Criminal Proceedings

December 19, 2019

Five individuals have been sentenced for their roles in a scheme to defraud TRICARE through the submission of false and fraudulent claims for compounded prescription pain creams.   Marketing firm Centurion Compounding, Inc., owned by  Frank Monte and Kimberley Anderson, entered into an agreement with LifeCare Pharmacy, owned by Carlos Mazariegos and Benjamin Nundy, to pay kickbacks to Dr. Anthony Baldizzi in exchange for him writing prescriptions for compounded creams marketed by Centurion to TRICARE beneficiaries. LifeCare billed health insurers, including TRICARE, more than $12.4 million for compounded cream prescriptions written by Baldizzi and marketed by Centurion, realizing a profit of more than $10 million, which it shared with Baldizzi, Monte, and Anderson.  Centurion also caused TRICARE to be billed additional fraudulent amounts through one or more other pharmacies.  Monte and Anderson of Centurion were sentenced to 2 years and 1.5 years, respectively, and Monte forfeited more than $3 million in property.  Baldizzi was sentenced to 1 year in prison, ordered to forfeit $100,000, and will surrender his license to practice medicine.  Mazariegos and Nundy of LifeCare were sentenced to 1 year in prison and 5 years probation, respectively, and paid over $12.8 million in restitution and forfeiture.  USAO MD FL

December 18, 2019

Abhijit Prasad was sentenced to 3 years in prison following his conviction for visa fraud and related charges.  Prasad submitted 19 applications for H-1B visas for individuals he claimed would be performing work for Cisco Systems although Cisco had no expectation that the foreign workers would perform work for them and, in some cases, Prasad submitted forged documents purporting to be from Cisco.  Prasad was also ordered to forfeit $1.9 million.  USAO ED Cal; USAO ND Cal

December 16, 2019

A Wisconsin man charged with leading a 12-year fraud scheme to win $260 million in government construction contracts intended for small businesses has been sentenced to 6.5 years in prison and ordered to forfeit assets worth almost $4 million.  Brian Ganos orchestrated the formation of three construction companies—Nuvo Construction Company, Inc., C3T, Inc., and Pagasa Construction Company, Inc.—and headed them with straw owners who qualified as disadvantaged individuals or service-disabled veterans in order to win government contracts.  USAO EDWI

December 12, 2019

For selling defective, Chinese-made products to the U.S. Department of Defense on fraudulently obtained contracts, Timothy Kelly, a California business manager for Emerson Company, has been sentenced to 2.5 years in prison.  Together with company owner Daniel Norton, who was sentenced to 8 years in prison, the two have also been ordered to pay $2.38 million in restitution, forfeit $333,000 in a bank account, and forfeit a $725,000 house in Hawaii.  USAO SDOH

December 10, 2019

Dr. Paul J. Mathieu and occupational therapist Lina Zhitnik have been sentenced to, respectively, 4 years and 1.2 years in prison, for their roles in a $30 million scheme to defraud Medicare and New York's Medicaid program.  Mathieu falsely posed as the owner of three medical clinics, which were actually owned by Aleksandr Burman, and Mathieu and Zhitnik falsely claimed to have treated thousands of patients at those clinics.  Over six years, Mathieu prepared or assisted in the preparation of false and fraudulent medical charts, issued referrals for expensive and unnecessary additional testing by providers also participating in the scheme, and wrote prescriptions for unnecessary medical supplies that were filled by a company also owned by Burman.  Another doctor participating in Burman's scheme, Ewald J. Antoine, was previously sentenced.  USAO SDNY

December 10, 2019

HSBC Private Bank (Suisse) SA has entered into a deferred prosecution agreement and agreed to pay $192 million for conspiring with U.S. clients and others to evade taxes over a ten year period.  At the peak of the scheme in 2007, HSBC Switzerland was estimated to hold undeclared assets worth approximately $1.26 billion on behalf of U.S. clients, before it self-disclosed to authorities three years later.  The resulting fine, which took into account the bank’s extensive cooperation with the investigation, represents about $61 million in restitution to the IRS, $72 million in civil forfeiture to the DOJ, and $59 million in penalties.  DOJ

December 9, 2019

Former U.S. Representative Christopher Collins, his son Cameron Collins, and the father of Cameron Collins’ former girlfriend, Stephen Zarsky, have settled insider trading charges with the SEC.  While serving on the board of Australian biotech company Innate Immunotherapeutics Ltd., the elder Collins learned about the impending release of negative test results for a multiple sclerosis drug.  His subsequent disclosure to his son, and his son’s disclosure to Zarsky, led the three to sell $700,000 worth of Innate shares before news hit the market.  Defendants will disgorge approximately $700,000, and have pleaded guilty to related criminal charges.  SEC

December 6, 2019

Telefonaktiebolaget LM Ericsson (“Ericsson”) has agreed to pay more than $1 billion to resolve DOJ and SEC allegations that its subsidiaries engaged in a large-scale bribery scheme, in violation of the Foreign Corrupt Practices Act (FCPA).  The alleged misconduct occurred over a span of 16 years ending in 2016 and involved approximately $45 million in bribes paid to a consulting party in Indonesia, $31.5 million paid to third parties in China, $4.8 million paid to a consulting company in Vietnam, $2.1 million paid to government officials in Djibouti, and $450,000 paid to a consulting company in Kuwait.  To settle charges, Ericsson has entered into a deferred prosecution agreement and will pay a criminal penalty of over $520 million, as well as disgorgement and prejudgment interest of $540 million.  DOJ; USAO SDNY; SEC

November 25, 2019

Two entities agreed to pay a total of $1.2 million to resolve claims that the Puerto Rico Municipality of Sabana Grande improperly subcontracted work to be performed under a grant from the U.S. Dept. of Education to the Puerto Rico Department of Education for teacher training. The grant required that the work could not be performed by private entities, but the municipality subcontracted with and disbursed grant funds to private entity the Puerto Rico Olympic Committee (COPUR), which further subcontracted with the company Administrative, Environmental and Sports Consultants (AESC).  The municipality will pay $500,000, and COPUR agreed to pay $700,000.  In addition, the United States seized more than $1 million from bank accounts belonging to AESC owner Irving Riquel Torres in connection with related criminal proceedings against him.  USAO PR

November 22, 2019

The former president of Transport Logistics International, Mark Lambert, was found guilty of violating the Foreign Corrupt Practices Act for his role in a bribery scheme designed to secure a contract for TLI from JSC Techsnabexport (TENEX), a subsidiary of Russia’s State Atomic Energy Corporation.  According to the evidence at trial, Lambert worked for years to direct payments to TENEX official Vadim Mikerin, using offshore accounts and creating fake invoices.  Lambert faces five years in prison.  TLI previously agreed to pay a $2 million penalty; Mikerin previously pleaded guilty on related charges.  USAO MD