Criminal Proceedings

June 3, 2022

FCA US LLC, formerly Chrysler Group LLC, has pleaded guilty to making false and misleading representations about emissions control systems on Jeep Grand Cherokees and Ram 1500s for the 2014-2016 model years.  The company will pay a criminal fine of nearly $100 million, and forfeit over $200 million, for a total of $300 million in penalties.  Fiat Chrysler marketed the vehicles as “clean EcoDiesel,” but installed software features to fraudulently help the vehicles meet emissions standards during testing that could not be met under normal driving conditions.  DOJ

May 24, 2022

Switzerland-based mining and commodity trading firm Glencore International A.G. and an affiliate have agreed to pay over $1.1 billion in criminal penalties and forfeitures, and will plead guilty to violations of the Foreign Corrupt Practices Act and conspiracy to engage in commodity price manipulation.  In addition, the companies will pay over $1.186 billion in civil penalties and disgorgement in settlement with the CFTC.  As part of the criminal plea agreement, Glencore admitted that between 2007 and 2018, it corruptly provided more than $100 million in payments and other things of value to intermediaries for the payment of bribes to officials in Nigeria, Cameroon, Ivory Coast, Equatorial Guinea, Brazil, Venezuela, and the Democratic Republic of the Congo.  With respect to the commodity price manipulation scheme, the CFTC found that from as early as 2007 through at least 2018, Glencore sought to increase profits from its physical and derivatives oil products trading by manipulating or attempting to manipulate four U.S. based S&P Global Platts physical oil benchmarks and related futures and swaps.  Criminal fines and forfeitures total over $700 million for the FCPA violations and nearly $486 million for the for the market manipulation violations, which amounts are subject to credits for amounts paid to the CFTC and foreign authorities including the United Kingdom.  The $1.186 billion CFTC resolution will also be reduced, with Glencore receiving credit for payments in the criminal resolutions.  DOJ; USAO SDNY; CFTC

May 23, 2022

Art dealer Inigo Philbrick will spend 7 years in prison and forfeit over $86 million for defrauding investors to finance his art business. Over a 3-year period, from 2016 through 2019, Philbrick misrepresented the ownership of certain artworks, selling multiple ownership interests in an artwork totaling more than 100%; created fraudulent contracts and records to further the scheme; made material misrepresentations and omissions to collectors, investors, and lenders; and sold or used artworks as collateral on loans without the knowledge of the artworks’ co-owners. The fraud was eventually exposed when investors learned of the fraudulent records and material misrepresentations Philbrick had made, and a lender notified Philbrick that he was in default on a $14 million loan. USAO SDNY

May 18, 2022

Pat Truglia will spend 120 months in prison, forfeit over $9.4 million, and will pay restitution of $33.7 million for conspiring to defraud Medicare, TRICARE, and CHAMPVA, among others, of approximately $50 million through their fraudulent billing scheme. The scheme involved offering, paying, soliciting, and receiving kickback for durable medical equipment—in this case, braces. Truglia and his conspirators obtained DME orders for Medicare and other federal healthcare program beneficiaries by running multiple call centers, which paid kickbacks and bribes to telemedicine companies, who then paid doctors to write medically unnecessary orders. The orders were filled by Truglia’s companies, who then fraudulently billed the healthcare programs. USAO NJ

May 18, 2022

Peter Bolos and Michael Palso, owners of Synergy Pharmacy, were sentenced to 14 years and 33 months in prison, respectively, and each will pay $24.6 million in restitution for defrauding pharmacy benefit managers into authorizing millions of dollars in claims paid to pharmacies controlled by the defendants. Bolos will forfeit an additional $2.5 million. The conspiracy involved cold-calling patients and deceiving them into accepting certain drugs (i.e., pain creams, scar creams, and vitamins) and providing their personal insurance information to receive them. The scheme impacted both private and public insurers, including Medicaid and TRICARE. DOJ, USAO EDTN

May 17, 2022

Allianz Global Investors U.S. LLC pleaded guilty to securities fraud and agreed to pay a criminal fine of $2.3 billion, an SEC penalty of $675 million, and over $5 billion in disgorgement and restitution to victims.  Three former AGI senior portfolio managers, Gregoire Tournant, Trevor Taylor, and Stephen Bond-Nelson, also pleaded guilty to related charges and will be sentenced at a later date.  As part of its plea, AGI admitted that between 2014 and 2020, AGI and the individual defendants made false and misleading statements to current and prospective investors in AGI’s Structured Alpha Funds which understated downside risks and overstated the level of independent risk oversight over the funds.  While the funds promised risk management and hedging, the actual investment strategy prioritized returns over risk management, and the promised hedging positions were not purchased.  To conceal losses and understate the magnitude of the actual risks, defendants fraudulently altered numerous financial reports and other information provided to investors.  The scheme was exposed when the funds experienced billions in losses during the 2020 COVID-related market volatility. With its guilty plea, AGI US is disqualified from providing advisory services to U.S.-registered investment funds for the next ten years, and will exit the business of conducting these fund services.  SEC; DOJ; SDNY

May 5, 2022

Robert Narvett will spend 15 years in prison for wire fraud and money laundering. Narvett, of Appleton, WI, defrauded nearly 70 different victims of over $2 million, in the end ruining credit scores, rendering victims unable to afford basic life necessities, and having to return to the workforce after retiring. USAO EDWI

May 4, 2022

Brenda Smith, former investment manager for Broad Reach Capital LP, pleaded guilty to seven counts of securities fraud. She will pay $47.2 million in restitution, spend 109 months in prison, and spend another 3 years thereafter under supervised release, for orchestrating a $100 million securities fraud scheme. To further her fraud, Smith provided investors with false monthly account statements, made false representations about her personal investment in the company, satisfied redemption requests by diverting other investors’ funds to pay the redemption amounts, and transferred clients’ funds to investments that were outside the scope of the promised investment strategy. NJ USAO

April 28, 2022

Donald Woo Lee, a California-based doctor who recruited Medicare beneficiaries to his clinics, falsely diagnosed them and provided them with medically unnecessary procedures, and then submitted upcoded bills for those procedures to Medicare, has been sentenced to nearly 8 years in prison after being found guilty of seven counts of healthcare fraud.  In addition to submitting approximately $12 million in false claims to Medicare, for which he received $4.5 million in reimbursement, Lee also repackaged and reused single-use catheters on his patients.  DOJ

April 27, 2022

The owner and operator of two Texas-based adult day care centers has been sentenced to 5 years in prison and ordered to pay $1.8 million in restitution after she was found to have billed the Texas Medicaid Program for items and services not provided.  Scherry Lynn Moses ran Scherry’s Adult Day Activity Center and New Creation Residential Care Homes, a room and board for Social Security recipients, but inconsistently provided boarders with basic needs.  USAO WDTX