DOJ Enforcement

October 19, 2018

Nicholas Joseph Genovese pleaded guilty to securities fraud and agreed to forfeit more than $13 million in proceeds from the fraud.  Genovese admitted to misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes as he solicited investors for a hedge fund he founded, Willow Creek Investments LP.  Genovese lost over $8 million of investor funds between January 2015 and December 2017.  SDNY

October 19, 2018

Settling a case brought by a whistleblower, mortgage lender Universal American Mortgage Company will pay $13.2 million to the United States.  UAMC acted as a direct endorsement lender in the Federal Housing Administration insurance program, originating and underwriting mortgages with FHA insurance.  Because the federal government is liable for FHA loans that default, DELs such as UAMC are required to follow underwriting and quality control rules in issuing mortgages; UAMC allegedly did not follow those rules and knowingly submitted loans for FHA insurance that did not qualify.  The whistleblower, Kat Nguyen-Seligman, a former employee of a UAMC related entity, will receive $1,980,000 from the settlement.  DOJ; USAO W.D.Wa.

October 18, 2018

A political consultant has plead guilty to illegally influencing the awarding of a Department of Energy contract to renovate part of the Lawrence Berkeley National Laboratory (LBNL). The consultant, Derf Butler, was allegedly approached by a developer who paid him $15,000 in cash to locate other developers and convince them to submit higher bids in exchange for subcontractor work on the project. He then lied to federal investigators about having any sort of financial relationship with the developer, even though by then, he'd requested another $15,000 and was anticipating additional funds. At least one developer who submitted a sham bid, Anton Kalafati of B Side Inc., has also plead guilty for his role in the fraud. USAO NDCA

October 18, 2018

Four individuals have pleaded guilty to conspiring to violate the Anti-Kickback Statute for a scheme that made payments to patient recruiters and a medical office assistant to find TRICARE beneficiaries to get prescriptions for compounded prescription pain cream, scar cream, and supplements from a doctor who had never seen the patients.  In less than one year, the scheme generated over $10 million in compound prescriptions for over 100 TRICARE beneficiaries.  E.D. Ark.

October 18, 2018

Michael Siva, a broker and financial advisor at a New York City investment bank, pleaded guilty to securities violations in connection with his role in an insider trading scheme in which Siva and co-defendants traded on material non-public information regarding potential and unannounced merger and acquisition transactions, including tender offers, which they obtained from a co-conspirator employed as a technology consultant at a different investment bank.  Siva and a co-defendant generated illicit profits in excess of $3 million on the trades, and Siva also earned thousands of dollars in commissions on the illegal trades entered on behalf of his clients. SDNY.  See also, August 2017 SEC Action.

October 18, 2018

Dr. Felmor Agatep, a Florida-based doctor, has plead guilty to receiving kickbacks and defrauding TRICARE over prescriptions to outrageously expensive and medically unnecessary pain and scar creams. According to the DOJ press release, a one month supply of the creams in question cost more than $16,000 when made by a compounding pharmacy. At some point in late 2014, Agatep agreed to receive kickbacks from a marketing group of $100 per TRICARE patient in exchange for writing prescriptions for these creams. In just a month and a half, Agatep allegedly wrote a total of 265 prescriptions, which amounted to a bill of $4.4 million for TRICARE. He now faces a maximum penalty of 10 years in prison. USAO MDFL

October 17, 2018

Two individuals formerly employed by Deutsche Bank, Matthew Connolly and Gavin Campbell Black, have been convicted of conspiracy and wire fraud for their roles in the manipulation of the London Interbank Offered Rate (LIBOR).  Connolly was the supervisor of Deutsche Bank’s Pool Trading Desk in New York; Black was a derivatives trader in London. In 2015, Deutsche Bank paid a $775 million fine for its role in the LIBOR manipulation scheme.  DOJ

October 17, 2018

A former financial advisor turned online sportswear retailer has been convicted of numerous counts of fraud for running a $20 million Ponzi scheme. Between 2014 and 2017, Dawn Bennett allegedly convinced investors to invest in her company, DJB Holdings, by misrepresenting its financial health and the investment risks. With the money she obtained from 46 investors, many of them elderly, Bennett paid legal expenses and repaid earlier investors. After the fraud was discovered, Bennett allegedly arranged to have priests in India perform protective spells on her behalf. Unfortunately for her, the spells did not work as intended, and she now faces a lifetime in prison. USAO MD

October 17, 2018

An investment advisor who owned and operated an investment firm called CM Capital Management LLC has plead guilty to running a Ponzi scheme that defrauded 53 investors of $6.1 million over the course of 13 years. In at least 13 of those cases, the investors with Edward Lee Moody, Jr.'s firm were elderly people who had entrusted him with their life savings. Instead of investing the funds on his clients' behalf, Moody used them to buy securities for himself, as well as buy a home, make car payments, and travel. To cover his tracks, he paid earlier investors using funds obtained from newer investors and created falsified statements that showed earned returns. Yet the reality was that in most of those cases, Moody hadn't even opened brokerage accounts for his clients, let alone buy securities on their behalf. He now faces a sentence of decades in prison at his sentencing in February. USAO EDVA

October 16, 2018

Two doctors and three nurses were sentenced to prison for their roles in fraudulently billing Medicare $11 million through claims submitted by two companies—Timely Home Health Services Inc., a home health provider, and Boomer House Calls, a house call provider, both in the Dallas area. The scheme allegedly took place from 2007 to 2015 and involved falsifying records so it appeared that Medicare beneficiaries received home health services when in fact they did not. The five defendants will serve sentences ranging from as little as 6 months to as much as 10 years in prison. DOJ