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Source: United States Department of Justice Criminal Division

Schaefer Systems International Ltd. (SSI) has agreed to pay $876,000 to resolve alleged False Claims Act violations relating to the payment of a prohibited finder’s fee in connection with the award of an Army and Air Force Exchange Service (AAFES) contract to supply a pallet racking system for a warehouse at a U.S. military base in South Korea. SSI markets and sells warehouse logistics systems and provides related services throughout Asia. SSI disclosed the prohibited payment to the government following an internal compliance review and internal investigation.

The settlement resolves allegations that prior to the award of the AAFES contract in 2018, SSI falsely certified its compliance with a procurement integrity provision limiting the payment of commissions to certain bona fide employees and agencies. Unbeknownst to AAFES, SSI intended to pay a finder’s fee to a South Korean national who had informed SSI of the potential contracting opportunity and helped secure the contract.

“Those who do business with the government must do so fairly and honestly,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “We will hold accountable contractors that fail to follow procurement rules, but we will also give credit to those who disclose their wrongdoing, take appropriate remedial actions, and meaningfully cooperate with the government’s investigation.”      

“Department of Defense contractors have a duty to uphold their contractual obligations and deliver honest value to the American taxpayer,” said Special Agent-in-Charge Stanley A. Newell of the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS), Transnational Operations Field Office. “This civil settlement demonstrates that illicit payment schemes and kickbacks will not be tolerated. The dedicated professionals of DCIS will work tirelessly to hold those who violate the public trust accountable.”

In connection with the settlement, the United States acknowledged that SSI took a number of significant steps entitling them to credit for cooperating with the government. Following an internal compliance review and independent investigation, SSI promptly disclosed to the government the prohibited payment. SSI also provided the government with a detailed and thorough written disclosure and cooperated with the government throughout its investigation.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section and DCIS.

Fraud Section Senior Trial Counsel Andrew A. Steinberg handled the matter.

The claims resolved by the United States in the settlement are allegations only. There has been no determination of liability.

Source: United States Department of Justice Criminal Division

Two California residents pleaded guilty yesterday in connection with their roles in defrauding Medicare of nearly $16 million through sham hospice companies and to laundering the proceeds of the fraud as part of a multi-year scheme.

According to court documents, Karpis Srapyan, 35, of Winnetka, California, conspired with others, including co-defendants Petros Fichidzhyan and Juan Carlos Esparza, to bill Medicare for hospice services that were not medically necessary and never provided. To conduct their fraudulent scheme, they used a series of four sham hospice companies: one owned by Esparza and the other three owned by foreign nationals but controlled by the defendants. Srapyan and his co-defendants concealed the scheme by using foreign nationals’ personal identifying information to open bank accounts, submit information to Medicare, and sign property leases. They also misappropriated names and other identifying information of several doctors, two of whom were deceased, to fraudulently bill Medicare for purported hospice services. In total, Medicare paid the fake hospice companies nearly $16 million.

Fichidzhyan, Esparza, and Srapyan worked with others to launder the fraudulent proceeds from their hospice scheme. Susanna Harutyunyan, 39, of Winnetka, was aware that her husband and co-defendant Mihran Panosyan was involved in illegal activity with Srapyan and Fichidzhyan. As part of the money laundering scheme, Harutyunyan and her co-defendants maintained fraudulent identification documents, bank documents, checkbooks, and credit and debit cards in the names of purported foreign owners in the residence where she and Panosyan lived and another residence that was owned in her name. Srapyan conducted dozens of financial transactions, totaling approximately $3.2 million, moving funds between accounts in the names of the sham hospice companies, accounts in the names of foreign nationals that were controlled by the defendants, and other accounts involved in the money laundering scheme. Harutyunyan knowingly spent fraudulent proceeds on personal expenses, including payments for a BMW automobile.

Srapyan pleaded guilty to conspiracy to commit health care fraud and money laundering and is scheduled to be sentenced on Oct. 6. He faces a maximum penalty of 20 years in prison. Harutyunyan pleaded guilty to money laundering and is scheduled to be sentenced on Nov. 17; she faces a maximum penalty of 10 years in prison. A federal district court judge will determine their sentences after considering the U.S. Sentencing Guidelines and other statutory factors. Harutyunyan faces deportation.

Co-defendant Petros Fichidzhyan previously pleaded guilty to health care fraud, aggravated identity theft, and money laundering. In May, Fichidzhyan was sentenced to 12 years in prison. Co-defendant Mihran Panosyan pleaded guilty to money laundering in June and is scheduled to be sentenced Sept. 8. Co-defendant Juan Carlos Esparza’s change of plea hearing is scheduled for July 14.

The guilty pleas today are the most recent convictions in the Justice Department’s ongoing effort to combat hospice fraud in the greater Los Angeles area. Last year, a doctor was convicted at trial for his role in a scheme to bill Medicare for hospice services patients did not need, and two other defendants were sentenced for their roles in a hospice fraud scheme.  

Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office, and Deputy Inspector General for Investigations Christian J. Schrank of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) made the announcement.

The FBI and HHS-OIG are investigating the case.

Trial Attorneys Michael Bacharach, Sarah E. Edwards, and Allison L. McGuire of the Criminal Division’s Fraud Section are prosecuting the case, and Assistant U.S. Attorney Tara B. Vavere for the Central District of California is handling asset forfeiture.

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 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

Azumi LLC; Zuma NYC LLC; Zuma Las Vegas LLC; Zuma Japanese Restaurant Miami LLC; Inko Nito Garey St. LLC; and Beach Chu Hallandale LLC (collectively, the “Azumi Entities”) have agreed to pay $3,602,423 to resolve allegations that they violated the False Claims Act by obtaining Paycheck Protection Program (PPP) loans for which they were not eligible.

“PPP loans were intended to assist eligible small businesses during the pandemic,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When ineligible businesses improperly obtained loans, they harmed both the taxpayers who funded the program and the eligible businesses who were denied relief.”

“The Paycheck Protection Program limits were put in place to prevent large corporate groups from obtaining a disproportionate share of the limited funds that were available to assist small businesses struggling during COVID,” said U.S. Attorney Leah B. Foley for the District of Massachusetts. “Our office is committed to holding accountable those who misappropriated taxpayer-funded relief program limits.”

The PPP, an emergency loan program established by Congress in March 2020 and administered by the U.S. Small Business Administration (SBA), was intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic. Borrowers were eligible to seek forgiveness of the loans if they spent the loan proceeds on employee payroll and other eligible expenses. In January 2021, SBA announced that certain parties that had previously received PPP loans were eligible to apply for a second loan, typically referred to as a second-draw PPP loan.   

When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications and agree that they would comply with all PPP rules. Among other things, PPP rules limited the total amount of funding a single “corporate group” could receive in connection with both first-draw and second-draw loans.

The Azumi Entities are limited liability companies, each of which operates a restaurant in the United States and each of which is either fully or partially owned by Azumi Limited. As part of the settlement, the Azumi Entities admitted that they collectively received and were granted loan forgiveness for second-draw loans in a total amount that exceeded the applicable corporate group limit for second-draw loans.  

The claims resolved by the resolution announced today include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. GNGH2 Inc. v. Azumi LLC et al., No. 22-cv-11822 (D. Mass.). As part of today’s resolution, GNGH2 Inc. will receive approximately $360,000.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts with assistance from the SBA’s Office of General Counsel and Office of the Inspector General.

This matter was handled by Fraud Section Trial Attorney Kimya Saied and Senior Trial Counsel Benjamin Wei, and Assistant U.S. Attorney Julien M. Mundele for the District of Massachusetts.

Except for the facts admitted by the Azumi Entities, the claims in the complaint are allegations only, and there has been no determination of liability.

Source: United States Department of Justice Criminal Division

Two Chinese nationals and a New York woman, all members of a prolific Chinese money laundering organization (CMLO), pleaded guilty today to money laundering charges involving drug trafficking proceeds. They are the last of six total defendants charged in the indictment to plead guilty.

According to court documents, Enhua Fang, 38, and Jianfei Lu, 30, both of China, and Shu Jun Zhen, 36, of Staten Island, New York, were members of the CMLO that laundered over $92 million in illicit funds, including proceeds from the importation and distribution of illegal drugs into the United States, primarily through Mexico.

According to court documents, Fang was an organizer within the CMLO who directed a group of couriers to pick up bulk cash proceeds from unlawful activities, including narcotics trafficking, from individuals throughout the United States. The couriers then deposited these illicit funds, which generally exceeded $10,000, into shell company bank accounts controlled by the CMLO in order to conceal the nature of the illicit funds. Fang used multiple cellphones, changing phone numbers regularly, and several encrypted messaging applications to communicate with the CMLO’s foreign-based operatives and U.S.-based drug traffickers. Pursuant to her plea agreement, Fang admitted that she was personally responsible for laundering at least $90 million of illicit funds in less than two years. Fang further admitted that she knew funds laundered in the conspiracy included drug trafficking proceeds or funds intended to promote drug trafficking.

According to court documents, Lu collected drug trafficking proceeds from U.S.-based drug traffickers and deposited those illicit funds, using both real and fake identities, into shell company bank accounts registered by other members of the CMLO. Lu also served as a manager for the CMLO: he coordinated bulk cash pickups and deposits while Fang was in China and procured fake driver’s licenses for the CMLO’s couriers, which were used to deposit illicit funds at major U.S. banks. Pursuant to his plea agreement, Lu admitted that he had actual knowledge and involvement in the laundering of between $25 million and $65 million in illicit funds. Lu further admitted that he knew funds laundered in the conspiracy included drug trafficking proceeds.

According to court documents, Zhen, at Fang’s and Lu’s direction, picked up and deposited — using both her real and fake identities — nearly $25 million of illicit bulk cash, including drug trafficking proceeds. Pursuant to her plea agreement, Zhen admitted that she knew funds laundered in the conspiracy included drug trafficking proceeds or funds intended to promote drug trafficking.

Fang and Zhen each pleaded guilty to one count of money laundering conspiracy, one count of money laundering to conceal the nature, location, source, ownership, and control of the illicit proceeds, and one count of monetary transaction involving criminally derived property greater than $10,000. Lu pleaded guilty to one count of money laundering conspiracy, two counts of money laundering to conceal the nature, location, source, ownership, and control of the illicit proceeds, and two counts of monetary transaction involving criminally derived property greater than $10,000.

The defendants face a maximum penalty of 20 years in prison on each of the conspiracy and money laundering counts and a maximum of 10 years in prison on each of the monetary transaction counts. A federal district court judge will determine their respective sentences after considering the U.S. Sentencing Guidelines and other statutory factors.

All members of the CMLO charged to date have pleaded guilty, including the three who pleaded guilty on April 30, 2025; as a result, this particularly prolific cell within the CMLO has been completely dismantled.

Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, U.S. Attorney Russ Ferguson for the Western District of North Carolina, Acting Special Agent in Charge Jae W. Chung of the Drug Enforcement Administration (DEA) Atlanta Division, and Criminal Investigation Chief Guy Ficco of the IRS Investigation (IRS-CI) Charlotte Field Office made the announcement.

The DEA Charlotte District Office and the IRS-CI Charlotte Field Office are investigating the case.

Acting Assistant Deputy Chief Mingda Hang, Acting Deputy Chief Melanie Alsworth, and Trial Attorney Jayce Born of the Criminal Division’s Narcotic and Dangerous Drug Section and Assistant U.S. Attorney Alfredo De La Rosa for the Western District of North Carolina are prosecuting the case.

This case is part of Operation Take Back America, a nationwide initiative that marshals the full resources of the Department of Justice to repel the invasion of illegal immigration, achieve the total elimination of cartels and transnational criminal organizations, and protect our communities from the perpetrators of violent crime. Operation Take Back America streamlines efforts and resources from the Department’s Organized Crime Drug Enforcement Task Forces and Project Safe Neighborhoods.

Source: United States Department of Justice Criminal Division

Stantec Inc. (Stantec) a provider of environmental development and engineering services, with its primary headquarters in Alberta, Canada, along with Cardno Consulting LLC (Cardno), a separate company that Stantec acquired in 2021, have agreed to pay $4 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of applications to the Environmental Protection Agency (EPA) for Brownfields Assessment Grants that falsely certified compliance with federal procurement regulations.

“Applicants for federal grant funds must comply with applicable procurement requirements” said Assistant Attorney General Brett A. Shumate, head of the Justice Department’s Civil Division. “The department will hold accountable those who undermine the integrity of the federal grant process by falsely certifying compliance with regulations that are designed to prevent unfair competitive advantage.”

“The EPA’s Brownfields Grant Program aims to help communities around the country transform contaminated sites into community assets,” said Acting EPA Inspector General Nicole Murley. “Fair competition is critical to the integrity of this program, and the EPA Office of Inspector General will vigorously pursue allegations of false certifications to protect both the program and the taxpayer dollars that fund it.”

The EPA Brownfields Grant Program provides grants and technical assistance to cities, towns, and other municipalities to assess, safely clean up, and sustainably reuse contaminated properties. The settlement relates to Assessment Grants the EPA awarded from 2014 to 2022. Applicants for EPA Brownfields grants must certify compliance with a requirement that “contractors that develop or draft specifications, requirements, statements of work, or invitations for bids must be excluded from competing on those procurements.”

The United States alleged that, from 2014-2022, Stantec, through its subsidiary Stantec Consulting Services Inc., and Cardno drafted or assisted in the drafting of the requests for proposals and statements of work associated with applications for EPA Brownfields Assessment Grants, and then competed for and won the work for which they had drafted the specifications. The United States alleged that this conduct violated the above requirement and that Stantec and Cardno falsely certified, or caused the communities applying for the grants to certify, that they had complied with it.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the EPA’s Office of Inspector General.

The matter was investigated by Trial Attorney Robin Overby of the Civil Division’s Commercial Litigation Branch (Fraud Section) and Special Agent Brian Scriver of the EPA’s Office of Inspector General.

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