Criminal Proceedings

May 29, 2019

Houston-based patient recruiter and home health clinic owner Egondu “Kate” Koko has been sentenced to over 15 years in prison and ordered to pay $14 million for participating in a $20 million kickback scheme involving Medicare beneficiaries.  Koko had plead guilty in October to paying bribes to both physicians and patients in order to earn between $9.5 and $25 million in ill-gotten gains, as well as to laundering money under another person’s identity and using proceeds from the fraud to buy a home.  DOJ

May 23, 2019

Following his November 2018 conviction, Edwin Fujinaga was sentenced to 50 years in prison for his role in leading a $1.5 billion Ponzi scheme.  Fujinaga was also ordered to pay restitution of over $1 billion and forfeit more than $813 million.  Fujinaga solicited more than $1 billion in investments from residents of Japan, misrepresenting how the funds would be used.  USAO NV

May 10, 2019

Broker-dealer Banca IMI Securities Corp. pleaded guilty to criminal antitrust charges arising from a conspiracy to rig bids to borrow pre-release American Depository Receipts (ADRs) from one of the depository banks permitted to create ADRs.  The depository bank instituted an auction process for pre-release ADRs, and Banca IMI conspired with others to submit artificially low, sometimes identical, bids, to the bank.  Banca IMI will pay a criminal fine of $2 million.  DOJ

May 8, 2019

A South Florida woman who received kickbacks in exchange for patient referrals has been sentenced to over 7 years in prison. In exchange for at least $710,000, Yamilet Diaz allegedly referred Medicare beneficiaries to five home health agencies, aiding the agencies in unlawfully receiving over $1.6 million in reimbursements from Medicare that were tainted by the kickbacks. DOJ

May 2, 2019

Insys Therapeutics executives were convicted for their part in a racketeering conspiracy where they defrauded Medicare and private insurance carriers. From May 2012 to December 2015, the defendants bribed medical practitioners to prescribe Subsys, an extremely addictive sublingual fentayl spray intended for use by cancer patients. In furtherance of these efforts, the defendants provided kickbacks to practitioners who increased their Subsys prescriptions. The defendants also defrauded health insurance providers who were hesitant to approve payment for the drug when it was prescribed for non-cancer patients. DOJ

May 1, 2019

Michael S. Flynn of Bridgeport, Connecticut, pleaded guilty to charges arising from his role in rigging bids on contracts to install insulation at construction projects for universities, hospitals, and other public and private entities in Connecticut, New York, and Massachusetts.  Flynn owned and ran an insulation contractor, an conspired with competitors to fix prices and submit bids that inflated customer costs by at least 10%, costing victims more than $45 million in total.  Flynn faces up to 30 years in prison.  DOJ

May 1, 2019

A Pennsylvania man has been convicted of defrauding the EPA and IRS of $50 million over the course of five years.  Together with his co-defendant, Ralph Tomasso, David Dunham Jr. used their companies to illegally profit from the EPA’s Renewable Fuel Standard (RFS) Program by fraudulently applying for, receiving, and selling credits to renewable biofuels that they didn’t actually sell or never actually possessed. Now, the government is seeking forfeiture of $1.7 million in fraudulently obtained revenue.  DOJ (August 6, 2020 sentencing)

April 25, 2019

Indianapolis-based trucking company Celadon Group, Inc., has agreed to pay $42.2 million in restitution to shareholders, $7 million of which will be credited to a disgorgement pursuant to agreement with the SEC, to settle allegations of accounting fraud.  Celadon was alleged to have avoided the recognition of $20 million in impairment charges and losses by recording a series of equipment trades as sales at inflated values.  Celadon management is further alleged to have falsely stated to its auditors that the equipment was sold at fair market value. Celadon has entered into a deferred prosecution agreement calling for specific compliance measures and cooperation in ongoing investigation of the accounting fraud.  SEC; DOJ; USAO SD IN

April 23, 2019

Oregon-based aluminum supplier Hydro Extrusion Portland, Inc., formerly known as Sapa Profiles Inc., together with its parent company, has agreed to pay $47 million to settle criminal mail fraud charges and civil claims alleging that between 1996 and 2015, the company altered the results of tensile tests measuring the consistency and reliability of extruded aluminum, and falsified certifications about products meeting testing requirements and contract specifications. Among the customers who received products that defendants knew did not meet contract specifications were NASA and the Dept. of Defense Missile Defense Agency.  The $47 million total settlement payment consists of forfeiture of $1.8 million, $34.1 million in criminal restitution to NASA, DOD, and commercial customers – $23.6 million of which is also credited to resolve civil claims under the False Claims Act – and an additional $11 million in payments to resolve civil FCA claims.  Defendant entered into a deferred prosecution agreement and has been  suspended as a U.S. government contractor.  DOJ; USAO EDVA