Criminal Proceedings

August 31, 2020

Brooklyn, New York resident Aleksander Pikus was sentenced to 13 years in prison and ordered to pay $39.4 million in restitution and forfeit $2.6 million following his conviction at trial for charges related to a kickback and tax avoidance scheme involving a number of medical clinics in Brooklyn and Queens.  Pikus referred patients to the clinics, receiving kickbacks in exchange, which he used to pay patient recruiters and patients themselves.  Pikus used shell companies and fake invoices to conceal his scheme and failed to report cash income to the IRS.  DOJ; USAO ED NY

August 28, 2020

Herbalife Nutrition Ltd. will pay over $123 million to resolve claims that the US-based company violated the Foreign Corrupt Practices Act by paying bribes to Chinese officials and other state-owned entities in order to secure required direct selling licenses, improperly influence Chinese investigations into Herbalife's business, and improperly influence Chinese state-owned and state-controlled media for the purpose of removing negative media reports about Herbalife. Herbalife admitted that over the course of ten years it falsified its books and records in order to provide corrupt payments and benefits to Chinese government officials.  To resolve criminal charges, Herbalife will enter into a deferred prosecution agreement and pay a $55 million criminal penalty; to resolve civil charges by the SEC, Herbalife will pay disgorgement and interest totaling approximately $67 million.  DOJ; USAO SDNY; SEC

August 26, 2020

LA-based clothing company Ambiance Apparel and its owner Sang Bum “Ed” Noh have pleaded guilty to customs violations and tax offenses, agreeing to pay a total of $118 million, which includes $36 million in previously-seized cash.  Defendants evaded import tariffs by colluding with Asian manufacturers for the submission of invoices to CBP that fraudulently understated the value of imported clothing. The fraudulent invoices indicated payment terms by letter of credit; a second invoice for the balance of the actual price was paid by defendants by wire transfer. In less than five years, Ambiance undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs. In addition, defendants failed to properly report cash transactions and maintained a second set of books for cash transactions, evading nearly $17 million in taxes.  The company will be placed on probation for five years and will be ordered to undertake specific compliance procedures.  USAO CD Cal

August 19, 2020

The Bank of Nova Scotia (Scotiabank) has been ordered to pay $127.4 million to the CFTC and $60.4 million in criminal fines, forfeiture, and restitution to the DOJ for attempting to manipulate prices and spoofing in precious metals futures contracts, making false and misleading statements to investigators, and failing to comply with swap dealer conduct and supervision requirements.  The alleged misconduct occurred over the eight years ending in 2016 and involved four precious metals traders in New York, London, and Hong Kong.  From the penalty paid to the CFTC, a record-breaking $42 million will go toward resolving the price manipulation and spoofing allegations, and a record-breaking $17 million will go toward resolving the false and misleading statements allegations.  In addition to the fines, Scotiabank has entered into a deferred prosecution agreement and agreed to retain an independent monitor.  CFTC; DOJ; USAO NJ 

August 7, 2020

A Canadian member of a large international fraud and money laundering ring has been sentenced to over 10 years in prison and ordered to pay $14.5 million in restitution for his role in defrauding victims from Australia, New Zealand, the United Kingdom, and Asia.  From at least 2014 to 2019, Brooks Thomas Nesbitt set up and operated “boiler rooms” to defraud victims using high-pressure sales of worthless investments.  Nesbitt then contracted with fellow fraudsters Mary Kathryn Marr and Michel Marc Chateau to launder the funds through funnel bank accounts, many of which were located in Florida and other states.  USAO MDFL

August 6, 2020

Following his conviction at trial on charges to defraud the EPA and IRS, David Dunham, who had ownership interests in Smarter Fuel LLC and Greenworks Holdings LLC, was sentenced to seven years in prison and ordered to pay restitution of $10.21 million.  Dunham fraudulently applied for, received, and sold over $50 million in EPA, IRA, and USDA credits and payments for producing biofuels that he, in fact, did not produce and, in many instances, had never possessed in the first place.  DOJ

July 28, 2020

Savraj Gata-Aura, a British citizen, has been sentenced to four years in prison and ordered to forfeit nearly $3 million for his role in a massive Ponzi scheme involving coworking space Bar Works that defrauded over 800 investors of more than $40 million.  Together with fellow British citizen Renwick Haddow—who was widely reported to be disqualified from serving as the director of a U.K. company and was managing Bar Works under the alias “Jonathan Black”—Gata-Aura solicited investors by making material misrepresentations about Bar Works’ management and the company’s financial condition.  Haddow is due to be sentenced later this year.  USAO SDNY

July 27, 2020

The owner and operator of three California-based companies, Brandon Frere, has been sentenced to over three years in prison for using deceptive sales tactics to draw customers to his companies’ student loan repayment services programs.  Between 2014 and 2018, Frere allegedly instructed employees of American Financial Benefits Center (AFBC), the Financial Education Benefits Center (FEBC), and Ameritech Financial (Ameritech) to make false statements concerning the companies’ abilities, engage in improper enrollment practices that made customer payments look smaller, and hide monthly fees.  A hearing later this year will determine the amount of restitution that Frere will be required to pay.  USAO NDCA