Criminal Proceedings

October 12, 2018

A father and son duo has plead guilty to causing over $27 million in losses from Affordable Care Act (ACA) programs in twelve states, including Arizona, California, Connecticut, Delaware, Indiana, Kentucky, New Jersey, Ohio, Oregon, Pennsylvania, Tennessee, and Texas. Jeffrey and Nicholas White of California allegedly made a living from drug rehabilitation centers through patient referral bonuses and cuts of money paid out by ACA programs. To maximize their profits, they enrolled participants in ACA programs in high paying states, regardless of whether the participants even lived in that state. The Whites also went to great lengths to further the fraud, including creating fictitious contact information, paying patients' insurance premiums, and paying for their transport to out-of-state rehabilitation centers. They each face a maximum of 10 years in prison. USAO CT

October 11, 2018

A Washington couple will serve time in federal prison for defrauding investors of $12.7 million over the course of 7 years. Delving into their ties to various religious organization, Laurence Hong and Grace Hong convinced more than 55 clients to invest their life savings in a hedge fund that they called Pishon Holdings, by claiming that Laurence had experience investing vast sums of money on behalf of wealthy families and Grace had experience working for an investment firm. In fact, Laurence, also known as Sung Hong, had just completed a nearly 3 year sentence for investment fraud when he began the new scheme. With the funds they stole from investors, the couple paid for rent on a house, bought a yacht and multiple luxury vehicles (including an Aston Martin, BMW, Lamborghini, and Maserati), and went on extravagant family vacations to the Bahamas and Beverly Hills. Laurence will now serve another 15 years in prison, and Grace, also known as Hyun Joo Hong, will serve 6 years. They have also been ordered to pay restitution of more than $12.7 million. USAO WDWA

October 9, 2018

Darrell Smith, who had worked as an investment advisor in Northern Iowa, was sentenced to nearly 15 years in prison following a guilty plea for charges arising from his fraudulent  diversion of funds from his clients to bio-energy and ethanol companies that he owned and/or controlled.  Smith stole over $2.4 million from client accounts, and has been ordered to pay restitution of over $ 1 million.   DOJ

October 4, 2018

Mercy Ainabe of Houston, Texas, was sentenced to nine years in prison for her role in a $3.6 million home healthcare Medicare fraud scheme.  Ainabe served as a patient recruiter, selling patient information to home healthcare companies, including Texas Tender Care, which then submitted claims to Medicare for home health services that were not medically necessary, were not provided, or both. USAO SDTX

September 27, 2018

Millicent Traylor, M.D., of Detroit, Michigan was sentenced to over 11 years in prison today for her part in a health care scheme against Medicare from 2011 to 2016. Traylor and her co-conspirators defrauded Medicare of an estimated $8.9 million during that period. They submitted fraudulent claims for home health care services and other services which were not provided or not medically necessary. At times, the physician services which were provided were provided by Dr. Traylor, though she was unlicensed during that period. Furthermore, evidence presented during the four-day trial showed that Traylor forged the signature of licensed physicians on prescriptions for opioid medications, oxycodone for instance, as a way to encourage patient participation in the scheme. Traylor’s three co-conspirators will also serve time in prison.  DOJ  

September 25, 2018

Edward J. DiMaria, the former chief financial officer of Bankrate, Inc., a publicly traded company, plead guilty and was sentenced to ten years in prison for orchestrating an accounting and securities fraud scheme that caused more than $25 million in shareholder losses.  DiMaria admitted that between 2010 and 2014 he took actions to artificially inflate Bankrate’s earnings by leaving millions of dollars in unsupported expense accruals on Bankrate’s books, then selectively reversing those accruals in later quarters to boost earnings, as well as misrepresenting other company expenses.  DiMaria lied to Bankrate's independent auditors to conceal the fraud.  As a result of the accounting fraud, Bankrate’s financial statements filed with the SEC were materially misstated.  S.D. Fla. USAO; DOJ

September 24, 2018

Azam Doost, the former owner of Equity Capital Mining LLC, which operated a marble mine in Afghanistan, was convicted for defrauding the Overseas Private Investment Corporation, a U.S. government agency in a $15.8 million loan the company obtained from OPIC. Doost had represented that he had no affiliation with mine suppliers who were paid from the loan proceeds; in fact, he had financial relationships with several of the suppliers, and diverted OPIC funds paid to those suppliers for his own use.  DOJ  For information on later sentencing, see here.

September 20, 2018

House of Oxford and its officer Alex Goldman were sentenced for conspiring with others to evade California's excise taxes on tobacco products intended for sale in California.  In addition to a three-year prison sentence for Goldman and probation for the entity, the defendants agreed to a civil forfeiture of approximately $14 million in assets, which were returned to the State of California.  E.D. Cal. USAO

September 19, 2018

Three men from three states have been indicted for allegedly conspiring to defraud more than 230 investors of more than $364 million in a classic Ponzi scheme, and in one of the largest ever charged in Maryland. Kevin B. Merrill, Jay B. Ledford, and Cameron Jezeierski of Maryland, Nevada, and Texas, respectively, allegedly persuaded investors across the country that they could make a profit by purchasing consumer debt portfolios that would either have their debt collected upon or be sold to other debt buyers. Instead, the defendants used the money to purchase expensive homes, boats, jewelry, and at least 25 cars, as well as lead a generally lavish lifestyle. To conceal the fraud, the defendants allegedly created fake debt selling companies, bank accounts, and brokers, and generated false contracts, records, and reports. They face both criminal charges from the DOJ and civil charges from the SEC, and if convicted, face both financial penalties as well as decades in prison for the combined charges. USAO MD; SEC

September 17, 2018

A father and son duo have been sentenced to decades in prison and are to pay over $1 million in restitution for defrauding small businesses, the Department of Agriculture (USDA), and the Small Business Administration (SBA). After being hired to help small businesses win contracts with the USDA, father Joseph Glenn Osborne, Sr. allegedly stole over half a million dollars paid to his clients and used the money to buy himself a mansion. Father and son then conspired with others to fraudulently win contracts with the same agency for son Joseph Glenn Osborne, II's business, and were awarded five contracts worth over $4 million. After the contracts were terminated for default—and company funds were used to fund renovations for the aforementioned mansion and extravagant nights out—they attempted to fraudulently win contracts with the SBA. USAO SDCA