Government Enforcement Actions

April 25, 2016

New Jersey announced that 48 people were indicted on charges including first-degree racketeering in connection with an elaborate bank fraud scheme in which numerous defendants impersonated holders of legitimate business bank accounts in order to steal more than half a million dollars from the accounts, withdrawing most of the funds at casinos in Atlantic City. The defendants allegedly targeted business accounts at JP Morgan Chase Bank, stealing more than $570,000 from 27 business bank accounts in two schemes carried out between February 2011 and August 2012. NJ

April 25, 2016

Star Pipe Products, Ltd., a supplier of ductile iron pipe fittings, will pay $120,000 in civil penalties to resolve FTC allegations that it violated a 2012 Commission order prohibiting it from sharing competitively sensitive information. It also has agreed to an order modification that adds training and notification obligations to prevent future violations. FTC

April 22, 2016

An Austell, Georgia husband and wife pleaded guilty to charges relating to their involvement in a stolen identity income tax refund fraud scheme. Anthony Alika, 42, pleaded guilty to one count of conspiracy to commit money laundering. His wife Sonia Alika, 27, pleaded guilty to one count of illegally structuring cash withdrawals to evade bank reporting requirements. In January 2016, Anthony Alika and Sonia Alika were charged with laundering the proceeds from a stolen identity refund fraud scheme. The indictment alleged that Anthony Alika, along with Rapheal Atebefia, 33, of Austell, Georgia, obtained means of identification of actual individuals, including their names and social security numbers, and used this information to access the IRS “Get Transcript” database. The indictment further alleged that Anthony Alika, Atebefia, and others obtained prepaid debit cards from stores located in multiple states, registered the cards in the names of the stolen identities, filed false income tax returns using the stolen identities and information obtained from the Get Transcript database, and directed the IRS to deposit the tax refunds onto these cards. DOJ

April 21, 2016

The CFPB filed a lawsuit against Dmitry Fomichev and Davit Gasparyan, co-founders of T3Leads, a lead aggregator that buys consumer information – called leads – from websites that market payday and installment loans. The complaint alleges their company did not vet or monitor its lead buyers, exploited consumers’ lack of understanding of the risks, costs, and conditions of the loans applied for, and put consumer information at risk of being trafficked for illegal purposes.  CFPB

April 21, 2016

New York announced a settlement with the national drugstore chain Walgreen, Co. and its subsidiary Duane Reade (collectively, “Walgreens”) for overcharging New York consumers and using misleading advertisements. In addition to paying $500,000 in penalties, fees, and costs, Walgreens has agreed to several important reforms of its current advertising and business practices in New York. The Attorney General’s undercover investigation had found that Walgreens deceptively induced New York consumers to purchase products. Among other claims, the investigation found that Walgreens represented to consumers that they would receive the price published in print advertisements and on store shelf tags, but charged consumers a different price at the register. Walgreens operates approximately 251 Walgreens and 214 Duane Reade stores across New York State. NY

April 21, 2016

New York announced four separate settlements with auto dealers that return nearly $2 million in restitution to nearly 5,000 consumers and $174,000 in penalties and costs to the state for selling “after-sale” products. The dealerships, Koeppel Auto Group, Plaza Dealerships, Manfredi Auto Group, and Huntington Honda have locations in Staten Island, Brooklyn, Queens, Long Island and Westchester. The Attorney General charged the dealerships with unlawfully selling “after-sale” products and services, including credit repair and identity theft protection services, that often added thousands of dollars to the purchase price of the vehicle. These settlements are part of the Attorney General’s wider initiative to end the practice engaged in by many dealers of “jamming,” or unlawfully charging consumers without their consent or knowledge for purchases. NY

April 20, 2016

New York announced the arrest of Certified Nurse Aide Jessicka Cohen in Ballston Spa. Cohen was arraigned on one count of Grand Larceny in the Fourth Degree and one count of Criminal Possession of Stolen Property in the Fourth Degree, both Class E felonies. In July 2015, she allegedly stole a unique wedding ring from a resident at Saratoga Center for Rehabilitation and Skilled Nursing Center. She then allegedly sold the ring at a local store. Cohen worked at Saratoga Center through Favorite Healthcare Staffing, a local agency from at least May through July of 2015. The ring was reported missing to the staff at Saratoga Center and pursuant to the investigation, documentation was discovered that the defendant sold the ring at Ballston Coin and Jewelry, in Ballston Spa. The ring was a wedding ring that the victim never took off of her finger. NY

April 19, 2016

New Jersey announced that Lawrence Durr – a longtime committeeman, mayor and planning board member in Chesterfield Township – pleaded guilty to a criminal charge that he filed fraudulent ethics disclosure forms that failed to disclose his financial relationship to a developer. A state investigation revealed that Durr entered into an undisclosed deal to sell transferrable development rights on a 104-acre farm to the developer, and then used his official positions to advance the developer’s plan to build a major residential and commercial project at another site in the township. In pleading guilty, Durr admitted that from February 2006 through October 2007, he filed false ethics disclosure forms with the Township of Chesterfield that failed to disclose his financial relationship with Renaissance Properties Inc. He is permanently barred from public office or employment. NJ

April 18, 2016

According to a civil lawsuit filed by the Justice Department, Rose M. Chazulle, a tax return preparer in Miami has prepared fraudulent federal tax returns that claim education and fuel credits to which her clients are not entitled. The suit seeks to bar Chazulle and her company, RMC Professional Services Corporation, from preparing federal tax returns for others. According to the complaint, Chazulle prepared federal income tax returns for customers that falsely claimed refundable credits, including American Opportunity Tax Credit and Lifetime Learning Credit. Chazulle included the false education credits for customers who did not incur educational costs and otherwise did not qualify for this credit. The complaint estimates that Chazulle’s conduct cost the United States over $14 million for the tax years 2011 to 2013. DOJ

April 15, 2016

A former North Jersey chiropractor who was stripped of his license to practice more than a decade ago, has been charged with masterminding a medical fraud ring that allegedly bilked nearly $4 million from numerous insurance carriers. In an indictment handed up in Morris County Superior Court, Philip Potacco was charged with conspiracy, money laundering, and a host of other crimes in connection with the scheme he allegedly ran from his South Orange Medical Facility Consulting Group LLC (“SOTC”), 2010 to 2015. Potacco, whose chiropractic license was revoked in 2002, allegedly hired a licensed chiropractor to act as a straw owner of SOTC while he ran it covertly. Potacco allegedly used illegal “runners” to recruit accident patients to the facility, including people who had staged their crashes. Potacco then fraudulently submitted insurance claims for those patients, using the billing information of the licensed chiropractor he had hired, prosecutors said. Some of those claims were for services that were never rendered, according to prosecutors. NJ