The 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.
If you would like to receive future reports via email, please subscribe here.
Health Care Fraud & Tax Fraud
Leah Hagen, 49, and Michael Hagen, 54, have been convicted in a health care kickback and money laundering scheme involving their durable medical equipment companies, Metro DME Supply LLC (Metro) and Ortho Pain Solutions LLC (Ortho Pain). According to the evidence presented at trial, the defendants paid a fixed rate per DME item in exchange for prescriptions and paperwork completed by telemedicine doctors that were used to submit false claims to Medicare. The defendants paid illegal bribes and kickbacks and wired money to their co-conspirator’s call center in the Philippines that provided signed doctor’s orders for orthotic braces. The evidence at trial showed emails exchanged between Leah and Michael Hagen and their co-conspirators showing a per-product pricing structure for orthotic braces but disguising their agreement as one for marketing and other services. Through this scheme, the defendants billed Medicare Parts B and C approximately $59 million and were paid approximately $27 million. The defendants wired millions of proceeds into their personal bank accounts, both in the U.S. and overseas. At sentencing, the Hagens each face a maximum sentence of 25 years in prison.
Grigoriy T. Rodonaia, 45, of Port Neches, Texas, was sentenced to 84 months in federal prison and ordered to pay $195,607.76 in restitution. Rodonaia was indicted on March 18, 2020. According to information presented in court, Rodonaia participated in a health care fraud scheme in which he issued prescriptions for specially compounded scar creams using the names, dates of birth, and Health Insurance Claim Numbers of TRICARE beneficiaries, and caused the prescriptions to be forwarded directly to Memorial Compounding Pharmacy in Houston, Texas. These prescriptions were issued without consultation with the patient and without the patient’s knowledge. The pharmacy billed the prescriptions to TRICARE, the military health care program, at approximately $9,000 to $13,000 per prescription, with multiple refills authorized per prescription. Rodonaia issued over 600 prescriptions in the names of approximately 140 beneficiaries. Before the scheme could be detected, TRICARE paid approximately $6.7 million in TRICARE funds to Memorial Compounding Pharmacy.
Texas attorney and former member of the Idaho legislature, John O. Green, and his client, Texas inventor Thomas Selgas, were sentenced for conspiracy to defraud the United States and tax evasion. Selgas was sentenced to 18 months in prison and Green to six months. According to the evidence presented at trial, Selgas conspired with Green to obstruct the IRS’s efforts to assess and collect the $1.1 million Selgas owed in taxes. Green helped Selgas conceal his money by using the lawyer’s Interest on Lawyers Trust Account (IOLTA) rather than using financial accounts in Selgas’s own name. An IOLTA is an escrow bank account used by a lawyer to hold money in trust for clients. From 2007 to 2017, Selgas deposited proceeds from the sale of gold coins and other income into Green’s IOLTA. At the direction of Selgas, Green would then use that escrow account to pay the personal expenses of Selgas and his wife, including their credit card bills.
Could your business already be in DOJ’s crosshairs?
Health care fraud investigations and prosecutions are on the rise, and scrutiny of physicians and other medical professionals can lead to career-ending charges. A mere investigation can cause untold damage to one’s reputation, to say nothing of the possible criminal penalties. Health care professionals and executives are encouraged to seek experienced counsel if they receive any indication they are being investigated.
At The Law Offices of Dan C. Guthrie, Jr., we have decades of experience both prosecuting and defending individuals in white collar crime cases, including many major health care prosecutions that ended in no indictment for our client.
Keith Alan Seguin, 55, a former civilian employee at Randolph Air Force Base in San Antonio, admitted to receiving millions of dollars in bribes in connection with a government contract fraud scheme that spanned more than a decade and impacted hundreds of millions of dollars in contract awards. According to court records, Seguin used his position to steer lucrative contracts and sub-contracts to the QuantaDyn Corporation, a software engineering company based in Ashburn, Virginia. Seguin, who was intimately involved in the government contracting process, leaked confidential competitor proposals to a prime contractor who would then subcontract the work to QuantaDyn. He also leaked confidential government budget information to prime contractors and to QuantaDyn, enabling them to maximize profits at government expense. Seguin admitted to accepting more than $2.3 million in bribes from David Joseph Bolduc, Jr., QuantaDyn’s owner.
Danny Patrick Keating, Jr., 52, of New Orleans, pleaded guilty in connection with a series of staged automobile accidents with tractor-trailers. According to his guilty plea, Keating, a personal injury attorney, admitted to conspiring to defraud insurance companies, commercial carriers, and trucking companies in the scheme. Keating admitted he filed lawsuits in state and federal court in Louisiana on behalf of his clients who were involved in the staged accidents, in which the plaintiffs lied about who was driving the vehicles, misrepresented who was at fault in the staged accidents, and falsely claimed injuries.
Mark Alexander Hopkins, 42, a Richardson man who calls himself “Doctor Bitcoin” has pleaded guilty to illegally operating a cash-to-cryptocurrency conversion business. According to plea papers, Hopkins admitted he ran a business that converted U.S. dollars to cryptocurrency, primarily Bitcoin, for a fee. He frequently sent Bitcoin to customers’ crypto wallets without taking additional steps in verifying the source of the cash, he admitted. In September 2019, a customer identified in court documents as “M.H.” approached Mr. Hopkins to convert U.S. dollars to Bitcoin. The money Mr. Hopkins received from M.H. stemmed from a lottery scam he was running with a co-conspirator in Nigeria.
Mr. Hopkins admitted he promised not to get involved in the details of M.H’s business dealings, but told M.H. how to circumvent financial institution reporting requirements by keeping deposits under $9,500, and directed M.H. to lie to financial institutions about the purpose of the business: “I’m set up as a marketing company, so tell them you’re paying for a marketing campaign,” he said. Over the course of about a year, Mr. Hopkins conducted 37 transactions with M.H., converting between $550,000 and $1.5 million.
Douglas Senerth, 32, of Connecticut, has been charged with offenses related to his alleged theft of approximately $679,000 from his grandparents. As alleged in the indictment, Senerth defrauded his grandmother and his late grandfather by falsely claiming to be a college student and inducing them to give him approximately $419,000 to pay for nonexistent college tuition and other related expenses, and an additional approximately $260,000 by falsely claiming that he would invest their money into an investment fund run by one of his nonexistent professors. As part of the scheme, Senerth created fraudulent college transcripts, letters, and email accounts that he used to corroborate his lies.
Two Orange County men, Jeremy David McAlpine, 25, of Fountain Valley, and Zachary Michael Matar, 28, of Huntington Beach, have agreed to plead guilty in connection with a cryptocurrency investment scheme. They are accused of conning thousands of investors into purchasing a cryptocurrency that purportedly provided exclusive access to a trading program that they falsely claimed was profitable, and then using most of the $1.8 million raised to enrich themselves.
Securities, Commodities & Investment Fraud
Donald Blakstad, the owner and principal of a California-based investment firm, was found guilty on all counts for committing insider trading and a securities offering fraud scheme. According to evidence presented at trial, Blakstad’s offenses yielded more than $7 million in criminal profits. According to evidence presented at trial, Blakstad had access to material nonpublic information about Illumina Inc., a San Diego-based biotechnology company whose securities trade on NASDAQ, and used this inside information to make profitable trades in Illumina securities shortly before Illumina’s earnings announcements.
Former Silicon Valley Bank vice president Mounir Gad, 34, has agreed to plead guilty to two counts of securities fraud in connection with a scheme to profit by sharing material non-public information regarding the acquisition of companies. According to court records, in April of 2015 and again in August of 2016, Gad obtained material non-public information through his employer when the bank advised clients about financial matters related to the acquisition of certain companies. Gad allegedly shared the non-public information with Nathan Guido, 38, who used the information to execute securities transactions and who has also been charged with securities fraud. The information alleges Gad and Guido both personally benefitted from the transactions and shared the profits from the illegal trades.
Sean Wygovsky, a trader at a large Canadian asset management firm (the “Employer Firm”), was charged in a Complaint in Manhattan federal court with securities fraud and wire fraud in connection with his scheme to steal confidential information about the trade orders of the Employer Firm to conduct hundreds of timely, profitable personal securities trades in the same stocks as the Employer Firm. According to the Complaint, Wygovsky attempted to hide his conduct by trading or causing trading in brokerage accounts held in the names of his close relatives.
Public Corruption & False Claims Act
A Dallas real estate developer has been convicted of bribing two former Dallas City Council members, Carolyn Davis and Dwaine Caraway. After a two-week trial, a federal jury convicted Ruel Hamilton, the president of AmeriSouth Realty Group, of one count of conspiracy and two counts of bribery of an agent of a local government receiving federal funds. According to evidence presented at trial, from 2013 to 2015, Mr. Hamilton shelled out tens of thousands of dollars in bribes to Carolyn Davis, who was then serving as chair of the city’s Housing Committee. In return, Ms. Davis – who pleaded guilty to her role in the scheme prior to her death in 2019 – supported Mr. Hamilton’s Royal Crest housing project, voting to authorize a real estate development loan and resolutions supporting an award of a 9 percent tax credit for Royal Crest. Ms. Davis supported the Royal Crest housing project, despite the fact that it failed to meet the city’s enumerated multifamily housing priorities.
El Paso Ear, Nose & Throat Associates (EPENT) has agreed to pay $750,000 to settle allegations that they violated the False Claims Act by billing Medicaid, Medicare and other federal health care programs by upcoding evaluation and management codes. The government alleged that EPENT knowingly caused false claims to be submitted to federal health care programs by billing for services at a higher rate of reimbursement than they would be entitled to for the service actually provided. This scheme is commonly referred to as “upcoding.”