DOJ Enforcement

December 4, 2014

Asem Elgawhary, former Principal Vice President of Bechtel Corporation and General Manager of the Power Generation Engineering and Services Company (PGESCo), pleaded guilty in connection with a $5.2M kickback scheme intended to manipulate the competitive bidding process for state-run power contracts in Egypt. In his plea agreement, Elgawhary admitted that, from 1996 to 2011, he was assigned by Bechtel to be the general manager at PGESCo, a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company (EEHC) and that he accepted a total of $5.2M from three power companies, which they paid to secure a competitive and unfair advantage in the bidding process. DOJ

December 4, 2014

The U.S. District Court for the Central District of California entered a permanent injunction against Neptune Manufacturing Inc. to prevent the distribution of adulterated seafood products. This follows a complaint DOJ filed at the request of the U.S. Food and Drug Administration (FDA) alleging the company’s seafood products are produced under conditions that are inadequate to ensure the safety of its products. DOJ

December 3, 2014

Rite Aid Corporation agreed to pay $3M to resolve allegations it violated the False Claims Act by offering illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies. The government alleged that from 2008 to 2010, Rite Aid had improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business. The charges originated in a whistleblower complaint filed by Jack Chin under the qui tam provisions of the False Claims Act. Chin will receive a whistleblower award of approximately $500,000. DOJ

December 2, 2014

Luis Duluc, a Florida owner and operator of multiple physical therapy rehabilitation facilities, was sentenced to serve 11 years in prison for his role in organizing a $28.3M Medicare fraud scheme involving physical and occupational therapy services. Duluc was chairman and president of a Delaware holding company known as Ulysses Acquisitions Inc. which was used to purchase comprehensive outpatient rehabilitation facilities and outpatient physical therapy providers, including West Coast Rehab Inc. in Fort Myers, Florida; Rehab Dynamics Inc. in Venice, Florida;Polk Rehabilitation Inc. in Lake Wales, Florida; and Renew Therapy Centerof Port St. Lucie LLC in Port St. Lucie, Florida. Duluc admitted that he and his co-conspirators paid kickbacks to obtain, and stole, the personal identifying information of Medicare beneficiaries and used this information to create and submit false claims to Medicare through the clinics owned by Ulysses Acquisitions. DOJ

December 1, 2014

Ohio’s former deputy treasurer Amer Ahmad and Chicago businessman Joseph Chiavaroli were sentenced to serve 15 years and 18 months in prison, respectively, for their roles in a bribery and money laundering scheme involving the Ohio Treasurer’s Office. DOJ

December 1, 2014

Kosei Tamura, a general manager for Japan-based auto radiator manufacturer T.RAD Co. Ltd., agreed to plead guilty and to serve one year in a U.S. prison for participating in a conspiracy to fix prices of radiators installed in cars sold to Honda Motor Co. Ltd. and certain of its subsidiaries in the US and elsewhere. In addition to the prison sentence, Tamura agreed to pay a $20,000 criminal fine and to cooperate with DOJ’s ongoing investigation. In November 2013, T.RAD pleaded guilty and was sentenced to pay a $13.75M criminal fine for its role in the conspiracy. Including today’s charges, 48 individuals have been charged in the ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines. DOJ

December 1, 2014

Kazumi Umahashi, former General Manager of Japanese auto parts maker Mitsuba Corporation, agreed to plead guilty and serve 13 months in prison for conspiring to fix the prices and allocate the supply of windshield wiper systems and starter motors sold to Honda Motor Co. Ltd. and its subsidiaries and affiliates in the U.S. and elsewhere. He also agreed to pay a $20,000 criminal fine. In November 2013 Mitsuba pleaded guilty for its involvement in the conspiracy and agreed to pay $135M in criminal fines. Including today’s charges, 48 individuals have been charged in DOJ’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines. DOJ

December 1, 2014

Maricopa County Community College District (MCCCD) agreed to pay $4M to resolve allegations under the False Claims Act that it submitted false claims to the Corporation for National and Community Service concerning AmeriCorps state and national grants. The allegations first arose from a whistleblower lawsuit filed by MCCCD employee Christine Hunt under the qui tam provisions of the False Claims Act. She will receive a whistleblower award of $775,827. DOJ

December 1, 2014

North Atlantic Medical Services Inc., doing business as Regional Home Care Inc., agreed to pay $852,378 to resolve allegations it violated the False Claims Act by submitting claims to Medicare and Medicaid for respiratory therapy services provided by unlicensed personnel. NAMS is a medical device company based in Massachusetts that provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea. According to the government, from September 2010 to January 2013, NAMS used unlicensed employees to set up sleep apnea masks and oxygen therapy equipment for patients in Massachusetts. The charges were initiated by former NAMS employees Konstantinos Gakis and Demetri Papageorgiou who filed a whistleblower action under the qui tamprovisions of the False Claims Act. They will receive a whistleblower award of $153,428. DOJ

November 25, 2014

Danish citizen Hammad Akbar pleaded guilty and was ordered to pay a fine of $500,000 for advertising and selling StealthGenie, a spyware application that could remotely monitor calls, texts, videos and other communications on mobile phones without detection. This marks the first-ever criminal conviction concerning the advertisement and sale of a mobile device spyware app. Akbar is the chief executive officer of InvoCode Pvt. Limitedand Cubitium Limited, the companies that advertised and sold StealthGenie online. StealthGenie could be installed on a variety of different brands of mobile phones, including Apple’s iPhone, Google’s Android, and Blackberry Limited’s Blackberry. Once installed, it could intercept all conversations and text messages sent using the phone. The app was undetectable by most users and was advertised as being untraceable. DOJ