South Sound Doctor Sentenced to More Than 12 Years in Prison for Health Care Fraud, Tax Crimes, and Drug Distribution

South Sound Doctor Sentenced to More Than 12 Years in Prison for Health Care Fraud, Tax Crimes, and Drug Distribution 
Doctor’s Mother Also Sentenced for Health Care Fraud and Tax Crimes

U.S. Attorney’s OfficeMarch 29, 2012

Western District of Washington(206) 553-7970

Antoine Johnson, 41, a former resident of Aberdeen, Washington, and his mother, Lawanda Johnson, 63, were sentenced today in U.S. District Court in Tacoma for more than two dozen federal felonies connected with their operation of four health care clinics in Western Washington, announced U.S. Attorney Jenny A. Durkan. The Johnsons were convicted in November 2011, following a three-week jury trial. Antoine Johnson was sentenced to 151 months in prison, three years of supervised releajse, and $1,281,873 in restitution for 24 counts of health care fraud, four counts of filing false income tax returns, and five counts of illegal drug distribution. Lawanda Johnson was sentenced to 87 months in prison, three years of supervised release, and $1,227,746 in restitution for 24 counts of health care fraud and six counts of filing false income tax returns. Orders of criminal forfeiture of funds were also entered. Sentencing them to the high end of the guidelines range, U.S. District Judge Ronald B. Leighton said the Johnsons “manipulated the standard of care for patients, they have manipulated the rules of reimbursement, they manipulated the Hippocratic Oath, they manipulated the Justice system...they have invented more excuses than they distributed pills.”

“Antoine Johnson not only defrauded taxpayers, he betrayed his oath as a doctor to ‘do no harm.’ Instead of healing his patients, he fed their addiction for narcotic painkillers to satisfy his own greed,” said U.S. Attorney Jenny A. Durkan. “Mother and son ruined many lives, sent the bill to taxpayers, and then filed false tax returns.”

According to testimony at trial and records in the case, in 2008, law enforcement investigated information obtained by the Grays Harbor County Drug Task Force and the Washington State Medicaid Fraud Control Unit that the clinics were dispensing a high number of prescriptions for narcotic pain medications without examining the patients. Antoine Johnson was the only medical doctor employed by the four clinics, the “Broadway Clinic” in Aberdeen and the “Johnson Family Practice” clinics in Tacoma, Lakewood, and Lacey. Dr. Johnson churned out prescriptions for Schedule II controlled substances such as Oxycodone and Methadone. Evidence introduced at trial indicated that these clinics had thousands of patients and over half of those patients were prescribed controlled substances by Dr. Johnson. These prescriptions were refilled for months and years at a time. Often, the patients would come to the clinic, get their weight and blood pressure taken by a nursing assistant, and then pick up a Schedule II prescription that had been pre-signed by Dr. Johnson. Sometimes a family member of a patient would pick up a prescription for another family member but was required to pay a $75 or $100 fee to the clinic for the signed prescription.

“One of the things Mr. Johnson claimed he did was serve disadvantaged communities, but he actually caused them great harm,” said Laura M. Laughlin, Special Agent in Charge of the FBI Seattle office. “Mr. Johnson turned patients into addicts and facilitated others in drug dealing. This is an egregious case of someone who is well placed to heal and treat deserving people but instead used his medical license to advance his greed at the expense of his neighbors’ health.”

The health care fraud investigation began following an audit by the Washington State Department of Social and Health Services (DSHS) of Medicaid billing practices at the clinics. Testimony and evidence at trial showed that the clinics, through their business manager, Lawanda Johnson, and their only medical doctor, Antoine Johnson, consistently billed for a higher level of service than was actually provided. Evidence introduced at trial showed that the clinic routinely billed Medicaid and Labor and Industries for high-level service even though a patient was only in the clinic for a refill of a controlled substance medication and only had the patients’ vitals taken.

“Dr. Johnson and his mother inflated bills for office visits and had taxpayers pick up the tab. Worse yet, too often, little or no medical services were provided other than writing prescriptions for highly addictive pain pills,” said Ivan Negroni, Special Agent in Charge for the Office of Inspector General of the Department of Health and Human Services region serving Washington. “As in this case, we will work in tight coordination with state and other federal agencies to shut off the flow of dangerous prescription drugs.”

“Today’s sentencing of Dr. Johnson and his mother sends a clear message to rogue physicians who dispense medications to patients without regard for their health, while stealing our nation’s precious healthcare dollars,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific Northwest. “IRS will investigate when greed is the motivation for medical professionals to betray their patients. Our role in this case included determining the total amount of loss to the American taxpayer from both the tax and health care frauds.”

The Johnsons closed their clinics and left the United States shortly after search warrants were executed at the four clinics and the residence of Lawanda Johnson in January 2009. The pair fled the United States, driving to Canada, from where they flew to Scotland and then to Madagascar. The United States State Department worked with the FBI and Madagascar authorities, resulting in the return of the Johnsons to the United States, where they were arrested and held for trial. The Department of Health revoked Dr. Johnson’s license to practice medicine while the Johnsons were in Madagascar. Dr. Johnson’s efforts to contest the revocation of his license upon his return to the United States were unsuccessful.

The case was investigated by the FBI, the Health and Human Services Office of the Inspector General (HHS-OIG), and the Internal Revenue Service Criminal Investigations (IRS-CI).

The case is being prosecuted by Assistant United States Attorneys Susan Loitz and Brian Werner.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at 206-553-4110 or Emily.Langlie@USDOJ.Gov.

Seven Plead Guilty in Wide-Ranging Corruption Scheme at the Naval Fleet Readiness Center in San Diego 

U.S. Attorney’s OfficeMarch 28, 2012

Southern District of California(619) 557-5610

United States Attorney Laura E. Duffy announced today that seven individuals, including four Navy officials, Donald Vangundy, Kiet Luc, David Lindsay, and Brian Delaney; and three defense contractors, Michael Graven, John Newman, and Paul Grubiss, each pleaded guilty before United States Magistrate Judge Bernard G. Skomal in connection with a wide-ranging fraud and corruption scheme at the Naval Air Station (NAS) North Island in Coronado, California. As part of the conspiracy, defense contractors provided Navy officials with over one million dollars in personal benefits, including cash, checks, retail gift cards, flat screen television sets, luxury massage chairs, home furniture and appliances, bicycles costing thousands of dollars, model airplanes, and home remodeling services. In return, the Navy officials placed millions of dollars in fraudulent orders with the defense contractors.

Four of the defendants who pleaded guilty were Navy officials employed at the Navy’s Fleet Readiness Center (FRC) located at NAS North Island. All four worked in the Navy’s E2/C2 aircraft program, which is dedicated to maintaining the tactical readiness of the Navy’s E-2 and C-2 aircrafts. The Grumman E-2 Hawkeye is an American all-weather, aircraft carrier-capable tactical airborne early warning aircraft. Since entering combat during the Vietnam War, the E-2 has served the U.S. Navy around the world, acting as the electronic “eyes of the fleet.” The C-2 Greyhound is a derivative of the E-2 Hawkeye, which shares wings and power plants with the E-2, but has a widened fuselage with a rear loading ramp. These aircraft are considered critical components of the U.S. Navy’s carrier air wings.

Among the Navy official defendants, Donald Vangundy oversaw tool control for the E2/C2 program and was promoted to supervise and authorize the purchase and replacement of tools for all FRC programs. Kiet Luc was the liaison and coordinator for tools in the E2/C2 program and was responsible for maintaining and controlling the tool program. David Lindsay was the supervisory production controller for the E2/C2 program, and Brian Delaney was the E2/C2 deputy program manager. Between them, these four former Navy officials received a total of more than $1 million in cash, goods, and services for their personal use, all fraudulently charged to and paid for by the Defense Department.

The remaining three defendants were owners or employees of various defense contractors that provided goods or services for NAS North Island. Michael Graven was the owner and operator of X&D Supply Inc., a contractor located in Carlsbad, California. The Navy paid X&D at least $2.26 million in connection with the fraud. John Newman was a sales manager at (and the former owner of) a defense contractor identified in the charging document as “Company A,” located in Poway, California. The Navy paid Company A at least $3.31 million in connection with the fraud. Paul Grubiss was a sales manager of a defense contractor identified in the charging document as “Company B,” also located in Poway, California. The Navy paid Company B approximately $1 million in connection with the fraud. Also implicated in the scheme was Jesse Denome, the owner of JD Machine Tech Inc.

As part of the scheme, the defense contractors prepared and submitted fraudulent invoices to the Department of Defense, making it appear that they were billing the Department for goods and services within the scope of legitimate government contracts. In fact, the Defense Department was unknowingly paying for, among other things, the cost of personal benefits provided to the Navy officials. Compounding the cost of the fraud, the defense contractors also routinely charged a markup on the fraudulent invoices. Ultimately, the Defense Department paid over $5.5 million in connection with the fraudulent invoices submitted by the defense contractor defendants.

Two of the Navy official defendants, Vangundy and Luc, also pleaded guilty to filing false tax returns for knowingly failing to report the value of the unlawful benefits provided to them by defense contractors. Graven also pleaded guilty to aiding and assisting in the filing of a false tax return by his business, X&D, for knowingly taking improper tax deductions for the illegal payments to the benefit of the Navy official defendants.

According to United States Attorney Duffy, the investigation into possible corruption at NAS North Island was initiated on the basis of citizen complaints. These complaints followed the July 2009 indictment of six individuals on fraud and corruption charges centered at the Space and Naval Warfare Systems Command (SPAWAR). As part of the SPAWAR corruption case, the government publicized a hotline dedicated to the reporting of possible waste, fraud, and abuse related to government and military contracts.

United States Attorney Duffy lauded the citizens who came forward and the coordinated efforts of the law enforcement agencies that participated in this long-running investigation, known as “Country Store,” including the Federal Bureau of Investigation, the Defense Criminal Investigative Service, the Internal Revenue Service-Criminal Investigation, the Naval Criminal Investigative Service, and the General Services Administration (GSA)-Office of Inspector General. In doing so, she emphasized that federal law enforcement agencies in the Southern District of California were committed to rooting out corruption in defense contracts and purchasing, which cheats the American taxpayer and our nation’s military readiness.

U.S. Attorney Duffy noted that the investigation is ongoing and urged anyone with information relating to waste, fraud, and abuse in government contracting to contact the Procurement Fraud Working Group hotline at sandiego.procurementfraud@usdoj.gov or to call 1-877-NO-BRIBE.

FBI Special Agent in Charge Keith Slotter commented, “Public corruption is the FBI’s number one criminal priority. It seriously undermines the people’s trust in their government and gives an unfair economic advantage to those who trade the public’s interest for their own personal gain. The FBI thoroughly investigates allegations of public corruption, and we remind the public to notify us, as they are sometimes the one person that can make a difference.”

Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service, Western Field Office said, “We are extremely pleased at this outcome, which yet again sends the message that corruption will be vigorously investigated and prosecuted. While the vast majority of Navy officials and contractors are honest in their work, some choose to abuse the public trust. This investigation clearly attests that those who compromise the integrity of the United States will face their day of reckoning. Corruption of this nature strikes at the heart of our national security and erodes public confidence. The Defense Criminal Investigative Service will use all tools available—our ability to track worldwide financial dealings, our advanced cyber capabilities, our worldwide law enforcement alliances—to protect taxpayers’ interests.”

Leslie P. DeMarco, Special Agent in Charge of IRS-Criminal Investigation (IRS-CI), Los Angeles Field Office said, “The Navy officials and defense contractors sought illicit opportunities to profit or gain other personal advantages at the expense of other law abiding businesses and taxpayers. Bribery and corruption schemes corrode the American financial and tax system. Today’s actions enforce IRS-CI’s commitment to work with our law enforcement partners, leveraging resources, to investigate and put an end to fraud by government officials.”

Geoffrey Cherrington, Assistant Inspector General for Investigations of GSA’s Inspector General’s Office stated, “The results of this case clearly demonstrate the tireless efforts of our special agents and our partners in law enforcement to protect the taxpayer. If you commit fraud, we are watching.”

The pleas are subject to final acceptance by United States District Judge Roger T. Benitez at or before sentencing. Sentencing for all seven of the defendants is currently scheduled for July 2, 2012, before Judge Benitez.

Defendants

Donald Vangundy, age 54, Chula Vista, California
Kiet Luc, age 53, San Diego, California
Brian Delaney, age 55, La Mesa, California
David Lindsay, age 57, San Diego, California
John Newman, age 51, Poway, California
Michael Graven, age 43, Carlsbad, California
Paul Grubiss, age 39, Wickliffe, Ohio

Summary of Charges

Count one: conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349 (all defendants)—maximum penalties: 20 years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment.

Count two: conspiracy to commit bribery, in violation of Title 18, United States Code, Section 371 (defendants Vangundy and Grubiss)—maximum penalties: five years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment.

Count three: filing a false tax return, in violation of Title 26, United States Code, Section 7206(1) (defendant Vangundy)—maximum penalties: three years in prison, $250,000 fine, term of supervised release of one year, restitution, costs of prosecution, and $100 special assessment.

Count four: filing a false tax return, in violation of Title 26, United States Code, Section 7206(1) (defendant Luc)—maximum penalties: three years in prison, $250,000 fine, term of supervised release of one year, restitution, costs of prosecution, and $100 special assessment.

Count five: aiding and assisting in a false tax return, in violation of Title 26, United States Code, Section 7206(2) (defendant Graven)—maximum penalties: three years in prison, $250,000 fine, term of supervised release of one year, restitution, costs of prosecution, and $100 special assessment.

Investigating Agencies

Federal Bureau of Investigation
Defense Criminal Investigative Service
Internal Revenue Service-Criminal Investigation
Naval Criminal Investigative Service
General Services Administration-Office of Inspector General

Florida Man Pleads Guilty to Computer Intrusion and Wiretapping Scheme Targeting Celebrities 

U.S. Attorney’s OfficeMarch 26, 2012

Central District of California(213) 894-2434

LOS ANGELES—A Florida man pleaded guilty today to a series of cyber-related crimes relating to his hacking into the personal e-mail accounts of more than 50 individuals associated with the entertainment industry.

Christopher Chaney, 35, of Jacksonville, Florida, pleaded guilty to nine felony counts of a 28-count first superseding indictment, including unauthorized access to protected computers in furtherance of wiretapping and wire fraud, unauthorized damage to protected computers resulting in more than $5,000 loss and physical harm, and wiretapping. At the conclusion of the hearing, United States District Court Judge S. James Otero ordered Chaney taken into custody.

During the hearing, Chaney admitted that from at least November 2010 to October 2011, he hacked into the e-mail accounts of Scarlett Johansson, Mila Kunis, Renee Olstead, and others by taking the victims’ e-mail addresses, clicking on the “Forgot your password?” feature, and then re-setting the victims’ passwords by correctly answering their security questions using publicly available information he found by searching the Internet. Once Chaney gained exclusive control of the victims’ e-mail accounts, he was able to access all of their e-mail boxes. While in the accounts, Chaney also went through their contact lists to find e-mail addresses of potential new hacking targets.

In pleading guilty to the wiretapping charges, Chaney admitted that, for most victims, he also changed their e-mail account settings by inserting his alias e-mail address into the forwarding feature so that a duplicate copy of all incoming e-mails to the victims—including any attachments—would be sent virtually simultaneously to Chaney without the victims’ knowledge. Most victims did not check their account settings, so even after they regained control of their e-mail accounts, Chaney’s alias address remained in their account settings. As a result, for many victims, copies of their incoming e-mails, including attachments, were sent to Chaney for weeks or months without their knowledge, causing Chaney to receive thousands of victim e-mails. In addition, when a victim reset his/her password to regain control of the account, Chaney sometimes hacked into the account again and reset the password, sometimes multiple times, in order to continue illegally accessing that victim’s account.

Chaney admitted that as his hacking scheme became more extensive, he began using a proxy service called “Hide My IP” because he knew what he was doing was illegal and wanted to “cover his tracks” so that law enforcement agents could not trace the hacking back to his home computer. Even after his home computers were seized by law enforcement agents pursuant to a federal search warrant, but before he was arrested, Chaney used another computer to hack into another victim’s e-mail account.

Chaney further admitted that as a result of his hacking scheme, he obtained numerous private communications, private photographs, and confidential documents from the victims’ e-mail accounts. The confidential documents included business contracts, scripts, letters, driver’s license information, and Social Security information. On several occasions, after hacking into victim accounts, Chaney sent e-mails from the hacked accounts to friends of the victims, fraudulently posing as the victims to request more private photographs. Chaney downloaded many of the confidential documents and photographs he stole to his home computer, where he saved them on his hard drive in separate computer file folders. Chaney e-mailed many of the stolen photographs to others, including another hacker and two gossip websites. As a result, some of those stolen photographs, several of which were explicit, were later posted on the Internet.

“Today’s guilty pleas shine a bright light on the dark underworld of computer hacking,” said United States Attorney André Birotte, Jr., whose office prosecuted the case. “This case demonstrates that everyone, even public figures, should take precautions to shield their personal information from the hackers that inhabit that dark underworld. It also demonstrates that the Department of Justice will take whatever steps are necessary to protect Americans from harm in cyberspace.”

“Mr. Chaney’s admission to compromising victim accounts, utilizing both technically and socially engineered means, demonstrates the persistence and extent to which a hacker will go to obtain private information,” said Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case sends an important message to all users of Internet-accessible media that practicing good computer security makes us less vulnerable to this type of attack. The FBI remains committed to investigating cyber adversaries who target protected computers, whether of private citizens or the nation’s critical infrastructure.”

Each charge of unauthorized access to a protected computer carries a maximum of five years in prison, each charge of unauthorized damage to a protected computer carries a maximum charge of 10 years in prison, and each charge of wiretapping carries a maximum of five years in prison. As a result of all of today’s guilty pleas, Chaney faces a total statutory maximum sentence of 60 years in federal prison. In addition to the possible prison term, as part of his plea agreement filed in federal court, Chaney agreed to forfeit his computers and related devices seized during the investigation, to pay restitution to all of the victims for any losses they suffered, and to comply with strict restrictions regarding his future use of computers and computer-related devices. In exchange, the government agreed to dismiss the remaining counts, including nine counts of aggravated identity theft, at the time defendant is sentenced.

Chaney is scheduled to be sentenced by United States District Judge S. James Otero on July 23, 2012.

The investigation of this case was led and conducted by the Federal Bureau of Investigation.

Former Mattoon Business Owner Sentenced for Fraud Scheme

From the FBI, Springfield Division:

Former Mattoon Business Owner Sentenced to 16 Months in Federal Prison for Fraud Scheme

U.S. Attorney’s Office January 05, 2012

Central District of Illinois (217) 492-4450

— filed under: Fraud, Press Release, Springfield Top Stories

URBANA, IL—A former Mattoon, Ill., woman, Rebecca L. Shockley, has been ordered to serve 16 months in federal prison and pay restitution of more than $400,000 for defrauding a local bank and the Illinois Department of Revenue. Chief U.S. District Judge Michael P. McCuskey sentenced Shockley, 63, currently of Bradenton, Fl., yesterday. Shockley was ordered to report on Mar. 7, 2012, to the Federal Bureau of Prisons to begin serving her sentence.

According to court documents, Shockley was co-owner of Quality Truck and Auto (QTA), in Mattoon, Ill., which did business as Cross Country RV Center. Shockley acted as bookkeeper for the business which sold new and used recreational vehicles and related items.

On May 9, 2011, Shockley entered a plea of guilty to one count each of mail fraud and bank fraud. Shockley admitted that from March 2007 to December 2008, she pledged vehicles as collateral to both the bank and another lender. Shockley had entered into the loan agreement, known as a floor plan line of credit, with the bank in mid-1999. According to court documents, as the business’s financial condition deteriorated, QTA was unable to pay-off the secured loans it had received from the bank and the bank learned that the RVs that were supposed to be collateral had already been sold and the sales proceeds forwarded to the other lender.
Shockley further admitted that from July 2006 to December 2008, she under-reported the amounts subject to sales tax by $1.8 million. As a result, although QTA collected $249,915 in sales taxes from more than 100 buyers, Shockley admitted that she remitted only $134,812 of the collected sales taxes to the state of Illinois, and kept the remainder for her own use and benefit. In addition, Shockley admitted that she under-reported the taxable retail sales of QTA from 2006 to 2008.

Shockley was ordered to pay a total of $412,028 in restitution, consisting of $279,438 to the bank and $132,590 to the Illinois Department of Revenue.

The charges were investigated by the Federal Bureau of Investigation and the Illinois Department of Revenue. The case was prosecuted by Assistant U.S. Attorney Eugene L. Miller.