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  4.  | The White Collar Defense Report® | July 2020 News Roundup

The White Collar Defense Report® | July 2020 News Roundup

by | Jul 1, 2020 | White Collar Defense Report

PPP Prosecutions a DOJ Priority

The Department of Justice has wasted no time in commencing prosecutions for alleged COVID-19 related fraud, specifically the Paycheck Protection Program (PPP), part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Here is a sampling of prosecutions that have already been announced:

A Seattle doctor was taken into custody on allegations that he fraudulently sought over $3 million in PPP loans. Dr. Eric R. Shibley, 41, was charged with one count of wire fraud and one count of bank fraud.

In Texas, Fahad Shah, 44, of Murphy, was charged with wire fraud, false statements to a financial institution and money laundering for his alleged participation in a scheme to file fraudulent loan applications seeking more than $3 million in PPP loans.

Shashank Rai, 30, from Beaumont, was charged with allegedly seeking $10 million in PPP loans by claiming 250 employees the government says were fictitious.

In Georgia, Maurice Fayne, aka Arkansas Mo, a reality  TV star, was also charged in federal court after obtaining over $2 million for Flame Trucking. Shortly after receiving the money, he allegedly used it to purchase $85,000 in jewelry and pay $40,000 for child support.

These charges were filed almost contemporaneously with the commission of the alleged crimes! This is unheard of in white collar cases, where investigations normally last years. This indicates to me that there is an  unprecedented coordination between government agencies regarding the investigation of COVID-19/PPP fraud crimes.

I predict the government will be very aggressive with these cases (and that the white collar criminal defense bar will be quite busy making sure innocent business owners aren’t being railroaded by the government).

In Other White Collar Crime News….

Healthcare fraud continues to dominate federal prosecutions across the country, with multinational companies and small medical practices —and seemingly everything in between —being charged with or resolving healthcare-related fraud claims with federal prosecutors. Here is a sampling of recent cases.

Novartis Pays Over $642 Million to Settle Allegations of Improper Payments to Patients and Physicians

Pharmaceutical company Novartis Pharmaceuticals Corporation (Novartis), based in East Hanover, New Jersey, has agreed to pay over $642 million in separate settlements resolving claims that it violated the False Claims Act (FCA). The first settlement pertains to the company’s alleged illegal use of three foundations as conduits to pay the copayments of Medicare patients taking Novartis’s drugs Gilenya and Afinitor. The second settlement resolves claims arising from the company’s alleged payments of kickbacks to doctors.

California Genetic Testing Company Agrees to Pay $8.25 Million To Resolve False Claims Allegations

Agendia, Inc., a molecular diagnostic testing company based in Irvine, California, will pay $8.25 million to resolve allegations of a nationwide scheme to bill Medicare for Agendia’s flagship genetic test, MammaPrint. The MammaPrint test analyzes the activity of certain genes within a breast cancer tumor to predict the risk of breast cancer recurrence in patients. This prosecution originated as a qui tam, or whistleblower, case, which means the whistleblower will receive a portion of the fine.

Ten Defendants Charged in $1.4 Billion Rural Hospital Pass-Through Billing Scheme

Ten individuals, including hospital managers, laboratory owners, billers and recruiters, were charged in Florida for their alleged participation in a billing scheme using rural hospitals in several states as billing shells to submit fraudulent claims for laboratory testing. The indictment alleges that from approximately November 2015 through February 2018, the conspirators billed private insurance companies approximately $1.4 billion for laboratory testing claims as part of this fraudulent scheme, and were paid approximately $400 million.

Houston’s “Compound King” and Wife Sentenced in $21 Million Healthcare Fraud Scheme

A Houston pharmacist and his wife were sentenced for their roles in an approximately $21.8 million Department of Labor (DOL) – Office of Workers Compensation Programs and Federal Employees Compensation Act fraud scheme. George Philip Tompkins, 75, of Houston, Texas, the self-proclaimed “Compound King” and former owner of Piney Point Pharmacy, was sentenced to 10 years in prison. Marene Kathryn Tompkins, 68, also of Houston, the former vice president of Piney Point Pharmacy, was sentenced to 30 days of home confinement and three years of supervised release.

Novartis Hellas S.A.C.I. and Alcon Pte Ltd Agree to Pay over $233 Million Combined to Resolve Criminal FCPA Cases

Novartis Hellas S.A.C.I. (Novartis Greece), a subsidiary of Novartis AG, a Switzerland-based global pharmaceutical company, and Alcon Pte Ltd, a former subsidiary of Novartis AG and current subsidiary of Alcon Inc., a multinational eye care company, have agreed to pay a combined total of more than $233 million in criminal monetary penalties to resolve the department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA).

Houston-Area Cardiologist Settles Allegations

Advanced Cardiovascular Care Center P.A. and its owner and administrator have agreed to pay $400,000 to resolve allegations they violated the False Claims Act (FCA), announced U.S. Attorney Ryan K. Patrick. Owner Dr. Annie T. Varughese, 57, and administrator Babu Varughese, 64, both of Spring, conducted business in three clinics located in Houston, Conroe and The Woodlands.

Arlington Doctor Charged with Drug Distribution Conspiracy, Fraud

A federal grand jury has indicted three Arlington healthcare professionals for drug crimes and fraud, announced U.S. Attorney for the Northern District of Texas Erin Nealy Cox. Clinton Battle, an Arlington physician, and Donna Green, his nurse practitioner, have been charged with conspiracy to distribute controlled substances. Dr. Battle and his medical assistant, Yajaira Lopez, have also been charged with conspiracy to commit mail fraud. His current practice, “Arlington Occupational & Medical Clinic,” is located on East Abram Street in Arlington.