Category: MIL-OSI

Source: United States Department of Justice Criminal Division

Today, the Justice Department, joined by the Federal Trade Commission (the “Agencies”) filed a statement of interest in the Eastern District of Texas in the case of Texas et al. v. BlackRock, Inc. The States’ lawsuit—led by the Texas Attorney General—alleges that BlackRock, State Street, and Vanguard used their management of stock in competing coal companies to induce reductions in output, resulting in higher energy prices for American consumers. This is the first formal statement by the Agencies in federal court on the antitrust implications of common shareholdings.

On Jan. 29, President Trump issued Executive Order 14156, declaring a national energy emergency. On April 8, Executive Order 14261 called for “increase[d] domestic energy production, including coal.” As the Agencies’ statement makes clear, protecting competition for coal furthers these policies by enabling the free market to unleash America’s energy security and economic dynamism.

“The President has declared a national energy emergency, and we need competition in coal production now more than ever to help fuel American energy dominance,” said Assistant Attorney General Abigail A. Slater of the Justice Department’s Antitrust Division. “American consumers suffer when institutional asset managers use shareholdings in competing companies to orchestrate output reductions. As the Supreme Court has held, ‘social justifications’ for anticompetitive conduct ‘do not make it any less unlawful.’ We will not hesitate to stand up against powerful financial firms that use Americans’ retirement savings to harm competition under the guise of ESG.”

Today’s statement of interest explains that while antitrust safe harbors for passive investment protect most index fund investing and beneficial corporate governance advocacy, they do not protect the use of commonly managed stock in competitors to encourage market-wide reductions in output. The statement explains how the law protects typical shareholder behavior, how the States’ complaint alleges an anticompetitive campaign, and how the law should properly be applied to the States’ claims.

The Antitrust Division routinely files statements of interest and amicus briefs in federal court where doing so helps protect competition and consumers, including by encouraging the sound development of the antitrust laws. A collection of these statements of antitrust and amicus filings is publicly available on the Division’s website. 

Source: United States Department of Justice Criminal Division

L3 Technologies Inc., a corporation doing business in Utah, has agreed to pay the United States $62 million to settle allegations that its division, Communications System West, violated the False Claims Act and the Truth In Negotiations Act by knowingly making false statements and submitting and causing the submission of false claims by failing to disclose accurate, current, and complete cost or pricing data for communications equipment sold to various Department of Defense agencies, including the Air Force, Army, and Navy, and other government agencies.

L3 manufactures communications equipment to operate unmanned vehicles and retrieve data and visuals for military operations and intelligence. The devices are known as remote operations video enhanced receivers (ROVER), Video-Oriented Transceivers for Exchange of Information (VORTEX), and Soldier Intelligence, Surveillance, and Reconnaissance (SIR) receivers.  The United States has purchased ROVER, VORTEX, and SIR products through sole source, fixed price contracts, and L3 also has supplied these products under subcontracts with other prime contractors who manufacture unmanned vehicles.

The settlement resolves allegations that, between October 2006 and February 2014, L3 failed to disclose accurate, complete, and current cost or pricing data relating to the labor, material, and other costs for manufacturing the ROVER, VORTEX, and SIR products, and each of their versions and kits, and falsely certified that it had done so in dozens of government contract proposals.  The United States alleged that this conduct violated the Truth in Negotiations Act, which requires a contractor to provide to the government at the time of an agreement on price the most current, complete, and accurate facts that could reasonably be expected to affect price negotiations significantly.  The United States further alleged that, by failing to disclose accurate, complete, and current cost or pricing data, L3 knowingly submitted or caused the submission of false claims in connection with the ROVER, VORTEX, and SIR contracts and subcontracts in violation of the False Claims Act.

“The Department will vigorously pursue federal contractors who fail to provide truthful information during contract negotiations to ensure federal agencies do not overpay for products and services.” said Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division.

“Taking advantage of the resources that support the armed forces of the United States and other government agencies will not be tolerated,” said Acting United States Attorney Felice John Viti of the District of Utah. “The U.S. Attorney’s Office will continue to work with our law enforcement partners to investigate and hold accountable individuals and contractors who defraud the government.”

“This $62 million settlement underscores the Air Force Office of Special Investigations (OSI) commitment to protecting national security and ensuring the integrity of Department of Defense acquisitions.,” stated OSI Special Agent Jeffery T.E. Herrin. “L3’s defective pricing in contract proposals for critical systems like ROVER, VORTEX, and SIR erodes public trust, and OSI, through robust law enforcement partnerships, will continue to uphold law and order within the defense industry.”

“This settlement is the result of a collaborative effort to guard against fraud, waste, and abuse, demonstrating the commitment of the Army Criminal Investigation Division (CID) and our partner agencies to safeguard public funds,” said Special Agent in Charge Olga Morales of the Department of the Army CID Southwest Field Office. “Investigating companies that defraud the Army is crucial to maintaining the trust of the American public and upholding the integrity of government contracting.”

The settlement resulted from a coordinated effort among the Civil Division’s Fraud Section and the U.S. Attorney’s Office for the District of Utah with assistance from the Defense Contract Management Agency, the Department of the Air Force, the Department of the Army, the Department of the Navy, and the Special Operations Command.  Senior Trial Counsel A. Thomas Morris and former Senior Trial Counsel Russell Kinner of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorney Carra Cadman for the District of Utah handled the matter.

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

Source: United States Department of Justice Criminal Division

Defendants Caused Combined Tax Loss of Nearly $10M and Facilitated Employment of Undocumented Aliens

Source: United States Department of Justice Criminal Division

A Texas rheumatologist was sentenced to 10 years in prison and three years of supervised release for perpetrating a health care fraud scheme involving over $118 million in false claims and the payment of over $28 million by insurers as a result of him falsely diagnosing patients with chronic illnesses to bill for tests and treatments that the patients did not need. Jorge Zamora-Quezada M.D., 68, of Mission, also falsified patient records to support the false diagnoses after receiving a federal grand jury subpoena. Following a 25-day trial, Zamora-Quezada was convicted of one count of conspiracy to commit health care fraud, seven counts of health care fraud, and one count of conspiracy to obstruct justice. In addition to his prison term, Zamora-Quezada was ordered to forfeit $28,245,454, including 13 real estate properties, a jet, and a Maserati GranTurismo.

According to the evidence presented at trial, Zamora-Quezada falsely diagnosed his patients with rheumatoid arthritis and administered toxic medications in order to defraud Medicare, Medicaid, TRICARE, and Blue Cross Blue Shield. The fraudulent diagnoses made the defendant’s patients believe that they had a life-long, incurable condition that required regular treatment at his offices. After falsely diagnosing his patients, Zamora-Quezada administered unnecessary treatments and ordered unnecessary testing on them, including a variety of injections, infusions, x-rays, MRIs, and other procedures—all with potentially harmful and even deadly side effects. To receive payment for these expensive services, Zamora-Quezada fabricated medical records and lied about the patients’ condition to insurers.

“Dr. Zamora-Quezada funded his luxurious lifestyle for two decades by traumatizing his patients, abusing his employees, lying to insurers, and stealing taxpayer money,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division. “His depraved conduct represents a profound betrayal of trust toward vulnerable patients who depend on care and integrity from their doctors. Today’s sentence is not just a punishment—it’s a warning. Medical professionals who harm Americans for personal enrichment will be aggressively pursued and held accountable to protect our citizens and the public fisc.”

“Through the false diagnoses and excessive false billing, Dr. Zamora-Quezada abused both patient trust and public resources,” said Special Agent in Charge Jason E. Meadows of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “It is imperative to investigate and address this form of fraud — not only to protect vulnerable individuals from harm but to uphold the integrity of the federal health care system and safeguard the use of public funds.”

“The FBI is dedicated to working with all of our partners to address health care fraud,” said Special Agent in Charge Aaron Tapp of the FBI’s San Antonio Field Office. “This case was not only a concern to us because of the financial loss — the physical and emotional harm suffered by the patients and their families was alarming and profound. We hope this significant sentence will help bring closure to the many victims in this case.”

Evidence at trial established that Dr. Zamora-Quezada falsely diagnosed patients in order to defraud insurers and enrich himself. Other rheumatologists in the Rio Grande Valley testified at trial that they saw hundreds of patients previously diagnosed with rheumatoid arthritis by Zamora-Quezada who did not have the condition, prompting one physician to explain that for “most” it was “obvious that the patient did not have rheumatoid arthritis.” Zamora-Quezada’s false diagnoses and powerful medications caused debilitating side effects on his patients, including strokes, necrosis of the jawbone, hair loss, liver damage, and pain so severe that basic tasks of everyday life, such as bathing, cooking, and driving, became difficult. As one patient testified, “Constantly being in bed and being unable to get up from bed alone, and being pumped with medication, I didn’t feel like my life had any meaning.” One mother described how she felt that her child served as a “lab rat,” and others described abandoning plans for college or feeling like they were “living a life in the body of an elderly person.”

Former employees detailed how Zamora-Quezada imposed strict quotas for procedures, leading to a climate of fear. Zamora-Quezada referred to himself as the “eminencia” — or eminence, threw a paperweight at an employee who failed to generate enough unnecessary procedures, hired employees he could manipulate because they were on J-1 visas and their immigration status could be jeopardized if they lost their jobs, and fired those who challenged him. Testimony also revealed Zamora-Quezada’s obstruction of insurer audits by fabricating missing patient files, including by taking ultrasounds of employees and using those images as documentation in the patient records. Testimony at trial established that Zamora-Quezada told employees to “aparecer” the missing records — “to make them appear.” Former employees also recounted being sent to a dilapidated barn to attempt to retrieve records. There, files were saturated with feces and urine, rodents, and termites that infested not only the records but also the structure.

Zamora-Quezada’s patient file storage facility

Zamora-Quezada used proceeds from his crimes to fund a lavish lifestyle, replete with real estate properties across the country and in Mexico, a jet, and a Maserati.

One of Zamora-Quezada’s luxury properties

Zamora-Quezada’s jet

FBI, HHS-OIG, Texas HHS-OIG, and the Texas Medicaid Fraud Control Unit investigated the case, with assistance from the Defense Criminal Investigative Service.

Principal Assistant Chief Jacob Foster and Assistant Chiefs Rebecca Yuan and Emily Gurskis of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Laura Garcia for the Southern District of Texas prosecuted the case. Assistant U.S. Attorney Kristine Rollinson handled asset forfeiture. Fraud Section Assistant Chief Kevin Lowell initially handled the prosecution. The prosecution team thanks the Fraud Section’s Data Analytics Team, whose work initiated the investigation, Victim Witness Specialist Olga De La Rosa of the U.S. Attorney’s Office for the Southern District of Texas, and the Texas Department of Insurance.

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.

Source: United States Department of Justice Criminal Division

An Illinois man and a foreign national were arrested yesterday on criminal charges related to their alleged submission of more than $227 million in fraudulent claims to Medicare.

According to court documents, Syed Murtuza Kablazada, 34, of Arlington Heights, and Syed Mehdi Hussain, 32, of Carol Stream, owned and operated purported medical laboratories that submitted fraudulent claims to Medicare for the reimbursement of over-the-counter COVID-19 test kits allegedly provided to Medicare beneficiaries. The defendants allegedly installed foreign nationals to act as nominee owners at the laboratories to submit fraudulent claims to Medicare for the provision of over-the-counter COVID-19 test kits, with the understanding the nominee owners would flee the United States when they learned that their laboratory was under investigation.

“As alleged, the defendants used straw owners at multiple laboratories to cause the submission of more than $200 million in fraudulent claims to Medicare for COVID-19 test kits,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division. “Health care fraud harms Americans by squandering taxpayer money and diverting limited resources from those who need them most. The Criminal Division will continue to aggressively prosecute these crimes to hold fraudsters accountable, protect victims, and recover financial losses.”

“The overwhelming fraud uncovered in this investigation details a blatant disregard for America’s critical health care program, Medicare, and puts all patients at risk,” said Special Agent in Charge Douglas S. DePodesta of the FBI Chicago Field Office. “The FBI and our partners will not tolerate anyone who abuses the health care system for personal gain and will aggressively pursue justice on behalf of both patients and taxpayers.”

“The submission of fraudulent claims to Medicare for products or services not dispensed or not medically necessary undermines the integrity of this valuable program, intended to protect the most vulnerable in our community,” said Deputy Inspector General for Investigations Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Today’s arrests demonstrate our unwavering commitment, working in conjunction with our law enforcement partners, to identify, investigate and bring to justice those who seek to defraud our nation’s federal healthcare programs.” 

As alleged in the indictment, the defendants rarely provided Covid-19 test kits to Medicare beneficiaries but instead submitted reimbursement claims on behalf of beneficiaries who had not requested COVID-19 test kits, including individuals who were deceased. Further, the defendants allegedly paid a marketing company to provide the names of hundreds of thousands of Medicare beneficiaries that the defendants used to submit fraudulent claims. In total, between September 2022 and June 2023, the defendants’ labs billed Medicare approximately $227 million in fraudulent claims, of which Medicare paid approximately $136 million in reimbursements.

Kablazada and Hussain are both charged by indictment with four counts of health care fraud. If convicted, they face a maximum penalty of 10 years in prison on each of the four counts.

The FBI Chicago Field Office and HHS-OIG are investigating the case.

Trial Attorney Andres Q. Almendarez of the Criminal Division’s Fraud Section is prosecuting the case, with assistance from Assistant U.S. Attorney Jasmina Vajzovic for the Northern District of Illinois.

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 9 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 the Office of the Inspector General for the Department of Health and Human Services, 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.