SEVERAL FIFA OFFICIALS INDICTED FOR ROLES IN CORRUPTING INTERNATIONAL SOCCER

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, May 27, 2015
Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruption

The Defendants Include Two Current FIFA Vice Presidents and the Current and Former Presidents of the Confederation of North, Central American and Caribbean Association Football (CONCACAF); Seven Defendants Arrested Overseas; Guilty Pleas for Four Individual Defendants and Two Corporate Defendants Also Unsealed

A 47-count indictment was unsealed early this morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer.  The guilty pleas of four individual defendants and two corporate defendants were also unsealed today.

The defendants charged in the indictment include high-ranking officials of the Fédération Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella.  Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses.  The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

The charges were announced by Attorney General Loretta E. Lynch, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Director James B. Comey of the FBI, Assistant Director in Charge Diego W. Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Erick Martinez of the IRS-CI’s Los Angeles Field Office.

Also earlier this morning, Swiss authorities in Zurich arrested seven of the defendants charged in the indictment, the defendants Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel and José Maria Marin, at the request of the United States.  Also this morning, a search warrant is being executed at CONCACAF headquarters in Miami, Florida.

The guilty pleas of the four individual and two corporate defendants that were also unsealed today include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International Inc. and Traffic Sports USA Inc., which is based in Florida.

“The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States,” said Attorney General Lynch.  “It spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks.  And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable.  Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice – and we look forward to continuing to work with other countries in this effort.”

Attorney General Lynch extended her grateful appreciation to the authorities of the government of Switzerland, as well as several other international partners, for their outstanding assistance in this investigation.

“Today’s announcement should send a message that enough is enough,” said Acting U.S. Attorney Currie.  “After decades of what the indictment alleges to be brazen corruption, organized international soccer needs a new start – a new chance for its governing institutions to provide honest oversight and support of a sport that is beloved across the world, increasingly so here in the United States.  Let me be clear: this indictment is not the final chapter in our investigation.”

Acting U.S. Attorney Currie extended his thanks to the agents, analysts and other investigative personnel with the FBI New York Eurasian Joint Organized Crime Squad and the IRS-CI Los Angeles Field Office, as well as their colleagues abroad, for their tremendous effort in this case.

“As charged in the indictment, the defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world,” said Director Comey.  “Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at FIFA.  I want to commend the investigators and prosecutors around the world who have pursued this case so diligently, for so many years.”

“When leaders in an organization resort to cheating the very members that they are supposed to represent, they must be held accountable,” said Chief Weber.  “Corruption, tax evasion and money laundering are certainly not the cornerstones of any successful business.  Whether you call it soccer or football, the fans, players and sponsors around the world who love this game should not have to worry about officials corrupting their sport.  This case isn't about soccer, it is about fairness and following the law.  IRS-CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.”

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

The Enterprise

FIFA is composed of 209 member associations, each representing organized soccer in a particular nation or territory, including the United States and four of its overseas territories.  FIFA also recognizes six continental confederations that assist it in governing soccer in different regions of the world.  The U.S. Soccer Federation is one of 41 member associations of the confederation known as CONCACAF, which has been headquartered in the United States throughout the period charged in the indictment.  The South American confederation, called CONMEBOL, is also a focus of the indictment.

As alleged in the indictment, FIFA and its six continental confederations, together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws.  The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.

As alleged in the indictment, one key way the enterprise derives revenue is to commercialize the media and marketing rights associated with soccer events and tournaments.  The organizing entity that owns those rights – as FIFA and CONCACAF do with respect to the World Cup and Gold Cup, their respective flagship tournaments – sells them to sports marketing companies, often through multi-year contracts covering multiple editions of the tournaments.  The sports marketing companies, in turn, sell the rights downstream to TV and radio broadcast networks, major corporate sponsors and other sub-licensees who want to broadcast the matches or promote their brands.  The revenue generated from these contracts is substantial: according to FIFA, 70% of its $5.7 billion in total revenues between 2011 and 2014 was attributable to the sale of TV and marketing rights to the 2014 World Cup.

The Racketeering Conspiracy

The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering.  Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks.  All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.

Most of the schemes alleged in the indictment relate to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, including FIFA World Cup qualifiers in the CONCACAF region, the CONCACAF Gold Cup, the CONCACAF Champions League, the jointly organized CONMEBOL/CONCACAF Copa América Centenario, the CONMEBOL Copa América, the CONMEBOL Copa Libertadores and the Copa do Brasil, which is organized by the Brazilian national soccer federation (CBF).  Other alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.

The Indicted Defendants

As set forth in the indictment, the defendants and their co-conspirators fall generally into three categories: soccer officials acting in a fiduciary capacity within FIFA and one or more of its constituent organizations; sports media and marketing company executives; and businessmen, bankers and other trusted intermediaries who laundered illicit payments.

Nine of the defendants were FIFA officials by operation of the FIFA statutes, as well as officials of one or more other bodies:

Jeffrey Webb: Current FIFA vice president and executive committee member, CONCACAF president, Caribbean Football Union (CFU) executive committee member and Cayman Islands Football Association (CIFA) president.

Eduardo Li: Current FIFA executive committee member-elect, CONCACAF executive committee member and Costa Rican soccer federation (FEDEFUT) president.

Julio Rocha: Current FIFA development officer.  Former Central American Football Union (UNCAF) president and Nicaraguan soccer federation (FENIFUT) president.

Costas Takkas: Current attaché to the CONCACAF president.  Former CIFA general secretary.

Jack Warner: Former FIFA vice president and executive committee member, CONCACAF president, CFU president and Trinidad and Tobago Football Federation (TTFF) special adviser.

Eugenio Figueredo: Current FIFA vice president and executive committee member.  Former CONMEBOL president and Uruguayan soccer federation (AUF) president.

Rafael Esquivel: Current CONMEBOL executive committee member and Venezuelan soccer federation (FVF) president.

José Maria Marin: Current member of the FIFA organizing committee for the Olympic football tournaments.  Former CBF president.

Nicolás Leoz: Former FIFA executive committee member and CONMEBOL president.

            Four of the defendants were sports marketing executives:

Alejandro Burzaco: Controlling principal of Torneos y Competencias S.A., a sports marketing business based in Argentina, and its affiliates.

Aaron Davidson: President of Traffic Sports USA Inc. (Traffic USA).

Hugo and Mariano Jinkis: Controlling principals of Full Play Group S.A., a sports marketing business based in Argentina, and its affiliates.

And one of the defendants was in the broadcasting business but allegedly served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials:

José Margulies:  Controlling principal of Valente Corp. and Somerton Ltd.

The Convicted Individuals and Corporations

The following individuals and corporations previously pleaded guilty under seal:

On July 15, 2013, the defendant Daryll Warner, son of defendant Jack Warner and a former FIFA development officer, waived indictment and pleaded guilty to a two-count information charging him with wire fraud and the structuring of financial transactions.

On Oct. 25, 2013, the defendant Daryan Warner waived indictment and pleaded guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy and the structuring of financial transactions.  Daryan Warner forfeited over $1.1 million around the time of his plea and has agreed to pay a second forfeiture money judgment at the time of sentencing.

On Nov. 25, 2013, the defendant Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, waived indictment and pleaded guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion and failure to file a Report of Foreign Bank and Financial Accounts (FBAR).  Blazer forfeited over $1.9 million at the time of his plea and has agreed to pay a second amount to be determined at the time of sentencing.

On Dec. 12, 2014, the defendant José Hawilla, the owner and founder of the Traffic Group, the Brazilian sports marketing conglomerate, waived indictment and pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice.  Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.

On May 14, 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.

All money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.

* * * *

The indictment unsealed today has been assigned to U.S. District Court Judge Raymond J. Dearie of the Eastern District of New York.

The indicted and convicted individual defendants face maximum terms of incarceration of 20 years for the RICO conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering and obstruction of justice charges.  In addition, Eugenio Figueredo faces a maximum term of incarceration of 10 years for a charge of naturalization fraud and could have his U.S. citizenship revoked.  He also faces a maximum term of incarceration of five years for each tax charge.  Charles Blazer faces a maximum term of incarceration of 10 years for the FBAR charge and five years for the tax evasion charges; and Daryan and Daryll Warner face maximum terms of incarceration of 10 years for structuring financial transactions to evade currency reporting requirements.  Each individual defendant also faces mandatory restitution, forfeiture and a fine.  By the terms of their plea agreements, the corporate defendants face fines of $500,000 and one year of probation.

The government’s investigation is ongoing.

The government’s case is being prosecuted by Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Darren A. LaVerne, Samuel P. Nitze, Keith D. Edelman and Brian D. Morris of the Eastern District of New York, with assistance provided by the Justice Department’s Office of International Affairs and Organized Crime and Gang Section.

FORMER EX-IM BANK LOAN OFFICER PLEADS GUILTY TO TAKING OVER $78,000 IN BRIBES

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, April 22, 2015
Former Loan Officer at Export-Import Bank Pleads Guilty to Accepting Over $78,000 in Bribes

A former loan officer at the Export-Import Bank of the United States (Ex-Im Bank) pleaded guilty in federal court today for accepting more than $78,000 in bribes in return for recommending the approval of unqualified loan applications to the bank, among other misconduct.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting Inspector General Michael T. McCarthy of the Export-Import Bank of the United States and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.      

Johnny Gutierrez, 50, of Stafford, Virginia, pleaded guilty before U.S. District Judge Gladys Kessler of the District of Columbia to one count of bribery of a public official.  A sentencing hearing is scheduled for July 20, 2015.

“Gutierrez risked both taxpayer dollars and the integrity of the Ex-Im Bank for his personal financial gain,” said Assistant Attorney General Caldwell.  “Those charged with serving the public will be held accountable when they seek personal enrichment at the public’s expense.”

“Gutierrez betrayed the trust and confidence of the hardworking Ex-Im Bank employees and the U.S. taxpayers,” said Acting Inspector General McCarthy.  “The Office of Inspector General will continue to aggressively and diligently investigate all allegations of waste, fraud, and abuse related to Ex-Im Bank programs.”

“In his role as a loan officer, Gutierrez betrayed the trust that was placed in him by fellow citizens and took bribes in exchange for providing favorable action on loan applicants,” said Assistant Director in Charge McCabe.  “The FBI, with our partners, will continue to investigate and expose fraudulent schemes that tarnish the good and ethical work of the U.S. government.”

According to his plea agreement, Gutierrez was a loan officer for the Ex-Im Bank based in Washington, D.C.  The Ex-Im Bank is the federal agency responsible for promoting the export of U.S. goods to foreign countries through the guarantee of domestic loans to foreign buyers.  As an Ex-Im Bank loan officer, Gutierrez was responsible for conducting credit underwriting reviews for companies and lenders submitting financing applications to the Ex-Im Bank.

As part of his guilty plea, Gutierrez admitted that on 19 separate occasions between June 2006 and December 2013, he accepted bribes totaling more than $78,000 in return for recommending the approval of unqualified loan applications and improperly expediting other applications.

Specifically, Gutierrez admitted that he intentionally ignored the fact that one company had previously defaulted in 10 previous transactions guaranteed by the bank, causing the Ex-Im Bank to lose almost $20 million.  Despite these defaults, Gutierrez accepted bribes to continue to recommend the approval of the company’s loan applications.  Additionally, Gutierrez admitted that he accepted bribes from a financing broker to expedite applications submitted by the broker, and that he privately assisted the broker to improve its applications before submission to the bank.  In exchange, Gutierrez was to receive half of the broker’s profit on the transactions financed by the bank.  Further, Gutierrez disclosed to the broker inside information about financing applications submitted to the Ex-Im Bank, so that the broker could solicit the applicants as clients.

The case was investigated by the Inspector General of the Export-Import Bank of the United States and the FBI, with significant assistance provided by the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Washington Field Office.  The case is being prosecuted by Senior Litigation Counsel Patrick M. Donley and Trial Attorney William H. Bowne of the Criminal Division’s Fraud Section.

SEC CHARGES GOODYEAR TIRE & RUBBER WITH VIOLATING FOREIGN CORRUPT PRACTICES ACT

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION
02/24/2015 11:15 AM EST

The Securities and Exchange Commission charged Goodyear Tire & Rubber Company with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries paid bribes to land tire sales in Kenya and Angola.
Goodyear agreed to pay more than $16 million to settle the SEC’s charges.    

According to the SEC’s order instituting a settled administrative proceeding, Goodyear failed to prevent or detect more than $3.2 million in bribes during a four-year period due to inadequate FCPA compliance controls at its subsidiaries in sub-Saharan Africa.  Bribes were generally paid in cash to employees of private companies or government-owned entities as well as other local authorities such as police or city council officials.  The improper payments were falsely recorded as legitimate business expenses in the books and records of the subsidiaries, which were consolidated into Goodyear’s books and records.

“Public companies must keep accurate accounting records, and Goodyear’s lax compliance controls enabled a routine of corrupt payments by African subsidiaries that were hidden in their books,” said Scott W. Friestad, Associate Director of the SEC’s Enforcement Division.  “This settlement ensures that Goodyear must forfeit all of the illicit profits from business obtained through bribes to foreign officials as well as employees at commercial companies in Angola and Kenya.”

The SEC’s order finds that Goodyear’s subsidiary in Kenya bribed employees of the Kenya Ports Authority, Armed Forces Canteen Organization, Nzoia Sugar Company, Kenyan Air Force, Ministry of Roads, Ministry of State for Defense, East African Portland Cement Co., and Telkom Kenya Ltd.  Goodyear’s subsidiary in Angola bribed employees of the Catoca Diamond Mine, which is owned by a consortium of mining interests including Angola’s national mining company Endiama E.P. and Russian mining company ALROSA.  Others bribed in Angola worked at UNICARGAS, Engevia Construction and Public Works, Electric Company of Luanda, National Service of Alfadega, and Sonangol.

The SEC’s order finds that Goodyear violated the books and records and internal control provisions of the federal securities laws: Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.  Goodyear neither admitted nor denied the SEC’s findings.  The settlement reflects the company’s self-reporting, prompt remedial acts, and significant cooperation with the SEC’s investigation.  Goodyear must pay disgorgement of $14,122,525 – which comprises the company’s illicit profits in Kenya and Angola – plus prejudgment interest of $2,105,540.  Goodyear also must report its FCPA remediation efforts to the SEC for a three-year period.

The SEC’s investigation was conducted by Devon A. Brown and Brian T. Fitzsimons, and the case was supervised by Brian O. Quinn.  The SEC thanks the Department of Justice’s Fraud Section and the U.S. Attorney’s Office for the Northern District of Ohio.

FORMER NATIONAL GUARD SERGEANT SENTENCED FOR ROLE IN PROTECTING ALLEGED DRUG TRAFFICKERS

FROM:  U.S. JUSTICE DEPARTMENT
Friday, February 20, 2015
Former Arizona Army National Guard Sergeant Sentenced to 52 Months in Prison for Participating in Scheme to Protect Purported Drug Traffickers
Fifty-Seven Individuals Previously Convicted and Sentenced as Part of This Investigation

A former member of the Arizona Army National Guard was sentenced today to 52 months in prison for his role in a scheme to accept bribes from purported drug traffickers in exchange for using his military position to protect shipments of cocaine during transportation, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

Raul Portillo, 42, of Phoenix, Arizona, pleaded guilty on Nov. 21, 2014, to one count of conspiracy to commit bribery and interfere with commerce by attempted extortion.  U.S. District Judge James A. Soto of the District of Arizona imposed the sentence.

According to admissions made in connection with his guilty plea, Portillo, a sergeant in the Arizona Army National Guard, conspired with others from the Arizona Army National Guard to accept cash bribes to protect narcotics traffickers who were purportedly transporting and distributing cocaine from Arizona to other locations in the southwestern United States.  Unbeknownst to Portillo and the other co-conspirators, however, the supposed narcotics traffickers were actually undercover FBI agents.

Specifically, Portillo admitted that he wore his official uniform, carried official forms of identification, used official vehicles and used his official authority, where necessary, to prevent police stops and searches as he drove cocaine shipments through checkpoints manned by the U.S. Border Patrol, the Arizona Department of Public Safety, and Nevada law enforcement officers.  Portillo admitted that he took bribe payments totaling $12,000 for transporting cocaine on two separate occasions.  Portillo also admitted that he accepted a $2,000 cash payment in exchange for recruiting an Immigration and Customs Enforcement inspector into the conspiracy.

In 2006, an arrest warrant was issued for Portillo, and Portillo was arrested in May 2011, arraigned and released on personal recognizance.  Portillo admitted that in or around July 2011, he fled to avoid prosecution.

To date, 58 defendants have been convicted and sentenced for charges stemming from this investigation.

This case is part of a joint investigation conducted by the Southern Arizona Corruption Task Force (SACTF), which is comprised of the FBI, the Drug Enforcement Administration, the Bureau of Immigration and Customs Enforcement, and the Tucson Police Department.  Though not part of the SACTF, the Arizona National Guard, Air Force Office of Special Investigations, Defense Criminal Investigative Service and Internal Revenue Service’s Criminal Investigation Division also participated in the investigation.  The case is being prosecuted by Trial Attorneys Monique T. Abrishami and Peter N. Halpern of the Criminal Division’s Public Integrity Section.

TWO U.S. ARMY SERGEANTS PLEAD GUILTY TO ACCEPTING BRIBES FROM AFGHAN TRUCK DRIVERS

FROM:  U.S. JUSTICE DEPARTMENT
Wednesday, February 11, 2015
Two U.S. Army Sergeants Plead Guilty to Taking Bribes While Deployed in Afghanistan

Two sergeants with the U.S. Army have pleaded guilty for accepting bribes from Afghan truck drivers at Forward Operating Base Gardez, Afghanistan (FOB Gardez), in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia.

James Edward Norris, 41, of Fort Irwin, California, and Seneca Darnell Hampton, 31, of Fort Benning, Georgia, each pleaded guilty before Chief U.S. District Judge Clay D. Land in the Middle District of Georgia to one count of conspiracy to commit bribery of a public official and one count of money laundering.

During their guilty pleas, Hampton and Norris admitted to conspiring with other soldiers stationed at FOB Gardez to solicit and accept approximately $2,000 per day from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base.  Hampton admitted that he concealed the scheme by attributing the increase in fuel usage to colder winter temperatures.

Hampton and Norris admitted that they shipped the bribe money back to the United States in tough boxes.  Norris further admitted that on June 7, 2013, after returning from deployment, he purchased a 2008 Cadillac Escalade with $31,000 cash derived from the bribery scheme.  Hampton further admitted that on May 20, 2013, after returning from deployment, he purchased a 2013 GMC Sierra with $29,000 cash derived from the bribery scheme.

As part of their plea agreements, Hampton and Norris agreed to forfeit the proceeds they received from the bribery scheme and the vehicles they purchased with those proceeds, as well as to pay full restitution.  Sentencing has been scheduled for May 21, 2015.

The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division.  The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section.

DOJ FILES LAWSUIT AGAINST PHARMA CONSULTING SERVICE FOR ALLEGEDLY TAKING KICKBACKS FROM PHARMA MANUFACTURERS

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, December 22, 2014

United States Files Suit Against Omnicare Inc. for Accepting Kickbacks from Drug Manufacturer to Promote an Anti-Epileptic Drug in Nursing Homes
The United States has filed a civil False Claims Act complaint against Omnicare Inc. alleging that it solicited and received millions of dollars in kickbacks from pharmaceutical manufacturer Abbott Laboratories, the Justice Department announced today.  Omnicare is the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes.  Federal regulations designed to protect nursing home residents from unnecessary drugs require nursing homes to retain consulting pharmacists such as those provided by Omnicare to ensure that residents’ drug prescriptions are appropriate.

In its complaint, the United States alleges that Omnicare solicited and received kickbacks from Abbott in exchange for purchasing and recommending the prescription drug Depakote for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare.  According to the complaint, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients.  The government alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott.

“Elderly nursing home residents suffering from dementia are among our nation’s most vulnerable patient populations, and they depend on the independent judgment of healthcare professionals for their daily care,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Kickbacks to consulting pharmacists compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

The United States alleges that Omnicare disguised the kickbacks it received from Abbott in a variety of ways.  Abbott allegedly made payments to Omnicare described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote.  For example, according to the complaint, Omnicare solicited substantial contributions from Abbott and other pharmaceutical manufacturers to its “Re*View” program.  Although Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents.  In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program.  The complaint also alleges that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident.  Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.

“Although the United States Attorney’s Office for the Western District of Virginia is small, we will not waver in our pursuit of the largest corporations, like Omnicare and Abbott, who illegally raid the coffers of Medicaid, Medicare, and other healthcare benefit programs,” said Acting U.S. Attorney Anthony P. Giorno for the Western District of Virginia.

“Kickback allegations place elderly nursing home residents at risk that treatment decisions are influenced by improper financial incentives,” said Special Agent in Charge Nicholas DiGiulio for the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) region including Virginia. “We will continually guard government health programs and taxpayers from companies more intent on their bottom lines than on patient care.”

In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.

The United States filed its complaint against Omnicare in two consolidated whistleblower lawsuits filed under the False Claims Act in the Western District of Virginia.  The whistleblower provisions of the False Claims Act authorize private parties to sue for fraud on behalf of the United States and share in any recovery.  The United States is entitled to intervene and take over such lawsuits, as it has done here.

This case 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 the Attorney General and the Secretary of Health and Human Services.  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 $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.

This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Virginia, HHS-OIG, the Office of the Attorney General for the Commonwealth of Virginia and the National Association of Medicaid Fraud Control Units.

The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.).  The claims asserted in the government’s complaint are allegations only and there has been no determination of liability.

FORMER FBI AGENT PLEADS GUILTY IN BRIBERY CASE

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, December 23, 2014
Former FBI Special Agent Pleads Guilty to Bribery Scheme

A former FBI special agent pleaded guilty today to bribery charges, admitting that he provided internal law enforcement documents and other confidential information about a prominent citizen of Bangladesh for use by a political rival in exchange for cash.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Justice Department Inspector General Michael E. Horowitz made the announcement.

“Robert Lustyik discarded the FBI’s principles of ‘fidelity, bravery, and integrity,’ and sold his badge to the highest bidder,” said Assistant Attorney General Caldwell.  “Greed has no place in public service or law enforcement.  The Department of Justice will root out corruption wherever it takes hold, and hold accountable those who abuse the public’s trust for personal gain.”

“Robert Lustyik today admitted to conducting a bribery scheme in which, for his own personal gain, he secretly sold information and documents to which he had access as an FBI agent,” said U.S. Attorney Bharara.  “Lustyik betrayed our system of justice: he breached not only the law, but also his sworn oath, and the great trust and confidence placed in him by citizens and colleagues.  For his criminal conduct he now faces, as he must, serious, commensurate penalties.”

“The Department of Justice Office of the Inspector General is committed to working with our law enforcement partners to identify, investigate, and bring to justice all DOJ employees who engage misconduct,” said Inspector General Horowitz.

Robert Lustyik, 52, of Westchester County, New York, pleaded guilty to all five counts in the indictment against him, including conspiracy to engage in a bribery scheme, soliciting bribes by a public official, conspiracy to defraud the citizens of the United States and the FBI, theft of government property, and unauthorized disclosure of a Suspicious Activity Report.  Lustyik is scheduled to be sentenced by U.S. District Court Judge Vincent L. Briccetti of the Southern District of New York on April 30, 2015.

According to the complaint, indictment, court hearings, and today’s plea proceeding, Lustyik was an FBI special agent who worked on the counterintelligence squad in the White Plains Resident Agency.  Johannes Thaler was Lustyik’s friend, and Rizve Ahmed, aka, “Caesar,” was an acquaintance of Thaler.  From September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme.  As part of the scheme, Lustyik and Thaler solicited payments from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI special agent.  The documents and information pertained to a prominent citizen of Bangladesh (Individual 1), who Ahmed perceived as a political rival.  Ahmed sought, among other things, to obtain information about Individual 1, to locate and harm Individual 1 and others associated with Individual 1.

As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information.  For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.”  Thaler responded, “I know.  It’s all right there in front of us.  Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .”

As another example, in late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, sent a text message to Thaler stating, “I want to kill C . . . . I hung my ass out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to Individual 1].”  Lustyik further stated, “So bottom line.  I need ten gs asap.  We gotta squeeze C.”

Thaler and Ahmed previously pleaded guilty to bribery and conspiracy to commit fraud, and are scheduled to be sentenced on Jan. 23, 2015.

The case was investigated by the Department of Justice Office of the Inspector General, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the Southern District of New York.

U.S. CONTRACTOR'S FORMER EMPLOYEE INDICTED FOR BRIBERY

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, December 16, 2014

Former Employee of U.S. Contractor in Afghanistan Indicted for Bribery
A former employee of a U.S. contractor was indicted today in the Eastern District of Texas for allegedly soliciting and accepting bribes in exchange for his influence in awarding U.S. government-funded contracts in Afghanistan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John Malcolm Bales of the Eastern District of Texas.

George E. Green, 57, of Carrollton, Texas, was charged with conspiracy to structure financial transactions to avoid currency transaction reporting requirements, wire fraud and receipt of bribes in connection with a program receiving federal funds.

According to the indictment, Green was the former director of contracts, procurement and grants for International Relief and Development Inc. (IRD), and was part of a cooperative agreement between IRD and the U.S. Agency for International Development (USAID) that sought to promote long-term agricultural development in specific areas in Afghanistan.

The indictment alleges that while working for IRD in Afghanistan, Green solicited and received bribes totaling $66,000 from a representative of an Afghan firm that contracted with IRD.  Some of those bribe payments were allegedly wired directly to an Italian automobile dealer for Green’s benefit.  After returning to Texas, Green allegedly attempted to conceal the bribe proceeds by engaging in a conspiracy to structure cash deposits into his bank and credit card accounts to avoid mandatory cash reporting requirements.  Additionally, even after leaving IRD, Green allegedly continued to solicit bribes from the Afghan firm by falsely claiming that he still had the ability to influence the contracting process.

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

This case is being investigated by the Office of Special Inspector General for Afghanistan Reconstruction (SIGAR), FBI and USAID Office of Inspector General.  The case is being prosecuted by Trial Attorney Mark H. Dubester on detail to the Criminal Division’s Fraud Section from SIGAR and Assistant U.S. Attorney Kevin McClendon of the Eastern District of Texas.

DOJ GOES AFTER APPROX. $100,000 IN BRIBES PAID TO FORMER CHAD AMBASSADOR BY CANADIAN COMPANY

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, November 7, 2014
Department of Justice Seeks Recovery of Approximately $100,000 in Bribes Paid to Former Chad Ambassador

The Department of Justice has filed a civil forfeiture complaint made public late yesterday seeking the forfeiture of $106,488.31 in allegedly laundered funds traceable to a $2 million bribe payment made by a Canadian energy company to Chad’s former Ambassador to the United States and Canada and his wife.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Assistant Director Joseph S. Campbell of the FBI’s Criminal Investigative Division made the announcement.

From 2004 to 2012, Mahamoud Adam Bechir, 49, served as Chad’s Ambassador to the United States and Canada.  According to the forfeiture complaint, Bechir agreed to use his position to influence the award of oil development rights in Chad in exchange for $2 million and other valuable interests from Griffiths Energy International Inc., a Canadian company.  In order to conceal the bribe, Bechir and his wife, Nouracham Niam, 44, allegedly entered into a series of agreements with Griffiths Energy that provided for the payment of a $2 million “consulting fee” if the company secured the oil rights in Chad.  After securing these oil rights in February 2011, Griffiths Energy allegedly transferred $2 million to an account located in Washington, D.C. held by a shell company created by Niam.  In 2013, Griffiths Energy pleaded guilty in Canadian court to bribing Bechir.

The complaint further alleges that, after commingling the bribe payment with other funds and laundering these funds through U.S. bank accounts and real property, Bechir transferred $1,474,517 of the criminal proceeds traceable to the bribe payment to his account in South Africa, where he is now serving Chad’s Ambassador to South Africa.  The current action seeks forfeiture of $106,488.31, which is the current balance of Bechir’s accounts in South Africa.  Those funds have been seized pursuant to the complaint unsealed today.  The Department of Justice is also seeking additional assets from Bechir and Niam.

The investigation was conducted by the FBI.  The case is being handled by Trial Attorney Nalina Sombuntham of the Criminal Division’s Asset Forfeiture and Money Laundering Section.

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office.

ARKANSAS STATE OFFICIAL PLEADS GUILTY IN BRIBERY CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, October 2, 2014

Former Deputy Director of the Largest State Agency in Arkansas Pleads Guilty to Bribery Scheme

A former deputy director of the Arkansas Department of Human Services (ADHS), a multi-billion dollar state agency, pleaded guilty today for providing official assistance in exchange for bribes from the owner of two mental health companies.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and First Assistant United States Attorney Patrick C. Harris of the Eastern District of Arkansas made the announcement.

Steven B. Jones, 49, of Marion, Arkansas, pleaded guilty to a two-count information charging him with conspiracy and bribery concerning programs receiving federal funds.  A sentencing hearing is scheduled for April 2, 2015, before U.S. District Judge Billy Roy Wilson of the Eastern District of Arkansas.

According to his plea agreement, Jones served as deputy director of ADHS from approximately April 2007 until July 2013.  While serving in that capacity, Jones solicited and accepted multiple cash payments and other things of value from the owner of two businesses that provided inpatient and outpatient mental health services to juveniles.  This individual provided the cash payments and other things of value to Jones through the use of two intermediaries, a local pastor and a former county probation officer and city councilman.

As part of his plea, Jones admitted that in return for the bribes, he provided official assistance, including providing internal ADHS information about the individual’s businesses.  Jones further admitted that he and other members of the conspiracy concealed their dealings by, among other things, holding meetings at restaurants in Memphis, Tennessee, or rural Arkansas, where they would not be easily recognized; funneling the cash payments through the pastor’s church; providing the bribe payments in cash so that the transactions would not be easily traceable; and speaking in code during telephone conversations.

The case was investigated by the FBI’s Little Rock Field Office, and is being prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Patricia S. Harris and Angela S. Jegley of the Eastern District of Arkansas.

FORMER ELECTED OFFICIAL ADMITS TO TAKING MONEY FROM PRESIDENTIAL CAMPAIGN COMMITTEE TO SWITCH SIDES

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, August 27, 2014

Former Iowa State Senator Pleads Guilty to Concealing Federal Campaign Expenditures

A former Iowa State Senator pleaded guilty today to concealing payments he received from a presidential campaign in exchange for switching his support and services from one candidate to another and to obstructing a subsequent investigation into his conduct.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Assistant Director in Charge Timothy A. Gallagher of the FBI’s Washington Field Office made the announcement.

“An elected official admitted that he accepted under-the-table payments from a campaign committee to secure his support and services for a candidate in the 2012 presidential election,” said Assistant Attorney General Caldwell.   “Campaign finance reports should be accurate and transparent, not tools for concealing campaign expenditures.   Lying by public officials – whether intended to obstruct the FEC or federal investigators – violates the public trust and the law, and the Department of Justice does not tolerate it.”

“Today, Mr. Sorenson has taken responsibility for his crimes,” said Acting Assistant Director in Charge Gallagher.  “Exploiting the political process for personal gain will not be tolerated, and we will continue to pursue those who commit such illegal actions.”

Kent Sorenson, 42, of Milo, Iowa, pleaded guilty today to one count of causing a federal campaign committee to falsely report its expenditures to the Federal Election Commission (FEC) and one count of obstruction of justice in connection with the concealed expenditures.   The guilty plea was taken by Chief Magistrate Judge Celeste F. Bremer of the Southern District of Iowa for later review by Senior District Court Judge Robert W. Pratt.   Sentencing will be scheduled at a later date.

According to a statement of facts filed with the plea agreement, Sorenson admitted that he had supported one campaign for the 2012 presidential election, but from October to December 2011, he met and secretly negotiated with a second political campaign to switch his support to that second campaign in exchange for concealed payments that amounted to $73,000.   On Dec. 28, 2011, at a political event in Des Moines, Iowa, Sorenson publicly announced his switch of support and work from one candidate to the other.

The payments included monthly installments of approximately $8,000 each and were concealed by transmitting them to a film production company, then through a second company, and finally to Sorenson and his spouse.  In response to criticism of his change of support for the candidates, Sorenson gave interviews to the media denying allegations that he was receiving any money from the second campaign committee, and noted that the committee’s FEC filings would show that the committee made no payments to him.

In his plea agreement, Sorenson also admitted that he gave false testimony to an independent counsel appointed at the request of the Iowa Senate Ethics Committee, which was investigating allegations from a former employee of the first presidential campaign.  Sorenson testified falsely to the independent counsel about the concealed payments, in part to obstruct investigations that he anticipated by the FBI and FEC .

The case is being investigated by the FBI’s Washington Field Office, with assistance from the Omaha Field Office and the Des Moines Resident Agency.   The case is being prosecuted by Election Crimes Branch Director Richard C. Pilger and Trial Attorney Robert J. Higdon Jr. of the Criminal Division’s Public Integrity Section.

FORMER LUFTHANSA SUBSIDIARY CEO PLEADS GUILTY TO FOREIGN BRIBERY CHARGES

FROM:  U.S. DEPARTMENT OF JUSTICE 

Thursday, July 24, 2014

Former Chief Executive Officer of Lufthansa Subsidiary BizJet Pleads Guilty to Foreign Bribery Charges

The former president and chief executive officer of BizJet International Sales and Support Inc., a U.S.-based subsidiary of Lufthansa Technik AG with headquarters in Tulsa, Oklahoma, that provides aircraft maintenance, repair and overhaul services, pleaded guilty today for his participation in a scheme to pay bribes to foreign government officials.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Danny C. Williams Sr., of the Northern District of Oklahoma and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“The former CEO of BizJet, Bernd Kowalewski, has become the third and most senior Bizjet executive to plead guilty to bribing officials in Mexico and Panama to get contracts for aircraft services,” said Assistant Attorney General Caldwell.  “While Kowalewski and his fellow executives referred to the corrupt payments as ‘commissions’ and ‘incentives,’ they were bribes, plain and simple.  Though he was living abroad when the charges were unsealed, the reach of the law extends beyond U.S. borders, resulting in Kowalewski’s arrest in Amsterdam and his appearance in court today in the United States.  Today’s guilty plea is an example of our continued determination to hold corporate executives responsible for criminal wrongdoing whenever the evidence allows.”

“I commend the investigators and prosecutors who worked together across borders and jurisdictions to vigorously enforce the Foreign Corrupt Practices Act,” said U.S. Attorney Williams.  “Partnership is a necessity in all investigations. By forging and strengthening international partnerships to combat bribery, the Department of Justice is advancing its efforts to prevent crime and to protect citizens.”

Bernd Kowalewski, 57, the former President and CEO of BizJet, pleaded guilty today in federal court in Tulsa, Oklahoma, to conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and a substantive violation of the FCPA in connection with a scheme to pay bribes to officials in Mexico and Panama in exchange for those officials’ assistance in securing contracts for BizJet to perform aircraft maintenance, repair and overhaul services.

Kowalewski was arrested on a provisional arrest warrant by authorities in Amsterdam on March 13, 2014, and waived extradition on June 20, 2014.   Kowalewski is the third BizJet executive to plead guilty in this case.   Peter DuBois, the former Vice President of Sales and Marketing, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA and a substantive violation of the FCPA and Neal Uhl, the former Vice President of Finance, pleaded guilty on Jan. 5, 2012, to conspiracy to violate the FCPA.   Jald Jensen, the former sales manager at BizJet, has been indicted for conspiracy as well as substantive FCPA violations and money laundering and is believed to be living abroad.   Charges were unsealed against the four defendants on April 5, 2013.

According to court filings, Kowalewski and his co-conspirators paid bribes directly to foreign officials to secure aircraft maintenance repair and overhaul contracts, and in some instances, the defendants funneled bribes to foreign officials through a shell company owned and operated by Jensen.   The shell company, Avionica International & Associates Inc., operated under the pretense of providing aircraft maintenance brokerage services but in reality laundered money related to BizJet’s bribery scheme.   Bribes were paid to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa, the air fleet for the Gobierno del Estado de Sonora and the Republica de Panama Autoridad Aeronautica Civil.

Further according to court filings, the co-conspirators discussed in e-mail correspondence and at corporate meetings the need to pay bribes, which they referred to internally as “commissions” or “incentives,” to officials employed by the foreign government agencies in order to secure the contracts.   At one meeting, for example, in response to a question about who the decision-maker was at a particular customer organization, DuBois stated that a director of maintenance or chief pilot was normally responsible for decisions on where an aircraft went for maintenance work.   Kowalewski then responded by explaining that the directors of maintenance and chief pilots in the past received “commissions” of $3,000 to $5,000 but were now demanding $30,000 to $40,000 in “commissions.”   Similarly, in e-mail correspondence between Uhl, DuBois, Kowalewski, and several others, Uhl responded to a question about BizJet’s financial outlook if “incentives” paid to brokers, directors of maintenance, or chief pilots continued to increase industry wide, stating that they would “work to build these fees into the revenue as much as possible.   We must remain competitive in this respect to maintain and gain market share.”

On March 14, 2012, the department announced that it had entered into a deferred prosecution agreement with BizJet, requiring that BizJet pay an $11.8 million monetary penalty to resolve charges related to the corrupt conduct.   That agreement acknowledged BizJet’s voluntary disclosure, extraordinary cooperation, and extensive remediation in this case.   In addition, the department announced on March 14, 2012, that BizJet’s indirect parent company, Lufthansa Technik AG, entered into an agreement with the department in which the department agreed not to prosecute Lufthansa Technik provided that Lufthansa Technik satisfies its obligations under the agreement for a period of three years.

This case is being investigated by the FBI’s Washington Field Office with substantial assistance form the Oklahoma Field Office.   The department has worked closely with its law enforcement counterparts in Amsterdam, Mexico and Panama, and has received significant assistance from Germany and Uruguay.   The Criminal Division’s Office of International Affairs has also provided assistance.   This case is being prosecuted by Assistant Chief Daniel S. Kahn and Trial Attorney David Fuhr of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kevin Leitch of the Northern District of Oklahoma.

TWO PLEAD GUILTY IN CONSPIRACY TO LAUNDER BRIBE MONEY RECEIVED IN AFGHANISTAN

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, May 28, 2014
Two Individuals Plead Guilty to Conspiring to Launder Bribes Received in Afghanistan

Two individuals have pleaded guilty for their roles in a scheme to launder approximately $250,000 in bribes received from Afghan contractors in Afghanistan.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney for the Western District of Tennessee Edward L. Stanton III and United States Attorney for the Eastern District of Tennessee William C. Killian made the announcement.

Jimmy W. Dennis, 44, formerly of Clarksville, Tennessee, and a former First Sergeant with the U.S. Army, pleaded guilty before U.S. District Court Judge Samuel H. May Jr. of the Western District of Tennessee to conspiracy to launder approximately $250,000 in bribe payments he received from Afghan contractors in Afghanistan.   Sentencing is scheduled for Sept. 4, 2014.

James C. Pittman, 45, of Rossville, Georgia, pleaded guilty last Thursday before U.S. Magistrate Judge William B. Carter of the Eastern District of Tennessee for his role in this conspiracy.   Sentencing is scheduled for Sept. 8, 2014.

According to pleadings filed at the time of the guilty pleas, from March 2008 through March 2009, Dennis was an Army Sergeant assigned as a paying agent in the Humanitarian Aid Yard (HA Yard) at Bagram Air Field, Afghanistan.   Dennis was a member of the team in the HA Yard that purchased supplies from local Afghan vendors for distribution as part of the Commander’s Emergency Response Program for urgent humanitarian relief requirements in Afghanistan.   Dennis and a partner entered into an agreement to steer contracts to certain Afghan vendors in return for approximately $250,000 in cash bribes.

Further according to court pleadings, Dennis smuggled the bribe money back to the United States hidden in packages addressed to his wife, his father and a former Army friend, Pittman.   Dennis sent $80,000 to $100,000 to his father from Afghanistan in packages that contained toy “jingle trucks,” colorfully decorated trucks or buses in Afghanistan and Pakistan.   Dennis hid the money in the rear compartment of the toy trucks.   Dennis also shipped a hope chest to his father containing approximately $100,000 in cash in a concealed compartment.

Also according to court documents, while on leave, Dennis met with Pittman, advised him that he had obtained money through kickbacks, and asked him for help laundering the funds.   Pittman, owner of a landscaping business, agreed to “run through his company” these bribery proceeds.  After returning to Afghanistan, Dennis sent approximately $60,000 to Pittman contained in toy jingle trucks.   Dennis also arranged for his father to send approximately $20,000 to Pittman, who returned it in the form of purported salary checks from Pittman’s company.

These matters are being investigated by the Special Inspector General for Afghanistan Reconstruction, the FBI, the Army Criminal Investigative Division, the Defense Criminal Investigative Service, and the Air Force Office of Special Investigation.   The prosecution is being handled by Trial Attorney Daniel Butler of the Criminal Division and Assistant U.S. Attorneys Frederick Godwin of the Western District of Tennessee and James Brooks of the Eastern District of Tennessee.

PUERTO RICO JUDGE, BUSINESSMAN INDICTED IN CONSPIRACY AND BRIBERY CASE

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, May 29, 2014

Puerto Rico Superior Court Judge and Local Businessman Indicted on Conspiracy and Federal Programs Bribery Charges

A current Puerto Rico Superior Court Judge and Puerto Rico businessman were charged with orchestrating a criminal scheme in which the businessman paid bribes to the judge presiding over the criminal case against the businessman according to an indictment unsealed today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico, and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.

“The outcome of a criminal case should be determined by the evidence and the law, not by paid-for bias,” said Assistant Attorney General Caldwell.  “When citizens can’t have faith in the very people who are sworn to uphold the law, confidence in the entire system is shaken.  We are committed to restoring that faith by rooting out corruption wherever it may be found.”

“A fair and impartial criminal justice system is one of the cornerstones of our democracy,” said U.S. Attorney Rodríguez-Vélez.  “Judges, in particular, are expected to protect the public’s trust in the fairness of the judicial system.  Investigations such as the one leading to today’s indictment are crucial to deter corrupt officials influenced by greed from breaking their oath to uphold the rule of law.   This case should serve as a strong warning to those who might consider similar behavior.  No one is above the law and everyone is accountable for their misdeeds.”

“Rogue justice as the one allegedly imparted by Judge Manuel Acevedo-Hernández will not be tolerated by the FBI,” said Special Agent in Charge Cases.   “The FBI will continue vigorously to investigate allegations of corruption at all levels.”

The indictment, returned yesterday by a federal grand jury in the District of Puerto Rico and unsealed today, charges Manuel Acevedo-Hernandez, 62, and Lutgardo Acevedo-Lopez, 39, with conspiracy to commit federal programs bribery.  Acevedo-Hernandez was also charged with receipt of a bribe by an agent of an organization receiving federal funds, and Acevedo-Lopez was charged with paying a bribe to an agent of an organization receiving federal funds.

According to the indictment, Acevedo-Hernandez, a Supervisory Superior Court Judge in the Aguadilla judicial region of Puerto Rico, allegedly accepted bribes from Acevedo-Lopez and others, knowing that the payments were made so that Acevedo-Hernandez would use his official position as a Superior Court judge for Acevedo-Lopez’s benefit.    In particular, Acevedo-Hernandez presided over a criminal trial of Acevedo-Lopez and acquitted Acevedo-Lopez of all charges pending against him, including vehicular homicide.   In exchange for the acquittal, Acevedo-Lopez, through an intermediary, bribed Acevedo-Hernandez by paying taxes owed by Acevedo-Hernandez, paying for construction of a garage, and providing him with a motorcycle, clothing and accessories, including cufflinks and a watch.

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

The case is being investigated by the FBI’s San Juan Division and is being prosecuted by Trial Attorney Peter Mason of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Timothy Henwood and Jose Capo of the District of Puerto Rico.

JAPANESE TRADING COMPANY PLEADS GUILTY TO FOREIGN BRIBERY CHARGES

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, March 19, 2014
Marubeni Corporation Agrees to Plead Guilty to Foreign Bribery Charges and to Pay an $88 Million Fine

Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, entered a plea of guilty today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“Marubeni pleaded guilty to engaging in a seven-year scheme to pay – and conceal – bribes to a high-ranking member of Parliament and other foreign officials in Indonesia,” said Acting Assistant Attorney General Raman.  “The company refused to play by the rules, then refused to cooperate with the government’s investigation.  Now Marubeni faces the consequences for its crooked business practices in Indonesia .”

“For several years, the Marubeni Corporation worked in concert with a Connecticut company, among others, to bribe Indonesian officials in order to secure a contract to provide power-related services in Indonesia,” said Acting U.S. Attorney Michael J. Gustafson.  “Today’s guilty plea by Marubeni Corporation is an important reminder to the business community of the significant consequences of participating in schemes to bribe government officials, whether at home or abroad.”

“Companies that wish to do business in the United States or with U.S. companies must adhere to U.S. law, and that means bribery is unacceptable,” said Assistant Director in Charge Parlave.  “The FBI continues to work with our international law enforcement partners as demonstrated in this case to ensure that companies are held accountable for their criminal conduct.  I want to thank the agents, analysts and prosecutors who brought this case to today’s conclusion.”

Marubeni entered a plea of guilty to an eight-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging Marubeni with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA.   Marubeni admitted its criminal conduct and has agreed to pay a criminal fine of $88 million, subject to the district court’s approval.  Sentencing has been scheduled for May 15, 2014.

As part of the plea agreement, Marubeni has agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation.   The plea agreement cites Marubeni’s decision not to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.

Frederic Pierucci, who was the vice president of global boiler sales at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA.   David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012, to one count of conspiracy to violate the FCPA.   Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013.   The charges against Hoskins and Pomponi are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

According to court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for Marubeni and its consortium partner to provide power-related services for the citizens of Indonesia.   To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project.   The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.

As admitted in court documents, Marubeni and its co-conspirators retained the first consultant in the fall of 2002.   However, in the fall of 2003, before the Tarahan contract had been awarded, Marubeni and its co-conspirators determined that the first consultant was not bribing key officials at PLN effectively.   One e-mail between employees of the power company’s subsidiary in Indonesia described a meeting between Marubeni employees, employees of its consortium partner, and PLN officials during which the PLN officials expressed “concern” that if Marubeni and its consortium partner win the project, whether the agent would give the officials “rewards” that they would consider “satisfactory,” or “only give them pocket money and disappear.   Nothing has been shown by the agent that the agent is willing to spend money.”   Shortly thereafter, a Marubeni employee sent an e-mail to other employees at Marubeni and its consortium partner stating that “unfortunately our agent almost did not execute his function at all, so far.   In case we don’t take immediate action now now [sic], we don’t have any chance to get this project forever.”

As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN.   In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the first consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.”

Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.   Marubeni and its co-conspirators paid hundreds of thousands of dollars into the first consultant’s bank account in Maryland to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.

This case is being investigated by FBI agents from the Washington Field Office, with assistance from the Resident Agency of the FBI in Meriden, Conn.   Significant assistance was provided by the Criminal Division’s Office of International Affairs.   In addition, the department greatly appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.

TRUCKING COMPANY CONTRACTOR IN AFGHANISTAN PLEADS GUILTY IN BRIBERY CASE

FROM:  JUSTICE DEPARTMENT AFGHANISTAN 
Friday, February 14, 2014
Independent Contractor in Afghanistan Pleads Guilty for His Role in Offering $54,000 in Bribes to a U.S. Government Official

Earlier today at the federal courthouse in Brooklyn, N.Y., Akbar Ahmad Sherzai, 49, of Centreville, Va., an independent contractor for a trucking company operating in Afghanistan that was responsible for delivering fuel to U.S. Army installations, pleaded guilty to his role in offering a U.S. Army serviceman $54,000 in bribes to falsify documents to reflect the successful delivery of fuel shipments that Army records indicate were never delivered.  Sherzai faces a maximum of 15 years imprisonment and a $250,000 fine.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and United States Attorney for the Eastern District of New York Loretta E. Lynch made the announcement.

“The defendant sought to use deception, corruption and greed to enrich his company at the risk of jeopardizing the U.S. Army’s supply lines in Afghanistan,” said U.S. Attorney Lynch.  “Attempts to corrupt American officials will not be tolerated, either at home or abroad.”  U.S. Attorney Lynch extended her grateful appreciation to the Special Inspector General for the Afghanistan Reconstruction, Homeland Security Investigations and the FBI for their assistance in this case.

The U.S. Army regularly contracts with local Afghan trucking companies to transport U.S. military equipment, fuel, and other supplies throughout Afghanistan.  To ensure the companies fulfilled these requests, the U.S. Army used transportation movement requests (TMRs), which, when properly completed, verified that the shipments were successfully completed before approving payments to the trucking companies.

In April 2013, Sherzai approached a U.S. military serviceman to discuss fuel delivery missions that had been classified by the U.S. Army as “no-shows,” meaning that the fuel had not been delivered.  Sherzai offered the serviceman a bribe to falsify the TMRs to reflect successful deliveries so that Sherzai’s company would receive payment and avoid penalties for failed fuel deliveries.  The serviceman, under the supervision of law enforcement, continued to meet with Sherzai to discuss payments for the falsification of records.  On two separate occasions, Sherzai paid the serviceman bribes in cash on American military bases in Afghanistan.  On another occasion, Sherzai arranged for the serviceman’s bribe to be transferred to the United States through a hawala, an informal money transfer system.  In total, Sherzai paid the serviceman $54,000 in cash to falsify fourteen TMRs.  Each “no show” delivery mission, absent the fraudulent TMRs, would have resulted in a fine of the company by the U.S. government of $75,000.

Sherzai was arrested on a criminal complaint on Sept. 24, 2013.  The guilty plea proceeding was held before U.S. Magistrate Judge Robert M. Levy.

The government’s case is being prosecuted by Assistant U. S. Attorney Amir H. Toossi and Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section.

THREE INDICTED IN $190 MILLION MEDICARE FRAUD CASE

FROM:  JUSTICE DEPARTMENT 
Thursday, January 30, 2014
Three Miami Residents Indicted for Alleged Roles in $190 Million Medicare Fraud Scheme
Three Miami residents have been indicted for their alleged participation in a $190 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement after the indictment was unsealed.

On Jan. 28, 2014, a federal grand jury in Miami returned a 10-count indictment charging Nelson Rojas, 43, Roger Bergman, 64, and Rodolfo Santaya, 54, for allegedly participating in a scheme to defraud Medicare by submitting false and fraudulent claims, from approximately December 2002 to October 2010.

Rojas was charged with conspiracy to pay and receive bribes and kickbacks in connection with a federal health care program, conspiracy to commit money laundering, two counts of money laundering and one count of aggravated identity theft.  Bergman and Santaya were each charged with conspiracy to commit health care fraud and wire fraud.  In addition, Bergman was charged with conspiracy to make false statements relating to health care matters.  Santaya was also charged with conspiracy to pay and receive bribes and kickbacks in connection with a federal health care program, as well as two counts of receiving bribes and kickbacks in connection with a federal health care benefit program.

According to the indictment, Rojas, Bergman and Santaya allegedly participated in a scheme orchestrated by the owners and operators of American Therapeutic Corporation (ATC) and its management company, Medlink Professional Management Group Inc.  ATC and Medlink were Florida corporations headquartered in Miami.  ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida.  Both corporations have been defunct since October 2010.

The indictment alleges that Bergman was a licensed physician’s assistant who participated in the scheme by, among other things, admitting Medicare beneficiaries to ATC facilities for PHP treatment even though they did not quality for such treatment and falsifying patient records to make it appear as though patients needed, qualified for and actually received legitimate PHP treatment when they did not.  The indictment alleges that Santaya served as a patient recruiter who provided ineligible patients to ATC in exchange for kickbacks.  The indictment alleges that Rojas was the co-owner of a check cashing business and that he facilitated the payments of bribes and kickbacks from ATC to various patient recruiters.

ATC, Medlink and various owners, managers, doctors, therapists, patient brokers and marketers of ATC and Medlink have pleaded guilty or have been convicted at trial.  In September 2011, ATC owner Lawrence Duran was sentenced to 50 years in prison for his role in orchestrating and executing the scheme to defraud Medicare.

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

The case is being investigated by the FBI and HHS-OIG 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 Southern District of Florida.  The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorney Nicholas E. Surmacz.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,700 defendants who collectively have falsely billed the Medicare program for more than $5.5 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.

SEC CHARGES ALCOA INC., WITH VIOLATING FOREIGN CORRUPT PRACTICES ACT

FROM:  SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission today charged global aluminum producer Alcoa Inc. with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries repeatedly paid bribes to government officials in Bahrain to maintain a key source of business.

An SEC investigation found that more than $110 million in corrupt payments were made to Bahraini officials with influence over contract negotiations between Alcoa and a major government-operated aluminum plant.  Alcoa’s subsidiaries used a London-based consultant with connections to Bahrain’s royal family as an intermediary to negotiate with government officials and funnel the illicit payments to retain Alcoa’s business as a supplier to the plant.  Alcoa lacked sufficient internal controls to prevent and detect the bribes, which were improperly recorded in Alcoa’s books and records as legitimate commissions or sales to a distributor.

Alcoa agreed to settle the SEC’s charges and a parallel criminal case announced today by the U.S. Department of Justice by paying a total of $384 million.

“As the beneficiary of a long-running bribery scheme perpetrated by a closely controlled subsidiary, Alcoa is liable and must be held responsible,” said George Canellos, co-director of the SEC Enforcement Division.  “It is critical that companies assess their supply chains and determine that their business relationships have legitimate purposes.”

Kara N. Brockmeyer, chief of the SEC Enforcement Division’s FCPA Unit added, “The extractive industries have historically been exposed to a high risk of corruption, and those risks are as real today as when the FCPA was first enacted.”

According to the SEC’s order instituting settled administrative proceedings, Alcoa is a global provider of not only primary or fabricated aluminum, but also smelter grade alumina – the raw material that is supplied to plants called smelters that produce aluminum.  Alcoa refines alumina from bauxite that it extracts in its global mining operations.  From 1989 to 2009, one of the largest customers of Alcoa’s global bauxite and alumina refining business was Aluminium Bahrain B.S.C. (Alba), which is considered one of the largest aluminum smelters in the world.  Alba is controlled by Bahrain’s government, and Alcoa’s mining operations in Australia were the source of the alumina that Alcoa supplied to Alba.

According to the SEC’s order, Alcoa’s Australian subsidiary retained a consultant to assist in negotiations for long-term alumina supply agreements with Alba and Bahraini government officials.  A manager at the subsidiary described the consultant as “well versed in the normal ways of Middle East business” and one who “will keep the various stakeholders in the Alba smelter happy…”  Despite the red flags inherent in this arrangement, Alcoa’s subsidiary inserted the intermediary into the Alba sales supply chain, and the consultant generated the funds needed to pay bribes to Bahraini officials.  Money used for the bribes came from the commissions that Alcoa’s subsidiary paid to the consultant as well as price markups the consultant made between the purchase price of the product from Alcoa and the sale price to Alba.

The SEC’s order finds that Alcoa did not conduct due diligence or otherwise seek to determine whether there was a legitimate business purpose for the use of a middleman.  Recipients of the corrupt payments included senior Bahraini government officials, members of Alba’s board of directors, and Alba senior management.  For example, after Alcoa’s subsidiary retained the consultant to lobby a Bahraini government official, the consultant’s shell companies made two payments totaling $7 million in August 2003 for the benefit of the official.  Two weeks later, Alcoa and Alba signed an agreement in principle to have Alcoa participate in Alba’s plant expansion.  In October 2004, the consultant’s shell company paid $1 million to an account for the benefit of that same government official, and Alba went on to reach another supply agreement in principle with Alcoa.  Around the time that agreement was executed, the consultant’s companies made three payments totaling $41 million to benefit another Bahraini government official as well.

The SEC’s cease-and-desist order finds that Alcoa violated Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934.  Alcoa will pay $175 million in disgorgement of ill-gotten gains, of which $14 million will be satisfied by the company’s payment of forfeiture in the parallel criminal matter.  Alcoa also will pay a criminal fine of $209 million.

The SEC appreciates the assistance of the Fraud Section of the Criminal Division at the Department of Justice as well as the Federal Bureau of Investigation, Internal Revenue Service, Australian Federal Police, Ontario Securities Commission, Guernsey Financial Services Commission, Liechtenstein Financial Market Authority, Norwegian ØKOKRIM, United Kingdom Financial Control Authority, and Office of the Attorney General of Switzerland.

OWNERS OF HEALTH CARE CLINIC SENTENCED FOR ROLES IN HEALTH CARE FRAUD

FROM:  U.S. JUSTICE DEPARTMENT
Monday, December 2, 2013
Health Care Clinic Owners Sentenced for Role in $8 Million Health Care Fraud Scheme

Two health care clinic owners were sentenced today in connection with an $8 million health care fraud scheme involving the now-defunct home health care company Flores Home Health Care Inc.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office, and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Miguel Jimenez, 43, and Marina Sanchez Pajon, 29, both of Miami, were sentenced by U.S. District Judge Ursula Ungaro in the Southern District of Florida.   Jimenez was sentenced to serve 87 months in prison and Pajon was sentenced to serve 57 months in prison.   Jimenez and Pajon pleaded guilty in August to conspiracy to commit health care fraud.

Jimenez and Pajon, who are married, were owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.

According to court documents, Jimenez and Pajon operated Flores Home Health for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or not provided.   Jimenez’s primary role at Flores Home Health involved controlling the company and running and overseeing the schemes conducted through Flores Home Health.   Both Jimenez and Pajon were responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims to the Medicare program.

Jimenez, Pajon, and their co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Flores Home Health for home health and therapy services that were medically unnecessary and/or not provided.   They also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications, and other documentation.   Jimenez, Pajon, and their co-conspirators used the prescriptions, medical certifications, and other documentation to fraudulently bill Medicare for home health care services, which Jimenez and Pajon knew was in violation of federal criminal laws.

From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services that were not medically necessary and/or not provided.

The case was investigated by the FBI and HHS-OIG 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 Southern District of Florida.  This case was prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.      
                       
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

AXIUS CEO SENTNECED IN STOCK SALES BRIBERY SCHEME

FROM: U.S. DEPARTMENT OF JUSTICE

Friday, June 14, 2013
Axius CEO Roland Kaufmann Sentenced for Conspiracy to Pay Bribes in Stock Sales

Roland Kaufmann, CEO of Axius Inc., was sentenced today to serve 16 months in prison for his role in a conspiracy to bribe purported stock brokers and manipulate the stock of a company he controlled, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of New York Loretta Lynch.


Kaufmann, 60, a Swiss citizen, was sentenced today by U.S. District Judge John Gleeson in the Eastern District of New York. In addition to his prison term, Kaufmann was sentenced to serve three years of supervised release and ordered to pay a fine of $450,000.

Kaufmann pleaded guilty in January 2013 to one count of conspiracy to violate the Travel Act in connection with a scheme to bribe stock brokers to purchase the common stock of a company he controlled and to manipulate its stock price. As part of his plea agreement, Kaufmann forfeited $298,740 gained through this crime.

According to court documents, Kaufmann controlled Axius, Inc., a purported holding company and business incubator located in Dubai. As part of the scheme, the defendant and his co-conspirator, Jean Pierre Neuhaus, enlisted the assistance of an individual who they believed had access to a group of corrupt stock brokers, but who was, in fact, an undercover law enforcement agent. Court documents reveal that they instructed the undercover agent to direct brokers to purchase Axius shares in return for a secret kickback of approximately 26 to 28 percent of the share price. Kaufman and Neuhaus also instructed the undercover agent as to the price the brokers should pay for the stock and that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period. By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock.

Jean Pierre Neuhaus has pleaded guilty and been sentenced for his role in the scheme.

The case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw, with assistance from Fraud Section Trial Attorney Nathan Dimock. The case was investigated by the FBI New York Field Office and the Internal Revenue Service New York Field Office. The Department also recognizes the substantial assistance of the U.S. Securities and Exchange Commission.

This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.