammond, Deputy  Assistant Attorney General of the Antitrust Division’s criminal enforcement  program.  “The Antitrust Division has  worked hand in hand with its international competition colleagues who have  provided invaluable assistance to the Justice Department in breaking up these worldwide  price-fixing cartels.”

“Today’s  charges should send a message to companies who believe they don’t need to  follow the rules,” said Ronald Hosko, Assistant Director of the FBI’s Criminal  Division.  “If you violate the laws of  this country, the FBI will investigate and put a stop to the threat you pose to  our commercial system.  The integrity of  our markets is a part of the foundation of a free society.”

Including those announced today, 20 companies and 21 executives have been charged in the Antitrust Division’s  ongoing investigation into price fixing and bid rigging in the auto parts  industry.  All 20 companies have either  pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.6  billion in criminal fines.  Seventeen of  the 21 executives have been sentenced to serve time in U.S. prisons or have  entered into plea agreements calling for significant prison sentences.

Each of the companies and executives  charged today has agreed to cooperate with the department’s ongoing antitrust investigation.  The plea agreements are subject to court approval.  The companies’ and executives’ agreed-upon fines and sentences are:

  • Hitachi Automotive Systems Ltd. to pay a $195 million criminal fine;
  • Jtekt Corporation to pay a $103.27 million criminal fine;
  • Mitsuba Corporation to pay a $135 million criminal fine;
  • Mitsubishi Electric Corporation (MELCO) to pay a $190 million criminal fine;
  • Mitsubishi Heavy Industries Ltd. to pay a $14.5 million criminal fine;
  • NSK Ltd. to pay a $68.2 million criminal fine;
  • T.RAD Co. Ltd. to pay a $13.75 criminal fine;
  • Valeo Japan Co. Ltd. to pay a $13.6 million criminal fine;
  • Yamashita Rubber Co. Ltd. to pay a $11 million criminal fine;
  • Tetsuya Kunida, a Japanese citizen and former executive of a U.S. subsidiary of a Japan-based automotive       anti-vibration rubber products supplier to serve 12 months and one day in a U.S. prison, and to pay a $20,000 criminal fine; and
  • Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier to serve 14 months in a U.S. prison, and to pay a $20,000 criminal fine.

MELCO and Hitachi conspired with each other and other  co-conspirator firms not charged today on sales of certain auto parts,  including starter motors, alternators, and ignition coils, the department said. Mitsuba and Mitsubishi Electric conspired together and with other  co-conspirators not charged today on certain sales of starter motors.  Each of the other companies charged today  colluded with other unnamed co-conspirators.

Generally, the companies, executives and co-conspirators  engaged in the various price-fixing schemes by attending meetings and  communicating by telephone in the United States and Japan to reach collusive  agreements to rig bids, set prices and allocate the supply of auto parts sold  to the car manufacturers.  They took  measures to keep their conduct secret by using code names and meeting in remote  locations.  Those charged also had  further communications to monitor and enforce the collusive agreements.

The multiple conspiracies also harmed U.S. automobile plants  in 14 states: Alabama; California; Georgia; Illinois; Indiana; Kansas;  Kentucky; Michigan; Mississippi; Missouri; Ohio; Tennessee; Texas and  Wisconsin, the department said.

The department has coordinated  its investigation with the Japanese Fair Trade Commission, the European  Commission, Canadian Competition Bureau, Korean Fair Trade Commission, Mexican Federal  Economic Competition Commission and Australian Competition and Consumer  Commission.

The following charges were filed today in U.S. District Court  for the Eastern District of Michigan in Detroit:

Hitachi Automotive Systems Ltd.

According to a one-count  felony charge, Hitachi and co-conspirators engaged in a conspiracy, by agreeing  during meetings and conversations, to rig bids for, and to fix, stabilize and  maintain the prices of auto parts it sold to Ford, General Motors, Honda,  Nissan and Toyota, in the United States and elsewhere. The affected auto  parts include starter motors, alternators, air flow meters, valve timing  control devices, fuel injection systems, electronic throttle bodies, ignition  coils, inverters and motor generators. According to the charge, Hitachi and its  co-conspirators carried out the conspiracy from at least as early as January 2000  until at least February 2010.

Hitachi manufactures and sells auto parts to automobile manufacturers  throughout the world. The affected auto parts perform an array of  functions in automobile engines, from regulating air and fuel flow to starting  the engine to controlling the timing of engine valves.

Mitsuba  Corporation

According to a two-count felony charge,  Mitsuba and co-conspirators engaged in a conspiracy, by agreeing during  meetings and conversations, to rig bids for, and to fix, stabilize and maintain  the prices of windshield washer systems and components, windshield wiper  systems and components, starter motors, power window motors, and fan motors it  sold to Chrysler, Honda, Subaru, Nissan and  Toyota in the United States and elsewhere. According to the charge,  Mitsuba and its co-conspirators carried out the conspiracy from January 2000  until February 2010.  Mitsuba also agreed  to plead guilty to one count of obstruction of justice, because of the  company’s efforts to destroy evidence ordered by a high-level U.S.-based  executive after learning of the U.S. investigation of collusion in the auto  parts industry.

Mitsuba manufactures and sells numerous automotive parts to automobile  manufacturers throughout the world.  The  affected auto parts perform an array of functions in automobiles.  Windshield washer and wiper systems include a  number of components and are designed to clear water or snow from vehicle  windows.  Starter motors are small  electric motors used in starting internal combustion engines.  Power window motors are small electric motors  used to raise and lower vehicle windows.   Fan motors are small electric motors used to turn radiator cooling fans.

Mitsubishi  Electric Corporation (MELCO)

According to a one-count felony charge, MELCO and co-conspirators engaged  in a conspiracy, by agreeing during meetings and conversations, to rig bids  for, and to fix, stabilize and maintain the prices of automotive parts,  including starter motors, alternators and ignition coils, it sold to Chrysler, Ford,  General Motors, Honda, Fuji Heavy Industries Ltd. (Subaru), Nissan, and certain  of their subsidiaries in the United States and elsewhere. According to  the charge, MELCO and its co-conspirators carried out the conspiracy from at  least as early as January 2000 until at least February 2010.

MELCO manufactures and sells automotive parts, including starter  motors, alternators, and ignition coils. Starter motors are small  electric motors used in starting internal combustion engines. Alternators  generate an electric current while the engine is in operation.  Ignition coils are part of the fuel ignition  system and release electric energy suddenly to ignite a fuel mixture.

Mitsubishi  Heavy Industries Ltd.

According to a one-count felony charge, Mitsubishi Heavy Industries  Ltd. (MHI) and co-conspirators engaged in a conspiracy, by agreeing during  meetings and conversations, to rig bids for, and to fix, stabilize and maintain  the prices of compressors and condensers it sold to General Motors and  Mitsubishi Motors North America in the United States and elsewhere.  According to the charge, MHI and its co-conspirators carried out the conspiracy  from at least as early as January 2001 until at least February 2010.

MHI manufactures and sells compressors and condensers. A  compressor produces and circulates highly pressurized refrigerant gas  throughout the car air conditioning system. A condenser cools the engine  by condensing the refrigerant gas into liquid and releasing heat.

T.RAD  Co. Ltd.

According to a  one-count felony charge, T.RAD Co. Ltd. and co-conspirators engaged in a  conspiracy, by agreeing during meetings and conversations, to rig bids for, and  to fix, stabilize and maintain the prices of radiators it sold to Toyota and  Honda and the prices of automatic transmission fluid warmers (ATF warmers) sold  to Toyota in the United States and elsewhere. According to the charge, T.RAD  and its co-conspirators carried out the conspiracy from November 2002 until  February 2010.

T.RAD manufactures and sells heat exchangers, including radiators and  ATF Warmers. Radiators are devices  located in the engine compartment of a vehicle that cool the engine. ATF warmers are devices located in the engine compartment of  a vehicle that warm the automatic transmission fluid.

Valeo  Japan Co. Ltd.

According to a  one-count felony charge, Valeo Japan Co. Ltd. and co-conspirators engaged in a  conspiracy, by agreeing during meetings and conversations, to allocate the  supply of, rig bids for, and to fix, stabilize and maintain the prices of air  conditioning systems it sold to Nissan North America Inc., Suzuki Motor  Corporation and Subaru, in the United States and elsewhere.  According to the charge, Valeo and its  co-conspirators carried out the conspiracy from April 2006 until February 2010.

Valeo was engaged in the manufacture and sale of automotive air conditioning  systems, which are systems that cool the interior environment of a  vehicle. Air conditioning systems, whether sold together or separately,  are defined as automotive compressors, condensers, HVAC units (typically  consisting of a blower motor, actuators, flaps, evaporator, heater core, and  filter embedded in a plastic housing), control panels, sensors and associated  hoses and pipes.

Gary  Walker

According to a  one-count felony charge, Gary Walker, a U.S. citizen and former executive of a  U.S. subsidiary of a Japan-based automotive products supplier, engaged in a  conspiracy to rig bids for, and to fix, stabilize and maintain the prices of  seatbelts sold to Honda, Mazda, Nissan, Subaru and Toyota in the United States  and elsewhere. According to the charge, Walker and his co-conspirators  carried out the conspiracy from at least Jan. 1, 2003 until at least February  2010.

The  following charges were filed today in U.S. District Court for the Southern  District of Ohio in Cincinnati:

Jtekt  Corporation

According to  a two-count felony charge, Jtekt and co-conspirators engaged in a  conspiracy, by agreeing during meetings and conversations, to allocate  markets, to rig bids for, and to fix, stabilize and maintain the prices of bearings it  sold to Toyota and electric powered steering assemblies it sold to Nissan,  in the United States and elsewhere. According to the charge, Jtekt and its  co-conspirators carried out the bearings conspiracy from 2000 until July 2011  and the steering assemblies conspiracy from 2005 until October 2011.

Jtekt manufactures and sells bearings and steering assemblies.  Bearings are widely used in industry in numerous  applications for many products. Bearings reduce friction and help  components to roll smoothly past on another.   Electric powered steering assemblies provide electric power to  help the driver more easily steer the automobile. Electric powered  steering assemblies link the steering wheel to the tires, and include the  column, intermediate shaft and electronic control unit, among other parts, but  do not include the steering wheel or tires.

NSK  Ltd.

According to a one-count felony  charge, NSK and co-conspirators engaged in a conspiracy, by agreeing during  meetings and conversations, to allocate markets, to rig bids for, and to  fix, stabilize and maintain the prices of bearings it sold to Toyota, in the United States and  elsewhere.  NSK manufactures and sells bearings.  According to the charge, NSK and its  co-conspirators carried out the conspiracy from 2000 until July 2011.

The  following charges were filed today in U.S. District Court for the Northern  District of Ohio in Toledo:

Yamashita  Rubber Co. Ltd.

According to a one-count felony charge, Yamashita Rubber Co. Ltd. and  co-conspirators engaged in a conspiracy, by agreeing during meetings and  conversations, to rig bids for, and to fix, raise, and maintain the prices of  automotive anti-vibration rubber products it sold in the United States and  elsewhere to Honda Motor Co. Ltd., American Honda Motor Company Inc. and Suzuki  Motor Corporation.  According to the  charge, Yamashita Rubber Co. and its co-conspirators carried out the  conspiracy from at least April 2003 until May 2012.

Automotive anti-vibration rubber products are comprised primarily of  rubber and metal, and are installed in automobiles to reduce engine and road  vibration.

Tetsuya  Kunida

According to a  one-count felony charge, Tetsuya Kunida, a former executive of a U.S.  subsidiary of a Japan-based automotive anti-vibration rubber products supplier,  engaged in a conspiracy, by agreeing during meetings and conversations, to rig  bids for, and to fix, raise, and maintain the prices of automotive  anti-vibration rubber products.  The  conspiracy affected sales of automotive anti-vibration rubber products to  Toyota Motor Corporation and other automakers in the United States and  elsewhere.  ccording to the charge,  Kunida and his co-conspirators carried out the conspiracy from at least  November 2001 until May 2012.

DENSO Corporation, Nippon Seiki Ltd., Tokai Rika Co. Ltd.,  Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd.,  Autoliv Inc., TRW Deutschland Holding GmbH, Diamond Electric Mfg. Co. Ltd., and  Panasonic Corporation have already pleaded guilty. Fifteen individuals  have been sentenced to pay criminal fines and to serve prison sentences ranging  from a year and a day to two years each.

The companies and individuals are charged with price fixing  in violation of the Sherman Act, which carries maximum penalties of a $100  million criminal fine for corporations and a $1 million criminal fine and 10  years in prison for individuals. The maximum fine may be increased to  twice the gain derived from the crime or twice the loss suffered by the victims  of the crime, if either of those amounts is greater than the statutory maximum  fine.  Additionally, Mitsuba was also  charged with obstruction of justice, which carries a maximum penalty of a $500,000  criminal fine.

The charges are the result of an ongoing federal  antitrust investigation into price fixing, bid rigging and other  anticompetitive conduct in the automotive parts industry, which is being  conducted by each of the Antitrust Division’s criminal enforcement sections and  the FBI. Today’s charges were brought by the Antitrust Division’s Chicago  Office, New York Office, the National Criminal Enforcement Section, and the  FBI’s Cincinnati, Cleveland, Detroit, New York and Washington Field Offices,  with the assistance of the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid  rigging and other anticompetitive conduct related to other products in the  automotive parts industry should contact the Antitrust Division’s Citizen Complaint  Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

ICAP Brokers Face Felony Charges for Alleged Long-Running Manipulation of LIBOR Interest Rates

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Two former derivatives brokers and a former cash broker employed by London-based brokerage firm ICAP were charged as part of the ongoing criminal investigation into the manipulation of the London Interbank Offered Rate (LIBOR), the Justice Department announced today.

Darrell Read, who resides in New Zealand, and Daniel Wilkinson and Colin Goodman, both of England, were charged with conspiracy to commit wire fraud and two counts of wire fraud in a criminal complaint unsealed in Manhattan federal court earlier today.  They each face a maximum penalty of 30 years in prison for each count upon conviction.

“By allegedly participating in a scheme to manipulate benchmark interest rates for financial gain, these defendants undermined the integrity of the global markets,” said Attorney General Eric Holder. “They were supposed to be honest brokers, but instead, they put their own financial interests ahead of that larger responsibility.  And as a result, transactions and financial products around the world were compromised, because they were tied to a rate that was distorted due to the brokers’ dishonesty.  These charges underscore the Justice Department’s determination to hold accountable all those whose conduct threatens the integrity of our financial markets.”

“These three men are accused of repeatedly and deliberately spreading false information to banks and investors around the world in order to fraudulently move the market and help their client fleece his counterparties,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.  “Our criminal investigation of the manipulation of LIBOR by some of the largest banks in the world has led us from New York to London, to Tokyo, and other financial hubs around the globe.  These important charges are just the latest law-enforcement action in the Criminal Division and Antitrust Division’s global LIBOR investigation, and reflect the Department’s continued dedication to detecting, and prosecuting, financial fraudsters who affect U.S. markets, whether they work at a bank, or a brokerage, and whether they carry out their fraud from a desk in the United States, or abroad.”

“The complaint unsealed today charges Colin Goodman, Daniel Wilkinson and Darrell Read for conspiring to manipulate benchmark interest rates that determined the profitability of their client’s trades,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program.  “In exchange for bigger bonus checks, the three defendants undermined financial markets around the world by compromising the integrity of globally used interest rate benchmarks.  The Department continues to demonstrate its commitment to protecting the interest of American citizens in free and fair financial markets.”

“Corporate and securities fraud involving the manipulation of these rates causes a worldwide impact on trading positions and erodes the integrity of the market and confidence in Wall Street,” said Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office.  “Unraveling such complex financial schemes is difficult and time consuming.  Today’s charges are the result of the hard work of the FBI special agents and forensic accountants who dedicated significant time and resources to investigating this case.”

According to the criminal complaint, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR is published by the British Bankers’ Association (BBA), a trade association based in London.  At the time relevant to the criminal complaint, LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The published LIBOR “fix” for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the contributor panel) selected by the BBA.

LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were estimated at approximately $450 trillion.

According to allegations in the criminal complaint filed in this case, between July 2006 and September 2010, Wilkinson was a desk director employed in the London office of ICAP, where he supervised a group of derivatives brokers – including Read – specializing in Yen-based financial products.  Generally, the desk’s clients were derivatives traders at large financial institutions, and the transactions brokered by Wilkinson, Read and others on the desk essentially consisted of bets between traders on the direction in which Yen LIBOR would move.  Between July 2006 and September 2009, the desk’s largest client was a senior trader at UBS (UBS Trader) in Tokyo, to whom Read spoke almost daily.  Because of the large size of the client’s trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits.  For example, UBS Trader once told Read that a 0.01 percent – or one basis point – movement in the final Yen LIBOR fixing on a specific date could result in $3 million profit for his trading positions.  A significant part of both Read’s and Wilkinson’s compensation was tied to the brokerage fees generated by UBS Trader and paid to ICAP.

Goodman was a cash broker at ICAP’s London office during the relevant time period.  In addition to brokering cash transactions, Goodman distributed a daily email to individuals outside of ICAP, including derivatives traders at several large banks as well as those responsible for providing the BBA with LIBOR submissions at certain banks.  Goodman’s email contained what was termed his “SUGGESTED LIBORS,” purported predictions of where Yen LIBOR ultimately would fix each day across eight specified borrowing periods.  Read and Wilkinson, along with Goodman himself, often referred to Goodman as “lord libor.”

The complaint alleges that Read, Wilkinson and Goodman, together with UBS Trader, executed a sustained and systematic scheme to move Yen LIBOR in a direction favorable to UBS Trader’s trading positions.

According to the criminal complaint, the primary strategy employed by Read, Wilkinson and Goodman to execute the scheme was to use Goodman’s “SUGGESTED LIBORS” email to disseminate misinformation to Yen LIBOR panel banks in hopes that the banks would rely on the misinformation when making their own respective Yen LIBOR submissions to the BBA for inclusion in the published fix.  Rather than providing good faith predictions as to where Yen LIBOR would fix, Goodman instead often used his daily email to set forth predictions which benefitted UBS Trader’s trading positions.

Beginning in or about June 2007, Goodman was paid a bonus through the desk Wilkinson supervised, allegedly intended, at least in part, to reward Goodman for his role in their effort to influence and manipulate the published Yen LIBOR fix.

As a second strategy, Read and Wilkinson allegedly further agreed to contact interest rate derivatives traders and submitters employed at Yen LIBOR panel banks in an effort to cause them to make false and misleading submissions to the BBA at UBS Trader’s behest.

As alleged in the charging document, Read, Wilkinson, Goodman, UBS Trader, and other co-conspirators often executed their scheme through electronic chats and email exchanges.  For example, on June 28, 2007, in an email message, Read told Wilkinson: “DAN THIS IS GETTING SERIOUS [UBS TRADER] IS NOT HAPPY WITH THE WAY THINGS ARE PROGRESSING . . . CAN YOU PLEASE GET HOLD OF COLIN AND GET HIM TO SEND OUT 6 MOS LIBOR AT 0.865 AND TO GET HIS BANKS SETTING IT HIGH. THIS IS VERY IMPORTANT BECA– — USE [UBS TRADER] IS QUESTIONING MY (AND OUR) WORTH.”

The complaint alleges that the defendants were aware of the effects that Goodman’s false and fraudulent “SUGGESTED LIBORS” had on submissions by Yen LIBOR panel banks.  For example, on Nov. 20, 2008, Read asked UBS Trader, “you have a really big fix tonight I believe? if Colin sends out 6m at a more realistic level than 1.10 [%] i reckon [the two panel banks] will parrot him, it might mean 6m coming down a bit.” On the following day, Nov. 21, 2008, Goodman moved his suggestion for 6-month Yen LIBOR down by nine basis points.  The two other banks mirrored Goodman’s suggestion, moving their 6-month Yen LIBOR submissions down by nine basis points.

According to allegations in the complaint, Read counseled UBS Trader how to most effectively manipulate Yen LIBOR.  For example, UBS Trader told Read in a July 22, 2009, electronic chat that “11th aug is the big date…i still have lots of 6m fixings till the 10th.”   Read responded to UBS Trader, “if you drop [UBS’s] 6m dramatically on the 11th mate, it will look v fishy… .  I’d be v careful how you play it, there might be cause for a drop as you cross into a new month but a couple of weeks in might get people questioning you.”  UBS Trader replied, “don’t worry will stagger the drops…ie 5bp then 5bp,” and Read told UBS Trader, “ok mate, don’t want you getting into [expletive].”  UBS Trader again assured Read that UBS and two additional panel banks would stagger their drops in coordination, and Read concluded, “great the plan is hatched and sounds sensible.”

A criminal complaint is a formal accusation of criminal conduct, not evidence.  A defendant is presumed innocent unless and until convicted.

The investigation is being conducted by special agents, forensic accountants, and intelligence analysts of the FBI’s Washington Field Office.  The prosecution is being handled by Deputy Chief William Stellmach and Trial Attorney Sandra L. Moser of the Criminal Division’s Fraud Section and Trial Attorneys Eric Schleef and Kristina Srica of the Antitrust Division.  Trial Attorneys Alexander Berlin and Thomas B.W. Hall, Law Clerk Andrew Tyler, and Paralegal Specialist Kevin Sitarski of the Criminal Division’s Fraud Section, along with Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, and former Trial Attorney Luke Marsh have also provided valuable assistance.  The Criminal Division’s Office of International Affairs has provided assistance in this matter as well.

The broader investigation relating to LIBOR and other benchmark rates has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the Department and, along with the U.K. Financial Conduct Authority, has played a major role in the investigation.  The Securities and Exchange Commission has also provided valuable assistance for which the Department is grateful.  The Department also expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation, and the Department is grateful for their cooperation and assistance as well.

Finally, the Department acknowledges ICAP’s continuing cooperation in the Department’s ongoing investigation.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

UBS Securities Japan Co. Ltd Sentenced for Long-running Manipulation of Libor

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UBS Securities Japan Co. Ltd. (UBS Securities Japan), an investment bank, financial advisory securities firm and wholly-owned subsidiary of UBS AG, was sentenced today for its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, the Justice Department announced.

UBS Securities Japan was sentenced by U.S. District Judge Robert N. Chatigny in the District of Connecticut.  UBS Securities Japan pleaded guilty on Dec. 19, 2012, to one count of engaging in a scheme to defraud counterparties to interest rate derivative trades by secretly manipulating LIBOR benchmark interest rates.  UBS Securities Japan signed a plea agreement with the government in which it admitted its criminal conduct and agreed to pay a $100 million fine, which the court accepted in imposing sentence.  In addition, UBS AG, the Zurich-based parent company of UBS Securities Japan, entered into a non-prosecution agreement (NPA) with the government requiring UBS AG to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation.  The NPA reflects UBS AG’s substantial cooperation in discovering and disclosing LIBOR misconduct within the financial institution and recognizes the significant remedial measures undertaken by new management to enhance internal controls.

Together with approximately $1 billion in regulatory penalties and disgorgement – $700 million as a result of a Commodity Futures Trading Commission (CFTC) action; $259.2 million as a result of a U.K. Financial Conduct Authority (FCA) action; and $64.3 million as a result of a Swiss Financial Market Supervisory Authority (FINMA) action – the Justice Department’s criminal penalties bring the total amount of the resolution to more than $1.5 billion.

“This action, and the resulting sentence, prove that no individual or firm is above the law – no matter what,” said Attorney General Eric Holder.  “The Department of Justice will continue to stand vigilant against corporations or individuals who threaten the integrity of our financial markets, undermine the stability of our economy, or jeopardize the well-being of our citizens.  And, when supported by the facts and the law, we will never hesitate to use every tool and authority available to us to hold accountable those who illegally take advantage of others for their own financial gain.”

“Through its guilty plea and sentence, UBS has been held to account for deliberately manipulating LIBOR, one of the cornerstone interest rates in our global financial system,” said Acting Assistant Attorney General Mythili Raman of the Criminal Division.  “The $1.5 billion global resolution against UBS – of which this guilty plea and sentence are a critical element – is just one of several actions we have taken against financial firms throughout the world that sought to illegally influence LIBOR.  As we continue our active and ongoing investigation of the manipulation of LIBOR, our prosecutors and agents will continue to tenaciously follow the evidence wherever it leads.  Neither UBS, nor the individual UBS defendants we have charged in connection with this sophisticated scheme, nor any other bank or individual, is above the law.”

According to documents filed in these cases, LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR serves as the primary benchmark for short-term interest rates globally, and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were estimated at approximately $450 trillion.

LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks.

Beginning in September 2006, UBS Securities Japan and a senior trader employed in the Tokyo office of UBS Securities Japan orchestrated a sustained, wide-ranging and systematic scheme to move Yen LIBOR in a direction favorable to the trader’s trading positions, defrauding UBS’s counterparties and harming others with financial products referencing Yen LIBOR who were unaware of the manipulation.  Between November 2006 and August 2009, the senior trader or a colleague of the senior trader endeavored to manipulate Yen LIBOR on at least 335 of the 738 trading days in that period, and during some periods on almost a daily basis.  Because of the large size of the senior trader’s positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits.  For example, the senior trader once estimated that a 0.01 percent movement in the final Yen LIBOR fixing on a specific date could result in a $2 million profit for UBS.

According to the charging documents, UBS Securities Japan and the senior trader employed three strategies to execute the scheme: causing UBS to make false and misleading Yen LIBOR submissions to the BBA; causing cash brokerage firms, which purported to provide market information regarding LIBOR to panel banks, to disseminate false and misleading information about short-term interest rates for Yen, which those banks could and did rely upon in formulating their own LIBOR submissions to the BBA; and communicating with interest rate derivatives traders employed at three other Yen LIBOR panel banks in an effort to cause them to make false and misleading Yen LIBOR submissions to the BBA.

In entering into the NPA with UBS AG, the Justice Department considered information from UBS and from regulatory agencies in Switzerland and Japan demonstrating that in the last two years UBS has made important and positive changes in its management, compliance and training to ensure adherence to the law.  The Department received favorable reports from the FINMA and the Japan Financial Services Authority (JFSA) describing, respectively, progress that UBS has made in its approach to compliance and enforcement and UBS Securities Japan’s effective implementation of the remedial measures the JFSA imposed based on findings relating to the attempted manipulation of Yen benchmarks.

The investigation was conducted by the FBI’s Washington Field Office.  The prosecution is being handled by Deputy Chiefs Daniel Braun and William Stellmach and Trial Attorneys Thomas B.W. Hall and Sandra L. Moser, along with former Trial Attorney Luke Marsh, of the Criminal Division’s Fraud Section.  Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut have provided valuable assistance.  The Criminal Division’s Office of International Affairs also provided assistance in this matter.

The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the CFTC’s Division of Enforcement referred this matter to the Department and, along with the FCA, has played a major role in the investigation.  The SEC has also played a significant role in the LIBOR series of investigations and, among other efforts, has made an invaluable contribution to the investigation relating to UBS.  The Department of Justice also wishes to acknowledge and thank FINMA, the Japanese Ministry of Justice, and the JFSA.  Various agencies and enforcement authorities from other nations also have participated in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the Department is grateful for their cooperation and assistance.

ISTA Pharmaceuticals Inc. Pleads Guilty to Federal Felony Charges; Will Pay $33.5 Million to Resolve Criminal Liability and False Claims Act Allegations

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Pharmaceutical company ISTA Pharmaceuticals, Inc. pled guilty earlier today to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute, the Department announced today.  U.S. District Court Judge Richard J. Arcara accepted ISTA’s guilty pleas.  The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom.

ISTA pled guilty in the Western District of New York to criminal charges that the company conspired to illegally introduce a misbranded drug, Xibrom, into interstate commerce.  Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration (FDA).  Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery.  In order to expand sales of Xibrom outside of its approved use, ISTA conspired to introduce misbranded Xibrom into interstate commerce.

Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema.  The evidence showed that continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians.  These activities are evidence of intended uses unapproved by FDA, which rendered the drug misbranded under the FDCA.

ISTA pled guilty to a felony based on evidence that some ISTA employees were told by management not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians’ offices relating to unapproved new uses.  These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others.  ISTA agreed that this conduct represented an intent to defraud under the law.

In addition, ISTA pled guilty to a conspiracy to knowingly and willfully offering or paying remuneration to physicians in order to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute.  Under the law, it is illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program.  In this matter, certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.  In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.

Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge.

ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government health care programs.  The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma.  The United States further alleged that ISTA’s violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs.  The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84.  Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.

“As today’s global resolution demonstrates, the Department of Justice is committed to making sure that pharmaceutical companies play by the rules,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “Health care fraud in any form undermines the integrity of our health care system and can drive up costs for all of us.”

“Today’s resolution sends a clear message that pharmaceutical companies cannot put profit ahead of people, by disregarding laws designed to protect the health of the American public,” said United States Attorney William J. Hochul, Jr.  “The fact that ISTA offered doctors illegal inducements – such as a wine tasting, golf outing, and payments to attend what were in essence marketing sessions – makes the company’s illegal conduct particularly deserving of the hefty penalty ISTA has agreed to pay.”

“It is especially concerning when companies actively take steps to conceal improper conduct which may jeopardize public health,” said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. “We will continue to work tirelessly with the Department of Justice and our law enforcement counterparts to uncover such conduct.”

In addition to the criminal fines and asset forfeiture, ISTA’s parent company, Bausch+Lomb, Incorporated (B+L), has agreed to maintain a Compliance and Ethics Program.  B+L has agreed that it will maintain policies and procedures that: (1) prohibit the involvement of sales and marketing personnel and others on the businesses’ commercial team in the final decision-making process with respect to educational grants in the United States, while also ensuring that the educational programming is focused on objective scientific and educational activities and discourse; (2) require sales agents to discuss only those product uses that are consistent with what is indicated on the product’s approved package labeling and to forward requests for information regarding uses of B+L’s products not approved by FDA to a Medical Affairs Professional; and (3) prohibit the company from engaging in any conduct that violates the Anti-Kickback Statute, including the offering or paying of any remuneration to any person to induce such person to prescribe any drug for which payment may be made in whole or in part under a Federal health care program.  The Program also requires that B+L’s President of Global Pharmaceuticals conduct an annual review of the effectiveness of B+L’s Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products, and certify that to the best of his or her knowledge, the Program was effective in preventing violations of Federal health care program requirements and the FDCA regarding sales, marketing, and promotion of B+L’s prescription pharmaceutical products.

The civil settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuits were filed in the Western District of New York and are captioned United States ex rel. Keith Schenker v. ISTA Pharmaceuticals, Inc. and United States, et al., ex rel. DJ PARTNERSHIP 2011, LLP  v. ISTA Pharmaceuticals, Inc.  As part of today’s resolution, Mr. Schenker will receive approximately $2.5 million from the federal share of the civil recovery.

Upon conviction for the criminal charges described above, ISTA will face mandatory exclusion from Federal healthcare programs.  Exclusion will mean that on the effective date of the exclusion, any ISTA labeled drugs in ISTA’s possession would no longer be reimbursable by Medicare, Medicaid, or other Federal healthcare programs.  In June 2012, B+L acquired ISTA.  Simultaneous with the False Claims Act settlement and the entry of the plea, the U.S. Department of Health and Human Services’ Office of Inspector General, ISTA, and B+L will enter into a Divestiture Agreement under which ISTA agrees to be excluded for 15 years, effective six months after the date of the settlement.  Under the terms of the Divestiture Agreement, ISTA will transfer all assets to B+L or a B+L subsidiary and will stop shipping ISTA labeled drugs within six months of the Divestiture Agreement.  Six months after the effective date of the Divestiture Agreement, all ISTA labeled drugs in the possession of ISTA or B+L will no longer be reimbursable by Medicare, Medicaid, and other Federal healthcare programs.  Those ISTA labeled drugs in the stream of commerce at that time will continue to be reimbursable.

“We agreed to enter into this Divestiture Agreement based on the facts of this case, including that B+L did not have a corporate relationship with ISTA during the improper conduct,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  “In addition, B+L acquired ISTA more than a year after the improper conduct ended, and B+L did not hire any of ISTA’s executives or senior management.”

The criminal case was prosecuted by Assistant Director Jeffrey Steger of the Consumer Protection Branch of the Civil Division of the Department of Justice and Assistant United States Attorney MaryEllen Kresse of the Office of the U.S. Attorney for the Western District of New York.  They were assisted by Associate Chief Counsel Kelsey Schaefer of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.  The case was investigated by the Food and Drug Administration’s Office of Criminal Investigations and Health and Human Services Office of Inspector General.  The civil settlement was handled by Trial Attorneys Colin Huntley and Benjamin Young of the Commercial Litigation Branch of the Civil Division of the Department of Justice and Assistant United States Attorney Kathleen Lynch of  the Office of the U.S. Attorney for the Western District of New York.

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 more than $10.4 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 $14.3 billion.

U.S. Renal Care to Pay $7.3 Million to Resolve False Claims Act Allegations

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U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today.  U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.

Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease.  Epogen vials contain a small amount of medication in excess of the labeled amount, known as “overfill,” to compensate for medication that may remain in the vial after extraction and in the syringe upon administration.  The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen.  However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.

“Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “We will continue to protect scarce Medicare dollars.”

“Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.

“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland.  “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide”

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 $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 $14.2 billion.

The allegations settled today arose from a lawsuit filed by Laura Davis against DCA under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery.  Ms. Davis will receive $1,314,000 as part of today’s settlement.

This case was handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the District of Maryland with assistance from the Office of Inspector General for the Department of Health and Human Services.  The claims settled by this agreement are allegations only, and there has been no determination of liability.  The whistleblower suit is captioned United States ex rel. Laura Davis v. Dialysis Corporation of America, No. 1:08-cv-2829 (D. Md.).

Medicare Fraud Strike Force Charges 89 Individuals for Approximately $223 Million in False Billing

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Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in eight cities has resulted in charges against 89 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $223 million in false billings.

Attorney General Holder and Secretary Sebelius were joined in the announcement by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, FBI Assistant Director Ron Hosko, Inspector General Daniel R. Levinson of the HHS Office of Inspector General (HHS-OIG) and Deputy Administrator and Director of Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity Peter Budetti.

This coordinated takedown was the sixth national Medicare fraud takedown in Strike Force history.  In total, almost 600 individuals have been charged in connection with schemes involving almost $2 billion in fraudulent billings in these national takedown operations alone. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,500 defendants who collectively have falsely billed the Medicare program for more than $5 billion.  In addition, CMS, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Approximately 400 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units and other state and local law enforcement agencies participated in the takedown.

“Today’s announcement marks the latest step forward in our comprehensive efforts to combat fraud and abuse in our health-care systems,” said Attorney General Holder.  “These significant actions build on the remarkable progress that the HEAT has enabled us to make – alongside key federal, state, and local partners – in identifying and shutting down fraud schemes.  They are helping to deter would-be criminals from engaging in fraudulent activities in the first place. And they underscore our ongoing commitment to protecting the American people from all forms of health-care fraud, safeguarding taxpayer resources and ensuring the integrity of essential health-care programs.”

“The Affordable Care Act has given us additional tools to preserve Medicare and protect the tens of millions of Americans who rely on it each day,” said Secretary Sebelius.  “By expanding our authority to suspend Medicare payments and reimbursements when fraud is suspected, the law allows us to better preserve the system and save taxpayer dollars.  Today we’re sending a strong, clear message to anyone seeking to defraud Medicare: You will get caught and you will pay the price. We will protect a sacred trust and an earned guarantee.”

The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes and money laundering.  The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, primarily home health care, but also mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and often never provided.  In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent billing to Medicare for services that were medically unnecessary or never performed.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $223 million in fraudulent billing.

“We have made it part of our core mission at the Department of Justice to hold accountable those who steal from the Medicare program to line their own pockets,” said Acting Assistant Attorney General Raman.  “There are Medicare fraudsters in prisons across the country – some who will be there for decades – who can attest to our determination, and our effectiveness.”

“We all feel the effects of health care fraud,” said FBI Assistant Director Hosko. “It leads to higher health care costs and makes it harder for seniors and those who are ill to get the care they need.  The FBI and our law enforcement partners are committed to preventing and prosecuting health care fraud at all levels.  But we need the public’s help.  Take the time to be aware of fraud and call law enforcement if you see anything suspicious included in the billings to your insurance, Medicare, or Medicaid or have any unusual encounters with health care providers.  We can work together to ensure your hard-earned dollars are used to care for the sick and not to line the pockets of criminals.”

“Taxpayers expect us to work harder and smarter, and that is exactly what happened across the nation today,” said HHS Inspector General Levinson. “In addition to the work of my agents and other federal, state, and local law enforcement officials, investigators from nine other IG offices joined us today.  Working together we can break down silos, pool expertise, reduce costs, and the successful result speaks for itself.”

“Today’s takedown is the result of dedicated commitment to working with our law enforcement partners to root out fraud in the Medicare program,” said CMS Program Integrity Deputy Administrator Budetti.  “This collaboration has been strengthened by the Affordable Care Act, which provided CMS with the tools it needs to stop the flow of money while working to rid our programs of fraud, waste and abuse.”

In Miami, a total of 25 defendants, including two nurses, a paramedic and a radiographer, were charged today and yesterday for their participation in various fraud schemes involving a total of $44 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion.  In one case, three defendants were charged for participating in a $20 million home health fraud scheme involving a home health agency, Trust Care Health Services.  Court documents allege that the defendants bribed Medicare beneficiaries for their Medicare information, which was used to bill for home health services that were not rendered or that were not medically necessary.  According to court documents, the lead defendant spent much of the money from the scheme, and purchased multiple luxury vehicles, including two Lamborghinis, a Ferrari and a Bentley.

Eleven individuals were charged by the Baton Rouge Strike Force.  Five individuals were charged today, including two doctors, in New Orleans by the Baton Rouge Strike force for participating in a different $51 million home health fraud scheme.  According to court documents, the defendants recruited beneficiaries, offering cash and other incentives in exchange for their Medicare information, which was used to bill medically unnecessary home health services. The Baton Rouge Strike Force also announced a superseding indictment and an information charging six individuals, including another doctor, with over $30 million in fraud in connection with a community mental health center called Shifa Texas.  These charges come on top of charges brought against the owners and operators of Shifa Baton Rouge, a related community mental health center which is at the center of an alleged $225 million scheme charged in an earlier indictment.

In Houston, two individuals, including a nurse and a social worker, were charged today with fraud schemes involving at total of $8.1 million in false billings for home health care.  The defendants, who are brother and sister, allegedly used patient recruiters to obtain Medicare beneficiary information that they then used to bill for services that were not medically necessary and not provided.

Thirteen defendants were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $23 million.  In one case, three individuals allegedly billed Medicare for more than $8.7 million in fraudulent billing for DME. According to the indictment, the defendants allegedly paid illicit kickbacks to patient recruiters to bribe beneficiaries to participate in the scheme. Once the individuals provided their Medicare information to recruiters, doctors and medical clinics conspiring with the defendants allegedly wrote prescriptions for medically unnecessary power wheelchairs, which they sold to the defendants for illegal kickbacks.

In Detroit, 18 defendants, including two doctors, a physician’s assistant and two therapists, were charged for their roles in fraud schemes involving approximately $49 million in false claims for medically unnecessary services, including home health, psychotherapy and infusion therapy.  In one case, three individuals were charged in a $12 million scheme where they allegedly held themselves out to be licensed physicians – which they were not – and signed prescriptions for drugs and documents about purported psychotherapy they provided.

In Tampa, nine individuals were charged in a variety of schemes, ranging from pharmacy fraud health care-related money laundering. In one case, four individuals were charged for their alleged roles in establishing and operating four supposed healthcare clinics in Tampa, Fl. – Palmetto General Health Care Inc., United Healthcare Center Inc., New Imaging Center Inc. and Lord Physical Rehabilitation Center Inc. – which they allegedly used to steal more than $2.5 million from Medicare for surgical procedures that were never performed.  The defendants allegedly billed Medicare for surgical procedures used to treat patients with high blood pressure by collapsing veins in the legs, but they did not actually perform the procedures.

In Chicago, seven individuals were charged, including two doctors, with a variety of health care fraud schemes.

In Brooklyn, N.Y., four individuals, including two doctors, were charged in fraud schemes involving $9.1 million in false claims. In one case, three additional individuals were allegedly involved in what is now alleged to be a $15 million scheme where massages by unlicensed therapists were billed to Medicare as physical therapy.  Six defendants were previously charged in the scheme. The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorney’s Offices for the Southern District of Florida, the Eastern District of Michigan, the Eastern District of New York, the Southern District of Texas, the Central District of California, the Middle District of Louisiana; the Northern District of Illinois, and the Middle District of Florida; and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.