Government Enforcement Actions

May 20, 2016

New Jersey announced that a chiropractor from Morris County pleaded guilty to taking more than $250,000 in illegal kickbacks from doctors and other individuals in return for referring patients to their practices, clinics and medical imaging centers. Dr. Alexander Dimeo, 61, of Budd Lake, N.J., and Fort Myers, Fla., pleaded guilty to two separate accusations before Superior Court Judge Michael A. Toto in Middlesex County. Dimeo retired last year, but he formerly operated Passaic Chiropractic & Therapy Center PC in Passaic. In pleading guilty, Dimeo admitted that between 2009 and 2015, he received approximately $254,500 in illegal kickbacks for patient referrals. NJ

May 20, 2016

New York announced that New Paltz-based construction company Lalo Drywall, Inc. and its owner Sergio Raymundo, 28, were sentenced in Manhattan Supreme Court after a conviction related to wage theft for underpaying workers at a mixed-use, commercial, and low-income residential project in Harlem. Raymundo and Lalo Drywall, Inc. admitted to cheating eight workers at a Harlem housing project out of approximately $800,000 in wages during a 17-month period. The defendants attempted to conceal the underpayments by signing false checks drawn on the company’s account indicating that employees on the job were paid properly under the law. However, those checks were never actually given to the workers. NY

May 20, 2016

Lunada Biomedical, Inc. and its three principals have settled FTC charges that they deceptively marketed Amberen, a dietary supplement, to women over 40 who are perimenopausal or menopausal, making a range of unsupported claims about its ability to help users lose weight and belly fat, and relieve menopause-related symptoms such as hot flashes and night sweats. “The Lunada defendants made strong claims about the effectiveness of their supplement without the scientific evidence to back them up,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The relief provided by this court order is intended to prevent the defendants from making unsupported health benefit claims in the future.” FTC

May 20, 2016

An Oregon woman pleaded guilty to one count of conspiracy to defraud the government with respect to claims, one count of wire fraud and one count of aggravated identity theft for running a federal income tax refund fraud scheme, announced the Justice Department’s Tax Division. Danyelle Calcagno, 41, admitted to filing at least 224 false federal income tax returns that fraudulently claimed a total of $1,220,246 in tax refunds, generally between $3,500 and $7,000 per return. Calcagno filed the fraudulent tax returns using Internet access at Portland-area hotels to disguise the source of filing. Calcagno filed the false tax returns using the names and social security numbers of other individuals obtained directly and through recruiters, including Latisha L. Simmons, 36, of Phoenix, Arizona. Calcagno directed the IRS to deposit the income tax refunds into bank accounts and onto stored value debit cards that she could access and control in order to divide the proceeds of the fraud and make it more difficult for law enforcement to identify Calcagno as the filer of the false tax returns. DOJ

May 18, 2016

New Jersey announced that a former Essex County insurance agent has been sentenced to six years in prison for submitting hundreds of fraudulent life insurance applications to reap more than $1 million in commission and bonuses from Massachusetts Mutual Life Insurance Company (MassMutual). Stanley Jerome, 33, of Orange, pleaded guilty to second-degree money laundering and insurance fraud in March. Jerome admitted to paying individuals for their identifying information which he then used to submit bogus life insurance applications to MassMutual to reap sales commissions and bonuses totaling $1,132,675. Because most of the applications were for low-income individuals, Jerome provided false employment, salary, and net worth information on the applications. NJ

May 18, 2016

The developers and marketers of the LearningRx “brain training” programs have agreed to stop making a range of false and unsubstantiated claims and pay $200,000 under a settlement with the FTC. According to the FTC’s complaint, LearningRx Franchise Corp. and its CEO, Dr. Ken Gibson, deceptively claimed that their programs were clinically proven to permanently improve serious health conditions like ADHD, autism, dementia, Alzheimer’s disease, strokes, and concussions and that the training substantially improved school grades and college admission test scores, career earnings, and job and athletic performance. FTC

May 17, 2016

New Jersey announced that a lawyer who practiced in Jersey City has been indicted by a state grand jury on charges that he stole more than $1.5 million from five clients over a period of more than 10 years. From October 2004 through May 2015, Joseph J. Talafous Jr. allegedly stole approximately $1,528,022 from clients, and laundered most of the funds through his attorney trust account and/or attorney business account. Among other allegations, Talafous is accused of stealing approximately $402,418 from a trust set up for the benefit of a young boy in 2005 with funds from a wrongful death suit stemming from the death of his father. The father died in 2001 in a workplace accident when the child, a West New York resident, was still an infant. NJ

May 17, 2016

Two brothers were sentenced to prison in the U.S. District Court for the District of Maryland after pleading guilty in January for perpetrating a scheme in which they filed 46 fraudulent income tax returns seeking refunds in excess of $224 million, announced the Justice Department’s Tax Division. Sean and Eric Gallman were each ordered to pay restitution to the IRS in the amount of $16,512,492. According to evidence presented by the government, the Gallmans established trusts and business entities and used mailboxes at numerous private commercial postal carrier stores in Maryland and North Carolina as the addresses for the trusts and business entities. The defendants, acting as trustees and agents, mailed fraudulent tax returns to the IRS in the names of the trusts and businesses requesting refunds. DOJ

May 13, 2016

Buffalo, New York-based M&T Bank Corp agreed to pay $64 million to settle charges it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements.  Specifically, the government alleged that M&T Bank failed to comply with certain FHA origination, underwriting and quality control requirements.  DOJ

May 13, 2016

A permanent injunction was entered against Detroit-based Scotty’s Incorporated and its co-owner and manager Sandra J. Jackson to prevent the distribution of adulterated ready-to-eat sandwiches.  According to the government, Scotty’s, which does business as Bruce Enterprises and Bruce’s Fresh Products, distributes ready-to-eat sandwiches prepared, packed or held under insanitary conditions and in violation of the Federal Food, Drug and Cosmetic Act.  DOJ