Government Enforcement Actions

April 15, 2016

Pennsylvania announced the arrest of a daughter and mother from Jefferson County charged with defrauding the Victims Compensation Assistance Program, a state program created to provide financial assistance to crime victims. The arrests of Monica Greene, 26, and Melissa L. Greene-Balbo, 46, are the result of an investigation by the Office of Attorney General’s Bureau of Criminal Investigations. According to investigators, Greene was physically assaulted and subsequently received $3,792 for moving expenses and lost wages that she was not entitled to by submitting false documentation to VCAP. Greene-Balbo, Greene’s mother, is accused of conspiring with her daughter to carry out the fraud, in part by providing false documentation, according to investigators. PA

April 15, 2016

The Department of Justice filed a civil injunction suit seeking to bar Patrick Clarke of Hallandale Beach, Florida, and Ruby Rodriguez of Orlando, Florida, from owning, operating, or franchising a tax return preparation business and preparing tax returns for others. The complaint also requests that the court order Clarke and Rodriguez to disgorge the fees that they obtained through the alleged fraudulent tax return preparation. According to the complaint, Clarke owns and operates Tax MD, a tax return preparation business with stores in Florida and North Carolina. Rodriguez allegedly manages one of Clarke’s stores located in Orlando. Clarke’s preparers, including Rodriguez, allegedly target primarily low to moderate income customers with misleading advertisements, prepare and file fraudulent tax returns to improperly increase their customers’ refunds and profit through unconscionable, exorbitant and often undisclosed fees—all at the expense of their customers and the U.S. Treasury. DOJ

April 14, 2016

A federal grand jury returned an indictment charging a District of Columbia tax return preparer with 35 counts of aiding in the preparation of false tax returns. According to the indictment, Joann Little worked at a tax return preparation business called Instant Tax Service, presently operating under the name Speedy Tax Service, which is located at 1002 H Street, NE, in Washington, D.C. The indictment alleges that Little prepared false personal income tax returns for clients for tax years 2009 through 2014. She is alleged to have attached schedules that reported inflated or fictitious deductions, which resulted in fraudulently claimed income tax refunds. DOJ

April 14, 2016

Three tax return preparers based in Minneapolis, Minnesota, were sentenced to prison for their involvement with a fraudulent return-preparation business with multiple storefronts in the Minneapolis area. According to the evidence presented at the trial, Ishmael Kosh, Amadou Sangaray, Francis Saygbay and a fourth individual, Chatonda Khofi, 50, of St. Paul, Minnesota, established a storefront location of Primetime Tax Services Inc. (Primetime), a tax return preparation business in the Minneapolis area. Along with a fifth individual, David Mwangi, 47, of Arlington, Texas, the defendants prepared over 2,000 fraudulent individual income tax returns on behalf of customers of Primetime for filing with the Internal Revenue Service (IRS) for the years 2006, 2007 and 2008. The defendants also prepared approximately 1,700 fraudulent state income tax returns for filing with the state of Minnesota for those years. At the sentencing hearing, Judge Tunheim found that the defendants’ conduct caused a total tax loss of between $1.5 and $3.5 million. DOJ

April 13, 2016

Florida announced the arrest of a Florida dentist in connection to a scheme to fraudulently obtain oxycodone. Dr. Joseph Gorfien, D.D.S., is a partner at Gorfien & Jacobsohn, P.A., a dental practice, along with partner and director Dr. Henry Jacobsohn, D.M.D. According to the investigation, Gorfien used Jacobsohn’s professional license information and prescription pad to forge, then later fill, unlawful prescriptions for oxycodone without his partner’s knowledge. Gorfien is charged with 11 counts of purchase of oxycodone, each a second-degree felony, one count of obtaining controlled substances by fraud or forgery, a third-degree felony, and one count of criminal use of personal identification information, a third-degree felony. If convicted, Gorfien faces up to 175 years in prison. FL

April 12, 2016

Florida arrested two Miami-Dade County residents for allegedly billing the Medicaid program more than $100,000 for in-home support services not rendered. According to the investigation, David Krochmal, 43, owner of Peer Link Programs, and Cecilia Ines Krochmal, 47, operated a Home Health Agency that specialized in servicing individuals with developmental disabilities. Cecilia Krochmal, David Krochmal’s sister-in-law, managed the day-to-day operations of the business. The defendants allegedly falsified service logs for individual Medicaid recipients to include in-home services, such as assisting with personal hygiene; however, told clients that the business could not afford to visit clients’ homes to provide individual services. Instead, the defendants picked up multiple Medicaid recipients to participate in group activities on the weekends. FL

April 12, 2016

The CFTC ordered Nathan Schleifer of New York City and his company Galileo Trading LLC to pay over $1.6 million in restitution and penalties for fraudulently soliciting customers to trade commodity futures and repeatedly making numerous false statements and material misrepresentations to the National Futures Association regarding their trading practices.  CFTC

April 12, 2016

Brian Hinman agreed to pay over $1 million in penalties and disgorgement to settle charges that he aided and abetted Kevin White's Texas-based entities’ RFF GP, LLC and KGW Capital Management, LLC, in a scheme that fraudulently solicited participants in a foreign currency exchange pool named Revelation Forex Fund, LP.  CFTC

April 12, 2016

Four companies that market skin care products, shampoos, and sunscreens online — ShiKai, Rocky Mountain Sunscreen, EDEN BodyWorks, and Beyond Coastal — have agreed to settle FTC charges that they falsely claimed that their products are “all natural” or “100% natural,” despite the fact that they contain synthetic ingredients. The proposed consent orders bar the four settling respondents from misrepresenting the following when advertising, promoting, or selling a product: 1) whether the product is all natural or 100 percent natural; 2) the extent to which the product contains any natural or synthetic components; 3) the ingredients or composition of a product; and 4) the environmental or health benefits of a product. FTC

April 11, 2016

Illinois announced a $41 million settlement with Goldman Sachs as a result of the investment bank’s misconduct in its marketing and sale of risky residential mortgage-backed securities (RMBS) leading up to the 2008 economic collapse. The agreement is part of a $5 billion national settlement forged by the U.S. Department of Justice (DOJ), state attorneys general from New York and California and other federal entities. The settlement includes $25 million in relief for Illinois’ pension systems and $16 million in relief for Illinois consumers. The agreement stems from an investigation concerning the investment bank’s failure to disclose the true risk of RMBS investments. IL