Criminal Proceedings

November 22, 2021

South Carolina chiropractor Daniel McCollum has consented to judgment of $9 million to resolve charges that he submitted false claims to federal healthcare programs in violation of the Anti-Kickback Statute and Stark Law.  McCollum admitted that his laboratory, Labsource (which was a party to a related action), gave referring providers an opportunity to earn revenue generated from their commercially-insured referrals for urine drug testing as an inducement for those providers to refer all of their federally-insured urine drug testing patients to Labsource.  McCollum also caused medically unnecessary prescriptions for pain creams often without the knowledge or approval of the patients’ healthcare providers.  In addition to the civil settlement, McCollum pleaded guilty to criminal kickback and healthcare fraud charges and will be sentenced at a later date.  DOJ; USAO SC

November 16, 2021

Richard Ayvazyan was sentence to 17 years in prison, his wife Marietta Terabelian to six years, and his brother Artur Ayvazyan to five years, following their convictions at trial on charges related to their scheme to fraudulently obtain more than $20 million in Paycheck Protection Program and Economic Injury Disaster Loan COVID-19 relief funds.  The defendants used dozens of false identities to submit fraudulent applications for approximately 150 PPP and EIDL loans, supporting applications with false and fictitious documents including fake identity documents, tax documents and payroll records. DOJ; USAO CD Cal

November 9, 2021

The owner of California-based DC Solar, Jeff Carpoff, has been sentenced to 30 years in prison for his role in a billion-dollar Ponzi scheme, the largest criminal fraud scheme ever prosecuted in the Eastern District of California.  Together with his wife Paulette and five other co-conspirators, Carpoff lied to investors about market demand for his company’s mobile solar generator (MSG) units, using false lease contracts and financial statements to back up the lie.  In addition to selling thousands of MSGs that didn’t even exist, the defendants paid prior investors using funds from newer investors, then laundered their ill-gotten gains.  USAO EDCA; Add'l defendant sentencing at USAO EDCA

October 20, 2021

Following his conviction at trial, investment manager Shawn Baldwin has been sentenced to 17 years in federal prison on investment fraud charges.  Baldwin, who had been previously disciplined by authorities, solicited investors with claims that overstated his credentials and misrepresented that their funds would be used to invest in stocks and other investment products.  In fact, Baldwin used most of the investors’ funds for his own personal benefit.  USAO ND IL

October 19, 2021

Credit Suisse Group AG, together with related subsidiaries, and VTB Capital plc will collectively pay more than $481 million to resolve charges related to the financing of hundreds of millions in loans to the government of Mozambique and an entity owned by that government, Empresa Moçambicana de Atum S.A. (EMATUM), which was formed to develop a tuna fishing project.  Credit Suisse, which pleaded guilty to defrauding investors and entered into a settlement agreement with the SEC, will pay nearly $475 million to U.S. and international authorities, as well as restitution to individual investors.  As part of its guilty plea, Credit Suisse admitted that it made material misrepresentations and omissions in statement to investors including about the planned use of loan proceeds; about $50 million in kickback payments to a Credit Suisse subsidiary and $150 million in bribes to government officials; about the existence and maturity dates of other loans to the government of Mozambique; about other red flags prior to and during the EMATUM financing; and about the risk of default.  In addition, the SEC charged that Credit Suisse violated the internal accounting controls and books and records provisions of the Foreign Corrupt Practices Act. Credit Suisse's payment consists of a $99 million payment to the SEC ($65 million as a penalty and $34 million in disgorgement and interest), a $247.52 million criminal monetary penalty to the U.S., with $175.6 million to be paid and the remaining to $47.2 million to be credited to related settlements, and $200.7 million to the United Kingdom's Financial Conduct Authority.  In addition, Credit Suisse agreed to provide $200 million as debt relief to Mozambique. VTB will pay $6.4 million to resolve SEC charges that it mislead investors in a related bond offering structured by VTB Capital and Credit Suisse, which the SEC found failed to disclose the true nature of Mozambique's debt and the high risk of default on the bonds.  SEC; DOJ

September 24, 2021

The former pastor of the Church of the Healthy Self has been sentenced to 14 years in federal prison and ordered to pay over $22.5 million in restitution for orchestrating an investment scam that defrauded church members of more than $33 million over a five-year period.  To solicit investments for the church’s investment arm, CHS Trust, church representatives under Kent Whitney’s direction appeared on television and live seminars and made false and misleading statements that were often recorded and uploaded to YouTube.  The statements included guaranteeing a 12% annual rate of return and return of principal with no risk, and claiming that the trust was audited by KPMG.  USAO CDCA

September 22, 2021

Jonathan Dean Davis, the owner of the Retail Ready Career Center, a for-profit trade school, was sentenced to nearly 20 years in prison following his conviction on fraud charges.  Davis marketed his school’s HVAC training course to veterans by falsely securing certification of his program by Texas state agencies in order qualify the program to charge veterans’ tuition and fees to the Veteran’s Administration under the Veteran’s Educational Assistance Act.  In fact, Retail Ready used up veteran’s GI Bill benefits and failed to prepare them for careers while collecting more than $72 million in GI Bill benefits from the VA.  Davis was also ordered to pay $65.2 million in restitution and forfeit $72.5 million.  USAO ND TX

September 20, 2021

Daryl Bank of Port St. Lucie, Florida was sentenced to 35 years in prison following his conviction at trial on charges related to his sale, through his company Dominion Private Client Group, of unregistered securities in companies that he owned and controlled, despite his previous FINRA bar from the securities industry.  Dominion’s former attorney, Billy Seabolt, previously pleaded guilty to related charges and was sentenced to ten years in prison.  USAO ED VA

September 7, 2021

The founder of Agape Healthcare Systems, Inc., Timothy Mark Harron, was sentenced to 12 years in prison and ordered to pay $4.3 million in restitution following his guilty plea on healthcare fraud charges.  Harron and his wife, Latisha Harron, scoured obituaries for recently deceased Medicaid recipients and billed Medicaid for up to a year of home health services that were allegedly provided to the deceased by Agape.  Latisha Harron was previously sentenced to 14 years in prison.  NC