Government Enforcement Actions

March 28, 2016

Tennessee-based defense contractor Kilgore Flares Company and one of its subcontractors, New York-based ESM Group Inc., agreed to pay $8 million to resolve charges they violated the False Claims Act by selling defective and illegally imported infrared countermeasure flares to the U.S. Army and, for ESM, knowingly evading U.S. customs duties.  The allegations first arose in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Reade Manufacturing Company, a domestic manufacturer of magnesium powder which is used in the flares.  The company will receive a whistleblower award of $400,000 from the proceeds of the government’s recovery from ESM.  Whistleblower Insider  

March 25, 2016

Damian Mayol, the president of Miami-based transportation company Transportation Services Providers Inc. was sentenced to 60 months in prison and to pay $26.8 million in restitution (and forfeit the same amount) for his role in a health care fraud scheme involving three mental health centers that resulted in the submission of approximately $70 million in false Medicare claims.  According to evidence presented at trial, Mayol and his co-conspirators used his company to coordinate the payment of illegal kickbacks to recruiters, who in return referred patients to three now-defunct community mental health centers -- R&S Community Mental Health Inc., St. Theresa Community Mental Health Center Inc. and New Day Community Mental Health Center LLC -- for costly partial hospitalization program services that were not medically necessary or not actually provided.  DOJ

March 25, 2016

U.S. Navy Capt. Daniel Dusek was sentenced to 46 months in prison for giving classified information to a foreign defense contractor in exchange for prostitutes, luxury travel and other gifts.  He is the highest-ranking official charged in a massive Navy bribery scandal.  Dusek admitted he used his influence as Deputy Director of Operations for the Seventh Fleet, headquartered in Yokosuka, Japan, and later as executive officer of the USS Essex and the commanding officer of the USS Bonhomme Richard, to benefit Leonard Glenn Francis and his company, Glenn Defense Marine Asia.  DOJ

March 23, 2016

Detroit-area doctor Laran Lerner was sentenced to 45 months in prison and to pay $2.8 million in restitution for his role in a $5.7 million Medicare fraud scheme in which he prescribed medically unnecessary controlled substances and billed for office visits and diagnostic testing that never took place.  DOJ

March 23, 2016

Gilbert G. Lundstrom, the former CEO of TierOne Bank -- a $3 billion publicly-traded commercial bank formerly headquartered in Lincoln, Nebraska -- was sentenced to 132 months in prison and to pay a $1.2 million fine for orchestrating a scheme to defraud TierOne’s shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate.  DOJ

March 23, 2016

Abraham Jose Shiera Bastidas, the owner of multiple U.S.-based energy companies, pleaded guilty to violating the Foreign Corrupt Practices Act by paying bribes to secure energy contracts from Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A.  DOJ

March 23, 2016

Pennsylvania-based Respironics Inc. agreed to pay $34.8 million to resolve charges it violated the False Claims Act and Anti-Kickback Statute by paying kickbacks in the form of free call center services to durable medical equipment (DME) suppliers that bought its masks for patients with sleep apnea.  Respironics allegedly provided DME companies with call center services to meet their patients’ resupply needs at no charge as long as the patients were using masks that Respironics manufactured; otherwise, the DME companies would have to pay a monthly fee based on the number of patients who used masks manufactured by a competitor of Respironics.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Dr. Gibran Ameer, who has worked for different DME companies.  He will receive a whistleblower award of $5.38 million from the proceeds of the government's recovery.  DOJ

March 21, 2016

Florida audiologist Terri L. Schneider was sentenced to 94 months in prison and to pay $2.5 million in restitution for her role in a multimillion-dollar health care fraud and money laundering scheme. According to evidence presented at trial, Schneider and her co-conspirators used three purported medical clinics in Florida -- Cornerstone Health Specialists, Summit Health Specialists and Coastal Health Specialists -- to submit approximately $12.3 million in false Medicare claims seeking reimbursement for radiology, audiology, cardiology and neurology services.  The evidence showed that Schneider and her co-conspirators used forged and falsified documents in the Medicare enrollment process for the medical clinics that they operated under false pretenses, and billed Medicare for services that had not been rendered by physicians.  They also paid illegal kickbacks in exchange for access to Medicare patients and Medicare patient information used in the fraud scheme.  DOJ

March 21, 2016

Maryland-based Coastal International Security, Inc. agreed to pay a total of $1.65 million to resolve criminal and civil allegations that the company defrauded the State Department during performance of a security contract and later concealed the fraud from contracting officials, and civil allegations that the company improperly obtained and used competitors’ pricing information to underbid competitors on government task orders.  Coastal International simultaneously agreed to pay $1.5 million to resolve civil claims under the False Claims Act for this conduct, as well as claims under the Procurement Integrity Act.  DOJ (EDVA)

March 18, 2016

A federal jury in New Orleans convicted Elaine Davis and Dr. Pramela Ganji for their roles in a $34 million Medicare fraud scheme.  The jury found that Davis, who owned Christian Home Health Care Inc., together with Ganji caused the healthcare company to bill Medicare for home health care services that were not needed and/or not actually provided.  Davis paid employees to recruit new patients and then sent their Medicare information to doctors, including Ganji, to obtain their signatures to certify that the patients qualified to receive home health care services, which trial evidence showed they did not qualify for or need.  DOJ