he White Collar Defense Report® provides updates on cases, policy developments and trends in the white collar area, including federal criminal matters as well as civil cases such as qui tam cases and SEC enforcement actions.
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PPP Loan & COVID Fraud Prosecutions
As the vaccine rollout has picked up, vaccine-related crimes were inevitable. And, of course, what issue of The White Collar Defense Report would be complete without at least one Paycheck Protection Program (PPP) fraud case?
Michigan Woman is First in the Nation Charged with Misappropriating Money Designed for COVID Medical Provider Relief
Amina Abbas, of Michigan, was indicted on allegations that she intentionally misappropriated government funds that were designed to aid medical providers in the treatment of COVID-19 patients. She is the first person to be charged with such a crime. According to the indictment, Abbas closed her home health agency in early 2020 after Medicare issued an overpayment demand for $1.6 million because the agency had submitted claims for patients who did not qualify for home health services. Even though her agency never operated during the pandemic, Abbas applied for and received $37,656 for the care of COVID-19 patients. The indictment claims that Abbas allegedly misappropriated the funds by issuing checks to her family members for personal use.
Houston woman charged with fraudulently receiving millions under CARES Act
LaDonna Wiggins, of Houston, has been charged with bank fraud, making a false statement to a bank and money laundering, stemming from her alleged submission of two PPP loan applications for two businesses. She received $3.6 million in PPP loans, which she allegedly used for personal purchases, including two homes, multiple vehicles, and luxury goods.
Wisconsin Pharmacist to Plead Guilty to Attempting to Spoil Hundreds of COVID Vaccine Doses
Steven R. Brandenburg, of Wisconsin, has pleaded guilty to attempting to render hundreds of doses of COVID-19 vaccine ineffective. According to court documents, Brandenburg was skeptical of vaccines in general and the Moderna vaccine specifically, so he purposefully removed a box of Moderna-made COVID-19 vaccine vials — which must be stored at specific cold temperatures to remain viable — from the hospital’s refrigeration unit, with the intent to render the vaccines inert and no longer effective. After leaving the vaccines out for several hours, Brandenburg returned the vaccines to the refrigerator to be used in the hospital’s vaccine clinic the following day. Before the full extent of Brandenburg’s conduct was discovered, 57 people received doses of the vaccine from these vials.
Could your business already be in DOJ’s crosshairs?
There is an unprecedented coordination between government agencies regarding the investigation of PPP fraud crimes. In many cases, businesses with no intent to defraud U.S. taxpayers get caught in a net of overzealous prosecutions. Business owners and executives must seek experienced counsel if they receive any indication they are being investigated.
Healthcare & Tax Fraud
Fort Worth Doctor Sentenced to 10 Years in Healthcare Fraud Conspiracy
Mark Kuper, a Fort Worth osteopath, has been sentenced to 10 years in federal prison for his role in a $10 million healthcare fraud. Kuper admitted he conspired with his wife, Melissa Kuper, and a physical therapist, Travis Couey, to defraud Medicare, Medicaid, and TRICARE. Kuper admitted he fraudulently billed insurers for services the clinic never actually rendered, including physical therapy and psychotherapy, and required patients to attend these bogus appointments in order to receive controlled substance prescriptions. He also admitted that he gave his wife access to the secure device and passcode he used to sign controlled substance prescriptions, allowing her to improperly dispense pain medications on her own initiative, without his input.
Dallas Tax Preparer Sentenced, Ordered to Pay $11.9 Million for Filing Fraudulent Tax Returns
Alma Jean Gilbert, of Dallas, was sentenced to 3½ years in prison and ordered to pay $11.9 million in restitution for filing fraudulent income tax returns. Gilbert owned and operated In Touch Tax Solutions, with offices in Dallas and Mesquite. According to court documents, between 2012 and 2017, Gilbert knowingly prepared and caused to be filed hundreds of fraudulent tax returns for clients. The fraudulent returns contained materially false credits and deductions – including false education credits, fuel tax credits, and business losses – for the purpose of increasing the refunds to the clients.
Antitrust & Financial Fraud
One of the Nation’s Largest Chicken Producers Pleads Guilty to Price Fixing and is Sentenced to a $107 Million Criminal Fine
Pilgrim’s Pride Corporation, of Colorado, has pleaded guilty and been sentenced to pay approximately $107 million in criminal fines for its participation in a conspiracy to fix prices and rig bids for broiler chicken products. According to court documents, from as early as 2012 and continuing at least into 2017, Pilgrim’s participated in a conspiracy to suppress and eliminate competition for sales of broiler chicken products in the United States that affected at least $361 million in Pilgrim’s sales of broiler chicken products. Pilgrim’s is the first company to plead guilty for its role in a conspiracy to fix prices and rig bids for broiler chicken products. Broiler chickens are chickens raised for human consumption and sold to grocers and restaurants. Ten executives and employees at major broiler chicken producers have also previously been charged. The investigation remains ongoing.
Serbian Man Extradited to U.S., Charged with $70 Million Fraud in Dallas
Antonije Stojilkovic, of Serbia, has been extradited from Serbia to the United States to face allegations that he and others duped investors out of more than $70 million. Stojilkovic and more than a dozen other alleged fraudsters were indicted by a Dallas-based federal grand jury in July 2020. According to the indictment, the defendants allegedly helped create and market more than 20 fraudulent investing platforms specializing in binary options and cryptocurrency mining. After instructing investors to wire money through an international bank account, the defendants allegedly provided logins for a bogus online investment portal, which consistently showed positive returns on investments. In actuality, no actual trading had occurred, and the so-called “investment” money was used to cover defendants’ personal expenses, pay commissions, and further the scheme.
Ghanaian National Arrested for Wire Fraud and Money Laundering Arising From $1.7 Million ‘Romance Scam’
Kofi Osei, a/k/a Paul Proia, a/k/a Kenneth Buck, a/k/a Jeffrey Anashe, a Ghanaian national residing in the Boston area, was arrested on wire fraud and money laundering charges involving funds obtained from “romance scam” victims. According to the indictment, from approximately 2016 to at least 2020, Osei duped victims in romance scams, in which perpetrators created fictitious online personas to develop online romantic relationships with individuals in the U.S., and then leveraged those relationships to obtain money and/or property. In all, victims were scammed out of $1.7 million.
Cyber Crimes & National Security
ADT Technician Pleads Guilty to Hacking Home Security Footage
Telesforo Aviles, of north Texas, has pleaded guilty to repeatedly hacking into customers’ video feeds when he was a home security technician with ADT, the home security company. According to court documents, Aviles admitted that he routinely added his personal email address to customers’ “ADT Pulse” accounts, giving himself real-time access to the video feeds from their homes. In some instances, he claimed he needed to add himself temporarily in order to “test” the system; in other instances, he added himself without their knowledge. Aviles took note of which homes had attractive women, then repeatedly logged into these customers’ accounts in order to view their footage for sexual gratification, he admitted. Over a four-and-a-half-year period, Aviles admitted he secretly accessed roughly 200 customer accounts more than 9,600 times without their consent.
Berkeley County Woman Sentenced for Willful Retention of Top-Secret National Defense Documents and International Parental Kidnapping
Elizabeth Jo Shirley, of West Virginia, was sentenced to 97 months of incarceration in connection with her attempts to sell classified information to Russia, as well as 36 months of incarceration for kidnapping her 6-year-old daughter and taking her to Mexico. In July 2019, Shirley took her daughter (of whom she did not have legal custody) to Mexico with the intent to contact representatives of the Government of Russia to request resettlement in a country that would not extradite her to the United States. Shirley, a former member of the U.S. Air Force who worked with the National Security Agency (NSA), took with her to Mexico national defense information, which she had unlawfully retained during her work with the U.S. Navy’s Office of Naval Intelligence, the Department of Defense, the Department of Energy, the National Cyber Investigative Joint Task Force, and at least five different cleared defense contractors.
MIT Professor Indicted on Charges Relating to Grant Fraud
Gang Chen, of Boston, was indicted by a federal grand jury in connection with failing to disclose contracts, appointments and awards from various entities in the People’s Republic of China (PRC) to the U.S. Department of Energy. Chen, a professor and researcher at Massachusetts Institute of Technology (MIT), has allegedly held various appointments with the PRC designed to promote the PRC’s technological and scientific development by providing advice and expertise – sometimes directly to PRC government officials – and often in exchange for financial compensation. This included acting as an “overseas expert” for the PRC government at the request of the PRC Consulate Office in New York and serving as a member of at least two PRC Talent Programs. Since 2013, Chen allegedly received approximately $29 million of foreign funding, including $19 million from the PRC’s Southern University of Science and Technology (SUSTech). From at least 2017 to 2019 when Chen was serving in several advisory roles for the PRC and PRC entities, he applied for and obtained a U.S. Department of Energy (DOE) grant to fund a portion of his research at MIT. In doing so, it is alleged that Chen failed to disclose information about his ongoing affiliations with the PRC as required by DOE. He also allegedly failed to disclose to the IRS in his 2018 tax return that he maintained a bank account in the PRC with more than $10,000 in 2018.
Drug Trafficking & Consumer Protection
Eight Individuals Indicted for Transnational Drug Trafficking, Money Laundering, and Financial Crimes
Debbie Mercer, 58, and Kayleigh Moffett, 33, both of Oklahoma City; Federico Machado, 53, of Florida; Carlos Villaurrutia, 40, of McAllen, Texas; and four others were indicted in a wide-ranging drug trafficking, money laundering, and financial crimes scheme. According to the indictment, the defendants smuggled large quantities of cocaine from Colombia, Venezuela, Ecuador, Belize, Honduras, Guatemala, and Mexico into the United States. The indictment separately charges Mercer, Moffett, and Machado with engaging in a fraud scheme related to the acquisition of aircraft used in the smuggling operation. According to the indictment, Machado recruited investors to invest in aircraft purchase deposits for sales transactions that never took place. Investors allegedly placed their funds in an escrow account held by Wright Brothers Title Company, which was owned and managed by Mercer and Moffett. Machado then allegedly used these funds for purposes other than the purchase of aircraft.
Indian Cancer Drug Manufacturer Agrees to Plead Guilty and Pay $50 Million for Concealing and Destroying Records in Advance of FDA Inspection
Fresenius Kabi Oncology Limited (FKOL), an Indian drug manufacturer, has agreed to plead guilty to concealing and destroying records prior to a 2013 U.S. Food and Drug Administration (FDA) plant inspection and pay $50 million in fines and forfeiture. According to court documents, FKOL owned and operated a manufacturing plant in Kalyani, West Bengal, India, that manufactured active pharmaceutical ingredients (APIs) used in various cancer drug products distributed to the United States. The government alleges that prior to a January 2013 FDA inspection of the Kalyani facility, FKOL plant management directed employees to remove certain records from the premises and delete other records from computers that would have revealed FKOL was manufacturing drug ingredients in contravention of FDA requirements. Kalyani plant employees removed computers, hardcopy documents, and other materials from the premises and deleted spreadsheets that contained evidence of the plant’s violative practices.