Headlines that Matter for Companies and Executives in Regulated Industries

DOJ News

Home Health Agency Owner Sentenced to 84 Months in Prison for Medicare Fraud

A home health agency owner from Michigan pled guilty to one count of conspiracy to commit health care fraud and wire fraud and one count of conspiracy to pay health care kickbacks. He was sentenced to 84 months in prison, and must also pay $8.3 million in restitution.

The defendant admitted to, over a 10-year period, submitting false certifications to enroll as a Medicare provider, paying kickbacks in exchange for referrals of Medicare patients (whose claims were then billed to Medicare), and submitting claims to Medicare for services that were not medically necessary and were ineligible for reimbursement.

The press release is here.

Former State Department Employee Pleads Guilty to Conspiracy with Agents of the People’s Republic of China

A former Office Management Specialist of the US Department of State, with a TOP SECRET security clearance, pled guilty in the US District Court for the District of Columbia on April 24, 2019, to a claim that she conspired to defraud the United States by lying to law enforcement about extensive contacts with agents of the People’s Republic of China, including gifts and money she received from them, in exchange for her provision of internal documents from the State Department.

The defendant’s TOP SECRET security clearance required her to report any contacts with potential affiliates of a foreign intelligence agency, as well as gifts from foreign sources over a certain amount. The defendant failed to report that two agents of the PRC’s Intelligence Service had provided her and her family tens of thousands of dollars in benefits, including cash, travel, tuition funds, and a fully-furnished apartment. In exchange, the defendant allegedly provided to these agents copies of internal State Department documents. The defendant also had co-conspirators whom she directed to delete evidence. The defendant will be sentenced on July 9, 2019, and faces a statutory maximum of five years in prison.

The press release is here.

Medical Executives Settle Alleged Diabetic Testing Supply Fraud for $1 Million

Two former executives of Arriva Medical, LLC each agreed to pay $500,000 to resolve allegations that they paid kickbacks to beneficiaries by offering free or no cost home blood glucose meters, or by waiving copayments, and then causing Arriva to bill Medicare for those beneficiaries’ claims. The executives also allegedly billed Medicare for home blood glucose meters that were medically unnecessary.

In 2016, the Centers of Medicare & Medicaid Services had prohibited Arriva from billing Medicare after Arriva allegedly billed for durable medical equipment shipped to a beneficiary more than two weeks after the beneficiary’s death. Arriva stopped operations in 2017.

The press release is here.

Security School Owner Indicted for Defrauding Department of Veterans Affairs

A federal grand jury indicted the owner of a security guard training school on twenty counts in connection with a scheme to defraud a US Department of Veterans Affairs’ Vocational Rehabilitation & Employment program, which rehabilitates disabled military veterans through education and employment services. The indictment alleges that the defendant’s institution became an approved vendor of the VR&E program in 2015, and that the defendant represented to the VA that he was providing 15 veterans with 40 hours per week of educational courses, totaling over 600 hours over the course of several months.

Instead, the defendant allegedly only offered a few hours of class per day and in some cases would end a class after less than a month. According to the indictment, the defendant facilitated the fraud by submitting “Certificates of Training” to the VA, certifying that the veterans had completed courses they did not, and submitted letters falsely representing that the veterans were employed. The VA ultimately paid the defendant’s school over $300,000 for the education the defendant claimed to have provided. The case will be prosecuted by the U.S. Attorney’s Office for the District of Columbia.

The press release is here.

Litigation News

CFTC Brings Charges in $75 Million Forex Fraud Scheme

The Commodities Futures Trading Commission unsealed a lawsuit in federal court in Florida alleging that Oasis International Group, along with two affiliated entities and several individuals, misappropriated investor funds for unauthorized expenses in the context of foreign exchange (forex) trading. Those expenses included personal real estate, tuition payments, and other unapproved business ventures.

The complaint alleges that the defendants misrepresented to investors that all of their funds would be used for forex trading, when very little was actually used for that purpose and the accounts were so overleveraged that they could have lost more money than they possessed. The defendants also allegedly misrepresented to investors that the pools were generating significant returns, when their actual returns in 2017 and 2018 were -45% and -96%, respectively. The complaint alleges that $28 million that had been invested in the funds was used for to repay other investors, and an additional $18 million was used for personal expenses. The CFTC’s complaint seeks disgorgement of all benefits received and injunctive relief to bar future trading.

The case is CFTC v. Oasis Int’l Grp. Ltd., Case No. 8:19-cv-00886, in the U.S. District Court for the Middle District of Florida.

Keystone Biofuels and Former Executives Convicted of $10 Million Tax Fraud

A jury in Pennsylvania convicted biofuel company Keystone Biofuels Inc., and two of its principals, for conspiracy against the United States and making false statements to the EPA, with respect to the amount of biodiesel defendants were creating pursuant to EPA’s Renewable Fuel Standard program. Under this program, fuel producers create renewable identification numbers (RINs) when manufacturing fuel that meets EPA standards, which can then be traded on the open market and can entitle the RIN holder to renewable energy tax credits.

The indictment asserted that the defendants submitted reports to EPA falsely representing that Keystone’s fuel met government standards, and created over 16 million RINs for fuel that was “off spec,” while also altering fuel samples submitted to customers and laboratories. The prosecutors had alleged that the government would have received an additional $4.15 million in taxes but for the scheme, and that the defendants received more than $10 million from their fraudulent tax refunds. The company executives face a statutory maximum prison term of five years on each of the seven counts for conspiracy and making false statements, and a statutory maximum term of three years for the false claim counts.

The case is United States v. Keystone Biofuels, Case No. 1:17-cr-00143, in the U.S. District Court for the Middle District of Pennsylvania.