FORMER ATTORNEY SENTENCED TO 70 MONTHS IN PRISON FOR ROLE IN $28.3 MILLION MEDICARE FRAUD

Thursday, August 7, 2014

FROM:  U.S. JUSTICE DEPARTMENT

Disbarred Attorney Sentenced to Prison for Her Role in $28.3 Million Medicare Fraud Scheme

A disbarred Florida attorney was sentenced in federal court in Tampa, Florida today to serve 70 months in prison in connection with her role in a $28.3 million Medicare fraud scheme involving false claims for physical and occupational therapy services.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III for the Middle District of Florida, Acting Special Agent in Charge Reginald France of the Health and Human Services Office of Inspector General (HHS-OIG) region including all of Florida and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.   The sentence was imposed by U.S. District Judge Susan C. Bucklew of the Middle District of Florida.

Margarita Grishkoff, 60, of Charlotte, North Carolina, formerly of southwest Florida, pleaded guilty on Jan. 24, 2014, to conspiracy to commit health care fraud.   In addition to serving a prison term of 70 months, Grishkoff was sentenced to serve three years of supervised release and ordered to pay $14,424,856 in restitution, jointly and severally with her co-conspirators.

Grishkoff admitted as part of her guilty plea that she and her co-conspirators submitted approximately $28.3 million in fraudulent reimbursement claims to Medicare through physical therapy clinics throughout Florida from 2005 through 2009.   Medicare paid approximately $14.4 million on those claims.

According to court documents, Grishkoff, a former attorney who was disbarred in Florida in 1997, was vice president and director for a Delaware holding company known as Ulysses Acquisitions Inc.   Through Ulysses Acquisitions, Grishkoff purchased comprehensive outpatient rehabilitation facilities and outpatient physical therapy providers, including West Coast Rehab Inc. in Fort Myers, Florida; Rehab Dynamics Inc. in Venice, Florida; Polk Rehabilitation Inc. in Lake Wales, Florida and Renew Therapy Center of Port St. Lucie LLC in Port St. Lucie, Florida, to gain control of these clinics’ Medicare provider numbers.

Grishkoff and her co-conspirators paid kickbacks to patient recruiters and clinic owners to obtain identifying information of Medicare beneficiaries and physicians.   Grishkoff and her co-conspirators then used this information to create and submit false claims to Medicare through the clinics Ulysses Acquisitions purchased.   These claims sought reimbursement for therapy services that were not legitimately prescribed and not actually provided.

Also according to court documents, Grishkoff and her co-conspirators used the clinics they controlled to submit false reimbursement claims to Medicare on behalf of clinics owned by others, in exchange for a percentage of the Medicare reimbursement received.   These Miami-based therapy clinics included Hallandale Rehabilitation Inc., Tropical Physical Therapy Corporation, American Wellness Centers Inc. and West Regional Center Inc.   Grishkoff and her co-conspirators kept approximately 20 percent of the money Medicare paid on these claims and paid the other 80 percent of the fraud proceeds to the co-conspirator clinic owners.

Grishkoff further admitted that after falsely billing Medicare through Ulysses Acquisitions, and in order to disassociate herself from the clinics, Grishkoff and her co-conspirators arranged sham sales of the clinics to nominee or straw owners, all of whom were recent immigrants to the United States with no background or experience in the health care industry.

The case is being investigated by HHS-OIG and the FBI 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 Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Simon A. Gaugush of the Middle District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.   In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

ATTORNEY SENTENCED FOR ARRANGING OVER $7 BILLION TAX FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 25, 2014

Former Jenkens & Gilchrist Attorney Sentenced to 15 Years in Prison for Orchestrating Multibillion Dollar Criminal Tax Fraud Scheme

Paul M. Daugerdas Personally Received More Than $95 Million in Fees from Tax Shelter Scheme That Generated Over $7 Billion in Fraudulent Tax Deductions
Deputy Assistant Attorney General Ronald A. Cimino for the Tax Division of the Department of Justice and U.S. Attorney Preet Bharara for the Southern District of New York announced that Paul M. Daugerdas, 63, a tax attorney and certified public accountant, was sentenced today in Manhattan federal court to serve 15 years in prison for orchestrating a massive fraudulent tax shelter scheme in which he and his co-conspirators designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to evade over $1.6 billion in taxes owed to the Internal Revenue Service (IRS).  The 20-year scheme, which Daugerdas hatched while working at the Arthur Andersen accounting firm and then continued while a partner at two law firms – Altheimer & Gray and then Jenkens & Gilchrist (J&G) – generated over $7 billion in fraudulent tax losses and yielded approximately $95 million in fees to Daugerdas personally.  In October 2013, Daugerdas was convicted following a seven-week jury trial, presided over by U.S. District Judge William H. Pauley III, who also imposed today’s sentence.

“Paul Daugerdas used his legal and accounting expertise to cheat the system and unlawfully deprive the government of over $1.6 billion of tax revenue,” said U.S. Attorney Bharara.  “With today’s sentence, Daugerdas’s giant tax fraud scheme has reached its just conclusion under the law, with a sentence of 15 years in prison.”

“Dishonest professionals who market tax fraud schemes to their clients need to sit up and take note of today’s sentence,” said Deputy Assistant Attorney General Cimino.  “The Justice Department and IRS are committed to holding responsible those who would misuse their skills and expertise to help others to evade their lawful tax obligations.”

According to the evidence at trial and other documents filed in the case:

From 1994 through 2004, Daugerdas, who is a lawyer, a certified public accountant, and the former head of the Chicago office of J&G and its tax practice, participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters.

As part of the scheme, Daugerdas and others plotted to defraud the IRS by, among other things, corruptly endeavoring to prevent the IRS from: detecting their clients’ use of these shelters; understanding how the transactions operated to produce the tax results reported by the clients; learning that, rather than serving as legitimate investment transactions, the tax shelters lacked economic substance in that they were designed and marketed as cookie-cutter products intended exclusively to eliminate or reduce large tax liabilities; learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits; and learning that, from the outset, all of the clients intended to complete a pre-planned series of steps that had been designed to lead to the specific tax benefits they sought.  Daugerdas and others created and assisted in creating transactional documents and other materials that falsely and fraudulently described their clients’ motivations for entering into the tax shelters and for taking various steps in order to yield the tax benefits.

As part of the scheme, Daugerdas and his co-conspirators also fraudulently backdated some of the tax shelter transactions.  In particular, Daugerdas and his co-defendants learned that certain tax shelter transactions had been implemented incorrectly during the year of the transactions in that they failed to produce the amount or type of tax losses requested by the clients.  Rather than reporting those tax shelter results as they occurred – as required by the Internal Revenue Code – Daugerdas and others engaged in corrupt “correcting” transactions after the close of the pertinent tax years, and then backdated the tax shelter documents to make it appear that the amount and type of tax losses sought by the clients had in fact been generated during the pertinent tax years.  Daugerdas also authored fraudulent tax opinion letters that falsely described when certain aspects of the transactions had actually occurred.  As a result of the fraudulent backdating, Daugerdas and others caused tax shelter clients to file tax returns that falsely and fraudulently claimed tens of millions of dollars of tax losses to which the clients were not entitled.

As a result of the scheme, Daugerdas and his co-conspirators made millions of dollars in fees and bonuses.  Daugerdas himself made $95 million in profits but used tax shelters to reduce the taxes he paid to less than $8,000; without the shelters, he would have owed over $32 million in taxes.

*                      *                      *

Daugerdas, of Wilmette, Illinois, was convicted of conspiring to defraud the IRS, to evade taxes, and to commit mail and wire fraud, and of corruptly endeavoring to obstruct and impede the internal revenue laws.  He was also convicted of four counts of tax evasion relating to the use of various tax shelters for specified clients, and of mail fraud.

In addition to the prison term, Judge Pauley ordered Daugerdas to forfeit $164,737,500 in proceeds of the offenses, which included certain assets that had been seized and frozen at the time Daugerdas was indicted.  The forfeited proceeds include a lakefront home on Lake Geneva in Wisconsin, and over $20 million in various securities and financial accounts.  Judge Pauley also ordered Daugerdas to pay $371,006,397 in restitution to the IRS.  At sentencing, Judge Pauley said that Daugerdas “was at the apex of tax shelter racketeers who tapped into the greed of the super wealthy who did not want to pay taxes.”

In connection with this scheme, David Parse, a former broker at Deutsche Bank, was convicted of various tax fraud charges in May 2011 after an 11-week jury trial, and was sentenced in March 2013 to serve 46 months in prison.  Donna Guerin, a former lawyer at J&G’s Chicago tax practice, pleaded guilty in September 2012 to various tax fraud charges related to her role in the scheme.  She was sentenced in March 2013 to serve eight years in prison.

Former J&G partner Erwin Mayer, former BDO Seidman vice chairman and board member Charles W. Bee Jr., former BDO principal and former member of BDO Seidman’s TSG and Tax Opinion Committee Michael Kerekes, former BDO Seidman vice chairman and TSG member Adrian Dicker, BDO Seidman partner Robert Greisman, and BDO Seidman partner Mark Bloom have all previously been convicted in connection with this scheme.

This case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Stanley J. Okula Jr. and Niketh Velamoor for the Southern District of New York and Assistant Chief Nanette L. Davis of the Tax Division are in charge of the prosecution.

SEC CHARGES THREE IN PRIME BANK OFFERING AND PONZI SCHEME

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission ("Commission") has charged Jenifer E. Hoffman and John C. Boschert, the former principals of Assured Capital Consultants, LLC - a now-dissolved Florida company - and Bryan T. Zuzga, the company's purported escrow agent, for their involvement in a fraudulent prime bank offering and Ponzi scheme.

According to the Commission's complaint, filed in U.S. District Court for the Middle District of Florida, between approximately January and September 2009, Assured Capital, through Hoffman, Boschert, and Zuzga, raised at least $25 million from investors, through false representations and fake documents. The complaint alleges that Hoffman and Boschert represented to investors that their money would be invested in Assured Capital's offshore, confidential trading program which, in turn, would invest in blocks of medium term notes. As the complaint further alleges, Hoffman and Boschert enticed investors with claims of exorbitant profits and with the illusion of safety by telling them that the investment would provide weekly returns of up to 50% and that it was performing, safe, and guaranteed. In addition, Hoffman and Boschert represented to investors their money would remain safe in an Assured Capital escrow account that would be used to secure a line of credit for investing in the company's offshore trading program. Furthermore, Hoffman, Boschert, and Zuzga told investors that Zuzga controlled the escrow account as Assured Capital's escrow agent and that he was a licensed attorney. Moreover, Hoffman provided investors with fake bank documents and a sham verification letter, notarized by Zuzga, purporting to confirm Assured Capital had $500 million at a Panamanian bank.

As the complaint alleges, none of these representations were true and the investment program was purely fictional. Zuzga was not Assured Capital's escrow agent and has never been a licensed attorney. Hoffman and Boschert used investor funds to make payments to other investors in Ponzi fashion, and stole investor funds along with Zuzga for their personal use. Assured Capital has since gone out of business.

The Commission's complaint alleges that Hoffman of Clermont, Florida, Boschert of Apopka, Florida, and Zuzga of Coldwater, Michigan, all violated Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission is seeking financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctions against all the defendants.

SEC OBTAINS FINAL JUDGEMENT AGAINST ATTORNEY FOR FALSE STATEMENT ABOUT CLIENT

FROM:  SECURITIES AND EXCHANGE COMMISSION 

SEC Obtains Final Judgment Against Miami Attorney Stewart A. Merkin
On July 1, 2013, the Honorable Donald L. Graham, United States District Judge for the Southern District of Florida, signed the final judgment against defendant Stewart A. Merkin (“Merkin”) in a civil action originally filed on October 3, 2011.  Merkin is an attorney in Miami, Florida.

The Commission brought a civil action against Merkin alleging violations of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 thereunder.  The Complaint alleged that on four occasions, Merkin, an experienced attorney, wrote letters falsely stating that his client, StratoComm Corporation (“StratoComm”), was not under investigation for violations of the securities laws.  The Complaint further alleged that Merkin knew that his statements were false because, at the time that he wrote each letter, he was representing StratoComm and several individuals in the Commission’s investigation into the company’s activities.  The Commission’s Complaint alleged that Merkin authorized his letters to be posted on the website maintained by Pink Sheets LLC (currently OTC Markets Group Inc.) for viewing by the investing public.

On October 3, 2012, the Court granted the Commission’s motion for summary judgment with respect to liability, finding that Merkin made false statements of material fact, with scienter, in connection with the purchase or sale of securities.  Merkin subsequently consented to the entry of a final judgment that: (i) orders him liable to pay a total of $125,000 in disgorgement, prejudgment interest and a civil penalty; (ii) imposes a permanent injunction against future violations of Section 10(b) and Rule 10b-5 of the Exchange Act by making false or misleading statements; and (iii) permanently bars Merkin from participating in an offering of penny stock.  In consenting to these remedies, Merkin retained his right to appeal from the Court’s ruling on summary judgment with respect to liability.