FORMER TV WEB PRODUCER INDICTED FOR CONSPIRING WITH "ANONYMOUS"

FROM: U.S. JUSTICE DEPARTMENT
Thursday, March 14, 2013
Former Web Producer Indicted in California for Conspiring with "Anonymous" Members to Attack Internet News Site


A former web producer for a Tribune Company-owned television station in Sacramento, Calif., was charged today in an indictment for allegedly conspiring with members of the hacker group "Anonymous" to hack into and alter a Tribune Company website, the Justice Department announced.

Matthew Keys, 26, of Secaucus, N.J., was charged in the Eastern District of California with one count each of conspiracy to transmit information to damage a protected computer, transmitting information to damage a protected computer and attempted transmission of information to damage a protected computer.

Keys was employed by Sacramento-based television station KTXL FOX 40, as its web producer, but was terminated in late October 2010.

The three-count indictment alleges that in December 2010 Keys provided members of the hacker group Anonymous with log-in credentials for a computer server belonging to KTXL FOX 40’s corporate parent, the Tribune Company. According to the indictment, Keys identified himself on an Internet chat forum as a former Tribune Company employee and provided members of Anonymous with a login and password to the Tribune Company server. After providing log-in credentials, Keys allegedly encouraged the Anonymous members to disrupt the website. According to the indictment, at least one of the computer hackers used the credentials provided by Keys to log into the Tribune Company server, and ultimately that hacker made changes to the web version of a Los Angeles Times news feature.

The indictment further alleges that Keys had a conversation with the hacker who claimed credit for the defacement of the Los Angeles Times website. The hacker allegedly told Keys that Tribune Company system administrators had thwarted his efforts and locked him out. Keys allegedly attempted to regain access for that hacker, and when he learned that the hacker had made changes to a Los Angeles Times page, Keys responded, "nice."

Each of the two substantive counts carry a maximum penalty of 10 years in prison, three years of supervised release and a fine of $250,000. The conspiracy count carries a maximum penalty of five years in prison, three years of supervised release and a fine of $250,000.

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

This case was investigated by the Sacramento and Los Angeles Field Offices of the FBI. The case is being prosecuted by the Criminal Division’s Computer Crime and Intellectual Property Section and the U.S. Attorney’s Office for the Eastern District of California.

RBS SUBSIDIARY AGREES TO GUILTY PLEA IN LIBOR INTERST MANIPULATION CASE

FROM: U.S. JUSTICE DEPARTMENT

Wednesday, February 6, 2013
RBS Securities Japan Limited Agrees to Plead Guilty in Connection with Long-Running Manipulation of Libor Benchmark Interest Rates
Second Financial Institution to Plead Guilty to Libor Fraud and Pay Substantial Criminal Penalties; RBS Parent Company Also Admits Fault in Deferred Prosecution Agreement

RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS), has agreed to plead guilty to felony wire fraud and admit its role in manipulating the Japanese Yen London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division and Special Agent in Charge Timothy A. Gallagher of the FBI’s Washington Field Office Criminal Division announced today.

A criminal information, being filed in U.S. District Court for the District of Connecticut, charges RBS Securities Japan with one count of wire fraud for engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating Yen LIBOR benchmark interest rates. RBS Securities Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $50 million fine.

In addition, the government is filing a criminal information in the District of Connecticut which charges parent company RBS as part of a deferred prosecution agreement (DPA). The information charges RBS with wire fraud for its role in manipulating LIBOR benchmark interest rates, and with participation in a price-fixing conspiracy in violation of the Sherman Act by rigging the Yen LIBOR benchmark interest rate with other banks. The DPA requires the bank to admit and accept responsibility for its misconduct as described in an extensive statement of facts, to continue cooperating with the Justice Department in its ongoing investigation and to pay a $100 million penalty beyond the fine imposed upon RBS Securities Japan.

Together with approximately $462 million in regulatory penalties and disgorgement – $325 million as a result of a Commodity Futures Trading Commission (CFTC) action and approximately $137 million as a result of a U.K. Financial Services Authority (FSA) action – the Justice Department’s criminal penalties bring the total amount of the resolution with RBS and RBS Securities Japan to approximately $612 million.

"As we have done with Barclays and UBS, we are today holding RBS accountable for a stunning abuse of trust," said Assistant Attorney General Breuer. "The bank has admitted to manipulating one of the cornerstone benchmark interest rates in our global financial system, and its Japanese subsidiary has agreed to plead guilty to felony wire fraud. The department’s ongoing investigation has now yielded two guilty pleas by significant financial institutions. These are extraordinary results, and our investigation is far from finished. Our message is clear: no financial institution is above the law."

"RBS secretly rigged the benchmark interest rates upon which many transactions and consumer financial products are based," said Deputy Assistant Attorney General Hammond. "RBS’ conduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere."

"The manipulation of LIBOR by RBS and its subsidiary directly affected the rates referenced by financial products held by and on behalf of American companies and investors. The FBI works to uncover wrongdoing such as this in order to protect American consumers and the integrity of financial markets," said Special Agent in Charge Gallagher. "Today’s announcement is the result of the hard work of the FBI special agents, financial analysts, and forensic accountants as well as the prosecutors who dedicated significant time and resources to investigating this case."

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

LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the Contributor Panel) selected by the BBA. From at least 2006 through 2010, RBS has been a member of the Contributor Panel for a number of currencies, including Yen LIBOR and Swiss Franc LIBOR, which are the focus of the plea agreement and DPA.

According to the filed charging documents, at various times from at least 2006 through 2010, certain RBS Yen and Swiss Franc derivatives traders – whose compensation was directly connected to their success in trading financial products tied to LIBOR – engaged in efforts to move LIBOR in a direction favorable to their trading positions. Through these schemes, RBS allegedly defrauded counterparties who were unaware of the manipulation affecting financial products referencing Yen and Swiss Franc LIBOR. The alleged schemes included hundreds of instances in which RBS employees sought to influence LIBOR submissions in a manner favorable to their trading positions in two principal ways: internally at RBS through requests by derivatives traders for Yen and Swiss Franc LIBOR submissions, and externally through an agreement with a separately charged derivatives trader to request Yen LIBOR submissions. The trader, Tom Alexander William Hayes, was formerly employed by a Japanese subsidiary of another Contributor Panel bank, UBS AG (UBS).

According to court documents, RBS employees engaged in this conduct through electronic communications, which included both emails and electronic chats.

A REVERSE MORTGAGE SCHEME RESULTS IN CONVICTIONS FOR TITLE AGENT AND BROKER

FROM: U.S. JUSTICE

Tuesday, February 5, 2013
Former Title Agent and Broker Convicted in Miami for Role in Reverse Mortgage Scheme

A Miami title agent and former mortgage broker was found guilty late yesterday, Feb. 4, 2013, for her role in a "reverse mortgage" fraud scheme in connection with a loan worth more than $400,000, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

After a six-day jury trial before the Honorable Richard W. Goldberg, sitting by designation in the Southern District of Florida, a federal jury convicted Yesenia Pouparina (aka Yesenia Campos), 40, of four counts of wire fraud and one count of mail fraud for her role in securing a fraudulent Home Equity Conversion Mortgage (HECM), commonly referred to as a reverse mortgage loan, and making false representations related to the occupancy of the property and its subsequent "short sale." A HECM is a federally insured loan that enables older Americans to withdraw equity from a home so they can remain independent and financially secure. The jury also found that three bank accounts controlled by the defendant, which were seized by the government during the course of the investigation, should be forfeited.

According to court documents and evidence presented at trial, Pouparina, a licensed title agent in the state of Florida, devised a scheme to obtain a reverse mortgage loan on her own property in the name of her mother, an individual who failed to meet the requirements of the HECM program. Pouparina submitted to a lending institution a false loan application and doctored records in support of that application, misrepresenting her mother’s eligibility to participate in the HECM program. Pouparina acted as the title agent for the loan and disbursed the loan proceeds directly to her own personal bank accounts. Pouparina also enriched herself by collecting fees generated by the loan, and also profited by using the loan proceeds in connection with her business as a "hard money lender" in other mortgage deals.

Judge Goldberg ordered Pouparina to surrender to the U.S. Marshals on Feb. 20, 2013. At sentencing, currently scheduled for May 9, 2013, Pouparina faces a maximum potential penalty per count of 20 years in prison and a $250,000 fine, or twice the net gain or loss from the offense.

This case was investigated by the Office of Inspector General, U.S. Department of Housing and Urban Development. Trial Attorneys Sandra L. Moser and Mary Ann McCarthy of the Justice Department Criminal Division’s Fraud Section prosecuted the case, with assistance from the U.S. Attorney’s Office for the Southern District of Florida.

This conviction is part of efforts underway 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.

COMPANY PAYS FINE FOR COLLECTING INFORMATION FROM MINORS

FROM: U.S. JUSTICE DEPARTMENT

Friday, February 1, 2013
Social Networking Company to Pay $800,000 for Collecting Personal Information from Minors

The company that operates Path, an online social networking application, agreed to pay an $800,000 penalty to settle charges that it violated the Federal Trade Commission (FTC) Act and the Children’s Online Privacy Protection Rule, the Justice Department announced today.

In a complaint filed on Jan. 31, 2013, the United States alleged that San Francisco-based Path Inc. violated the Children’s Online Privacy Protection Rule by collecting personal information from children under the age of 13 without obtaining parental consent. According to the complaint, in over 3,000 instances, Path collected personal information from the address books in children’s mobile devices, including the names, addresses, phone numbers and email addresses of the child’s contacts. Path also collected personal information from children during the registration process and by allowing them to post content online.

"The rules established by the Children’s Online Privacy Protection Act play an important role in keeping kids safe online," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. "Companies that market to children must respect their privacy by getting parental consent before collecting any personal information, and the Justice Department will work with the FTC to ensure that they do."

According to the complaint, Path also violated the FTC Act by failing to disclose to consumers that it was automatically collecting information from users’ address books on their mobile devices. Path’s privacy policy and "Add Friends" feature led consumers to believe that this information would be collected only with the user’s consent.

Along with the civil penalty, Path agreed to an injunction barring future violations of the FTC Act and the Children’s Online Privacy Protection Rule. Path further agreed that it would delete all information previously collected from children under age 13, implement a comprehensive privacy program, and submit to regular assessments by an independent third party.

The FTC, which oversees the Children’s Online Privacy Protection Rule, referred the case to the Justice Department. The lawsuit, United States v. Path Inc., was filed in the Northern District of California.

Principal Deputy Assistant Attorney General Delery thanked the FTC for investigating this matter and referring it to the department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.

ASSISTANT AG BREUER, RESPONSIBLE FOR CRIMINAL PROSECUTIONS OF FRAUDSTERS, LEAVES JUSTICE

FROM: U.S. JUSTICE DEPARTMENT
Wednesday, January 30, 2013
Assistant Attorney General Lanny A. Breuer Announces Departure from Department of Justice

The Justice Department announced today that Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division will leave the department on March 1, 2013.

"Lanny has led one of the most successful and aggressive Criminal Divisions in the history of the Department of Justice, accomplishing record penalties in corruption cases at home and abroad and dismantling major organized crime and health care fraud networks around the country while also protecting the integrity of our banking systems and fighting financial fraud," said Attorney General Eric Holder. "Throughout his tenure, Lanny has demonstrated an unwavering commitment to the mission of this Department and I want to thank him for his dedication and exceptional service."

"Serving as Assistant Attorney General for the Criminal Division has been the greatest privilege of my professional life," said Assistant Attorney General Breuer. "From my first day on this job, nearly four years ago, I have loved it, and I am so proud of what the Criminal Division has accomplished over the past four years. I have had no higher honor than to work alongside the talented and dedicated men and women of the Criminal Division, and I will forever be grateful for the opportunity to serve the American people together with them."

Assistant Attorney General Breuer was unanimously confirmed by the U.S. Senate on April 20, 2009, and is the longest-serving head of the Criminal Division in recent history.

Under the leadership of Assistant Attorney General Breuer, the Criminal Division has taken significant steps to fight corruption at home and abroad, including by developing the innovative Kleptocracy Asset Recovery Initiative to identify and forfeit the proceeds of foreign official corruption – ensuring that corrupt officials from other countries are prevented from hiding their ill-gotten gains in the United States. The Criminal Division has also substantially increased enforcement of the Foreign Corrupt Practices Act (FCPA), convicting three dozen individuals for FCPA-related offenses – a record number – and entering into more than 40 corporate resolutions involving eight of the top 10 largest FCPA penalties in history. The Criminal Division also partnered with the Securities and Exchange Commission to publish groundbreaking guidance on FCPA enforcement.

Assistant Attorney General Breuer was asked by the Attorney General to oversee the Deepwater Horizon Task Force – created to investigate conduct leading up to, and following, the Deepwater Horizon explosion on April 20, 2010. The Task Force reached the largest criminal resolution in U.S. history with BP. On Jan. 29, 2013, BP was ordered to pay $4 billion in criminal fines and penalties after previously having agreed to plead guilty to 11 felony manslaughter charges, environmental crimes and obstruction of congress. The Criminal Division brought charges against four individuals in connection with the explosion and its aftermath as part of the ongoing investigation. Additionally, Assistant Attorney General Breuer has overseen efforts to combat fraud arising from the oil spill, as well as to detect and deter fraud in the wake of natural disasters such as Hurricane Sandy, through the Disaster Fraud Task Force.

Protecting the integrity of the banking system and fighting financial fraud have been hallmarks of the Criminal Division during Assistant Attorney General Breuer’s tenure. The division’s aggressive, ongoing investigation into manipulation of the London Interbank Offered Rate by global financial institutions has thus far led to nearly $2 billion in criminal penalties, as well as a guilty plea by a UBS subsidiary and charges against individuals. Assistant Attorney General Breuer also spearheaded the development of the division’s Money Laundering and Bank Integrity Unit to pursue financial institutions and individuals who violate money laundering statutes and the Bank Secrecy Act. Along with U.S. Attorney partners, the groundbreaking unit already has secured approximately $3.1 billion in criminal forfeitures from major financial institutions – including the largest forfeiture ever by a bank.

The Criminal Division has also prosecuted, together with U.S. Attorneys’ Offices, numerous significant perpetrators of financial fraud, including Lee Bentley Farkas, former chairman of Taylor, Bean & Whitaker, who perpetrated an approximately $3 billion bank fraud; and R. Allen Stanford, former chairman of Stanford International Bank, who perpetrated a $7 billion investment fraud scheme. Both were convicted at trial and are serving 30 and 110 years in prison, respectively.

Assistant Attorney General Breuer has also focused on combating healthcare fraud, helping to expand the Medicare Fraud Strike Force from two to nine cities and to carry out the two largest Medicare fraud takedowns in history, one involving 111 defendants charged and the other involving $452 million in alleged fraudulent billings.

The Criminal Division under Assistant Attorney General Breuer’s leadership, working alongside its partners at U.S. Attorneys’ Offices, has pursued innovative cybercrime and intellectual property crime prosecutions. Those prosecutions include the indictment of Megaupload and its leadership for intellectual property infringement in one of the largest criminal copyright cases brought by the United States.

During Assistant Attorney General Breuer’s tenure, the Criminal Division has made great strides in the fight against violent crime along the southwest border and across the country. Among other successes, the division, along with several U.S. Attorneys’ Offices, brought charges against 127 members and associates of La Cosa Nostra in the largest traditional organized crime takedown in U.S. history. The Criminal Division and U.S. Attorney partners also have brought prosecutions against 35 Barrio Azteca gang members and associates – including those allegedly responsible for the death of a U.S. Consular official and others in Juarez, Mexico, on March 13, 2010; individuals allegedly responsible for the murder of ICE Special Agent Jaime Zapata; and dozens of members and associates of the Aryan Brotherhood of Texas, including the gang’s top "generals." Assistant Attorney General Breuer has traveled frequently to Mexico to develop close relationships with Mexican counterparts and created new prosecutorial units dedicated to targeting Mexican cartels and seizing their assets. In 2012, the Criminal Division secured 115 extraditions from Mexico, a record for a calendar year.

Along with these new or expanded teams and initiatives, Assistant Attorney General Breuer has taken significant steps to reform the Criminal Division to meet the needs of the modern law enforcement climate, including creating the Organized Crime and Gang Section and the Human Rights and Special Prosecutions Section, and hiring hundreds of talented prosecutors and several new Section Chiefs into the division.

In his role as head of the Criminal Division, Assistant Attorney General Breuer has engaged on issues of criminal law policy throughout the United States and around the world, delivering dozens of keynote and special addresses across the country as well as in Russia, the Ukraine, the United Kingdom, Romania, Sweden, Liechtenstein, Spain and at the World Bank and United Nations.

Prior to joining the Justice Department, Assistant Attorney General Breuer was a partner in the law firm of Covington and Burling LLP. He earlier served as special counsel to President William Jefferson Clinton, and began his legal career as an Assistant District Attorney in Manhattan. He is a graduate of Columbia College and Columbia Law School.

U.S. JUSTICE DEPARTMENT DESCRIBES $205 MILLION MEDICARE FRAUD CASE

FROM: U.S. JUSTICE DEPARTMENT
Friday, January 25, 2013
Former Program Director and Marketers Sentenced to Prison in Florida in $205 Million Community Mental Health Fraud Scheme

The former program director and two former marketers for Miami-based mental health care company American Therapeutic Corporation (ATC) have been sentenced to prison for their roles in a $205 million Medicare fraud and kickback scheme in which patients were forced to attend inappropriate treatment programs.

The sentences were announced by Assistant Attorney General Lanny A. Breuer 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 Dennis of the Health and Human Services’ Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

Miami-area residents Lydia Ward, 47, a former program director, and Hilario Morris, 47, a former marketer, were sentenced today by U.S. District Judge Patricia A. Seitz in Miami federal court to 99 months and 60 months in prison, respectively. In addition to the prison term, Judge Seitz sentenced Ward and Morris each to serve three years of supervised release and ordered them to pay more than $34.1 million and $82.2 million in restitution, respectively, jointly and severally with their co-defendants.

Ward was convicted on Nov. 15, 2012, by a federal jury of conspiracy to commit health care fraud. Morris was convicted on June 1, 2012, by a federal jury of conspiracy to pay illegal health care kickbacks. Ward and Morris have been in federal custody since their convictions.

Former marketer Sandra Jimenez, 39, also from the Miami area, was sentenced to 36 months in prison yesterday, Jan. 24, 2013. In addition to the prison term, Judge Seitz sentenced Jimenez to serve three years of supervised release and ordered her to pay $20.5 million in restitution, jointly and severally with her co-defendants.

On Jan. 17, 2012, Jimenez pleaded guilty to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to receive and pay health care kickbacks.

In pleading guilty, Jimenez admitted that she served as a marketer for ATC and American Sleep Institute (ASI). ATC, a Florida corporation headquartered in Miami, operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Jimenez also admitted that she and co-conspirators used related company ASI to submit fraudulent Medicare claims.

Additionally, Jimenez admitted she participated in a separate Medicare fraud scheme through Priority Home Health, a Miami home health agency that submitted fraudulent claims to Medicare for home health services. Jimenez and her co-conspirators recruited Medicare beneficiaries to Priority Home Health who did not qualify for the services.

According to the plea agreement, Jimenez’s participation in the ATC fraud and the Priority Home Health fraud resulted in $46 million in fraudulent billings to Medicare.

Evidence at Ward’s and Morris’ trials demonstrated that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through ATC and ASI, and that ATC secured patients by paying kickbacks to assisted living facility owners and halfway house owners who would then steer patients to ATC.

According to the evidence, Morris was a marketer for ATC from September 2004 through October 2010, when ATC closed its doors due to the federal case. In that capacity, Morris acted as a liaison, maintaining relationships between ATC and those who were selling their patients to ATC. Morris would physically pay the kickbacks throughout North Miami and Florida’s Broward County. These patients, who attended ATC, were ineligible for the services billed to Medicare and did not receive them. After Medicare paid the claims, some of the co-conspirators then laundered the Medicare money in order to create cash to pay the kickbacks for patients.

Evidence at trial revealed that Ward was a program director at ATC’s Ft. Lauderdale, Fla., center from November 2008 until ATC’s closing in October 2010. The evidence showed Ward helped doctors at ATC sign patient files without reading them or seeing the patients, and that Ward and others would assist the owners of ATC in fabricating doctor notes, therapist notes and other documents to make it falsely appear in ATC’s patient files that patients were qualified for the individualized, specialized treatment. Included in these false and fraudulent submissions to Medicare were claims for patients who were in the late stages of diseases causing permanent cognitive memory loss and patients who had substance abuse issues and were living in halfway houses. These patients were ineligible for PHP treatments, and because they were forced by their assisted living facility owners and halfway house owners to attend ATC, they were not receiving treatment for the diseases they actually had.

ATC executives Lawrence Duran, Marianella Valera and Judith Negron were previously sentenced to 50 years, 35 years and 35 years in prison, respectively, for their roles in the fraud scheme. The 50- and 35-year sentences represent the longest federal sentences for health care fraud ordered to date in the United States.

ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010. Dozens of individuals have been convicted at trial or pleaded guilty for their participation in the scheme, including doctors Mark Willner and Alberto Ayala, who were each sentenced to 10 years in prison.

Evidence at trial showed that the ATC scheme resulted in a total of $205 million in fraudulent Medicare billings.

The cases were prosecuted by Senior Trial Attorney Jennifer L. Saulino and Trial Attorney Laura M.K. Cordova of the Justice Department Criminal Division’s Fraud Section and James V. Hayes, Assistant U.S. Attorney in the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

OVER $50 MILLION IN SETTLEMENTS ENTERED INTO FOR CLEAN UP OF SUPERFUND SITE IN RIALTO, CALIFORNIA

Credit:  U.S. Fish And Wildlife Service.

FROM: U.S. JUSTICE DEPARTMENT

Wednesday, December 5, 2012
US and Local Governments Achieve $50 Million Settlement to Address Contamination at Superfund Site in Rialto, Calif.

WASHINGTON – The United States has entered into two settlements worth more than $50 million to clean up contamination from the B.F. Goodrich Superfund Site in San Bernardino County, Calif. There are a dozen settling parties including Emhart Industries and Pyro Spectaculars, Inc. (PSI), as well as the cities of Rialto and Colton and County of San Bernardino.

The Superfund site has been used to store, test and manufacture fireworks, munitions, rocket motors and pyrotechnics and was added to the EPA’s National Priorities List in September 2009. The area’s groundwater is contaminated with trichloroethylene (TCE) and perchlorate, which have resulted in the closure of public drinking water supply wells in the communities of Rialto and Colton.

"After decades of harmful groundwater contamination and following protracted and costly litigation, the parties responsible for releases of TCE and perchlorate at the BF Goodrich Superfund Site have agreed to a comprehensive long-term plan to clean up the contaminated groundwater at the site," said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. "The commitment made under the consent decrees announced today will provide immeasurable benefits to the environment and the communities who live in Rialto and Colton, California."

"For decades, the defendants have been polluting this critical source of drinking water with both perchlorate and industrial solvents," said Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest. "Today's historic settlement ensures that the impacted communities in Southern California will finally have their drinking water sources restored."

Under one agreement, Emhart will perform the first portion of the cleanup, which is estimated to cost $43 million over the next 30 years to design, build and operate groundwater wells, treatment systems and other equipment needed to clean up the contaminated groundwater at the site. A significant portion of these funds will come from other settling parties, including the Department of Defense. The cities of Rialto and Colton will receive $8 million.

The Emhart settlement includes the following entities: Emhart Industries Inc., Black & Decker Inc, American Promotional Events Inc., the Department of Defense, the Ensign-Bickford Company, Raytheon, Whittaker Corporation, Broco Inc., and J. S. Brower & Associates Inc. and related companies, as well as the cities of Rialto and Colton and the County of San Bernardino.

As part of the second agreement, six entities, including PSI and its former subsidiary, will pay a combined $4.3 million to the EPA toward cleanup at the site and $1.3 million to the cities of Rialto and Colton and San Bernardino County. The entities involved in this settlement are PSI; Astro Pyrotechnics (a defunct subsidiary of PSI); Trojan Fireworks; Thomas O. Peters and related trusts; and Stonehurst Site, LLC.

EPA used government funds to pay for investigation and clean up work at the site while investigating potentially responsible parties for their role in the contamination. The United States, on behalf of EPA, sued Emhart and PSI, as well as the Goodrich Corporation, the estate of Harry Hescox and its representative, Wong Chung Ming, Ken Thompson Inc. and Rialto Concrete Products, in 2010 and 2011 to require cleanup and recover federal money spent at the site. Prior to EPA’s lawsuit, the cities of Rialto and Colton initiated litigation against many of the settling parties, including the Department of Defense, in 2004.

A company acquired by Emhart manufactured flares and other pyrotechnics at the site for the military in the 1950s. PSI has operated at the site since 1979, designing fireworks shows produced throughout the United States.

TCE is an industrial cleaning solvent. Drinking or breathing high levels may cause damage to the nervous system, liver and lungs. Perchlorate is an ingredient in many flares and fireworks, and in rocket propellant, and may disrupt the thyroid’s ability to produce hormones needed for normal growth and development.

The consent decree for the Emhart settlement (City of Colton v. American Promotional Events Inc., et al.) will be lodged with the federal district court by the U.S. Department of Justice and is subject to a comment period and final court approval. Copies of the proposed decrees are available on the Justice Department website at: www.justice.gov/enrd/Consent_Decrees.html. The PSI settlement is also subject to court approval.

U.S. ATTORNEY GENERAL HOLDER SPEAKS AT BALTIMORE UNIVERSITY SCHOOL OF LAW

U.S. Attorney General Eric Holder

FROM: U.S. JUSTICE DEPARTMENTAttorney General Eric Holder Speaks at the Baltimore University School of Law
Baltimore ~ Thursday, November 8, 2012

Thank you, Ron. I appreciate those kind words, and I want to thank you and President Bogomolny – along with all of the faculty members, administrators, and students who are here with us today – for welcoming me to this vibrant campus, with your dramatic new Law School building under construction. It’s a pleasure to be here. And, especially during this historic week, it’s a privilege to be joined by so many current – and future – leaders of our nation’s legal community – men and women who will help to shape America’s course and to bring Americans together.

As members of this law school community, you are well – and uniquely – suited for such endeavors. History proves this. For more than eight decades, the University of Baltimore School of Law has served as an important meeting ground – where issues of consequence are discussed and addressed. It’s also become known as a training ground for distinguished attorneys, jurists, advocates, policymakers, and public servants. The track record you’ve built, and the reputation you’ve established, are impressive. And, with students like all of you – and educators like the outstanding professors who are with us today, including your new Dean – it’s easy to see why.

As you just heard, I had the pleasure of working closely with Ron during his tenure at the Justice Department, where he served as Assistant Attorney General for Legislative Affairs – a role widely considered to be one of the hardest jobs in all of government. That was especially true over the last three years. But our roots – and shared experiences – run even deeper. Ron and I are both native New Yorkers. We attended rival high schools – and both went to Columbia University as undergraduates.

To anyone who knows Ron, it’s clear that he is deeply grateful for the first-rate education that he received – from the second-best high school in New York, from Columbia, and from Yale Law School. And he recognizes that these learning opportunities paved the way for the remarkable career he has built – in private practice; on Capitol Hill, as chief counsel to the late Senator Ted Kennedy, and as principal legal advisor to the U.S. Senate Majority Leader; at our nation’s Justice Department; and, now, in academia. He also understands that with these extraordinary opportunities come important obligations – to help others recognize and realize their potential. This is why Ron is here. And this is what motivates his efforts to support the kind of inclusive academic environment – and foster the robust discussion and debate – for which this University has become known. Although we miss him in Washington, I can think of no one better to help train the next generation of lawyers, leaders, advocates, and public servants – whose service, and contributions, will help to keep the great American experiment in motion – and ensure that our nation can continue to carry out, and live up to, its founding ideals.

T he country we have inherited has been defined by the hard work and tremendous courage of those who, throughout our history, have chosen not just to devote themselves to studying the law, but also to advancing the cause of justice. These brave individuals – armed with the same training that you’re receiving – have served on the front lines of national efforts to abolish slavery and segregation, to guarantee decent wages for our workers, and to secure fundamental civil rights protections for all – regardless of race, religion, gender, economic means, social status, or sexual orientation. They’ve helped to draft – and safeguard – our founding documents; to shape – and improve – the greatest legal system in the world; and to maintain the strength and integrity of our most sacred institutions by securing, and expanding, the most basic right of American citizenship – the right to vote.

These are the issues that must continue to unite our profession – and our nation. Despite the divisions we may have felt in recent months, and the fierceness with which this year’s campaigns were contested, I am convinced that that the American people will come together, as they always have in times of difficulty, to advance the aspirations, and to honor the values, we share. Starting this week, we face a uniquely democratic moment of both healing and renewal – a time when all Americans, and especially our elected leaders, are called upon to join forces once again; to meet common challenges with shared resolve; and to carry forward the critical work that has always driven our pursuit of a more perfect Union.

As aspiring stewards of the law – and servants of those whom it protects and empowers –the students in this room have made an important commitment, and taken on very serious responsibilities. Already, you’re putting your legal training to work in assisting vulnerable tenants, disabled students, disadvantaged patients, and victims of crime – as well as nonprofits and neighborhood organizations. And you’re striving to realize the vision that has always shaped this University’s unique culture, and defined it as an institution founded on community involvement, dedicated to serving the public interest, and determined to foster increased diversity.

Along the way, you’re learning to build relationships with your peers and to engage in respectful debates with one another. You’re identifying the best ways to right wrongs, to address disparities, and to formulate solutions for problems that span across regions and even around the globe. And soon – whether you choose to build a career in private practice, join a corporation, teach, serve in government, or even run for public office – all of you will be called upon to fulfill the ideal that has always been at the center of your legal education and the heart of your chosen profession: not merely to serve clients or win cases, but to do justice.

I realize that’s an intimidating thought. But the fact that you’re here today proves that you’re not only up to the challenges that lie ahead – you welcome the chance to confront them. And that’s why I urge you to make a habit of public service; to seek to improve the lives of those around you; and to do everything in your power to help make your communities, and your country, stronger.

Despite the tremendous advances that have been made over the course of our nation’s history – and even within my lifetime – the reality is that significant obstacles, persistent disparities, and evolving threats remain before us. And you don’t have to look far to find them.

Today, in too many American neighborhoods, including many here in Baltimore, young people – especially young men of color – are more likely to be murdered than to die by any other cause. A majority of our children – 60 percent of them – have been exposed to violence at some point in their lives, either as victims or as witnesses. In total, more than 50 million Americans are eligible for federally-funded legal aid – but most cannot access it. Nearly 80 percent of civil legal needs go unmet. Countless lives and communities are devastated each year by fraud targeting homeowners, investors, and those who rely on essential federal health care programs. And systemic threats – from terrorism to climate change – continue to challenge our society, to endanger our people, and to spark conflict and division around the world.

These are just a few of the challenges that America’s current and future leaders will be called upon to address and overcome. There’s no question that they are daunting. And the stakes could hardly be higher. But you’ve been given a rare opportunity – the chance to make a profound difference. And, here at the University of Baltimore, you’re gaining the tools you’ll need to do just that.

Armed with the skills and knowledge that only a world-class legal education can confer –I’m certain that each of you soon will find that, just as surely as you’re coming of age in a moment of great consequence, you stand poised to lead our nation’s legal profession, and justice system, at a time of extraordinary promise.

In these efforts, I am proud to count each of you as partners. And, as our nation looks toward a new chapter in its history, you make me feel optimistic about the days ahead. I look forward to all that you must – and surely will – achieve together. And I want you to know that I am counting on you all – and that includes you, Dean Weich.

ENVIRONMENTAL LABORATORY OPERATOR CHARGED WITH FALSIFIYING RECORDS AND OBSTRUCTION

FROM: U.S. JUSTICE DEPARTMENT
Friday, November 9, 2012
Mississippi Laboratory Operator Charged with Falsifying Records on Industrial Wastewater
An owner and sole operator of an environmental laboratory has been charged in U.S. District Court for the Southern District of Mississippi with falsification of records and obstructing a federal criminal investigation, announced U.S. Attorney for the Southern District of Mississippi Gregory K. Davis and Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division.

Tennie White, owner, operator and manager of Mississippi Environmental Analytical Laboratories Inc. was charged in a three-count felony indictment with two false statements counts and one count of obstructing proceedings.

According to the indictment, White was hired to perform laboratory testing of a manufacturer’s industrial process waste water samples and then to use those results to complete monthly discharge monitoring reports for submission to the Mississippi Department of Environmental Quality (MDEQ). The indictment alleges that from February to August 2009 White created three discharge monitoring reports (DMRs) that falsely represented that laboratory testing had been performed on samples when, in fact, such testing had not been done. The indictment further alleges that White created a fictitious laboratory report and presented it to her client for use in preparing another DMR.

The indictment further alleges that White made false statements to a federal agent during a subsequent criminal investigation.

An indictment is not a finding of guilt, and a defendant is presumed innocent unless and until proven guilty in a court of law.

The false statements charges carry a maximum sentence of five years in prison and a $250,000 fine per count. The obstructing proceedings charge carries a maximum sentence of 20 years in prison and a $250,000 fine.

This case is being prosecuted by Trial Attorney Richard J. Powers of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, and Assistant U.S. Attorney Gaine Cleveland of the U.S. Attorney’s Office for the Southern District of Mississippi.

FORMER POLICE GOES TO PRISON FOR ATTACKING RESTRAINED PRISONER

FROM: U.S. JUSTICE DEPARTMENT

Monday, October 22, 2012
Former Georgia Police Chief Sentenced for Assaulting Restrained Inmate
Former chief of the Omega, Ga., Police Department, Walter Young, 54, was sentenced today for physically abusing a man in his custody, the Justice Department announced.

U.S. District Judge Hugh Lawson sentenced Young to 24 months in prison for violating the civil rights of a pretrial detainee while acting in his capacity as the chief of police.

According to evidence presented at trial, on March 24, 2011, the former police chief assaulted the detainee, Alfonso Moreno, by repeatedly slapping and punching him in the head and face while he was fully restrained in a restraint chair. Young struck Mr. Moreno a total of eight times, breaking Moreno’s nose. Young’s excessive use of force was captured by the jail’s video surveillance system. A federal jury convicted Young on Aug. 1, 2012.

"There was no excuse for this use of force on a restrained individual and excessive force by those sworn to uphold the law will not be tolerated," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department will continue to vigorously prosecute law enforcement officers who violate the constitutional rights of others."

"We trust our law enforcement officers to protect and serve the people of their community," said Michael J. Moore, U.S. Attorney for the Middle District of Georgia. When we discover violations of that trust, the U.S. Attorney’s Office will use all of our resources to see that those officers who broke the law are made to account for their actions."

This case was investigated by the FBI and prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd of the Civil Rights Division of the U.S. Department of Justice, with the assistance of the U.S. Attorney’s Office for the Middle District of Georgia and the support of the Georgia Bureau of Investigations.

MAN PLEADS GUILTY IN PLOT TO ASSASSINATE SAUDI AMBASSADOR TO THE U.S.

FROM: U.S. JUSTICE DEPARTMENT

Wednesday, October 17, 2012

Man Pleads Guilty in New York to Conspiring with Iranian Military Officials to Assassinate Saudi Arabian Ambassador to the United States

Manssor Arbabsiar, aka Mansour Arbabsiar, pleaded guilty today in federal court in the Southern District of New York to participating in a plot to murder the Saudi Arabian Ambassador to the United States while the Ambassador was in the United States. Arbabsiar, a 58-year-old naturalized U.S. citizen holding both Iranian and U.S. passports, was arrested on Sept. 29, 2011, at New York’s John F. Kennedy International Airport. He pleaded guilty today before U.S. District Judge John F. Keenan.

The guilty plea was announced by Attorney General Eric Holder; Michele M. Leonhart, Administrator of the Drug Enforcement Administration ( DEA); Lisa Monaco, Assistant Attorney General for National Security; Preet Bharara, U.S. Attorney for the Southern District of New York; and Stephen L. Morris, FBI Houston Special Agent in Charge.

Arbabsiar pleaded guilty to a superseding information that charges him with three counts. Count one charges Arbabsiar with traveling in foreign commerce and using interstate and foreign commerce facilities in the commission of murder-for-hire. Count two charges him with conspiring to do so. Count three charges Arbabsiar with conspiring to commit an offense against the United States, namely, an act of terrorism transcending national boundaries. He faces a maximum potential sentence of 25 years in prison (10 years on counts one and two, and five years on count three). Arbabsiar is scheduled to be sentenced by Judge Keenan on Jan. 23, 2013, at 11:30 a.m.

In connection with his guilty plea, Arbabsiar admitted that, from the spring of 2011 to the fall of 2011, he conspired with officials in the Iranian military who were based in Iran, to cause the assassination of the Saudi Arabian Ambassador while the Ambassador was in the United States. Arbabsiar acknowledged that at the direction of these co-conspirators, he traveled to Mexico on several occasions during 2011 in order to arrange the assassination of the Ambassador. Arbabsiar admitted that, with his co-conspirators’ approval, he had arranged to hire a DEA confidential source (CS-1), who claimed to be a representative of a drug cartel, and CS-1’s criminal associates, to murder the Ambassador. Arbabsiar further admitted that he agreed to pay $1.5 million to CS-1 and had discussed with CS-1 a plan to murder the Ambassador at a restaurant in Washington, D.C. -- a plan that was approved by Arbabsiar’s co-conspirators. Arbabsiar then arranged for a $100,000 down payment, in two installments, to be wired to CS-1.

As noted in the complaint and indictment previously filed in Manhattan federal court, t he Qods Force is a branch of the Iranian Islamic Revolutionary Guard Corps (IRGC). The Qods Force conducts sensitive covert operations abroad, including terrorist attacks, assassinations and kidnappings, and is believed to have sponsored attacks against Coalition Forces in Iraq. In October 2007, the U.S. Treasury Department designated the Qods Force under Executive Order 13224 for providing material support to the Taliban and other terrorist organizations.

"A little more than a year after his arrest, Manssor Arbabsiar has admitted to his role in a deadly plot approved by members of the Iranian military to assassinate a sitting foreign Ambassador on U.S. soil," said Attorney General Holder. "Today’s plea and the disruption of this plot should serve as a reminder of the exceptional efforts of our law enforcement and intelligence agencies in protecting America against terrorist attacks and in holding accountable those who plan such actions."

"The dangerous connection between drug trafficking and terrorism cannot be overstated, and this case is yet another example of DEA’s unique role in identifying potentially deadly networks that wish to harm innocent Americans and our allies worldwide," said DEA Administrator Leonhart. "Using DEA’s elaborate and sophisticated investigative expertise to infiltrate violent drug and terror organizations globally, we successfully identified this threat and worked closely with the FBI to prevent a potentially deadly outcome." ‪

"Thanks to the collaborative efforts of many U.S. law enforcement and intelligence professionals, this international assassination plot hatched in Iran was thwarted before anyone was harmed and a key conspirator has pleaded guilty. This case underscores the evolving threat environment we face and the need for continued vigilance at home and abroad," said Assistant Attorney General Monaco.

U.S. Attorney Bharara stated: "As was originally charged, and as Arbabsiar has now admitted, he was the extended murderous hand of his co-conspirators, officials of the Iranian military based in Iran, who plotted to kill the Saudi Ambassador in the United States and were willing to kill as many bystanders as necessary to do so. Arbabsiar traveled to and from the United States, Mexico and Iran and was in telephone contact with his Iranian confederates while he brokered an audacious plot. The audacity of the plot should not cause doubt, but rather vigilance regarding others like Arbabsiar, who are enlisted as the violent emissaries of plotting foreign officials. This office will continue to pursue the co-conspirators in this plot and others in Iran or elsewhere who try to export murder. Thanks to the great work of the FBI, DEA and the prosecutors in this office, Mr. Arbabsiar must now answer for his conduct."

"Today’s guilty plea entered by Mr. Arababsiar is the culmination of exceptional intelligence and law enforcement efforts," said FBI Special Agent in Charge Morris. "I would like to thank the investigators, analysts and task force officers at the FBI and DEA in Houston, our Legal Attaché Office in Mexico City, and all partners in the Intelligence Community who worked tirelessly on this case. Of special note I’d like to recognize the exemplary leadership from Department of Justice’s National Security Division and the U.S. Attorney’s Office in the Southern District of New York."

According to the complaint and indictment filed in Manhattan federal court, as well as the information to which Arbabsiar pleaded:

Arbabsiar met with CS-1 in Mexico on multiple occasions between May 2011 and July 2011. During the course of these meetings, Arbabsiar inquired as to CS-1’s knowledge with respect to explosives and explained that he was interested in, among other things, attacking an embassy of Saudi Arabia and the murder of the Saudi Ambassador to the United States. In a July 14, 2011, meeting in Mexico, CS-1 told Arbabsiar that he would need to use at least four men to carry out the Ambassador’s murder and that his price for carrying out the murder was $1.5 million. Arbabsiar agreed and stated that the murder of the Ambassador should be handled first, before the execution of other attacks that Arbabsiar had discussed with CS-1. Arbabsiar also indicated that he and his associates had $100,000 in Iran to pay CS-1 as a first payment toward the assassination.

During the same meeting, Arbabsiar also described to CS-1 his cousin in Iran, who he said had requested that Arbabsiar find someone to carry out the Ambassador’s assassination. Arbabsiar indicated that his cousin was a "big general" in the Iranian military; that he focuses on matters outside of Iran and that he had taken certain unspecified actions related to a bombing in Iraq.

In a July 17, 2011, meeting in Mexico, CS-1 noted to Arbabsiar that one of his workers had already traveled to Washington, D.C., to surveil the Ambassador. CS-1 also raised the possibility of innocent bystander casualties. Arbabsiar made it clear that the assassination needed to go forward, despite mass casualties, telling CS-1, "They want that guy [the Ambassador] done [killed], if the hundred go with him f**k ‘em." CS-1 and Arbabsiar discussed bombing a restaurant in the United States that the Ambassador frequented. When CS-1 noted that others could be killed in the attack, including U.S. senators who dine at the restaurant, Arbabsiar dismissed these concerns as "no big deal."

On Aug. 1 and Aug. 9, 2011, Arbabsiar caused two overseas wire transfers totaling approximately $100,000 to be sent to an FBI undercover account as a down payment for CS-1 to carry out the assassination. Later, Arbabsiar explained to CS-1 that he would provide the remainder of the $1.5 million after the assassination. On Sept. 20, 2011, CS-1 told Arbabsiar that the operation was ready and requested that Arbabsiar either pay one half the agreed upon price ($1.5 million) for the murder or that Arbabsiar personally travel to Mexico as collateral for the final payment of the fee. Arbabsiar agreed to travel to Mexico to guarantee final payment for the murder.

On Sept. 28, 2011, Arbabsiar flew to Mexico. Arbabsiar was refused entry into Mexico and was placed on a return flight destined for his last point of departure. On Sept. 29, 2011, Arbabsiar was arrested by federal agents during a flight layover at JFK International Airport in New York. Several hours after his arrest, Arbabsiar was advised of his Miranda rights and he agreed to waive those rights and speak with law enforcement agents. During a series of Mirandized interviews, Arbabsiar confessed to his participation in the murder plot.

Arbabsiar also admitted to agents that, in connection with this plot, he was recruited, funded, and directed by men he understood to be senior officials in Iran’s Qods Force. He said these Iranian officials were aware of and approved of the use of CS-1 in connection with the plot; as well as payments to CS-1; the means by which the Ambassador would be killed in the United States and the casualties that would likely result.

Arbabsiar also told agents that his cousin, who he had long understood to be a senior member of the Qods Force, had approached him in the early spring of 2011 about recruiting narco-traffickers to kidnap the Ambassador. Arbabsiar told agents that he then met with CS-1 in Mexico and discussed assassinating the Ambassador. Arbabsiar said that, afterwards, he met several times in Iran with Gholam Shakuri, aka "Ali Gholam Shakuri," a co-conspirator and Iran-based member of the Qods Force, and another senior Qods Force official, where Arbabsiar explained that the plan was to blow up a restaurant in the United States frequented by the Ambassador and that numerous bystanders would be killed. The plan was approved by these officials.

In October 2011, after his arrest, Arbabsiar made phone calls at the direction of law enforcement to Shakuri in Iran that were monitored. During these phone calls, Shakuri confirmed that Arbabsiar should move forward with the plot to murder the Ambassador and that he should accomplish the task as quickly as possible, stating on Oct. 5, 2011, "[j]ust do it quickly, it’s late…" Shakuri also told Arbabsiar that he would consult with his superiors about whether they would be willing to pay CS-1 additional money. Shakuri, who was also charged in the plot, remains at large. The charges against Shakuri are merely accusations, and he is presumed innocent unless and until proven guilty.

HOUSTON AMBULANCE COMPANY PLEADS GUILTY TO EMERGENCY MEDICARE FRAUD

FROM: U.S. JUSTICE DEPARTMENT

Monday, October 15, 2012
Houston Ambulance Company Administrator Pleads Guilty to Fraud

WASHINGTON – The administrator of CardioMax EMS, a Houston-based ambulance company, pleaded guilty today to charges that he submitted approximately $1,734,550 in fraudulent claims to Medicare, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent-In-Charge Elvis McBride of the FBI’s Houston Field Office; Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the U.S. Department of Health and Human Service’s Office of the Inspector General (HHS-OIG); and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).

Okechukwu Ofoegbu, 31, of Houston, pleaded guilty today in U.S. District Court in the Southern District of Texas to one count of conspiracy to commit health care fraud.

Ofoegbu was the administrator of Cardiomax EMS, a Houston-based ambulance company that primarily transported patients to community mental health centers. According to Ofoegbu’s plea agreement, from January 2011 through December 2011, Ofoegbu and others at Cardiomax were involved in transporting patients that did not meet the requirements for ambulance transport under Medicare regulations, falsifying ambulance run sheets that described patients’ conditions and using the falsified run sheets to file claims with Medicare. Ofoegbu admitted in his plea agreement that he conspired to submit claims to Medicare for ambulance services that he knew were miscoded, not medically necessary and, in some cases, not provided.

As part of the plea agreement, Ofoegbu has agreed to pay $553,002 in restitution to the United States. At sentencing, scheduled for Jan. 24, 2013, Ofoegbu faces a maximum sentence of 10 years in prison.

Ofoegbu was originally indicted as part of a nationwide takedown on May 2, 2012, that resulted in charges against 107 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing.

The case was prosecuted by Trial Attorney Laura M.K. Cordova, Special Trial Attorney James S. Seaman, Special Trial Attorney Ronald Cummings and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by HHS-OIG, FBI and the Texas Attorney General’s Medicaid Fraud Control Unit, as part the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and 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 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

TWO DOCTORS GET 10 YEARS IN PRISON FOR ROLES IN $205 MILLION MEDICARE FRAUD

FROM: U.S. JUSTICE DEPARTMENT
Monday, October 1, 2012

Two Miami-Area Doctors Sentenced to 10 Years in Prison for Participating in $205 Million Medicare Fraud Scheme

WASHINGTON – Miami-area residents Dr. Mark Willner and Dr. Alberto Ayala, former medical directors at the mental health care company American Therapeutic Corporation (ATC), were each sentenced today to 10 years in prison for participating in a $205 million Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer 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 Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

Willner, 56, and Ayala, 68, were sentenced by U.S. District Judge Patricia A. Seitz in the Southern District of Florida. Judge Seitz ordered Willner to pay more than $57 million in restitution and Ayala to pay more than $87 million in restitution, both jointly and severally with their co-defendants. Willner and Ayala were also both sentenced to three years of supervised release following their prison terms.

On June 1, 2012, after a seven week trial, a federal jury in the Southern District of Florida found Willner and Ayala each guilty of one count of conspiracy to commit health care fraud.

Evidence at trial demonstrated that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. The defendants and their co-conspirators also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.

Evidence at trial revealed that ATC secured patients by paying kickbacks to assisted living facility owners and halfway house owners who would then steer patients to ATC. These patients attended ATC, where they were ineligible for the treatment ATC billed to Medicare and where they did not receive the treatment that was billed to Medicare. After Medicare paid the claims, some of the co-conspirators then laundered the Medicare money in order to create cash to pay the patient kickbacks.

The defendants were charged in an indictment returned on Feb. 8, 2011. ATC, the management company associated with ATC, and 20 individuals, including the ATC owners, have all previously pleaded guilty or have been convicted at trial.

Evidence at trial revealed that doctors at ATC, including Willner and Ayala, signed patient files without reading them or seeing the patients. Evidence further revealed that ATC then billed Medicare for more than $100 million in PHP treatment for these patients under the names of Willner and Ayala. Included in these false and fraudulent submissions to Medicare were claims for patients in neuro-vegetative states, along with patients who were in the late stages of diseases causing permanent cognitive memory loss, and patients who had substance abuse issues and were living in halfway houses. These patients were ineligible for PHP treatment, and because they were forced by their assisted living facility owners and halfway house owners to attend ATC, they were not receiving treatment for the diseases they actually had.

Willner and Ayala have been in federal custody since their convictions.

ATC executives Lawrence Duran, Marianella Valera, Judith Negron and Margarita Acevedo were sentenced to 50 years, 35 years, 35 years and 91 months in prison, respectively, for their roles in the fraud scheme. The 50- and 35-year sentences represent the longest sentences for health care fraud ordered to date. Acevedo, who pleaded guilty early on and has been cooperating with the government since November 2010, testified at the doctors’ trial.

ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.

The case was prosecuted by Trial Attorneys Jennifer L. Saulino, Robert A. Zink and James V. Hayes of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

TAX FRAUD PROMOTER GETS 84 MONTHS IN PRISON

FROM: U.S. JUSTICE DEPARTMENT
Thursday, September 6, 2012
Massachusetts Tax Fraud Promoter Sentenced to Prison for Conspiracy to Obstruct and Impede the IRS

A federal judge in Worcester, Mass., sentenced William Scott Dion today to 84 months in prison for conspiring to defraud the United States, and for obstructing the Internal Revenue Service (IRS), the Justice Department and IRS announced. U.S. District Judge F. Dennis Saylor also ordered Dion to pay restitution in the amount of $3 million.

On April 2, 2012, a federal jury convicted Dion and Catherine Floyd, both of Sanbornville, N.H., and Charles Adams, of Norwood, Mass., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes. The jury convicted all three of conspiracy to defraud the IRS by promoting an "under the table" payroll scheme. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an "underground warehouse banking" scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.

According to the evidence presented at trial, Dion, Floyd and Adams ran a payroll tax scheme in order to pay employees "under the table" without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. The three ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.

The evidence at trial also established that Dion and Floyd conspired to defraud the United States by promoting and operating an "underground warehouse banking" scheme which helped subscribers conceal income and assets from the IRS. According to the evidence, the warehouse scheme operated under three different names: Your Virtual Office, Office Services and Calico Management. As part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. According to evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme.

In August 2009, the three defendants were indicted with four other individuals relating to the promotion and use of these schemes. On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the "warehouse banking" scheme, and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns. On Jan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to one count of tax evasion. All four defendants are awaiting sentencing.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, and Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts, commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, Tax Division Assistant Chief John N. Kane, former Tax Division Trial Attorney Jeffrey L. Shih, Assistant U.S. Attorney Victor A. Wild, who prosecuted the case.

DOMINICAN NATIONAL PLEADS GUILTY TO TRAFFICKING IN IDENTITIES

FROM: U.S. JUSTICE DEPARTMENT
Tuesday, September 4, 2012
Foreign National Pleads Guilty to Leading Role in Trafficking the Identities of Puerto Rican U.S. Citizens
Co-Defendant Pleads Guilty to Conspiracy to Commit Alien Smuggling for Financial Gain

WASHINGTON – A Dominican national pleaded guilty today in connection with his leading role in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.

Rafael Joaquin Beltre-Beltre, 35, formerly of Caguas, Puerto Rico, pleaded guilty to one count of conspiracy to commit identification fraud, one count of conspiracy to commit alien smuggling for financial gain and one count of international money laundering. He also agreed to forfeit $422,793 in illegal proceeds and deportation after serving his sentence. The plea took place in the District of Puerto Rico before U.S. Magistrate Judge Marcos E. Lopez.

Beltre-Beltre was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme.

Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers) obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls. The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.

Court documents allege that some identity brokers assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.

According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.

Beltre-Beltre admitted that he operated as a Savarona supplier and was a leader and organizer in the conspiracy. At sentencing, Beltre-Beltre faces a maximum sentence of 15 years in prison for conspiracy to commit identification fraud, 10 years in prison for conspiracy to commit alien smuggling for financial gain and 20 years in prison for international money laundering. Beltre-Beltre is also subject to a maximum fine of $250,000 for each charge.

Another defendant involved in the scheme, Alma Yesenia Garcia-Ramirez, 28, a foreign national formerly of Crystal Lake, Ill., pleaded guilty today to one count of conspiracy to commit alien smuggling for financial gain and agreed to forfeit $35,900 in illegal proceeds as well as to deportation to Mexico after serving her sentence. According to court documents, Garcia-Ramirez assisted an Illinois-based identity broker and transferred money on behalf of the organization. Additionally, she used a Puerto Rican identity herself to commit financial fraud and traffic the identities. Garcia-Ramirez also admitted to obstructing justice in relation to the investigation by attempting to hide evidence from law enforcement investigators. Garcia-Ramirez’s plea took place in the District of Puerto Rico before U.S. Magistrate Judge Bruce J. McGiverin. At sentencing, Garcia-Ramirez faces a maximum sentence of 10 years in prison and a maximum fine of $250,000.

Beltre-Beltre and Garcia-Ramirez are the 14th and 15th defendants to plead guilty in this case.

The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic, and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.

The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Sarah Chang, Christina Giffin and Courtney B. Schaefer of the Justice Department Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Trial Attorney Jeannette Gunderson of the Justice Department Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Southern District of Ohio and Western District of Virginia provided substantial assistance.

HEALTHCARE CLINIC ALLEGEDLY UNREPORTED INCOME TO INCREASE MEDICAID REIMBURSEMENT

FROM: U.S. JUSTICE DEPARTMENT
Tuesday, August 7, 2012
United States Joins Lawsuit Against San Francisco Area’s North East Medical Services
Federally Qualified Healthcare Clinic Allegedly Failed to Report Income to Increase Medicaid Reimbursement
　
The United States has joined a whistleblower action pending in the Northern District of California against the federally-qualified health center (FQHC), North East Medical Services (NEMS), alleging that the center under-reported income it received from a managed care organization in order to artificially inflate reimbursements it received from the California Medicaid program, the Justice Department announced today. North East serves the San Francisco Bay area.
FQHCs are "safety net" community clinics certified under federal law and licensed under state law to provide medical care to poor and under-served populations. As such a health center, North East Medical Services is entitled to special payments from the California Medicaid program (Medi-Cal) that are significantly more generous than typical Medicaid payments. However, in order to receive these additional payments, NEMS must submit annual reports to Medi-Cal stating the total amount it actually received during the preceding year from any source for treating Medi-Cal enrollees. Medi-Cal then subtracts that amount from the amount that NEMS is entitled to receive as an FQHC and pays NEMS the difference. The government alleges that NEMS significantly under-reported payments it received from a managed care organization for treating Medi-Cal beneficiaries in order to artificially inflate the payments it received from Medi-Cal.
"As health care costs continue to rise, it is more important than ever that health care providers report accurate information to federal and state health care programs," said Stuart Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. "The Department of Justice is committed to cracking down on improper accounting practices such as those alleged in this case, which undermine the integrity of these health care programs and increase the costs of health care for the rest of us."
"Filing claims that improperly inflate reimbursement amounts means there are less funds available for people in need," said Melinda Haag, U.S. Attorney for the Northern District of California. "My office views the actions this defendant allegedly committed as a serious breach of the responsibilities healthcare organizations owe to people in need of medical care and also to the taxpayers who fund these programs. We are committed to doing everything in our power to protect the integrity of the healthcare system."
The whistleblower action, captioned United States ex rel. Trinh v. North East Medical Services, Inc. Civil Action No. 10-1904 (N.D. Cal.), was filed under the qui tam provisions of the False Claims Act. The False Claims Act allows for private persons to file actions to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, the whistleblower who initiated the action can receive a share of between 15 percent to 25 percent of the amount recovered.
The whistleblower action contained additional allegations. However, the United States is intervening only with regard to allegations that NEMS failed to report certain income on annual reports to Medi-Cal.
The investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Northern District of California, the Office of Inspector General of the Department of Health and Human Services, and the California Attorney General’s Office.
The claims asserted in the complaint against NEMS are allegations only, and there has been no determination of liability.

U.S. JUSTICE DEPARTMENT SETTLES WITH WOODLAKE, CA REGARDING UNLAWFUL PRE-EMPLOYMENT MEDICAL EXAMS

FROM: U.S. JUSTICE DEPARTMENT
The Justice Department announced  that it has reached a settlement with the city of Woodlake, Calif., to resolve allegations that the city engaged in a pattern or practice of discrimination against people with disabilities by requiring applicants for job vacancies to undergo unlawful pre-employment medical examinations before receiving an offer of employment, in violation of the Americans with Disabilities Act (ADA).

The settlement concludes a pattern or practice investigation by the Justice Department based on information that the city of Woodlake was requiring all job applicants to undergo a medical examination as part of the application process, before making an offer of employment. Such pre-offer medical examinations are illegal under the ADA, as they make it easier for employers to discriminate against qualified individuals on the basis of disability in the hiring process. The settlement agreement requires the city to eliminate its current discriminatory policy, to develop and implement a non-discrimination policy and to train staff on the requirements of the ADA.

"This settlement is an important step towards eliminating discrimination against people with disabilities in employment," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We commend the city of Woodlake for working cooperatively with the Justice Department to ensure that their policies and practices comply with federal law and for their commitment to ensuring that people with disabilities are treated equally and fairly in the hiring process."

"We are pleased that the city of Woodlake and the U.S. Department of Justice agreed so quickly on measures that will protect the rights of individuals with disabilities," said U.S. Attorney for the Eastern District of California Benjamin B. Wagner.

The ADA requires that employers, including state and local government entities, not conduct any pre-employment medical examination or inquiry before making an offer of employment. Once a conditional job offer is made, employers may make disability-related inquiries or conduct medical examinations of an applicant if this is done for all entering employees in that job category regardless of disability. Once an employee is hired, employers may only make disability-related inquiries or require medical examinations of an employee if such examination or inquiry is shown to be job-related and consistent with business necessity. The ADA also requires employers not to discriminate against individuals with disabilities in making personnel decisions, including hiring or promoting employees.