Department of Justice

U.S. Attorney’s Office

Western District of Wisconsin

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Former Village Clerk Sentenced for Stealing Over $22,000 From Bank of Alma

MADISON, WIS. -- John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that Penny M. Mau, 54, Nelson, Wis., was sentenced today by U.S. District Judge William M. Conley to one year of supervised release for stealing money belonging to the Village of Nelson while that money was in the care of the Bank of Alma.  Mau pleaded guilty to this charge on June 23, 2016. 

Judge Conley also ordered Mau to pay $11,740 in restitution, and a $5,000 fine.  Mau paid back approximately $12,000 to the bank before her scheme was detected, and another $10,000 after she was confronted by the bank.  Mau owes the additional $1,600 to the bank to cover the cost of their internal investigation. 

The investigation established that between January 2011 and January 2014, Mau stole $22,141 from a Village of Nelson account at the Bank of Alma.  Mau’s scheme went undetected for three years because she would return the money she stole by the end of each month, so the shortage would not appear on the monthly statements.  During the course of the scheme, she was the clerk for the Village of Nelson and an employee of the Bank of Alma, giving her ability to handle the money in a way that avoided detection.

When initially confronted by the bank, there was a $10,000 shortage in a Village of Nelson account, money that had been deposited instead into Mau’s personal account.  Mau initially attributed the losses to accounting errors, but eventually pleaded guilty to taking the money. 

However, following her guilty plea in federal court, Mau submitted a resignation letter to the Village of Nelson indicating that she was not guilty of the offense.  Mau retracted those statements at her sentencing hearing today and apologized to both the Village of Nelson and the Bank of Alma.

In sentencing Mau, Judge Conley indicated that she violated the trust of both the village and the bank in a fairly sophisticated way, and that one of the reasons she was prosecuted for a federal felony was the lies she told early in the investigation.  In response to her continued lies in her letter of resignation to the village following her plea hearing, Judge Conley observed that to the extent Mau paints herself as a victim, she is doing herself, her family, and her community a disservice, and stated “you can’t move on until you own it.”  Judge Conley further noted that while Mau has some good qualities, she has a serious problem with confronting truth.

The charge against Mau was the result of an investigation conducted by the Federal Bureau of Investigation in La Crosse.  The prosecution of the case has been handled by Assistant U.S. Attorney Laura Przybylinski Finn. 

Department of Justice

U.S. Attorney’s Office

Eastern District of California

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Final Defendant Sentenced to 14 Years in Prison for Nationwide Foreclosure Rescue Scam

Over $90 Million in Fraudulent Loans and Hundreds of Homes Stolen from Homeowners

SACRAMENTO, Calif. — On Wednesday, September 14, 2016, Domonic McCarns, 41, of Irvine, was sentenced to 14 years in prison by U.S. District Judge Kimberly J. Mueller for conspiracy to commit mail fraud for his participation in a nationwide foreclosure-rescue scam, Acting U.S. Attorney Phillip A. Talbert announced.

McCarns is the final defendant to be sentenced for a pair of schemes that lured homeowners with the promise to help them avoid foreclosure and repair their credit. Two indictments were brought in 2008. Four defendants were convicted after two jury trials, 13 defendants pleaded guilty, and now, all 17 defendants have been sentenced. On September 9, 2013, Charles Head was sentenced to 35 years in prison, and on October 29, 2014, his brother and fellow leader in the scheme Jeremy Michael Head was sentenced to 10 years in prison.

Acting U.S. Attorney Talbert said: ‘This scheme purposely targeted the financially vulnerable during their time of greatest distress with promises of help. The defendants tricked the victims into handing over their most valuable assets, their homes. Few economic crimes are more reprehensible. This final sentence in this case will bring some measure of justice for their victims.”

“In large fraud schemes like the one devised by Charles Head, we can’t forget about the individual homeowners who comprised the millions of dollars in losses,” said Monica M. Miller, Special Agent in Charge of the Sacramento division of the FBI. “Today’s sentencing ends an investigation that has been ongoing for more than 10 years and brings some closure to the innocent people who were victimized by Head’s callous scheme.”

“Dominic McCarns and his co-conspirators assured innocent homeowners across the country facing foreclosure that they could turnaround their misfortunes and keep their homes,” said Michael T. Batdorf, Special Agent in Charge, IRS-Criminal Investigation. “However the defendants had other plans which resulted in one of the most harmful mortgage fraud schemes in the country. The sentence handed down today by the court is befitting of this defendant and his actions.”

According to court documents, the defendants solicited homeowners facing foreclosure, and through misrepresentations, fraud, and forgery, substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge. These straw buyers were often friends and family members of the defendants, or were solicited on the internet. Once the straw buyers were on title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes. The defendants then shared the proceeds of the ill-gotten equity and the “rent” that the victim homeowners paid them. Ultimately, the victim homeowners were left with no home, no equity, and with damaged credit ratings.

Initially, the scam focused on distressed homeowners in California before expanding throughout the United States. In the course of the schemes, between January 2004 and June 2006, the defendants obtained over $90 million in fraudulent loans, caused estimated losses of over $50 million, and stole title to over 300 homes.

On December 2, 2013, McCarns was convicted after a five-week trial along with Charles Head, 36, of Pittsburgh, Pennsylvania, (formerly of Los Angeles); and Benjamin Budoff, 46, of Colorado Springs, Colorado. Head had been previously convicted in a trial in a nearly four-week trial in May 2013 with his brother Jeremy Michael Head, 34, of Huntington Beach.

This case was the product of an investigation by the Internal Revenue Service, Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorneys Michael D. Anderson and Matthew Morris prosecuted the case.

Fourteen other defendants have been sentenced:

Elham Assadi, 39, of Irvine, sentenced to 5 years’ probation with 6 months of home detention;

Leonard Bernot, 50, of Laguna Hills, sentenced to 18 months in prison;

Akemi Bottari, 36, of Los Angeles, sentenced to 3 years’ probation with 6 months of home detention;

Keith Brotemarkle, 51, of Johnstown, Penn., sentenced to 5 years, 10 months in prison;

Benjamin Budoff, 49, Colorado Springs, Colo. sentenced to 4 years in prison;

Joshua Coffman, 37, of North Hollywood, sentenced to 20 months in prison;

John Corcoran, 61, of Anaheim, sentenced to 4.5 years in prison;

Sarah Mattson, 33, of Phoenix, Ariz., sentenced to 3 years’ probation with 3 months of home detention;

Omar Sandoval, 36, of Rancho Cucamonga, sentenced to 4 years and 10 months in prison;

Xochitl Sandoval, 37, of Rancho Cucamonga, sentenced to 8 months in prison;

Lisa Vang, 31, of Westminster, sentenced to 3 years’ probation;

Andrew Vu, 38, of Santa Ana, sentenced to 6 months in prison with 6 months of home detention;

Justin Wiley, 37, of Irvine, sentenced to 18 months in prison, and

Kou Yang, 40, of Corona, sentenced to 4 years in prison.

This case was part of 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. For more information on the task force, please visit www.StopFraud.gov.

Department of Justice

U.S. Attorney’s Office

Eastern District of Texas

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Texas Doctor Resentenced to Prison Following Appeal

TYLER, Texas – A 65-year-old Dallas County, Texas, physician, has been resentenced to federal prison for health care fraud and identity theft violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales. 

In July 2014, Tariq Mahmood, of Cedar Hill, Texas, was found guilty by a jury of conspiracy to commit health care fraud, seven counts of health care fraud, and seven counts of aggravated identity theft following a four-day trial before U.S. District Judge Michael Schneider.  Mahmood had been indicted by a federal grand jury on April 11, 2013.

According to information presented in court, Mahmood, a general practitioner, owned and operated several hospitals in the state of Texas, including Cozby Germany Hospital in Grand Saline, Renaissance Terrell Hospital in Terrell, Central Texas Hospital in Cameron, Community General Hospital in Dilley, and Lake Whitney Medical Center in Whitney.  From January 2010 to April 2013, Mahmood and others carried out a scheme to defraud Medicare and Medicaid through the submission of false and fraudulent claims.  Mahmood and others added, changed, and incorrectly sequenced diagnostic codes in a way that did not reflect the actual diagnoses and conditions of the patients and often did so without reviewing the medical records.  They submitted false and fraudulent claims to Medicare and Medicaid based on the added, changed, and incorrectly sequenced diagnostic codes.  Mahmood and others also unlawfully used Medicare beneficiaries’ names and Medicare numbers in order to commit health care fraud. 

Following his appeal, Mahmood was resentenced to 135 months in federal prison and ordered to pay restitution in the amount of $145,358.23 to Medicare, Medicaid, and Blue Cross Blue Shield of Texas.

The case was investigated by the Texas Office of the Attorney General – Medicaid Fraud Control Unit (OAG-MFCU), the U.S. Department of Health and Human Services – Office of the Inspector General (HHS-OIG), the Federal Bureau of Investigation (FBI), and the U.S. Postal Inspection Service (USPIS).  This case was prosecuted by Assistant U.S. Attorneys Nathaniel C. Kummerfeld and Frank Coan and Special Assistant U.S. Attorney Ken McGurk.

Any individuals with knowledge of these or other health care fraud violations are encouraged to contact the Department of Health and Human Services’ fraud hotline at 1-800-HHS-TIPS (447-8477)

Department of Justice

U.S. Attorney’s Office

Southern District of Texas

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Accountant Convicted of Embezzling More than $3 Million from Houston Company

HOUSTON – An accountant from Georgia has admitted he committed wire fraud and stole more than $3 million from Houston company Airis International Holdings, announced U.S. Attorney Kenneth Magidson.

Daniel Nathan West, 50, of Duluth, Georgia, was previously employed as the treasurer and chief financial officer for Airis International Holdings. In this role, he was to manage Airis finances during construction projects, control the company’s monetary assets, administer payments and payroll, among other things.

In 2005, West resigned from Airis to start his accounting firm - Westtree Financial.  Shortly thereafter, Airis contracted with Westtree Financial to provide accounting services to Airis. Although West no longer worked directly for Airis, through his company he continued to have signature authority on Airis’ bank accounts and authority to transfer funds on behalf of Airis. 

From 2005 to 2012, West embezzled $3,616,563.45 from Airis, admitting he used the monies to purchase a luxury home in Georgia, a beach house in Florida, an office building in Georgia and luxury vehicles.

U.S. District Judge Kenneth Hoyt accepted the plea and set sentencing for Dec. 5, 2016. At that time, he faces up to 20 years in prison. He was permitted to remain on bond pending that hearing.

The FBI conducted the investigation. Assistant U.S. Attorney Vernon Lewis is prosecuting the case.

Department of Justice

U.S. Attorney’s Office

Southern District of Mississippi

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Jackson Man to Pay $5.4 Million in Restitution to Bankruptcy Estate

Jackson, Miss - William David Dickson, aka "Butch" Dickson, 60, of Jackson, was ordered by U.S. District Court Judge Tom S. Lee to pay restitution to the bankruptcy estate of Community Home Financial Services, Inc., in the amount of $5,442,004.58, announced U.S. Attorney Gregory K. Davis, Acting U.S. Trustee Henry G. Hobbs, Jr. of Region 5, FBI Special Agent in Charge Donald Alway and U.S. Marshal George White.

In December, 2015, Dickson was sentenced to 57 months in federal prison followed by three years of supervised release for the fraudulent receipt of over $9 million and concealment of bank accounts containing funds belonging to the bankruptcy estate of Community Home Financial Services, Inc. Total losses to the bankruptcy estate were determined to be in excess of $12 million as a result of Dickson’s criminal conduct. The government has already recovered a portion of these losses through asset forfeiture of funds and other property. Efforts to recover additional funds and property remain ongoing.

William David Dickson placed Community Home Financial Services, Inc. in bankruptcy on May 23, 2012, in the Southern District of Mississippi. Dickson devised a scheme and artifice to defraud the bankruptcy court and the Chapter 11 Trustee by fraudulently causing funds of the debtor’s bankruptcy estate to be transferred to multiple accounts outside of the United States, including accounts in Panama and Costa Rica, that were controlled by Dickson. Dickson was expelled by authorities from Panama, and he was arrested by the FBI when he arrived at Miami International Airport in Florida on March 14, 2014.

The Chapter 11 Trustee, Kristina M. Johnson, along with the U.S. Trustee’s Jackson, Mississippi office referred this matter to the U.S. Attorney’s office. The investigation was conducted by the FBI, with assistance from the Chapter 11 Trustee and the United States Marshals Service. The case was handled by Assistant United States Attorney Dave Fulcher and Special Assistant United States Attorney Sammye S. Tharpe.

Department of Justice

U.S. Attorney’s Office

Southern District of Texas

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Two Doctors from Mexican Clinic Sentenced in Scheme to Commit Wire Fraud

McALLEN, Texas ‐ Two physicians from a family medicine clinic in Mexico have been ordered to prison for their role in a scheme to submit false and fraudulent insurance claims, announced U.S. Attorney Kenneth Magidson.

Dr. Mayolo Melchor, 59, and Dr. Bertha Hernandez-Melchor, 61, both of Reynosa, Tamaulipas, Mexico, pleaded guilty June 1, 2016, to conspiring with policyholders of the American Family Life Assurance Company (AFLAC) to fax fraudulent claim forms and accident reports to AFLAC for accidents and injuries that never occurred.

Today, U.S. District Judge Micaela Alvarez handed both Melchor and Herndandez-Melchor sentences of 34 months in federal prison. They were further ordered to pay $2,585,219.50 in restitution. In handing down the sentences, Judge Alvarez noted the large number of fraudulent claims submitted and the time period involved in the conspiracy. Both are expected to face deportation proceedings following release from federal prison.

The defendants admitted AFLAC policyholders paid them to prepare and sign fictitious reports for accidents and injuries that never occurred. AFLAC policyholders filled out the fictitious claim forms in the McAllen area and delivered them to the defendants’ family medicine clinic in Mexico where Melchor and Hernandez-Melchor prepared and signed corresponding accident reports for each fake accident and injury. The policyholders then faxed the fictitious claim and accident forms to AFLAC headquarters in Columbus, Georgia. 

The defendants admitted the fraudulent claim forms and accident reports that were faxed to AFLAC from September 2001 to August 2010 resulted in the disbursement of approximately $2,585,219.50 in fraudulent benefit checks to the policyholders.

Both will remain in custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

The FBI investigated. Assistant U.S. Attorneys Michael Day and Tina Ansari are prosecuting the case.

Department of Justice

U.S. Attorney’s Office

Northern District of California

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FOR IMMEDIATE RELEASE

Thursday, September 15, 2016

Former Securities Lawyer Pleads Guilty To Securites Fraud

Disbarred Marin attorney admits he defrauded investors of more than $2.5 million

SAN JOSE – James Seltzer, a former attorney and resident of Marin County, pleaded guilty to securities fraud, announced United States Attorney Brian Stretch, FBI Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The guilty plea was accepted yesterday by U.S. District Judge Lucy H. Koh.

According to the plea agreement, beginning no later than October of 2007 through at least May of 2011, Seltzer, 67, formerly of Belvedere, defrauded and deceived multiple individuals in connection with the purchase and sale of securities.  Seltzer admitted he misrepresented to the investors that he would use their money to make certain investments for their exclusive benefit but instead diverted the funds to other uses.  Seltzer acknowledged that in many cases, he diverted all or virtually all of the monies he had obtained from his investors and spent the monies on his own personal and business expenses after depositing the funds into his own personal bank accounts.  Seltzer further admitted that he had more than ten victims resulting in losses of more than $2,500,000.

Seltzer was indicted by a federal grand jury on June 18, 2015.  He was charged with five counts of securities fraud, in violation of 15 U.S.C. § 78; one count of mail fraud, in violation of 18 U.S.C. § 1341; and three counts of money laundering, in violation of 18 U.S.C. § 1957. Pursuant to the plea agreement, Seltzer admitted his guilt to one count of securities fraud and the remaining counts were dismissed.  After being apprehended in Hawaii in September 2015, Seltzer was ordered to appear in San Jose to face the charges presented in the indictment. 

The maximum term of imprisonment for securities fraud is 20 years.  Additional periods of supervised release, fines, and special assessments also could be imposed.    Any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  Seltzer remains free on a bond and is scheduled to appear before Judge Koh on February 15, 2017, for sentencing.  

Assistant U.S. Attorneys Timothy Lucey and Arvon Perteet are prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation.

Department of Justice

U.S. Attorney’s Office

District of Maine

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

New Hampshire Man Sentenced to 15 Years for Armed Bank Robberies

Contact: Michael J. Conley
Assistant United States Attorney
Tel: (207) 780-3257

Portland, Maine:  United States Attorney Thomas E. Delahanty II announced that Joseph Richards, 47, of Manchester, New Hampshire, was sentenced today in U.S. District Court by Chief Judge Nancy Torresen to 15 years in prison and five years of supervised release for armed bank robbery.  The charges arose from the August 3, 2015 armed bank robbery of Norway Savings Bank (NSB) in Freeport, Maine; the August 14, 2015 armed bank robbery of Franklin Savings Bank (FSB) in Franklin, New Hampshire; the September 4, 2015 armed bank robbery of University Credit Union (UCU) in Portland; and the September 12, 2015 armed bank robbery of TD Bank (TDB) in Lewiston, Maine.

According to court records, the defendant used a pellet gun in each robbery and absconded with $5,854 from NSB, $13,240 from FSB, $12,308 from UCU and $9,888 from TDB.  At the time of the robberies, the defendant was on federal supervised release for a 2003 federal bank robbery conviction in New Hampshire, for which he received a 12½ year sentence.

On July 28, 2016, one of Richards’ co-conspirators, Neil West, Sr., of Portland, Maine, was found guilty following a jury trial in U.S. District Court of armed bank robbery and conspiracy to commit bank robbery arising out of the UCU and TDB robberies.  West served as the getaway driver for both robberies.  The TD Bank robbery resulted in a high-speed chase which culminated in Saco.  Following the chase, West and Richards were arrested. 

Before imposing sentence, Chief Judge Torresen stated the seriousness of these offenses is impossible to overstate.  People’s lives were put at risk.  The emotional harm that the tellers suffered will last a lifetime. 

The joint investigation was conducted by the Franklin (New Hampshire), Manchester (New Hampshire), Freeport, Portland, Lewiston, Old Orchard Beach and Saco (Maine) Police Departments; the Maine State Police; and the Southern Maine Gang Task Force comprised of agents and officers from the Federal Bureau of Investigation; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Drug Enforcement Administration; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the Portland, South Portland, Lewiston and Biddeford Police Departments.

Department of Justice

U.S. Attorney’s Office

Southern District of Mississippi

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

Terry Resident Pleads Guilty to Bankruptcy Fraud

Jackson, Miss - Kenneth Bowman, Jr., 63, of Terry, Mississippi, pled guilty on September 13, 2016, before U.S. District Judge Tom S. Lee, to one count of bankruptcy fraud, announced U. S. Attorney Gregory K. Davis, Acting U. S. Trustee Henry G. Hobbs, Jr. of Region 5, and FBI Special Agent in Charge Donald Alway.

Bowman, as the officer and representative of Piggly Wiggly of Crystal Springs, Inc., a debtor in Chapter 11 bankruptcy in the Southern District of Mississippi, embezzled approximately $101,733.55 from the bankruptcy estate. Bowman appropriated to his own use estate funds belonging to the debtor, specifically making checks payable to cash and using the cash to satisfy his personal debts, and reducing assets available to creditors.

Bowman will be sentenced on December 15, 2016 at 9:00 a.m. by U.S. District Judge Tom S. Lee and faces a maximum penalty of five years in prison and a $250,000 fine.

The Office of the U. S. Trustee and the U.S. Bankruptcy Court for the Southern District of Mississippi referred the matter to the U. S. Attorney for prosecution. The case was investigated by the FBI and the U.S. Trustee. It was prosecuted by Assistant U.S. Attorney Mary Helen Wall and Trial Attorney Sammye S. Tharp with the Office of the U.S. Trustee.

Department of Justice

U.S. Attorney’s Office

Middle District of Florida

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

United States Settles False Claims Act Allegations Against Compound Pharmacy Owners For $7.75 Million

Jacksonville, FL – United States Attorney A. Lee Bentley, III announces today that Andy Miller, Tracy Miller, and the Healthmark Investment Trust have agreed to pay to the government $7.75 million to resolve allegations that they violated the False Claims Act.

The United States contends that QMedRx, a compound pharmacy in Maitland, Florida, knowingly billed federal healthcare programs for services that were not reimbursable.  Specifically, the government contends that from January 1, 2013, until January 22, 2014, QMedRx submitted to federal healthcare programs, compounded prescriptions that were tainted within the meaning of the Anti-Kickback Statute. Because Healthmark Investment Trust was a partial owner of QMedRx, the government sought penalties and fines from the owners who participated in the fraud. The government is still pursuing penalties and fines from other owners and participants within QMedRx. 

“The United States Attorney’s Office is committed to protecting TRICARE and other federal health care programs from fraud,” said U.S. Attorney Bentley.  “Those who violate the Anti-Kickback Statute to generate business will be held accountable.” 

This case was developed through an initiative to track and prosecute compound pharmacies that submitted millions of dollars in improper claims to the TRICARE program.  The government estimates that up to $2 billion of tainted and unnecessary compound prescriptions were submitted and paid by the government.  In the Middle District of Florida, the government has recovered almost $60 million in fines and penalties over the past 18 months. 

“We appreciate the support from the Department of Justice in protecting the TRICARE benefit from fraud and helping to ensure the benefit continues to exist for our service members, families, and retirees,” said Vice Admiral R. Bono, Director, Defense Health Agency.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $30.5 billion through False Claims Act cases, with more than $18.4 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was investigated by the Defense Criminal Investigative Service (DCIS) and the Federal Bureau of Investigation (FBI). It was prosecuted by Assistant United States Attorney Jason Mehta.

The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

Department of Justice

U.S. Attorney’s Office

District of New Jersey

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

Clerk Sentenced To 46 Months In Prison For Stealing Material Information From Prominent Law Firm For Use In $5.6 Million Insider Trading Scheme

TRENTON, N.J. - The former managing clerk for a prominent, international law firm was sentenced today to 46 months in prison for stealing sensitive, confidential information for use in a five-year insider trader scheme that yielded net profits of more than $5.6 million, U.S. Attorney Paul J. Fishman announced.

Steven Metro, 42, of Katonah, New York, previously pleaded guilty before U.S. District Judge Michael A. Shipp to the first two counts of an indictment charging him with securities fraud and conspiracy to commit securities and tender offer fraud. Judge Shipp imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

From 2009 to 2013, Metro stole material nonpublic information from his then-employer, Simpson Thacher & Bartlett LLP, one of the nation’s premier mergers and acquisitions firms. The information related to corporate transactions, such as mergers and acquisitions or tender offers, in which the firm represented a party or financial advisor to the transaction. As the firm’s managing clerk, Metro did not personally work on most of these transactions. Instead, Metro stole the inside information by scouring the firm’s computer system for client names and the keywords “merger agreement,” “bid letter,” “engagement letter,” and “due diligence.”

After obtaining the inside information, Metro would meet his friend, Frank Tamayo, 43, of Brooklyn, New York, at a bar, coffee shop, or other location near their respective workplaces in midtown Manhattan. During these meetings, Metro provided Tamayo material information pertaining to, among other things, the names and/or ticker symbols of the companies whose securities should be purchased. Tamayo would write the security’s ticker symbol on a small piece of paper or napkin and commit the rest of the inside information to memory.

Afterwards, Tamayo would meet Vladimir Eydelman, 44, formerly of Colts Neck, New Jersey, usually at a location near Eydelman’s workplace, such as at the large clock in New York City’s Grand Central Terminal. Tamayo would show Eydelman the paper or napkin with the ticker symbol of the company whose securities should be purchased. After Eydelman memorized the ticker symbol, Tamayo would place the paper or napkin into his mouth and chew it until it was destroyed.

After receiving the inside information provided by Metro, whom Eydelman knew as Tamayo’s “source,” Eydelman then purchased securities for himself, family members, friends, and/or clients, including Tamayo. Eydelman quickly sold the shares and covered any positions once the relevant deal was publicly announced and the stock price rose. 

Throughout the course of the approximately five-year scheme, Tamayo reinvested the approximately $7,000 in profits that Metro made on the first deal, and updated Metro on the running balance of his profits from the insider trading scheme. As of October 2013, by which time the conspirators had traded ahead of at least 13 planned corporate transactions, Metro’s share of the profits had reached approximately $168,000. Metro sought to “cash out” his share of the accrued profits from the insider trading scheme, pressing Tamayo to “liberate some cash” during a meeting in January 2014. Eydelman paid approximately $7,000 in cash to Tamayo in February 2014, with the expectation that Tamayo would use the cash to compensate his law firm source – i.e., Metro – for providing them the inside information.

By exploiting the information that Metro took from the firm, Metro, Tamayo and Eydelman netted more than $5.6 million in illicit profits over five years.

In addition to the prison term, Judge Shipp sentenced Metro to three years of supervised release and fined him $10,000.

Tamayo and Eydelman have both pleaded guilty to their roles in the scheme; Tamayo is scheduled to be sentenced Sept. 15, 2016, and Eydelman is scheduled to be sentenced Sept. 22, 2016. 

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, for the investigation leading to today’s sentencing.  He also thanked the U.S. Securities and Exchange Commission’s Market Abuse Unit, under the direction of Robert Cohen and Joseph Sansone.

The government is represented by Assistant U.S. Attorney Shirley U. Emehelu of the Special Prosecutions Division of the U.S. Attorney’s Office in Newark, and R. Joseph Gribko of the U.S. Attorney’s Office in Trenton, as well as Unit Acting Chief Barbara Ward and Assistant U.S. Attorney Jafer Aftab of the Office’s Asset Forfeiture and Money Laundering Unit.

These charges are 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. attorney’s 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. For more information on the task force, visit www.stopfraud.gov.

Defense counsel:  James R. Froccaro Jr. Esq., Port Washington, New York

Department of Justice

U.S. Attorney’s Office

District of Columbia

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

District Man Pleads Guilty to Series of Armed Robberies Of Commercial Establishments in Washington, D.C. and Maryland

Crimes Took Place Over Three-Week Period in Summer of 2014

            WASHINGTON – Curtis Fogg, 29, of Washington, D.C., pled guilty today to offenses stemming from a series of armed robberies that targeted commercial businesses in Washington, D.C. and Maryland during a three-week period in 2014.

            The guilty plea was announced by Channing D. Phillips, U.S. Attorney for the District of Columbia; Rod J. Rosenstein, U.S. Attorney for the District of Maryland; Paul M. Abbate, Assistant Director in Charge of the FBI’s Washington Field Office; Cathy L. Lanier, Chief of the Metropolitan Police Department (MPD), and Hank Stawinski, Chief of the Prince George’s County, Md. Police Department.

            Fogg pled guilty in the U.S. District Court for the District of Columbia to nine counts of interference with interstate commerce by robbery, one count of using, carrying, and possessing a firearm in furtherance of a crime of violence, and one count of armed robbery. The plea, which is contingent upon the Court’s approval, calls for a prison sentence of 20 to 22 ½ years. The Honorable Senior Judge Paul L. Friedman scheduled sentencing for Jan. 11, 2017.

            According to the government’s evidence, Fogg brandished a firearm while committing 10 separate armed robberies of commercial businesses in August and September 2014. In many instances, store surveillance video captured Fogg and his distinct tattoos.

            “For nearly three weeks, Curtis Fogg armed himself with a gun and held up restaurants, convenience markets and cellphone stores,” said U.S. Attorney Phillips. “He was apprehended after a concerted effort by law enforcement and now has taken responsibility for his crimes. This prosecution demonstrates the commitment shared by federal and local law enforcement to target violent offenders who threaten the safety of our communities.”

            “Curtis Fogg violently targeted our local area business community, threatening and endangering lives for his own financial gain,” said Assistant Director in Charge Abbate.  “The FBI will continue to work closely with our exceptional partners at the Metropolitan and Prince George’s County Police Departments to track down and stop those who threaten our citizens with violence.  Today’s guilty plea sends a strong message that crime that does not pay.”

            “The Prince George’s County Police Department thanks our federal and local law enforcement partners for their tremendous efforts in this case. Together, we were able to arrest and prosecute a suspect who brazenly targeted businesses in our community in the summer of 2014. We are pleased he can no longer victimize anyone in our region,” said Chief Stawinski.

            The robberies included:

• Aug. 14, 2014, approximately 10:30 p.m.: Fogg stole $250 and phones from two women who were in the New Look Hair Salon, in the 4300 block of Sheriff Road NE.

• Aug. 14, 2014, approximately 11:15 p.m.: Fogg stole about $100 from the register of a Papa John’s pizza restaurant in the 900 block of 11th Street SE.

• Aug. 15, 2014, approximately 9:30 p.m.: Fogg stole about $600 from registers at the Patron Convenience Store in the 3200 block of Pennsylvania Avenue SE.

• Aug. 27, 2014, approximately 2:45 p.m.: Fogg again stole about $100 from the register of the Papa John’s restaurant in the 900 block of 11th Street SE.

• Aug. 28, 2014, approximately 3 p.m.: Fogg stole $513 from a Cricket cellular telephone store in the 5500 block of Georgia Avenue NW.

• Aug. 30, 2014, approximately 5:10 p.m.: Fogg stole $284 from the cash register of a Subway sandwich shop in the 2800 block of Alabama Avenue SE.

• Aug. 31, 2014, approximately 6:30 p.m.: Fogg stole $60 from the register of Mama’s Pizza Kitchen, in the 2000 block of Martin Luther King Avenue SE, while also robbing the store’s owner of $100 in cash.

•  Sept. 1, 2014, approximately 7:25 p.m: Fogg stole $469 from the register of a Metro PCS cellular telephone store in the 4100 block of Wheeler Road SE.

• Sept. 2, 2014, approximately 7:10 p.m.: Fogg stole $500 from the Boost Mobile cellular telephone store in the 6200 block of Oxon Hill Road in Oxon Hill, Md.

• Sept. 3, 2014, approximately 2:10 p.m.: Fogg entered a Metro PCS store in the 5200 block of Indian Head Highway in Oxon Hill, Md. and took about 15 new cellular telephones that were for sale on the counter, $539.75 in cash, and personal items from the individuals inside the store.

            Fogg was arrested on Sept. 5, 2014 and has been in custody ever since. At the time of his arrest, he was on supervised release following a 2009 conviction in the Superior Court of the District of Columbia for possession with the intent to distribute cocaine.

            This case was investigated by the FBI’s Washington Field Office, the Metropolitan Police Department, and the Prince George’s County Police Department. Those working on the case from the U.S. Attorney’s Office for the District of Columbia include Legal Assistants Latoya Wade, Brendan Coyne, and Diane Brashears, Paralegal Specialist Candace Battle, and Assistant U.S. Attorney Christopher Macchiaroli, of the Violent Crimes and Narcotics Trafficking Section, who prosecuted the matter. Those working on the case from the U.S. Attorney’s Office for the District of Maryland include Assistant U.S. Attorney Thomas Sullivan and Special Assistant U.S. Attorney Matthew L. Paeffgen, who prosecuted the Maryland cases prior to them being transferred to Washington, D.C. for resolution before Judge Friedman.

Department of Justice

U.S. Attorney’s Office

Southern District of Mississippi

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

Cleveland Mississippi Hospice Owner Sentenced for Healthcare Fraud and Ordered to Pay Over 5 Million Dollars in Restitution

Jackson, Miss – Andre Kirkland, 52, of Cleveland, Mississippi was sentenced in U.S. District Court in Oxford on September 1, 2016, on charges that he defrauded Medicare and Medicaid by signing up patients for hospice care who were not terminally ill, announced U.S. Attorney Gregory K. Davis, FBI Special Agent in Charge Donald Alway, Special Agent in Charge Derrick L. Jackson with the U.S. Department of Health and Human Services Office of Inspector General, and Mississippi Attorney General Jim Hood.

Kirkland, who owned and operated Revelation Hospice in Clarksdale, pled guilty on May 4, 2016, to conspiracy to commit health care fraud. U.S. District Judge Michael Mills sentenced Kirkland to serve 48 months in home confinement in lieu of imprisonment due to recurrent metastatic cancer, which requires substantial medical care. Kirkland was also ordered to pay restitution in the amount of $5,400,843.50 to Medicare and $66,171.43 to Medicaid.

The investigation revealed that Andre Kirkland and Revelation Hospice were knowingly enrolling non-hospice eligible Medicaid and Medicare recipients and then filing false hospice claims to Medicaid and Medicare for services that were not medically necessary or were not ever provided. Kirkland, as a registered nurse and Revelation’s Director of Nursing, personally admitted non-hospice appropriate Medicaid and Medicare recipients into Revelation and deceived the patients about the true nature of the services in which they were being enrolled. As part of this deception, many patients unknowingly signed Do Not Resuscitate forms along with undated hospice revocation forms. Kirkland would later use the revocation forms to discharge patients from Revelation Hospice without the patient’s knowledge.

As the Director of Nursing for Revelation, Andre Kirkland was responsible for hospice admissions and the supervision of all nursing staff. He also treated patients in the field. According to patient interviews, Kirkland deceived patients about the true nature of the services they were being enrolled in and never told the patients that they were terminally ill. Most of the
patients enrolled in hospice care were not terminally ill and were therefore not eligible for hospice care. For example, one of the patients enrolled was a 29 year old pregnant female who was not terminally ill and was not in any way hospice eligible. She remains in good health today, years after Kirkland fraudulently enrolled her in hospice care.

A medical review of a 30-patient Medicare patient sample revealed that 100% of those patients were not eligible. Revelation had a live discharge rate of 93.30%, meaning that 93.30% of patients enrolled were discharged from Revelation Hospice while still living. By comparison, 2010 data shows that the national average live discharge rate for hospices is 18.2%.
“The health care fraud perpetrated by this defendant was an abuse of public trust motivated by greed. Patients were deceived into being signed up for services intended to help those with terminal illnesses. We remain committed to protect the integrity of our health care system and will continue to strictly enforce our federal health care laws,” said U.S. Attorney Gregory K. Davis.
“Health care fraud costs our country billions of dollars each year, and the FBI will continue to seek out those that extort health care in the United States,” said Donald Alway, special agent in charge of the FBI in Mississippi. “These are not victimless crimes, because health care fraud harms our overall economy. The FBI and our partners are committed to identifying and charging those that engage in this type of activity.”

“Hospice fraud has reached epidemic proportions in Northern Mississippi,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General. “Patients are being falsely diagnosed as terminally ill in order to line the pockets of hospice owners who are treating Medicare like their own personal ATM.”
“Joint investigations have proven to be an essential tool in the fight against fraud in healthcare benefit programs,” Attorney General Jim Hood said. “We will continue to work with our federal and state partners in this ongoing battle to protect our most vulnerable citizens.”

The case was investigated by the United States Department of Health and Human Services Office of the Inspector General, the Medicaid Fraud Control Unit of the Mississippi Attorney General’s Office, and the Federal Bureau of Investigation. It was prosecuted by Assistant U.S. Attorney Dave Fulcher.

Department of Justice

U.S. Attorney’s Office

Western District of Kentucky

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FOR IMMEDIATE RELEASE

Wednesday, September 14, 2016

Monroe County, Kentucky, Physician Guilty Of Prescribing Pain Medications Outside The Course Of Professional Medical Practice

BOWLING GREEN, Ky. – A Monroe County, Kentucky physician pleaded guilty today, in U.S. District Court, before Magistrate Judge H. Brent Brennenstuhl, with prescribing pain medications outside the course of professional medical practice, during a more than six year period, to five patients announced United States Attorney John E. Kuhn, Jr.

Clella Louise Hayes, whose medical practice is located in Tompkinsville, Kentucky, pleaded guilty to five counts of a grand jury indictment charging her with dispensing and distributing Schedule II controlled substances and Schedule III controlled substances outside the course of her professional medical practice.  Hayes, age 41, of Glasgow, Kentucky, pleaded guilty to authorizing prescriptions for fentanyl, morphine, Oxycodone, Demerol, hydrocodone and Klonopin. According to the plea agreement, the illegal activities occurred between March 2008 through March 2014 and included five patients.

Specifically, between June 2009 and September 2011, Hayes intentionally dispensed Schedule II controlled substances to the same patient, outside the course of professional medical practice, by issuing and authorizing prescriptions for fentanyl, morphine, Oxycodone, and Demerol. During the same time period, Hayes failed to establish a legitimate diagnosis of A.R.’s (the patient) pain complaints, failed to establish an individualized treatment plan, failed to take into account significant risk factors for abuse, and failed to take into account multiple inconsistent urine drug screens which reflected drug abuse and diversion.  On September 19, 2011, Dr. Hayes prescribed fentanyl to A.R.  On September 23, 2011, at age 55, A.R. died as a result of a fentanyl overdose, with post-mortem toxicology reports reflecting fentanyl at five times the therapeutic range in A.R.’s blood.

In a similar instance, Between November 2011 and November 2012, A.H. was Dr. Hayes’s patient.   During that time period, Dr. Hayes knowingly and intentionally dispensed Schedule II controlled substances to A.H. outside the course of professional medical practice, by issuing and authorizing prescriptions for Oxycontin and Demerol.

Dr. Hayes failed to establish a legitimate diagnosis of A.H.’s pain complaints, failed to establish an individualized treatment plan, failed to take into account significant risk factors for abuse, and failed to take into account multiple inconsistent urine drug screens which reflected drug abuse and diversion. 

On November 27, 2012, A.H. died at age 48 as a result of a poly-pharmacy overdose, with post-mortem toxicology reports reflecting high blood concentrations of medications Dr. Hayes prescribed to A.H., including Oxycodone and Klonopin. 

Further, Between June 2010 and January 2014, K.S. was Dr. Hayes’s patient.   During that time period, Dr. Hayes knowingly and intentionally dispensed Schedule II and Schedule III controlled substances to K.S. outside the course of professional medical practice, by issuing and authorizing prescriptions for Oxycontin and hydrocodone.

Dr. Hayes failed to establish a legitimate diagnosis of K.S.’s pain complaints, failed to establish an individualized treatment plan, failed to take into account significant risk factors for abuse, and failed to take into account multiple inconsistent urine drug screens which reflected drug abuse and diversion. 

On January 1, 2014, K.S. died at age 53 as a result of a poly-pharmacy overdose, with post-mortem toxicology results reflecting oxycodone, and hydrocodone at ten (10) times the therapeutic dose, both of which Dr. Hayes prescribed to K.S in December 2013. 

Sentencing is scheduled before Senior Judge Thomas B. Russell, in Bowling Green on January 18, 2017.

This case is being prosecuted by Assistant United States Attorney David Weiser and is being investigated by the Kentucky State Police (KSP) Drug Enforcement/Special Investigations West, and the Federal Bureau of Investigation (FBI) with assistance from the Tompkinsville Police Department.

Department of Justice

U.S. Attorney’s Office

District of New Hampshire

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FOR IMMEDIATE RELEASE

Tuesday, September 13, 2016

Nashua Man Pleads Guilty To Armed Bank Robbery

            CONCORD, N.H. – Daniel Quinn, 48, of Nashua, New Hampshire, pleaded guilty in United States District Court for the District of New Hampshire to armed bank robbery, reports United States Attorney Emily Gray Rice.

            Shortly before noon on June 25, 2015, Daniel Quinn entered the St. Mary’s Bank at 3 Winnhaven Drive in Hudson, New Hampshire wearing a black hat, a mask and gloves, and carrying a knife in his left hand while keeping a brown leather satchel over his left shoulder hanging by his waist on the right side in which it appeared he had a handgun.  Quinn forced all of the patrons and employees, other than those behind the teller counters, to line up against a wall while he robbed one of the tellers using the knife.  After getting the money from the teller, Quinn took one of the bank employees hostage in order to make his escape.  Shortly after Quinn and the hostage left the bank the hostage was able to get away from Quinn and ran back into the bank, while Quinn ran in the opposite direction.  Fortunately, the hostage was not physically harmed.

            The Hudson Police Department responded to the bank within minutes of the robbery and a police canine, which quickly picked up Quinn’s scent, led police to a residential neighborhood close to the bank where Quinn was found hiding in the side yard of a home.  Quinn was taken into custody without incident and the leather satchel, which was found within a few feet of Quinn partially covered with leaves, was seized.  Inside the satchel, the money from the robbery, the knife, the gloves, the mask and other things related to the robbery were recovered.  What had been thought to be a handgun, but which turned out to be a BB gun, was also found in the satchel.

            Quinn, who is facing a maximum prison sentence of 25 years and a fine of up to $250,000, will be sentenced on January 6, 2017 at 10:00 AM.  Quinn has been in custody since his arrest on the day of the robbery and will remain in custody until his sentencing hearing.

            This case was investigated by the FBI and the Hudson, NH Police Department and is being prosecuted by Assistant United States Attorney Arnold H. Huftalen.