Tag Archives: Kenneth A. Blanco

New Orleans Woman Convicted for Role in $3.2 Million Medicare Kickback Scheme

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Thursday, November 9, 2017

A federal jury found a New Orleans woman guilty today for her role in an approximately $3.2 million Medicare fraud and kickback scheme.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Duane A. Evans of the Eastern District of Louisiana, Acting Special Agent in Charge Daniel Evans of the FBI’s New Orleans Field Office and Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Field Office made the announcement.

After a three-day trial, Sandra Parkman, 61, was convicted of one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive kickbacks, two counts of health care fraud and five counts of accepting kickbacks.  Sentencing is scheduled for Jan. 17, 2018, before U.S. District Judge Kurt D. Engelhardt of the Eastern District of Louisiana, who presided over the trial.

According to evidence presented at trial, from 2004 to 2009, Parkman and others engaged in a scheme to provide medically unnecessary durable medical equipment, including power wheelchairs, to Medicare beneficiaries in and around New Orleans.  The evidence showed that Parkman received kickback payments from the equipment supply company in return for providing eligible Medicare beneficiaries’ personal information to the company, as well as to obtain physican signatures on order forms.

As a result of the scheme, Parkman’s co-defendant, Tracy Richardson Brown, caused Medicare to pay over $3.2 million based on those illegally obtained referrals, the evidence showed.

Brown was previously convicted following a trial in June 2016 and was sentenced to 48 months in prison.

This case was investigated by the FBI and HHS-OIG.  Trial Attorneys Kate Payerle and Jared Hasten of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative 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.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Owner and Manager of New York Medical Equipment Provider Charged for Their Roles in Alleged $3.5 Million Scheme to Defraud Government-Funded Health Plans

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Wednesday, November 15, 2017

The owner and the manager of a purported durable medical equipment (DME) company in the Bronx, New York, were charged in an indictment unsealed today for their roles in an allegedly fraudulent scheme that involved submitting over $3.5 million in claims to private insurers, which included government-sponsored managed care organizations.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office and Special Agent in Charge Scott Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Office of Investigations made the announcement.

Ikechukwu Udeokoro, 41, of West New York, New Jersey, and Ayodeji Fasonu, 51, of Stamford, Connecticut, the owner and manager, respectively, of Meik Medical Equipment and Supply LLC of the Bronx, were charged with one count of health care fraud in an indictment filed in the Eastern District of New York on Nov. 13.  The indictment was unsealed upon the arrest of the defendants this morning, and the defendants are expected to be arraigned this afternoon before U.S. Magistrate Judge James Orenstein of the Eastern District of New York at the federal courthouse in Brooklyn.  The case has been assigned to U.S. District Judge Ann M. Donnelly.

According to the indictment, beginning in approximately December 2010 and continuing through at least February 2014, Udeokoro and Fasonu executed a scheme in which they submitted fraudulent claims to private insurers, including those that participated in Medicare Part C, for reimbursement for DME that was purportedly provided to the insurers’ members, many of whom were elderly or disabled and had insurance through Medicare Advantage plans or New York Medicaid Managed Care plans.  As part of the scheme, the defendants allegedly submitted claims to the private insurers for reimbursement for DME such as multi-positional patient support systems and combination sit-to-stand systems, when the defendants in fact provided the insurers’ members either nothing or a far less expensive product, such as a lift chair/recliner.

As alleged in the indictment, Meik Medical Equipment & Supply submitted more than $3.5 million in claims.

The charges in the indictment are merely allegations, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  Trial Attorney Andrew Estes of the Fraud Section is prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Michigan Doctor and Owner of Medical Billing Company Sentenced to 15 Years in Prison for $26 Million Health Care Fraud Scheme

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Tuesday, November 7, 2017

A Detroit-area doctor was sentenced to 180 months in prison today for his role in a $26 million health care fraud scheme that involved billing Medicare for nerve block injections that were never provided and efforts to circumvent Medicare’s investigation of the fraudulent scheme.  A co-conspirator who owned a medical billing company was previously sentenced to 10 years in prison.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Daniel L. Lemisch of the Eastern District of Michigan, Special Agent in Charge David P. Gelios of the FBI’s Detroit Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office and Special Agent in Charge Manny Muriel of Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

Johnny Trotter M.D., 42, of Bloomfield Hills, Michigan, was sentenced today by U.S. District Judge George C. Steeh of the Eastern District of Michigan.  The owner of the medical billing company, Elaine Lovett, 61, of Detroit, was sentenced by Judge Steeh on Sept. 26.  Judge Steeh also ordered each defendant to pay $9,199,946 in restitution and scheduled a hearing tomorrow on forfeiture.  Trotter and Lovett were convicted in April 2017 after a four-week jury trial of one count of conspiracy to commit health care fraud and wire fraud, and three counts of health care fraud.  Trotter was remanded to custody pending a detention hearing tomorrow.

According to the evidence presented at trial, from May 2008 until May 2014, Trotter and Lovett knowingly submitted fraudulent bills for services that they knew had not been provided, mainly nerve block injections.  Additionally, after Medicare imposed a requirement in 2009 that required Trotter’s claims to undergo a medical review prior to payment, Trotter and Lovett conspired to circumvent Medicare’s fraud investigation of Trotter by creating sham medical practices, the evidence showed.  To continue to receive payment for services that were not provided, Trotter and Lovett concealed their involvement with these practices from Medicare, and instead recruited their family members and employees to serve as straw owners of the companies, the evidence further showed.

The FBI, HHS-OIG and IRS-CI investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  Fraud Section Assistant Chiefs Malisa Dubal and Allan Medina, as well as Trial Attorneys Tom Tynan and Jacob Foster, prosecuted the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative 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.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Owner of Florida Pharmacy Pleads Guilty in $100 Million Compounding Pharmacy Fraud Scheme; Real Properties, Cars and a 50-Foot Boat Will Be Forfeited

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Monday, November 6, 2017

Seven Others Previously Pleaded Guilty

The president and owner of a Florida pharmacy that was at the center of a massive compounding pharmacy fraud scheme, which impacted private insurance companies, Medicare and TRICARE, pleaded guilty today for his role in the scheme.  Seven other individuals have previously pleaded guilty in connection to the scheme.  Various real properties, cars and a 50-foot boat will be forfeited as part of the guilty pleas.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida, Special Agent in Charge Eric W. Sporre of the FBI’s Tampa Field Office, Special Agent in Charge Robert F. Lasky of the FBI’s Miami Field Office, Special Agent in Charge Shimon Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office and Resident Agent in Charge Brooke Harris of the U.S. Defense Criminal Investigative Service’s (DCIS) Tampa Regional Office made the announcement.

Nicholas A. Borgesano Jr., 45, of New Port Richey, Florida, the president and owner of A to Z Pharmacy of New Port Richey, pleaded guilty in the Middle District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to engage in monetary transactions involving criminally derived property.  His sentencing will be scheduled before U.S. District Judge James S. Moody Jr of the Middle District of Florida.

According to admissions made as part of his plea agreement, Borgesano owned and operated numerous pharmacies and shell companies that he and his co-conspirators used to execute a fraud scheme involving prescription compounded medications.  The scheme generated over $100 million in fraud proceeds, he admitted.  Borgesano acquired and controlled A to Z Pharmacy in New Port Richey, Havana Pharmacy, Medplus/New Life Pharmacy and Metropolitan Pharmacy, all of Miami; and Jaimy Pharmacy and Prestige Pharmacy, both of Hialeah, Florida.  He admitted using these pharmacies to cause the submission of false and fraudulent reimbursement claims for prescription compounded medications, chiefly pain creams and scar creams, to private insurance companies, Medicare and TRICARE.  Borgesano admitted that he and his co-conspirators manipulated billing codes in the reimbursement claims and submitted reimbursement claims for pharmaceutical ingredients they did not have.  Borgesano and his co-conspirators also paid kickbacks and bribes in exchange for prescriptions and patient identifying information used to further the scheme, including to a physician in exchange for the physician signing prescriptions for patients he never saw.  Borgesano admitted using A to Z Pharmacy as the hub of his operation on behalf of all his pharmacies.  He disbursed proceeds of the fraud scheme through a variety of methods, including by check and wire transfer to co-conspirators’ shell companies and through the purchase of assets, he admitted.

In addition to Borgesano, the following defendants have previously pleaded guilty to conspiracy to commit health care fraud for their roles in the scheme:

  • Bradley Sirkin, 55, of Boca Raton, Florida;
  • Scott P. Piccininni, 49, of Fort Lauderdale, Florida;
  • Edwin Patrick Young, 49, of New Port Richey, Florida;
  • Wayne M. Kreisberg, 40, of Parkland, Florida;
  • Matthew N. Sterner, 48, of New Port Richey, Florida;
  • Peter B. Williams, 57, of New Port Richey, Florida; and
  • Joseph Degregorio, 71, of New Port Richey, Florida

The cars that will be forfeited include a 1936 Ford Deluxe, a 1964 Chevrolet Corvette convertible, a 1967 Chevrolet Camaro, a 1970 Chevrolet Monte Carlo and a 2008 Lamborghini convertible.  The boat that will be forfeited is a 2009 50’7” Cigarette racing boat.   The cars and boat had previously been seized.  The combined equity in the real properties, cars and boat that will be forfeited is over $7.6 million.  The real properties, cars and boat had been purchased with proceeds from the fraud scheme.

This case was investigated by the FBI with support from HHS-OIG and DCIS and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida.  The case is being prosecuted by Senior Trial Attorney Christopher J. Hunter and Trial Attorney Timothy P. Loper of the Fraud Section.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative 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.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Former CEO of Arthrocare Corporation Sentenced to 20 Years in Prison for Role in $750 Million Securities Fraud Scheme

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Friday, November 3, 2017

The former chief executive officer of ArthroCare Corporation, a publicly traded medical device company based in Austin, Texas, was sentenced today to 240 months in prison for his role in orchestrating a fraud scheme that resulted in shareholder losses of over $750 million.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, U.S. Attorney Richard L. Durbin Jr. of the Western District of Texas and Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field office made the announcement.

Michael Baker, 58, of Austin, Texas, was sentenced by U.S. District Judge Sam Sparks of the Western District of Texas, who also ordered Baker five years of supervised release following his prison sentence and to pay a fine in the amount of $1 million and to forfeit $13.7 million.  At the sentencing hearing, the Court found that investors lost more than $750 million as a result of the fraud scheme.  On Aug. 18, after a two-week re-trial, Baker was convicted of one count of conspiracy to commit wire fraud and securities fraud, seven counts of wire fraud, two counts of securities fraud and two counts of making false statements.

Evidence at trial showed that, beginning in 2005 and continuing until 2009, Baker, along with his co-conspirators, masterminded and executed a scheme to artificially inflate sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors.  Baker, along with his co-conspirators, determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders.  Baker and others then caused ArthroCare to “park” millions of dollars’ worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter.  ArthroCare reported these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.

The trial evidence further showed that ArthroCare’s distributors agreed to accept shipment of millions of dollars of products in exchange for special conditions, including substantial, upfront cash commissions, extended payment terms and the ability to return products, allowing ArthroCare to falsely inflate revenue by tens of millions of dollars.  In the case of ArthroCare’s largest distributor, DiscoCare, Baker caused ArthroCare to acquire DiscoCare specifically to conceal from the investing public the nature and financial significance of ArthroCare’s relationship with DiscoCare.  In addition to falsely inflating ArthroCare’s revenue, Baker lied when he was deposed by the U.S. Securities and Exchange Commission in November 2009 about ArthroCare’s relationship with DiscoCare, the evidence showed.

Baker’s earlier conviction was overturned by the U.S. Court of Appeals for the Fifth Circuit, resulting in the retrial.  The sentence imposed on Baker today of 20 years imprisonment is identical to the sentence he received after his first trial.

Co-conspirators David Applegate and John Raffle, both former senior vice presidents of ArthroCare, pleaded guilty to multiple felonies in 2013 in connection with their participation in the scheme.  Co-conspirator Michael Gluk, former chief financial officer of ArthroCare, pleaded guilty to conspiracy to commit wire and securities fraud on June 14, in connection with his participation in the scheme.

On Aug. 29, 2014, Raffle was sentenced to 80 months in prison.  On Aug. 29, 2014, Applegate was sentenced to 60 months in prison.  Gluk’s sentencing is scheduled for Jan. 5, 2018.

This case was investigated by the FBI’s San Antonio Field Office.  The case is being prosecuted by Securities and Financial Fraud Unit Chief Benjamin D. Singer, Assistant Chief Henry P. Van Dyck and Trial Attorney Caitlin Cottingham of the Criminal Division’s Fraud Section.

Nurse Practitioner and Physician Indicted in Compounding Pharmacy Fraud Schemes

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Tuesday, October 24, 2017

A Mississippi-based nurse practitioner was charged in an indictment unsealed today for her role in a multi-million dollar scheme to defraud TRICARE, the health care benefit program serving U.S. military, veterans and their respective family members.  A Mississippi-based physician was charged in a separate indictment filed last week for his role in a similar scheme.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, U.S. Attorney Mike Hurst of the Southern District of Mississippi, Special Agent in Charge Christopher Freeze of the FBI’s Jackson, Mississippi Field Division and Special Agent in Charge Jerome R. McDuffie of the Internal Revenue Service Criminal Investigation (IRS-CI) New Orleans Field Office made the announcement.

Susan Perry N.P., 58, of Grand Bay, Alabama, and Albert Diaz M.D., 78, of Ocean Springs, Mississippi, were charged in separate indictments returned on Oct. 18, in the Southern District of Mississippi, in Hattiesburg.  Perry’s indictment was unsealed upon her arrest and initial appearance today before U.S. Magistrate Judge John Gargiulo of the Southern District of Mississippi.  Perry is scheduled to be arraigned on Oct. 25, at 10:30 a.m., and Diaz is scheduled to be arraigned on Nov. 1, at 10:30 a.m., both before Judge Gargiulo.

Perry was charged in a 13-count indictment with one count of conspiracy to commit health care fraud and wire fraud, four counts of wire fraud, one count of conspiracy to distribute and dispense a controlled substance, one count of distributing and dispensing of a controlled substance, one count of conspiracy to solicit and receive healthcare kickbacks, four counts of soliciting and receiving healthcare kickbacks and one count of making false statements.  Diaz was charged in a 16-count indictment with one count of conspiracy to commit health care fraud and wire fraud, four counts of wire fraud, one count of conspiracy to distribute and dispense a controlled substance, four counts of distributing and dispensing a controlled substance, one count of conspiracy to falsify records in a federal investigation and five counts of falsification of records in a federal investigation.

The indictments allege that both Perry and Diaz participated in schemes to defraud TRICARE by prescribing medically unnecessary compounded medications, some of which included Ketamine, a controlled substance, to individuals they had not examined, for the purpose of having a Hattiesburg-based compounding pharmacy dispense these medically unnecessary compounded medications and to seek reimbursement from TRICARE.  According to the indictments, between February 2013 and October 2016, TRICARE reimbursed the compounding pharmacy more than $3.3 million for compounded medications prescribed by Perry, and between October 2014 and December 2015, TRICARE reimbursed the compounding pharmacy more than $2.3 million for compounded medications prescribed by Diaz.  Additionally, Perry is alleged to have received more than $50,000 in kickback payments from a marketer for the compounding pharmacy in return for prescribing the compounded medications, as well as having made false statements to the FBI.   Diaz is alleged to have submitted falsified patient records in response to an audit conducted by TRICARE to make it appear as though he had examined patients before prescribing the compounding medications.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI, IRS-CI, the Defense Criminal Investigative Service, the U.S. Department of Health and Human Services Office of Inspector General, the Mississippi Bureau of Narcotics and other government agencies investigated the case.  Trial Attorneys Dustin M. Davis, Katherine Payerle and Jared Hasten of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mary Helen Wall of the Southern District of Mississippi are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative 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.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.

Former Global Head of HSBC’s Foreign Exchange Cash-Trading Found Guilty of Orchestrating Multimillion-Dollar Front-Running Scheme

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Monday, October 23, 2017

The former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was found guilty today for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.”

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Andrew Vale of the FBI’s Washington Field Office made the announcement.

Mark Johnson, 51, a United Kingdom citizen with residences both in the U.K. and the United States, was found guilty after a four-week jury trial of one count of conspiracy to commit wire fraud and eight counts of wire fraud.  Sentencing date has not been scheduled.  U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York presided over the trial.  Johnson was arrested on a criminal complaint in July 2016 and indicted in August 2016.

“This verdict makes clear that the defendant corruptly manipulated the foreign exchange market for the benefit of his bank and his bonus pool, to the detriment of the bank’s client,” said Acting Assistant Attorney General Blanco.  “This case demonstrates the Criminal Division’s commitment to protecting the financial system from harm, and holding corporate executives, including at the world’s largest and most sophisticated financial institutions, responsible for their crimes.”

“The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” said Acting U.S. Attorney Rohde.  “This Office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

“This case involved a complex fraud scheme to ‘front run’ a foreign exchange transaction in order to generate millions of dollars in illicit profits for HSBC, which also indirectly benefited individual traders,” said Inspector General Lerner. “Such cases are challenging, but important, to bring against bank insiders who misuse their positions and undermine the integrity of a major international financial institution.”

“Mark Johnson misused confidential information to manipulate currency prices and defrauded a client out of more than $7 million,” said Assistant Director in Charge Vale.  “The American people need to be assured that we are working vigorously to ensure integrity is upheld in financial services industries.  We will continue to work with our law enforcement partners to investigate and prosecute those who engage in illegal business practices.”

According to the evidence presented at trial, in November and December 2011, Johnson cheated an HSBC client out of millions of dollars by misusing information provided to him by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries.  HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.  HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential.  Instead, Johnson misused confidential information he received about the client’s transaction to cheat the client out of millions of dollars, the evidence showed.

Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pound Sterling for their own benefit in their HSBC “proprietary” accounts.  Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,” or drive up, the price of the Pound Sterling, benefiting their proprietary positions and HSBC at the expense of their client.

As part of their scheme, Johnson and his co-conspirators made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions.  In total, Johnson and the traders he supervised generated HSBC profits of roughly $7.5 million from the execution of the FX  transaction for the victim company.

The investigation was conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office.  The Criminal Division’s Office of International Affairs provided significant support.  Assistant Chiefs Carol Sipperly and Brian Young and Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country, focusing on cases of national significance and international scope.  Fraud Section prosecutors have vast experience in investigating and prosecuting securities and financial fraud, health care fraud and foreign corruption.  The Section is routinely the national leader in large, sophisticated white collar investigations and prosecutions, frequently in partnership with U.S. Attorneys’ Offices and in coordination with foreign law enforcement agencies.  Learn more about the Criminal Division’s Fraud Section at: https://www.justice.gov/criminal-fraud.

New York Businessman Charged in Telemarketing-Related Fraud and Identity Theft Scheme

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Thursday, October 5, 2017

A New York businessman was arrested today for overseeing a scheme to forge hundreds of thousands of counterfeit documents containing improperly obtained personal information, which he allegedly sold to his clients, who then allegedly provided this information to telemarketers.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office, Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office and FBI Assistant Director in Charge William F. Sweeney, Jr. of the New York Field Office made the announcement.

William Patrick Nanry, 55, of Pearl River, New York, was charged on Tuesday, October 3, in an indictment filed in the Eastern District of New York with one count of conspiracy to commit wire and mail fraud, one count of mail fraud, one count of identity theft and one count of aggravated identity theft.

According to the indictment, Nanry operated a business selling “sweepstakes leads,” which are documents listing the phone numbers and personal information of individuals who have responded to mass mailings notifying recipients that they may have won, or were likely to win, expensive prizes and enormous cash payouts.  Such information is highly valued by fraudulent telemarketers, who seek to identify individuals who may be susceptible to questionable pitches.

The indictment alleges that beginning in approximately 2009, Nanry acquired lists of names and contact information for hundreds of thousands of people—primarily senior citizens— and used this information to create fake sweepstakes leads, which he then sold to his clients as authentic.  The indictment further alleges that Nanry directed a team of employees and associates to write the personal information of the victims onto the counterfeit sweepstakes forms, even though the victims had not agreed to this use, and even though many of the victims had never responded to a sweepstakes mailing.  Nanry allegedly directed these employees and associates to vary their handwriting, to use a large number of pens in varying colors, and to take other actions to make the fake leads appear authentic.  According to the indictment, the counterfeit sweepstakes leads were then sold to Nanry’s clients, who provided them to telemarketers, who then contacted the people named in the leads.  Many of these fake sweepstakes leads allegedly ended up in the hands of telemarketers who attempted to defraud the victims.  Some of the individuals who had their information misused by Nanry were ultimately defrauded by scam telemarketers.

Over the duration of the scheme, Nanry earned over $1.7 million by selling fake sweepstakes leads to his clients, the indictment alleges.

An indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI is investigating this matter.  Timothy A. Duree and Tracee Plowell of the Criminal Division’s Fraud Section are prosecuting the case

Former Congressional Staffer Pleads Guilty to Extensive Fraud and Money Laundering Scheme

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Wednesday, October 11, 2017

A former congressional staffer pleaded guilty today for his role in  orchestrating a scheme to steal hundreds of thousands of dollars from charitable foundations and the individuals who ran those foundations to pay for personal expenses and to illegally finance a former congressman’s campaigns for public office, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division and Acting U.S. Attorney Abe Martinez of the Southern District of Texas.

Jason T. Posey, 46, formerly of Houston, and currently residing in Mississippi, pleaded guilty to one count of mail fraud, one count of wire fraud and one count of money laundering before Chief U.S. District Judge Lee H. Rosenthal of the Southern District of Texas.  Sentencing is set for March 29, 2018.

According to admissions made in connection with Posey’s plea, Posey served as director of special projects and treasurer of the congressional campaign committee for former U.S. Congressman Stephen E. Stockman, 60, of the Houston, Texas area, from in or around January 2013 until in or around November 2013.  Posey admitted that, at Stockman’s direction, he and another congressional staffer, Thomas Dodd, 38, of the Houston, Texas area, illegally funneled $15,000 of charitable proceeds into Stockman’s campaign bank account and caused the campaign to file reports with the Federal Election Commission (FEC) that falsely stated that the money was a contribution from their parents and from the staffers themselves.  According to Posey’s admissions, Stockman also directed Posey to send a letter to a charitable donor that falsely stated that the donor’s $350,000 donation had been used to support a charitable endeavor, when in fact the funds were actually used for other purposes, including Stockman’s campaigns for public office.

In connection with his plea, Posey also admitted that he and Stockman raised $450,571.65 to support Stockman’s 2014 Senate campaign by falsely representing to a donor that the funds would be used to support a legitimate independent expenditure by an independent advocacy group Posey created.  In fact, Posey admitted that Stockman personally directed and supervised the activities of the purportedly independent group, including the printing and mailing of hundreds of thousands of copies of a pro-Stockman publication to Texas voters.  Posey also admitted that he submitted a false affidavit to the FEC in order to conceal the scheme.

Dodd pleaded guilty on March 20 to conspiracy to commit mail and wire fraud and conspiracy to make illegal conduit contributions and false statements to the FEC.  Stockman’s trial is scheduled to begin on Jan. 29, 2018.  The charges and allegations in this case are merely accusations.  Stockman is presumed innocent until proven guilty.

The FBI and IRS-CI are investigating the case.  Trial Attorneys Ryan J. Ellersick and Robert J. Heberle of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Melissa Annis of the Southern District of Texas are prosecuting the case.

Chief Executive Officer of Armored Vehicle Company Convicted of Defrauding the United States

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Tuesday, October 10, 2017

A federal jury convicted the owner and chief executive officer of an armored vehicle company for his role in a scheme to provide the U.S. Department of Defense with armored gun trucks that did not meet ballistic and blast protection requirements set out in the company’s contracts with the United States.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Acting U.S. Attorney Rick A. Mountcastle of the Western District of Virginia; Special Agent in Charge Adam S. Lee of the FBI’s Richmond, Virginia Field Office and Special Agent in Charge Robert E. Craig Jr. of the Defense Criminal Investigative Service’s (DCIS) Mid-Atlantic Field Office, made the announcement.

William Whyte, 72, of King City, Ontario, the owner and CEO of Armet Armored Vehicles of Danville, Virginia, was found guilty after a two-week trial of three counts of major fraud against the United States, three counts of wire fraud and three counts of criminal false claims.  Whyte was charged by an indictment in July 2012.  Following the verdict, Senior U.S. District Judge Jackson L. Kiser of the Western District of Virginia, who presided over the trial, remanded Whyte into custody pending a full bond hearing.  A sentencing date has not yet been scheduled.

Evidence at trial demonstrated that Whyte executed a scheme to defraud the United States by providing armored gun trucks that were deliberately underarmored.  According to the trial evidence, Armet contracted to provide armored gun trucks for use by the United States and its allies as part of the efforts to rebuild Iraq in 2005.  Despite providing armored gun trucks that did not meet contractual specifications, Whyte and his employees represented that the armored gun trucks were adequately armored in accordance with the contract, the evidence showed.  Armet was paid over $2 million over the course of the scheme, including an $824,000 advance payment that the United States made after Whyte personally promised the United States that he would use the money in furtherance of the contract, the evidence showed.

The case was investigated by DCIS and the FBI.  The case is being prosecuted by Trial Attorney Caitlin Cottingham of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Heather Carlton of the Western District of Virginia.