Criminal Proceedings

January 27, 2021

One of the largest marketing companies in the world, Epsilon Data Management LLC, has agreed to pay $150 million to settle claims that its Direct to Consumer (DTC) Unit knowingly sold the data of more than 30 million consumers—which the company had identified as most likely to respond to marketing solicitations—to clients it knew were engaged in fraud schemes against the elderly and other vulnerable individuals.  In addition to the monetary settlement, $127.5 million of which will be set aside for victim restitution, Epsilon has entered into a deferred prosecution agreement with the government, agreed to implement significant compliance measures to safeguard consumer data, and agreed to maintain a procedure for consumers to request that their data not be sold.  USAO CO

January 15, 2021

The co-owner of multiple compounding pharmacies and pharmaceutical distributors in Mississippi has been sentenced to 18 years in prison and ordered to pay over $287 million in restitution and over $56 million in forfeiture after pleading guilty to healthcare fraud and money laundering.  As part of his guilty plea, Wade Ashley Walters admitted to being the mastermind behind a four-year scheme that defrauded TRICARE and private health benefit programs of over $287 million.  To perpetuate the fraud, Walters and his co-conspirators solicited and paid recruiters to procure prescriptions for highly reimbursed compounded medications, solicited and paid physicians to authorize prescriptions for same, adjusted prescription formulas to ensure the highest reimbursement possible, and improperly waived or reduced mandatory beneficiary copayments.  USAO SDMS

January 14, 2021

Indonesia-based paper products manufacturer PT Bukit Muria Jaya will pay $1.6 million and enter into a deferred prosecution agreement with a compliance program to resolve charges that the company illegally shipped products to North Korea in violation of U.S. sanctions law, and took steps to conceal the true nature of the transactions from U.S. banks.  DOJ; OFAC

January 11, 2021

Steve Chen was sentenced to 10 years in prison following his guilty plea to charges arising from his promotion of a pyramid/Ponzi scam that netted $147 million from tens of thousands of investors.  Chen told victims that they could purchase interests in U.S. Fine Investment Arts, Inc. and other companies owned by him, falsely claiming that those companies mined and sold amber and other gemstones, and enlisted those investors to recruit others by awarding them bonuses and “Gem Coins” that he claimed were a digital currency.  USAO CD Cal

January 8, 2021

Ducci Electrical Contractors, Inc. has agreed to pay more than $3.2 million to resolve criminal and civil charges alleging fraud on two public construction contracts in Connecticut that were largely funded by the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program.  The two contracts—one from 2007 that was valued at over $79 million, and the other from 2012 that was valued at nearly $7 million—Ducci indicated that it would subcontract with a particular DBE at 13% and 12% respectively.  However, in violation of the terms of the program, Ducci controlled most of the decisions made by the DBE, preventing the DBE from performing a commercially useful function on either contract, and falsely submitted to the government that the DBE had performed the work.  USAO CT

January 7, 2021

The Boeing Company entered into a deferred prosecution agreement regarding charges arising from its misrepresentations to the FAA about components of the Boeing 737 MAX.    As part of the agreement, Boeing will pay over $2.5 billion, consisting of a $243.6 million criminal penalty, $1.77 billion in compensation to 737 Max purchasers, and the establishment of a $500 million crash-victim beneficiaries fund to compensate the heirs, relatives, and legal beneficiaries of the passengers killed on Lion Air Flight 610 and Ethiopian Airlines Flight 302. In addition, Boeing admitted that the company concealed information about changes to the 737 MAX’s Maneuvering Characteristics Augmentation System (MCAS) from the FAA’s Airplane Evaluation Group, resulting in the FAA AEG approving the plane without reference to the MCAS system, depriving pilots of information about the MCAS changes.  Boeing also admitted continuing to conceal information about MCAS from the FAA after the Lion Air crash.  In addition to the monetary penalties, Boeing agreed to strengthen its compliance programs.  DOJ

January 7, 2021

Andrei Tyurin, who previously pleaded guilty to an extensive computer hacking campaign that targeted financial institutions, brokerage firms, and financial publishers, was sentenced to 12 years in prison.  Tyurin’s hacking, which included the theft of data for 80 million customers of J.P. Morgan Chase, was done in part in to advance securities fraud schemes with co-conspirators.  USAO SDNY

December 21, 2020

Government contractor Schneider Electric Buildings Americas Inc. will pay a total of $11 million to resolve criminal and civil claims that it overcharged the government on eight separate energy savings performance contracts under which the company was to install energy upgrades including solar panels, LED lighting, and insulation, in federal buildings.  The company admitted to wrongdoing including the disguising of unauthorized design costs by charging them to unrelated contract components and the receipt of kickbacks from subcontractors on the ESPCs. $9.3 million of the settlement resolves civil liability under the False Claims Act and Anti-Kickback Act; $1.7 million is denominated as criminal forfeiture.  DOJ