Government Enforcement Actions

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

November 24, 2014

Two Northern California real estate investors, Su Chu Chou “Terry” Cheng and Chung Li “George” Cheng, agreed to plead guilty for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California. According to the government, between May 2008 and January 2011, George and Terry Cheng conspired with others not to bid against one another, and instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda and Contra Costa counties. To date, as a result of DOJ’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 49 individuals have agreed to plead or have pleaded guilty. DOJ

November 24, 2014

Continental Automotive Electronics LLC andContinental Automotive Korea Ltd. have agreed to plead guilty and pay a single criminal fine of $4M for their roles in a conspiracy to rig bids of instrument panel clusters installed in vehicles sold to Hyundai Motor Co., Kia Motors Corp. and Kia Motors Manufacturing Georgia in the US and elsewhere. Instrument panel clusters are a set of instruments located on the dashboard of a vehicle that contain gauges such as a speedometer, tachometer, odometer, and fuel gauge, as well as warning indicators. 32 companies and 46 executives now have been charged in DOJ’s ongoing investigation into the automotive parts industry. Each of the charged companies have pleaded guilty and agreed to pay more than $2.4B in criminal fines. Of the 46 individuals, 26 have been sentenced to serve time in U.S. prisons. DOJ

November 21, 2014

Three Miami real estate developers, Stavroula Mendez, Lazaro Mendez and Marie Mendez, were convicted for their roles in a $20M mortgage fraud scheme involving the sale of condominium units in the Miami area. DOJ

November 21, 2014

A California man, Shahin Abdollahi, aka Sean Holdt, was sentenced to serve 18 months in prison and ordered to pay $34,712 in restitution, for remotely hacking into the computerized cash registers of Subway restaurants and fraudulently obtaining more than $40,000 in gift cards. Abdollahi admitted he owned Subway franchises in Southern California, and later operated a California company called “POS Doctor,” which sold and installed point-of-sale (POS) computer systems to Subway franchises around the country. Abdollahi further acknowledged he and Jeffrey Wilkinson conspired to remotely hack into the POS systems he installed in Subway franchises around the country. DOJ

November 21, 2014

Credit Suisse AG was sentenced today for conspiring to assist US taxpayers file false income tax returns the IRS. Credit Suisse pleaded guilty to conspiracy on May 19. The plea agreement, along with agreements made with state and federal agencies, provides that Credit Suisse will pay a total of approximately $2.6B: approximately $1.8B in a criminal fine and restitution, $100M to the Federal Reserve and $715M to the New York State Department of Financial Services. As part of the plea agreement, Credit Suisse acknowledged that, for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS. DOJ

November 19, 2014

President and founder of Happy’s Pizza, Happy Asker, was convicted of tax fraud. From June 2004 through April 2011, Asker, along with certain franchise owners and employees, executed a tax fraud scheme in which they substantially underreported gross sales and payroll amounts to the IRS for nearly all 60 Happy’s Pizza franchise restaurants located in Michigan, Ohio and Illinois. The IRS is owed more than $6.2 million in taxes as a result of this fraud scheme. DOJ

November 19, 2014

ConvergEx Global Markets Limited (CGM Limited), a brokerage subsidiary of ConvergEx Group LLC, was sentenced and ordered to pay a criminal penalty and restitution of $26M for wire fraud and conspiracy to commit securities and wire fraud in connection with a scheme to charge clients millions of dollars in unwarranted and hidden fees. The company pleaded guilty on Dec. 18, 2013. In total, CGM Limited and ConvergEx Group will pay $43.8M in criminal penalties and restitution. DOJ