Category: MIL-OSI

Source: United States Department of Justice Criminal Division

An indictment was unsealed Friday charging two Florida men for their roles in a scheme to submit approximately $34.8 million in false and fraudulent claims to Medicare for medically unnecessary products. As part of the scheme, the defendants and their co-conspirators targeted thousands of Medicare beneficiaries and, through deceptive telemarketing, persuaded them to accept medical equipment that they did not need, such as orthotic braces and continuous glucose monitors.

“The defendants are alleged to have perpetuated a scheme that involved the submission of $34.8 million in fraudulent claims to Medicare for medically unnecessary medical equipment,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. “That money, which came from American taxpayers, was intended to benefit Americans in need of medical care. Friday’s arrests send a clear message to those who would defraud our healthcare system: the public fisc is not your private purse, and we will aggressively prosecute those that steal from benefit programs.”

“Greed-fueled fraud schemes, like billing for medically unnecessary medical equipment, are a threat to both taxpayer-funded health care programs and patients alike,” stated Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working shoulder to shoulder with our law enforcement partners, we will continue to aggressively investigate such allegations to hold fraudsters fully accountable.”

“The harm done by these actors cannot be overstated,” said Assistant Director Jose A. Perez of the FBI Criminal Investigative Division, “The FBI will continue to pursue those who seek to damage our healthcare system and defraud everyday Americans seeking aid.”

According to court documents, Kenneth Charles Kessler III, 42, of Miami-Dade County, Florida, and Michael Andrew Gomez, 42, of Broward County, Florida, are charged in connection with their ownership and operation of seven durable medical equipment (DME) supply companies based in Florida. Kessler and Gomez are accused of paying illegal kickbacks and bribes to purported marketing companies that targeted thousands of Medicare beneficiaries with deceptive and aggressive telemarketing campaigns. The indictment alleges that these marketing companies obtained the beneficiaries’ personally identifiable information and arranged for purported telemedicine companies to generate doctors’ orders for unnecessary medical equipment. Kessler and Gomez allegedly used these doctors’ orders to submit false and fraudulent claims to Medicare through their network of DME companies.

Kessler and Gomez are both charged with conspiracy to commit health care and wire fraud, two counts of health care fraud, conspiracy to defraud the United States and to offer and pay health care kickbacks, and two counts of offering and paying kickbacks in connection with a federal health care program. If convicted, Kessler and Gomez each face up to 65 years in prison. A federal judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The U.S. Department of Health and Human Services, Office of Inspector General and the FBI are investigating the case.

Trial Attorneys Aisha Schafer-Hylton and Owen Dunn of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,800 defendants who collectively have billed federal health care programs and private insurers more than $30 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice Criminal Division

The United States has filed a complaint under the False Claims Act in a lawsuit against Local Initiative Health Authority for Inland Empire Health Plan doing business as Inland Empire Health Plan (IEHP), a California Local Initiative Health Plan based in Rancho Cucamonga, California. IEHP contracted with California’s Department of Health Care Services (DHCS) to arrange for the provision of health care services to Riverside County and San Bernardino County residents under Medi-Cal, California’s Medicaid program. The government’s complaint alleges that IEHP violated the False Claims Act by making false statements to Medi-Cal and knowingly retaining overpayments.

“The Medicaid program provides critical health care services,” said Deputy Assistant Attorney General Brenna Jenny of the Justice Department’s Civil Division. “Today’s complaint demonstrates our continued commitment to protect the integrity of the Medicaid program, and the taxpayer dollars that support it, from health insurers that knowingly seek to divert program funds for their own financial benefit.”

“Today’s lawsuit against IEHP shows our steadfast commitment to hold accountable insurers that brazenly compromise the Medicaid system,” said Acting U.S. Attorney Bill Essayli for the Central District of California. “We will take every measure to restore integrity and accountability to the Medicaid system and ensure that patient care – not financial gain – is the primary focus of our health care system.”

Beginning in January 2014, Medi-Cal was expanded to cover the previously uninsured “Medi-Cal Expansion” population: adults between the ages of 19 and 64 without dependent children with annual incomes up to 133% of the federal poverty level. The federal government fully funded the expansion coverage for the first three years of the program. Under its contractual arrangement with DHCS, IEHP received funding to serve the Medi-Cal Expansion population. If IEHP did not spend at least 85% of those funds on “allowed medical expenses,” IEHP was required to pay back to the state the difference between 85% and what it actually spent. California, in turn, was required to return that amount to the federal government.

The United States’ complaint alleges that IEHP developed schemes to misuse surplus Medi-Cal Expansion funding, falling into two broad categories: (1) sham incentive programs and (2) an extra-contractual retroactive rate increase. Through these schemes, IEHP misspent Medi-Cal Expansion funding for impermissible purposes, including spending on administrative expenses, other patient populations, and simply giving away federal funding in exchange for no value in return. The complaint further alleges that IEHP was motivated by a desire to conserve its other funding, thus enriching itself.

The complaint alleges that, to make the spending appear legitimate, IEHP deceived the state by making false statements — which it knew would be relayed to the federal government — about the nature, timing, and purpose of its payments to providers. For example, IEHP internally admitted it was giving providers “free money” but asserted to DHCS that the payments were part of a metric-based incentive program rewarding providers with good performance. IEHP also disguised payments for consultants and technology services as incentive payments by funneling those payments through providers and backdated spending to fall during earlier time periods. According to the United States’ complaint, those payments allegedly were not “allowed medical expenses” permissible under the contract between DHCS and IEHP.

The United States’ pursuit of this lawsuit illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477). 

This case is being handled by the Civil Division’s Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Central District of California, in coordination with the California Department of Justice and with valuable assistance from HHS-OIG and DHCS.  

The United States is represented in this matter by Fraud Section Trial Attorney Mary Beth Hickcox-Howard and Assistant U.S. Attorneys S. Desmond Jui and Jack D. Ross for the Central District of California.

The claims asserted in the complaint are allegations only and there has been no determination of liability.

Source: United States Department of Justice Criminal Division

Braden Birdsong, 28, of Oklahoma City, Oklahoma, appeared before U.S. District Court Judge Bernard M. Jones for the Western District of Oklahoma today and pleaded guilty to a federal hate crime violation.

According to filed plea documents and today’s court hearing, on Aug. 25, 2023, Birdsong, a white man, attacked D.G., a black man, while D.G. was cleaning the parking lot of the Oklahoma City restaurant at which he worked. Birdsong used racial slurs and other anti-black rhetoric as he punched D.G. in the head multiple times. D.G. suffered bodily injury because of the attack. As Birdsong admitted in court today, he assaulted D.G. because of D.G.’s race and color.  

Birdsong faces a maximum penalty of 10 years in prison and three years of supervised release for the hate crime violation. U.S. District Court Judge Jones will determine Birdsong’s final sentence after considering the U.S. Sentencing Guidelines and other statutory factors at a later date. Birdsong will remain in federal custody pending the future sentencing hearing.

Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division, U.S. Attorney Robert J. Troester for the Western District of Oklahoma, and Special Agent in Charge Douglas M. Goodwater of the FBI Oklahoma City Field Office made the announcement.

The FBI Oklahoma City Field Office investigated the case.

Assistant U.S. Attorney Julia E. Barry for the Western District of Oklahoma and Trial Attorneys Laura Gilson and Taylor Payne of the Civil Rights Division’s Criminal Section are prosecuting the case.

Source: United States Department of Justice Criminal Division

It is great to speak with you today at ACAMS’ Assembly.

The Assembly brings together the largest group of anti-financial crime and anti-money laundering professionals to learn about critical issues facing the U.S. and global financial systems. Today, I’d like to share our perspective on the key threats to the United States that are most relevant to you all, and how all of us – at the Department of Justice and in the business community – can work to mitigate these threats.

Our work has led us to identify myriad threats to our nation. Most relevant to the financial services industry, these include cartels and transnational criminal organizations, particularly those operating in Mexico and the Western Hemisphere; Chinese money laundering organizations; and rogue nation-states like North Korea and Iran.

What is the Department doing to counter these threats?

Since February, the Department has taken custody of more than 50 cartel bosses and high-level targets who will, at long last, have to account for their crimes in U.S. courts. Collectively, this constitutes one of the greatest takedowns in law enforcement history. We have brought material support for terrorism and other charges against cartel leaders. And we are holding these criminals to account – as one noteworthy example, the co-founder of the Sinaloa Cartel, Ismael Zambada Garcia, also known as “El Mayo,” recently pleaded guilty to charges that carry a mandatory minimum life sentence.

While we will continue our relentless pursuit of cartel members, we have to tackle this threat from all angles. The cartels cannot survive without the networks of financial facilitators that move their illicit proceeds, and we are committed to dismantling these networks too.

For instance, Chinese money laundering organizations, or CMLOs, are critical to cartel profitability. CMLOs facilitate the cartels’ repatriation of funds back into Mexico and other Latin American countries and the purchase of precursor chemicals from China. They do so at a low cost using every money laundering technique in the book, including cash pickups, shell accounts, and trade-based money laundering.

This year, my division alone has charged or convicted thirty individuals for laundering money for drug trafficking organizations, including foreign officials, third-party money launderers, and corrupt bankers. Across all of these drug trafficking-related money laundering schemes, we see money laundered through financial institutions that are right here in this room.

We have in particular targeted CMLOs, arresting their members across the United States and overseas. As one example, in May, three members of a prolific CMLO that laundered over $92 million in illicit funds pleaded guilty to money laundering charges. One of the defendants traveled throughout the United States to collect drug trafficking proceeds and deposited those illicit funds, using both real and fake identities, into shell company bank accounts.

Beyond these illicit organizations, we are also holding companies accountable when they enable laundering of illicit narcotics proceeds. Last year, the Criminal Division’s Money Laundering and Asset Recovery Section and the District of New Jersey brought the ground-breaking prosecution of TD Bank for facilitating money laundering for drug traffickers. We continue to prosecute individuals for their involvement in this scheme. And this work – prosecuting companies, including financial institutions, and individuals that knowingly facilitate criminal conduct such as narcotics trafficking – remains a core part of our practice.

We are also targeting the money laundering networks that enable other criminals, such as fraudsters, sanctions evaders, and hackers too. A key component of our work is taking the profit out of crime and recovering victims’ funds. Earlier this year, with our partners in the U.S. Attorney’s Office for the District of Columbia, we filed a forfeiture complaint against over $225 million in cryptocurrency connected to cryptocurrency investment scams that targeted everyday Americans. And we are continuing to target overseas scam centers, and their money laundering networks, that prey on victims.

Sanctions evasion committed by, or on behalf of, our foreign adversaries poses a critical threat to our national security. In June, with our partners in the U.S. Attorney’s Office for the District of Columbia and the National Security Division, we filed an action to forfeit over $7.74 million worth of cryptocurrency being laundered on behalf of the North Korean government in connection with North Korean IT worker schemes. Such schemes, in which North Koreans misrepresent their identities to obtain jobs with U.S. companies and other organizations, have been used to fund North Korea’s weapons development program.

That brings me to an ever-present threat: Iran. Iran’s continued support for terrorism has endangered the United States for far too long. Iran carries out its terror campaign in myriad ways, from terror attacks to developing its nuclear program to human rights abuses. To finance and facilitate these criminal acts, Iran seeks access to the U.S. financial system.

With the partnership of U.S. financial institutions, we have driven Iran out of the traditional financial sector, but Iran and its proxies still seek to exploit the U.S. dollar and abuse our economy, using shadow banking, front companies, layered transactions, and complex financial networks. We are attuned to these developments and are actively working to stop this conduct and hold bad actors accountable.

I am proud that the Criminal Division continues to support these efforts across the Department. Not only by bringing our own prosecutions and seizure actions, but by offering our expertise in support of the Department’s priorities. 

These threat actors exploit the U.S. financial system for one reason: we have the safest and most dynamic financial system in the world, and criminals are determined to access our financial networks to further their crimes.

Having reviewed the threats and some of what the Department is doing to combat them, let me take a minute to discuss how we view the private sector’s role.

So, first and foremost, we want you to work cooperatively with us.

Many of you in this room are the first line of defense. You see the suspicious transactions, you know when red flags are raised. When that happens, I encourage your institutions to contact us. The faster we can move, the faster we can stop the flow of funds and choke off the funding that allows these illicit networks to prosper.

In May, I revised the Criminal Division’s Corporate Enforcement Policy to provide a clear path to companies and institutions that timely self-report potential misconduct, cooperate, and remediate. When companies self-report, they will receive the most favorable resolution we can offer. They will have to disgorge illicit proceeds, but companies can avoid charges, avoid a monitor, and avoid additional penalties. Self-reporting also allows us to focus our resources on the individuals that commit crimes, holding them accountable and dismantling the schemes they facilitate.

This is about even-handed justice. It is about putting the right incentive structures in place. We do this to encourage entities to identify wrongdoing, work cooperatively with the government to prevent crime, and ensure that we can hold individuals accountable. 

And, if you work at a company that is not interested in cooperating with the government to counter these threats, we still want to hear from you. We have expanded our whistleblower program and are focused on reports relating to our priorities, many of which I covered here today.

Since I announced the expansion of the program in May, we have received credible whistleblower tips across the spectrum of white-collar violations. In those four months, we have received 313 whistleblower tips and found 120 of them to warrant further investigation, including a number of tips relating to our priority areas – procurement fraud, trade fraud, and sanctions evasion. The program is working.

Our hope is that this is another incentive for companies to address the problems identified by their compliance personnel. Make no mistake, though. Where companies do not come forward, do not cooperate, or do not remediate, they will face consequences. White-collar enforcement remains a priority for the Criminal Division, and I have directed our prosecutors to aggressively investigate and prosecute bad actors.

The best case for all Americans is to avoid these issues or address them before they ripen. You all are here to put compliance first and stop threats before they become problems for your institution. You are here to safeguard our economy and the American people. We share those goals and look forward to working with you. 

Thank you. 

*These remarks were delivered on Tuesday, Sept. 16.

Source: United States Department of Justice Criminal Division

Today, the Antitrust Division of the Department of Justice announces its collaboration with the Federal Trade Commission (FTC) to identify over 170 anticompetitive regulations in response to the President’s Executive Order on Reducing Anti-Competitive Regulatory Barriers. Under the leadership of President Trump, the Antitrust Division, in close coordination with the FTC and federal agencies, conducted a comprehensive, government-wide effort to identify and reform anticompetitive regulations that distort markets and stifle competition.

“In America we believe in free markets, not central planning by government regulators or powerful monopolists,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division. “Lowering barriers to entry by removing anticompetitive regulations will free America’s innovators and entrepreneurs to do what they do best: drive America’s future success.”

The Executive Order recognized that federal regulations should not predetermine economic winners and losers, yet some regulations “operate to exclude new market entrants.”  It tasked the Chairman of the FTC and the Attorney General to consult with the heads of agencies and to develop a consolidated list of regulations that warrant rescission or modification in light of their anti-competitive effects. The FTC and DOJ worked closely and effectively on this review, and today Chairman Ferguson submitted an extensive list of anti-competitive regulations to the Director of the Office of Management and Budget.

Source: United States Department of Justice Criminal Division

Today, the Department of Justice’s Civil Rights Division sued the states of Oregon and Maine, and their respective Secretaries of State, for failing to provide information regarding voter list maintenance procedures and electronic copies of statewide voter registration lists.

“States simply cannot pick and choose which federal laws they will comply with, including our voting laws, which ensure that all American citizens have equal access to the ballot in federal elections,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “American citizens have a right to feel confident in the integrity of our electoral process, and the refusal of certain states to protect their citizens against vote dilution will result in legal consequences.”

The lawsuit against Oregon alleges that Oregon and its Secretary of State Tobias Read violated the National Voter Registration Act (NVRA) the Help America Vote Act (HAVA) and the Civil Rights Act of 1960 (CRA) by refusing to produce the current unredacted electronic copy of the state’s voter registration list, to provide information on the state’s voter list maintenance program, and to disclose registration information for any ineligible voters.

The lawsuit against Maine alleges that Maine and its Secretary of State Shenna Bellows violated the NVRA, HAVA, and CRA by refusing to provide data regarding the removal of ineligible individuals and to produce an unredacted, computerized state voter registration list.

Yet both states gave identical information requested by the Justice Department to a private organization.