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Saturday, October 31, 2015

Speaking of Pumpkins

From the #USDA:


U.S. production of pumpkins rose by over 30 percent from 2000 to 2014, reflecting rising demand for pumpkins destined for both ornamental and food use.  The Economic Research Service has created a special web page on pumpkin background information and statistics.
U.S. production of pumpkins rose by over 30 percent from 2000 to 2014, reflecting rising demand for pumpkins destined for both ornamental and food use. The Economic Research Service has created a special web page on pumpkin background information and statistics.
In the fall a person’s fancy often turns to thoughts of…pumpkins. The season is underway, from the ornamental pumpkins of Halloween to the pies that grace many tables at Thanksgiving and Christmas.
Where do pumpkins come from? Though six States account for nearly half of U.S. production, pumpkins are grown in virtually every State of the union. This is important to consider in light of recent media reports of a looming pumpkin shortage.
Reports of “the great pumpkin shortage of 2015” cite heavy rains during the planting season in central Illinois as the culprit. Illinois is the top producing State, and most of its output is processed (think canned pumpkin for pies). So the concern this year is for Thanksgiving rather than for Halloween. Illinois’ Tazewell County is the top producer of pumpkins in the United States. And the town of Morton, near Peoria, home to a huge canning facility, is the (self-proclaimed) Pumpkin Capital of the World.
While data are not yet available on the size of the 2015 U.S. pumpkin crop, the production of pumpkins is widely dispersed. (And like this year, occasional alerts on pumpkin shortages over the years have been attributed to weather conditions in specific areas of the country.)
Meanwhile, consumers have been buying more pumpkins over the past decade, in both fresh and processed form. U.S. production of pumpkins for all uses rose 31 percent – from 1.46 billion pounds in 2000 to 1.91 billion pounds in 2014 – reflecting rising demand for ornamental and food-use pumpkins. Per capita annual use (adjusted for feed use, shrinkage, and marketing loss) rose from 4.6 pounds to 5.4 pounds during the same period. Demand for specialty pumpkins in particular has expanded. With names like Big Mack, Cinderella, and Knucklehead, and the heirloom pumpkins, these varieties are available in alternative skin textures and in colors such as green, white, and yellow/green stripes. Food uses such as pumpkin-flavored coffees and seasonal beers are also gaining popularity.
This year, as in previous years, the Economic Research Service (ERS) has posted a special web page assembling information and data on pumpkins. Journalists – and other interested users – can grab background information like the farm value of pumpkins over several years, production volume and yield in the top six States, and recent wholesale and retail prices. At ERS, this web resource is one sign of the season.
    

Co-ops Help Make Home Affordable and Bridge Digital Divide for Rural Americans

From the #USDA:


A young resident of the Ponderosa Homeowners Cooperative was among those celebrating the conversion of their community to a resident-owned co-op. Photo by Mike Bullard, courtesy ROC USA
A young resident of the Ponderosa Homeowners Cooperative was among those celebrating the conversion of their community to a resident-owned co-op. Photo by Mike Bullard, courtesy ROC USA

October is National Cooperative Month, and we’re happy to spotlight several projects throughout the month that have been supported through USDA Rural Development’s Cooperative Services. John McNamara is a Cooperative Development Specialist with the Northwest Cooperative Development Center in Olympia, Washington, and his story below helps illustrate how resident-owned communities benefit when their members are proficient with new technology: 
Manufactured home communities play an important role in meeting the need for affordable housing in the Northwest and across the nation. Through cooperative action, many people now have the opportunity to create resident-owned communities (ROCs), securing the land beneath their homes for perpetuity. 
Once a cooperative completes such a purchase, residents have responsibilities to govern and manage their communities. The Northwest Cooperative Development Center (NWCDC), a ROC USA® certified technical assistance provider (CTAP), is charged with providing guidance to community leaders as they carry out these duties. A major challenge is maintaining good communications among co-op members and helping them balance their work/life needs.
It is becoming increasingly important to supplement communications with Internet technologies. Progress has been made in connecting rural residents to broadband and “next-generation” Internet. But a digital divide still exists between rural and urban communities.
Resident-owned communities often have limited ability to bridge this divide, whether caused by a lack of hardware or software, or the ability to use it – or for all of these reasons. NWCDC, in partnership with ROC USA, is seeking to close this gap by bringing the benefits of modern information technology to the communities in its network.
To accomplish this, ROCs are testing standardized curriculum and software systems designed to help co-op members develop increased technology self-sufficiency. The curriculum should also help CTAPs better manage a growing portfolio of clients. Communities in the Washington towns of Moses Lake and Puyallup are serving as a pilot project intended to create a nationally replicable model.
There are broad aspirations for the initiative. “A resident-owned community is more than just a homeowner’s association; it is a business that requires constant attention, maintenance, oversight and nurturing,” says Daniel Luis Arrañaga, a CTAP for NWCDC. Goals are to promote residents’ computer fluency and more efficient and productive time allocation for CTAPs, he notes. Another goal is to help build leadership in communities.
Doug Winscot and Lacy Hopper celebrate the creation of the Elmwood Homeowners Cooperative. Photo by Mike Bullard, courtesy ROC USA
Doug Winscot and Lacy Hopper celebrate the creation of the Elmwood Homeowners Cooperative. Photo by Mike Bullard, courtesy ROC USA
Many resident-owners of ROC’s have never had – nor necessarily needed – access to information technology. To overcome this challenge, NWCDC has partnered with students from the Evergreen State College in Olympia to create curriculum to teach adults basic skills in e-mail, on-line editing and typing. Arrañaga began using Google Docs, a free software word processing application, to work with community members.
“The great thing is that I can get on the document with board members who are 250 miles away and train them on how to make an agenda without making an eight hour round-trip drive,” says Arrañaga.
The goal of this initiative is to give resident-owners a greater sense of ownership by using IT to research solutions to community problems, find needed vendors and to create an archive of organizational documents that all members can access and share. It will reduce the need for CTAPs to provide some of these services, opening more time to work with new clients and providing for more efficient use of funds needed to develop new ROCs.
    

USDA Assists in Bringing Commercial Dehairing Operations Back to United States

From the #USDA:


 
Mark Schalk explains the process for sorting Alpaca hair that will be used to make blanket yarn. Schalk is the owner of Two Branch Ranch, an Alpaca farm in Saline, Mich. He brought the fiber to Springfield, Ky., for sorting and cleaning.
Mark Schalk explains the process for sorting Alpaca hair that will be used to make blanket yarn. Schalk is the owner of Two Branch Ranch, an Alpaca farm in Saline, Mich. He brought the fiber to Springfield, Ky., for sorting and cleaning.

October is National Cooperative Month, and we’re happy to spotlight several projects throughout the month that have been supported through USDA Rural Development’s Cooperative Services.
It took nearly two years to travel from Italy to America via transportation across water, through the air, and along roadways and railways – and now a large, brightly colored piece of equipment is making history in the tiny rural community of Springfield, Ky.
But this is no ordinary piece of hardware. It is a technically advanced dehairing machine that is unique for a variety of reasons. The machine is one of only four in existence in the world; it is touted as one of the most powerful, sophisticated dehairing machines available; and it will greatly reduce the time and cost required to prepare American natural fibers for processing into luxury yarns that will be used to make textiles.
Natural Fiber Producers cooperative – which is comprised of 318 producers of all types of animal fibers, primarily alpaca, llama, and sheep – invested their own money to make the down payment for the equipment. NFP worked with USDA to obtain a Business and Industry Loan Guarantee with financing from Springfield State Bank, in addition to the Kentucky Agricultural Finance Corporation,
The dehairing machine is operating it in a 12,000-square-foot facility owned by U.S. Natural Fibers. It occupies 500 square feet of floor space and can process between 20-65 pounds of fiber per hour.
USDA Rural Development staff joined members of NFP cooperative from across the country for a grand opening and ribbon cutting celebration on Sept. 17, 2015.
A large crowd turned out to celebrate this monumental 2-day event because of its significance in creating more textile jobs in the United States. NFP President Brian Willsey said this machine greatly improves fibers for use in luxury textiles and reinforces the growth of “Made in America” and “Buy Local” campaigns.
Bison hair after processing through the dehairing machine (l) and the raw bison hair (r).
Bison hair after processing through the dehairing machine (l) and the raw bison hair (r).
For more than three decades, luxury fiber producers lacked access to the dehairing process, which meant they, along with U.S. textile manufacturers, had to outsource their processing overseas.
With the purchase of this equipment, producers will save time and money by shipping raw fiber to the Kentucky plant and having it processed into soft, usable fiber.
    

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Tarrant County Men Sentenced for Running $2.4 Million Ponzi Scheme

FBI Dallas Division Press Release:


Tarrant County Men Sentenced for Running $2.4 Million Ponzi Scheme

U.S. Attorney’s OfficeOctober 26, 2015
  • Northern District of Texas(214) 659-8600
FORT WORTH, TX—Two Tarrant County men were sentenced to lengthy federal prison sentences following their guilty pleas earlier this year to a conspiracy charge stemming from their operation of an investment Ponzi scheme they ran from 2004 through 2014, announced U.S. Attorney John Parker of the Northern District of Texas.
Kurtis Keith Lowe, 63, of Fort Worth, Texas, and Robert Allen Blackburn, 49, of Arlington, Texas, were each sentenced on Friday, by U.S. District Judge John McBryde, to 60 months in federal prison and ordered to pay $2,373, 462 in restitution, jointly and severally. Each must surrender to the Bureau of Prisons on November 13, 2015.
Both Lowe and Blackburn pleaded guilty in July 2015 to one count of conspiracy to commit mail fraud.
According to documents filed in the case, in 2004, Blackburn, a licensed insurance agent, convinced a victim to invest money in Omni Capital Management Trust (OCMT), an entity created merely as a convenience for Lowe, OCMT’s sole owner. Blackburn knew OCMT was not a functioning company. Lowe deposited the investor’s check into OCMT’s business bank account and gave the proceeds to Blackburn. Lowe and Blackburn repeated this procedure several times.
By 2007, Blackburn was regularly recruiting individuals to invest in OCMT using materially false representations about OCMT. In particular, Blackburn falsely represented that victims’ funds would be invested in an annuity fund, when in fact, he knew the money would not be invested at all.
To entice investors to make multiple investments, Lowe and Blackburn created more bogus companies, including Amwest Capital Management (AMWEST) and National Fidelity Management (NFM). Lowe also opened accounts at an out-of-state mail service, and established separate telephone numbers for each company, to make investors believe the bogus companies were legitimate.
When investors requested account statements or tax forms, Blackburn would advise Lowe how much the investor had deposited, and Lowe would generate forms that falsely showed the investors’ money had been invested and had, in fact, appreciated.
Between January 2007 and April 2014, Blackburn solicited more than $2.4 million from 21 different investors using false material representations. None of the money was invested.
The FBI investigated the case.
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Operator of Multi-Million-Dollar Ponzi Scheme Sentenced to More Than Nine Years in Prison on Securities Fraud Charges

FBI Charlotte Division Press Release:


Operator of Multi-Million-Dollar Ponzi Scheme Sentenced to More Than Nine Years in Prison on Securities Fraud Charges

U.S. Attorney’s OfficeOctober 28, 2015
  • Western District of North Carolina(704) 344-6222
CHARLOTTE, NC—Daniel H. Williford, 57, of Fleetwood, N.C. was sentenced on Tuesday, October 27, 2015 to 110 months in prison for operating a Ponzi scheme that defrauded nearly 100 investors, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. In addition to the prison term, U.S. District Judge Max O. Cogburn, Jr. ordered Williford to serve three years of supervised release and to pay $17,915,013.35 as restitution.
U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina.
According to filed court documents and statements made in court, from January 2007 through July 2013, Williford operated a fraudulent investment scheme, through which he obtained more than $44 million from over 200 investors in Charlotte and elsewhere, causing nearly $18 million in losses to more than 100 investors by the time the scheme collapsed. Court records show that Williford lied to his victims, promising their money would be invested in wireless Internet equipment, Internet towers, and other facilities and companies. According to court records, rather than investing the victims’ money as promised, Williford used the majority of the funds to run a Ponzi-style scheme and used a portion to fund his personal lifestyle. Court records show that over course of the fraud, Williford invested only $7.7 million of the victims’ money and used approximately $32 million to pay some of his victims’ supposed “profits” on their investments and to cover personal expenses.
Court records also show that even after Williford ceased having any legitimate business operations, he continued to solicit money from investors for several years. One victim told the court yesterday evening that he was Williford’s co-pilot in a commercial airliner, and that Williford had literally defrauded him on the runway before takeoff. Other victims spoke about being unable to retire, declaring bankruptcy, losing children’s college savings, and one victim told the court he would have to sell his businesses, jeopardizing the jobs of over 50 employees as a result of the fraud. Williford pleaded guilty to securities fraud in July 2014.
Judge Cogburn said that Williford’s lengthy sentence was intended to “frighten those who will think about doing this, to make them think twice about stealing other people’s money” and to make such people realize “that going to prison for that long is not worth it.” Judge Cogburn also noted that the victims “will suffer a long time,” and pointed to the “callousness and huge period of time in which [Williford] took these people’s money” as a basis for the sentence.
The FBI investigated the case. Assistant U.S. Attorney Dan Ryan of the U.S. Attorney’s Office in Charlotte prosecuted the case.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established 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. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.”
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Rutherford Co. Man Sentenced to 57 Months in Prison on Securities Fraud Charges for Stealing More Than $2 Million from More Than 30 Investors

FBI Charlotte Division Press Release:


Rutherford Co. Man Sentenced to 57 Months in Prison on Securities Fraud Charges for Stealing More Than $2 Million from More Than 30 Investors

U.S. Attorney’s OfficeOctober 27, 2015
  • Western District of North Carolina(704) 344-6222
CHARLOTTE, NC—U.S. District Judge Max O. Cogburn, Jr. sentenced today Chuckie Beaver, 52, of Ellenboro, N.C. to 57 months in prison for defrauding more than 30 investors of over $2 million, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Judge Cogburn also ordered Beaver to serve three years under court supervision after he is released from prison.
Matthew Quinn, Assistant Special Agent in Charge of the United States Secret Service, Charlotte Field Division and Thomas L. Noyes, Inspector in Charge of the Charlotte Division of the U.S. Postal Inspection Service (USPIS) join U.S. Attorney Rose in making today’s announcement.
According to information contained in court documents and today’s sentencing hearing, Beaver was the sole owner of “Best Services, Inc.,” (Best Services), a company specializing in the repair of industrial electronic equipment. Court records show that from June 2012 to April 2014, Beaver induced over 30 victims, including friends, neighbors, and fellow church members, to invest in his fraudulent scheme, falsely claiming that his company needed additional capital to purchase materials to complete a large number of outstanding repair orders from major corporations. To further the scheme, Beaver created and showed his investors fake documents, including bogus repair orders indicating significant work activity, fake customer checks, and fake customer e-mails, giving a false impression he had strong relationships with major corporations.
Court records show that Beaver often gave his victims post-dated checks at the time of their initial investment, written for the full amount of the promised investment plus as much as 100% interest. According to court records, when the investors’ checks were returned by the bank for insufficient funds, Beaver made up a number of excuses to his victims, and, in some instances, he induced the victims to invest additional funds with the promise of even greater returns. Beaver previously admitted in court that contrary to what he promised his investors, he used their money to pay for personal expenses and to make payments to earlier investors, commonly referred to as Ponzi payments. In total, over the course of the scheme, Beaver defrauded more than 30 individuals from Mecklenburg, Gaston, Cleveland and Lincoln counties of more than $2 million. Beaver pleaded guilty to securities fraud in November 2014.
In announcing Beaver’s sentence, Judge Cogburn said that, “Everybody needs to watch out for this defendant” and stated that he did not trust anything the defendant said. “It is obvious he is a con man,” Judge Cogburn noted, adding, “Once a con man always a con man.”
Beaver is currently in federal custody and will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
The investigation was handled by the Secret Service and USPIS. Assistant United States Attorney Kevin Zolot, of the U.S. Attorney’s Office in Charlotte prosecuted the case.
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Former Niagara Falls Businessman Pleads Guilty to Bank Fraud

From FBI Buffalo Division Press Release:


Former Niagara Falls Businessman Pleads Guilty to Bank Fraud

U.S. Attorney’s OfficeOctober 28, 2015
  • Western District of New York(716) 843-5700
BUFFALO, NY—U.S. Attorney William J. Hochul Jr. announced today that Timothy DePetris, 46, of Niagara Falls, NY, pleaded guilty to bank fraud before Senior U.S. District Judge William M. Skretny. The charge carries a maximum penalty of 30 years in prison and a $1,000,000 fine.
Assistant U.S. Attorney MaryEllen Kresse, who is handling the case, stated that the defendant, as owner of Electro-Dyn Choke Corporation in Niagara Falls, caused payroll checks to be issued to him and another individual and negotiated the payroll checks even though he knew there were insufficient funds in corporation’s account at M&T Bank to cover the checks. As a result of the defendant’s conduct, M&T Bank suffered a loss of approximately $177,500.
The plea is the culmination of an investigation by Special Agents of the Federal Bureau of Investigation, under the direction of Special Agent in Charge Adam S. Cohen.
Sentencing is scheduled for March 10, 2016 at 11:00 a.m. before Judge Skretny.
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Warmer Chilcott Agrees to Plead Guilty in Health Care Fraud Scheme and to Pay $125 Million

FBI Boston Division Press Release:


Warmer Chilcott Agrees to Plead Guilty in Health Care Fraud Scheme and to Pay $125 Million
Former President Arrested in Boston

U.S. Attorney’s OfficeOctober 29, 2015
  • District of Massachusetts(617) 748-3100
BOSTON—Pharmaceutical company Warner Chilcott has agreed to plead guilty to health care fraud and pay $125 million to resolve criminal and civil liability arising from the illegal promotion of the drugs Actonel®, Asacol®, Atelvia®, Doryx®, Enablex®, Estrace®, and Loestrin®, and various formulations of these drugs.
In a related development, former Warner Chilcott President W. Carl Reichel was arrested this morning in Boston for conspiring to pay kickbacks to physicians. Reichel will make an initial appearance in U.S. District Court in Boston today at 2:30 p.m.
In addition, in recent weeks, three former Warner Chilcott district managers pleaded guilty or agreed to plead guilty to conspiracy to commit health care fraud and criminal HIPAA violations, and a Springfield, Mass. physician was indicted for taking kickbacks, criminal HIPAA violations and obstruction of justice.
“Doctors’ medical judgment should be based on what is best for the patient, and not clouded by expensive meals and other pharmaceutical company kickbacks,” said United States Attorney Carmen M. Ortiz. “Pharmaceutical company executives and employees should not be involved with treatment decisions or submissions to a patient’s insurance company. Today’s enforcement actions demonstrate that the government will seek not only to hold companies accountable, but will identify and charge corporate officials responsible for the fraud.”
“The Justice Department is committed to protecting the integrity of physician prescribing decisions and ensuring that financial arrangements in the healthcare marketplace comply with the law,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department will continue to hold companies and responsible individuals accountable when they use improper incentives, like those alleged here, to promote their products.”
“Pharmaceutical companies and their employees have a significant responsibility to sell and market drugs in an ethical and legal manner,” said Special Agent in Charge Harold H. Shaw of the FBI’s Boston Field Office. “This settlement and the related indictments reflect the commitment of the FBI and our government partners to aggressively investigate companies and individuals who fail that responsibility and seek to profit from fraudulent activities.”
“Placing financial gain above the legitimate needs of patients is deplorable,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services. “Paying kickbacks and even providing instructions on how to defraud Medicare are practices that will not be tolerated.”
“These types of health care fraud investigations have great impact on VA operations because the settlement will return funds to VA for the continued care of our nation’s Veterans,” said Jeffrey G. Hughes, Special Agent in Charge, Department of Veterans Affairs, Office of Inspector General. “The VA OIG will continue to work with its law enforcement partners and the Boston U.S. Attorney’s Office to combat fraud in the health care arena.”
The Warner Chilcott Resolution
In a criminal Information filed today in U.S. District Court in Boston, the government charged that, between 2009 and 2013, Warner Chilcott employees, at the direction of members of the company’s management team, paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs. The Information alleges that Warner Chilcott employees provided payments, meals, and other remuneration associated with so-called “Medical Education Events.” These events, which were often held at expensive restaurants, frequently contained minimal or no educational component, and were instead used to pay prescribing physicians in an attempt to gain a competitive advantage over other pharmaceutical companies.
The Information also alleges that, from 2011 to 2013, Warner Chilcott employees submitted false, inaccurate, or misleading prior authorization requests to federal health care programs for the osteoporosis medications Atelvia® and Actonel®. A prior authorization request contains protected health information, including biographical data and information concerning a patient’s medical condition. The fraudulent requests were provided to certain insurance companies in order to overcome restrictions that favored less expensive osteoporosis drugs. In some instances, Warner Chilcott sales representatives submitted these prior authorizations directly to insurance companies, holding themselves out to be physicians.
In addition, the Information alleges that Warner Chilcott employees were instructed by members of the company’s management team to make unsubstantiated superiority claims when marketing the drug Actonel® even though the claim was not supported by clinical evidence. The management team instructed the sales representatives to tell physicians that Actonel® was superior to other bisphosphonates due to its supposedly unique “mechanism of action.”
Under the terms of the criminal plea agreement, Warner Chilcott will pay a fine of $22,940,000. Warner Chilcott also entered into a civil settlement agreement under which it agreed to pay $102,060,000 to the federal government and the states to resolve false claims it submitted to government health care programs. The federal share of the civil settlement is approximately $91.5 million, and the state Medicaid share of the civil settlement is approximately $10.6 million. The civil settlement was brought under the whistleblower provisions of the False Claims Act and the whistleblowers will receive approximately $22.9 million from the federal share of the civil recovery.
The civil case was investigated by the FDA’s Office of Chief Counsel, HHS Office of Counsel to the Inspector General, and the National Association of Medicaid Fraud Control Units. The civil settlement was handled by Assistant U.S. Attorneys Sonya Rao and Susan Poswistilo of Ortiz’s Civil Division and Trial Counsel Colin Huntley of the Commercial Litigation Branch of the Justice Department’s Civil Division.
The criminal case was investigated by the FBI, HHS-OIG, the Department of Defense’s Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, the Department of Veterans Affairs and the Office of Personnel Management’s Office of Inspector General. The criminal case of the company was handled by Assistant U.S. Attorneys David Schumacher and Miranda Hooker of Ortiz’s Health Care Fraud Unit and AUSAs Rao and Poswistilo. The criminal cases of individuals are being prosecuted by AUSAs Schumacher and Hooker of Ortiz’s Health Care Fraud Unit.
Carl Reichel Indictment
The former President of Warner Chilcott, W. Carl Reichel, 57, of Chester, N.J., was indicted on one count of conspiracy to pay kickbacks. Reichel was arrested today in Boston and will make an appearance before U.S. District Court Chief Magistrate Judge Jennifer Boal at 2:30 p.m.
The indictment alleges that, between 2009 and 2012, Reichel, designed a sales and marketing strategy to provide physicians payment and other benefits, including free dinners and bogus “speaker” fees, in return for prescriptions of Warner Chilcott drugs. Reichel provided the sales force with virtually unlimited expense accounts to wine and dine physicians and other health care practitioners. These so-called “medical education programs,” in fact, contained little, if any, medical education, and a primary purpose of the program was to obtain prescriptions from the physicians.
Reichel also allegedly designed the strategy of signing up physicians who prescribed a high volume of their drugs as paid “speakers” for Warner Chilcott. According to the indictment, the “speakers” often did not speak at all, and instead enjoyed an expensive dinner with a sales representative. Reichel instructed the sales force that they should only continue to use the “speakers” if they were prescribing Warner Chilcott drugs at a high level, and that they should communicate to the “speaker” that he or she would not be used—paid—at subsequent events until their Warner Chilcott prescriptions increased.
The charging statute provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The District Manager Pleas 1. Timothy Garcia
Timothy Garcia, 35, of Los Gatos, Calif., pleaded guilty on Oct. 16, 2015, to one count of conspiracy to commit health care fraud. U.S. District Court Chief Judge Patti B. Saris scheduled sentencing for April 14, 2016.
From 2008 to 2011, Garcia worked for Warner Chilcott and served as a district manager in the company’s osteoporosis division in 2011, managing approximately 12 sales representatives in the San Francisco Bay area. The same year, Warner Chilcott launched Atelvia®, an osteoporosis drug, which many insurance companies around the country did not cover primarily because a generic alternative was available. Many of these insurance companies would only pay for Atelvia® if a physician submitted a prior authorization but were often hesitant to do so. Recognizing this, Garcia aggressively pushed his sales representatives to manipulate Atelvia® prior authorizations. Garcia instructed his sales representatives that, if the physicians or staff were unwilling to prepare Atelvia® prior authorizations, the sales representatives should fill them out themselves. Futhermore, Garcia stressed the importance of concealing the misconduct of his sales representatives.
In 2011, Garcia received a bonus of more than $60,000, and was promoted to senior district manager in Warner Chilcott’s most prestigious sales division. As a result of the scheme, insurance companies, including Medicare, paid Warner Chilcott at least $100,000 for Atelvia® based on prior authorizations that were manipulated by Garcia’s sales representatives.
The charging statute provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or loss resulting from the offense, and exclusion from the Medicare program. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
2. Landon Eckles
Landon Eckles, 30, of Huntersville, N.C., was charged in an Information on Oct. 16, 2015, with one count of wrongful disclosure of protected health information, in violation of the criminal provisions of the Health Insurance Portability and Accountability Act (HIPAA). A plea hearing is scheduled for Nov. 12, 2015, before U.S. District Court Judge George A. O’Toole, Jr.
According to the Information, from 2007 to 2012, Eckles worked for Warner Chilcott and served as a district manager in the company’s osteoporosis division in a mid-Atlantic district. Atelvia® had poor insurance coverage in Eckles’s district when it was launched in 2011, and many insurance companies required a prior authorization before covering Atelvia®. Eckles allegedly directed certain sales representatives that, if physicians refused to fill out Atelvia® prior authorizations, the sales representatives should fill them out themselves. By doing so, Eckles and his sales representatives accessed patients’ protected health information.
In addition, following directions from his supervisors, Eckles allegedly encouraged his sales representatives to ensure that patient medical charts in physicians’ offices were “flagged” with Atelvia® brochures, so that physicians would be reminded to prescribe Atelvia® for the patients. According to the Information, Eckles and a sales representative accessed a number of patients’ medical charts and placed Atelvia® brochures in the charts in a Philadelphia physician’s office. Eckles bragged about this tactic, stating, “I guarantee you that this is going to drive business,” and encouraged his sales representatives to follow suit. In part, as a result of his scheme, Eckles received a bonus of approximately $60,000 in 2011.
The charging statute provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000, forfeiture, and exclusion from the Medicare program. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
3. Jeff Podolsky
Jeff Podolsky, 49, of East Meadow, N.Y., pleaded guilty on July 7, 2015, to one count of conspiracy to commit health care fraud. U.S. District Court Chief Judge Patti B. Saris scheduled sentencing for April 8, 2016.
From 2009 to 2013, Podolsky worked for Warner Chilcott. He served as a district manager in New York City and Long Island in 2010 and 2011, during which time Atelvia®, as well as its predecessor drug, Actonel®, had poor insurance coverage. Podolsky directed the sales representatives in his district to fill out prior authorizations for physicians who prescribed Actonel® and Atelvia®, using false clinical justifications as to why the patient needed the drugs and submitted them to health insurance companies.
As a result of the scheme, Podolsky’s district was the top-grossing district in Warner Chilcott’s osteoporosis division. In 2011, Podolsky received a bonus of more than $100,000, and was promoted to senior district manager in a more prestigious sales division. Insurance companies and Medicare paid at least $200,000 for Actonel® and Atelvia® prescriptions that were based on prior authorizations that were manipulated by Podolsky’s sales representatives.
The charging statute provides a sentence of no greater than 10 years in prison, three years of supervised release and a fine of $250,000, or twice the gross gain or loss resulting from the offense, forfeiture and exclusion from the Medicare program. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Rita Luthra Indictment
Rita Luthra, M.D., 64, of Longmeadow, Mass., was indicted on Oct. 21, 2015 with one count of accepting kickbacks, one count of wrongful disclosure of protected health information, and one count of obstructing a criminal investigation.
From October 2010 to November 2011, Warner Chilcott paid Luthra $23,500 to prescribe its osteoporosis drugs, Actonel® and Atelvia®. On at least 31 occasions during that period, a Warner Chilcott sales representative brought food into Luthra’s medical office for Luthra and her staff and paid Luthra $750 to talk with her for 25-30 minutes while she ate. It is alleged that Luthra’s prescriptions of Actonel® and Atelvia® increased during the time that she was paid by Warner Chilcott and precipitously declined once she stopped being paid. Luthra also allowed a Warner Chilcott sales representative to access protected health information in her patient’s medical files in order to submit prior authorizations for Atelvia®. Finally, Luthra allegedly lied to federal agents when interviewed about her relationship with Warner Chilcott, and allegedly directed one of her employees to do the same.
The charge of violating the Anti-Kickback Statute provides a sentence of no greater than five years in prison, three years of supervised release, a fine of $25,000, forfeiture and exclusion from the Medicare program. The charge of disclosure of individually identifiable health information provides a sentence of no greater than one year in prison and/or a fine of $50,000, one year of supervised release and exclusion from the Medicare program. The charge of obstructing a criminal health care investigation provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
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