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.
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Paycheck Protection Program (PPP) Fraud
Tax Preparer Charged with COVID-19 Loan Fraud
Leonel Rivero, 35, of Miami, was charged with wire fraud in connection with a scheme to obtain over 100 COVID-19-relief loans under the PPP. Rivero owned a tax-preparation business and submitted approximately 118 fraudulent PPP loan applications on behalf of himself and his accomplices. Combined, the 118 PPP loan applications sought more than $2.3 million in PPP loans. On each PPP loan application, Rivero allegedly falsified the applicant’s prior-year income and expenses and submitted fraudulent IRS tax forms. Rivero and his accomplices allegedly received approximately $975,582 in PPP loans as a result of the fraud.
Texas Man Pleads Guilty to $24 Million COVID-Relief Fraud Scheme
Dinesh Sah, 55, of Coppell, pleaded guilty to orchestrating a fraudulent scheme to obtain approximately $24.8 million in PPP loans and laundering the proceeds. Sah admitted that he submitted 15 fraudulent applications, filed under the names of various purported businesses that he owned or controlled, to eight different lenders seeking approximately $24.8 million in PPP loans. Sah claimed that these businesses had numerous employees and hundreds of thousands of dollars in payroll expenses when, in fact, no business had employees or paid wages consistent with the amounts claimed in the PPP applications. Sah further admitted that he submitted fraudulent documentation in support of his applications, including fabricated federal tax filings and bank statements for the purported businesses, and falsely listed other persons as the authorized representatives of certain of these businesses without the authority to use their identifying information on the applications.
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
14 Defendants Sentenced to 74+ Years in Forest Park Healthcare Fraud
Fourteen defendants convicted in the Forest Park Medical Center bribery scam have been sentenced to a combined 74+ years in federal prison and ordered to pay a total of $82.9 million in restitution. Seven defendants – Wilton McPherson “Mac” Burt, Jackson Jacob, Douglas Sung Won, Michael Bassem Rimlawi, Shawn Mark Henry,Mrugeshkumar Shah, and Iris Kathleen Forrest – were convicted at trial in April 2019. Ten other defendants pleaded guilty prior to trial, and one, who was granted a mistrial, pleaded guilty after trial. The $200 million scheme was designed to induce doctors to steer lucrative patients – particularly those with high-reimbursing, out-of-network private insurance – to the now defunct hospital. Most of the kickbacks, which totaled more than $40 million, were disguised as consulting fees or “marketing money” doled as a percentage of surgeries each doctor referred to Forest Park.
Federal Court Enjoins Dallas Area Tax Preparer from Preparing Tax Returns
Keysha Briseño, a Dallas-area tax return preparer, has been permanently enjoined from preparing federal income tax returns for others pursuant to a stipulated permanent injunction. Prosecutors allege that Briseño repeatedly included false business losses and fabricated business expenses on some of her clients’ returns. She and her spouse allegedly own and operate Tax Genius LLC; Tax Genie; and K&J Tax Service. Tax Genius prepared over 4,200 tax returns between 2017 through 2019, more than 25% of which contained fabricated business losses, court filings indicate. After the IRS revoked her federal return preparer identification in 2012, Briseño continued to prepare tax returns using her sister’s preparer identification.
Dallas Man Pleads Guilty to Obstructing IRS Law
David Marcus Easler, 58, pleaded guilty to attempting to obstruct IRS tax laws as a result of his longstanding failure to pay his income taxes dating back to 1996. Since at least 2004, the IRS sent several Notices of Levy on Wages to Mr. Easler to collect past due income taxes. When the IRS became aware of his employment with a particular company, the IRS attempted to collect past due income taxes by either withholding taxes from his salary, or by using tax levies and/or garnishment of wages from Mr. Easler’s employer. In direct response to IRS efforts to collect his past due taxes, Mr. Easler filed four different voluntary petitions for bankruptcy. With some of these bankruptcy filings, Mr. Easler submitted false and fraudulent tax returns and other tax return related documents. For example, as part of his 2009 bankruptcy filing, he submitted several income tax returns that falsely reported that he made “0” dollars of taxable income. Mr. Easler now faces up to three years in federal prison.
Arlington Man Sentenced to 5 Years in Prison for Filing Fraudulent Tax Returns
Glenn Edwards Boggus, 34, whose fraudulent tax filings netted him more than $935,000 in improper refunds, has been sentenced to five years in federal prison and ordered to pay $495,368 in restitution to the IRS. Mr. Boggus admitted that in January 2017, he filed a fraudulent individual income tax return that claimed a $1.14 million tax refund for tax year 2016. Along with his fraudulent return, he submitted a false wage and tax statement reporting $5,647,888 in wages and $3,333,116 in withholdings, which he knew to be false. (At his sentencing hearing, prosecutors introduced evidence that the company from which he’d purportedly collected his wages was fake.)
Tax Attorney Indicted for Facilitating Tax Fraud
Carlos E. Kepke, a Houston-based tax attorney, was indicted on a charge of conspiring with the Chairman and Chief Executive Officer of a private equity firm to defraud the IRS. The grand jury further charged him with three counts of aiding and assisting in the preparation of the CEO’s false tax returns for the 2012 to 2014 tax years. From 1999 to 2014, Kepke allegedly helped Robert F. Smith create and maintain offshore entities that were used to conceal from the IRS approximately $225 million of capital gains income Smith had earned. When Smith earned capital gains income from his private equity funds, a portion was allegedly deposited into bank accounts in the British Virgin Islands and Switzerland. For his services, Smith has allegedly paid Kepke nearly $1 million since 2007.
False Claims Act, Financial Fraud and National Security
Texas Doctor Accused of False Claims Act Violations
Dr. Clay Cockerell, 64, is the subject of a civil False Claims Act lawsuit filed by the U.S. Attorney’s Office for the Northern District of Texas. The suit claims that the dermatopathologist and his clinic, Cockerell Dermatopathology (CDP), submitted nearly $4.2 million in fraudulent claims to TRICARE, a federal health insurance program. Cockerell allegedly permitted a laboratory management company to use his clinic’s lab license to submit false claims to federal health insurance programs, including TRICARE, for medically unnecessary tests. In return, the management company agreed to pay CDP twenty percent of the net revenue from those tests.
Washington Man Pleads Guilty to $244 Million Ghost-Cattle Scam
Cody Allen Easterday, 49, of Mesa, Washington, pleaded guilty to defrauding Tyson Foods Inc. and another unnamed company out of more than $244 million by charging them under various agreements for the purported costs of purchasing and feeding hundreds of thousands of cattle that did not actually exist. Beginning in 2016 and continuing through November 2020, Easterday submitted false and fraudulent invoices to Tyson and the other company for reimbursement for the purported costs of purchasing and growing hundreds of thousands of cattle that Easterday never purchased, and that did not actually exist. As a result of the scheme, Tyson and the unnamed company paid Easterday Ranches over $244 million for the purported costs of purchasing and feeding these ghost cattle.
Former Venezuelan Official Pleads Guilty in Connection with International Bribery and Money Laundering Scheme
Jose Luis De Jongh Atencio (De Jongh), 48, a dual U.S.-Venezuelan citizen and former official at Citgo Petroleum Corporation, pleaded guilty in connection with his role in laundering millions of dollars in bribes and corruptly providing business advantages to multiple individuals who obtained contracts with Citgo and Petróleos de Venezuela S.A., Venezuela’s state-owned and state-controlled energy company. Between 2013 and 2019, De Jongh allegedly accepted more than $7 million in bribe payments from businessmen including Jose Manuel Gonzalez Testino, a dual U.S.-Venezuelan citizen, and Tulio Anibal Farias Perez, a Venezuelan national and Houston resident, and others in exchange for assisting the businessmen and related companies in procuring contracts with Citgo, and providing them with other business advantages.
Owner of Dallas-Area Trade School Who Wrote of Lies in Journal is Convicted of $70 Million Fraud
Jonathan Davis, 43, was convicted of defrauding Veterans Affairs out of about $70 million through a Dallas-area trade school that trained military veterans in the heating and air-conditioning industry, The Dallas Morning News reported (subscription required). “Davis’ own words describing his lies and fraud — jotted down in his personal journal seized by agents — helped convict him,” the newspaper reported. Davis was also convicted of misleading student veterans who attended his now-defunct for-profit school, Retail Ready Career Center, in Garland. Among the journal entries that helped convict him: “I lied to the accountant that I am using for my audit service, I told him that I don’t have anything in the company name other than a lease … and that I’ve had a bank account with expenses out of it because it is a disaster and wouldn’t project a very good picture.”
Texas Man Charged With Intent to Attack Data Centers
Seth Aaron Pendley, 28, of Wichita Falls, has been charged with malicious attempt to destroy a building with an explosive over his plot to blow up a data center in Virginia. He was arrested after allegedly attempting to obtain an explosive device from an undercover FBI employee in Fort Worth. The investigation began after a concerned citizen contacted the FBI on Jan. 8 about alarming statements posted on MyMilitia.com, a forum dedicated to organizing militia groups. A user who went by the screen name “Dionysus” stated he was planning to “conduct a little experiment,” that he said would “draw a lot of heat” and could be “dangerous.” When another user asked what outcome Dionysus desired, he responded, “death.” A confidential source provided the FBI with the user’s email address, which was registered to Mr. Pendley. A subsequent search of the defendant’s Facebook account showed that he had boasted about being at the U.S. Capitol on Jan. 6.
Investment Fraud, Public Corruption, Cyber & Drug Crimes
Moses Moreira, 42, of Carrollton, has pleaded guilty to conspiracy to commit wire fraud and wire fraud. Moreira allegedly worked with co-conspirators to devise and execute an online fraud scheme that involved, among other things, fabricating false identities and stories to entice victims and ultimately lure money from them. Moreira and his co-conspirators used the fraudulently obtained funds for personal purchases and converted portions of these funds for use in international shipping. According to the indictment, at least 80 victims sent money to Moreira and his co-conspirators, with at least 60 victims sending money directly to Moreira or accounts controlled by Moreira. These victims have lost a combined total of approximately $4 million. Moreira was indicted on Feb. 10, 2021 and charged with federal violations.
Deputy Constable Arrested on Drug and Money Laundering Charges
Alexsander S. Reyes, 47, has been charged with conspiring with his girlfriend to possess with the intent to distribute cocaine. Reyes, a Harris County deputy constable, allegedly laundered what he believed was $350,000 in drug proceeds over a four-month-period. Reyes and his girlfriend, Priscilla Yvette Cervantes, 44, are charged with one count of conspiracy to possess with the intent to distribute cocaine. If convicted, they face a minimum of 10 years and up to life in prison as well as a possible $10 million maximum fine. Reyes also faces up to 20 years if convicted of either of the two counts of money laundering.
Dallas Man Sentenced to 21 Months for Obstruction of Justice
Tyler C. King, 32, of Dallas, was sentenced to 21 months in prison for falsifying evidence and obstructing justice at his November 2019 jury trial in Albany, New York. As part of his previously entered guilty plea, King admitted to obstructing justice by falsifying evidence for use in his 2019 trial. Following that trial, King was convicted of conspiracy to commit computer fraud, computer fraud, and aggravated identity theft in connection with his hacking of a New York-based technology company. The 21-month term of imprisonment imposed today will run consecutive to the 57-month term on the previous conviction, for a total term of imprisonment of 78 months.
Colombian Soccer Star Sentenced in the Eastern District of Texas for Conspiracy to Import Cocaine into the United States
Jhon Eduis Viafara Mina, 42, a native of Robles, Colombia, was sentenced to federal prison for drug trafficking crimes in the Eastern District of Texas. The former Colombian soccer star had pleaded guilty in November 2020 to conspiracy to import cocaine into the United States and was sentenced to 135 months in federal prison. Viafara Mina previously played for the Colombian National Team and Once Caldas football club, as well for the English football clubs Portsmouth and Southampton, among many others.
Operation Wasted Daze: 46 Convicted in $18 Million Pill Mill Scheme
Forty-six defendants, including two doctors, a nurse practitioner, and five pharmacists, have been convicted of operating an $18 million pill mill scheme. They were arrested in 2020 by the DEA’s Fort Worth Tactical Diversion Squad in “Operation Wasted Daze.” The lead defendant, 61-year-old oncologist Caesar Mark Capistrano, was charged with multiple counts of conspiracy to dispense hydrocodone and possession with intent to distribute hydrocodone or carisoprodol. He and five coconspirators – pharmacists Ethel Oyekunle-Bubu, Wilkinson Oloyede Thomas, and Christopher Kalejaiye Ajayi as well as recruiter Brian Kincade and recruit Alphonse Fisher – were convicted at trial. The remaining 41 defendants pleaded guilty prior to trial. According to evidence presented at three different trials conducted in early 2021, Dr. Capistrano and his associate, 36-year-old Dr. Tameka Lachelle Noel, wrote prescriptions for hydrocodone, oxycodone, alprazolam, carisoprodol, zolpidem, phentermine, and promethazine with codeine, knowing the drugs would be diverted to the streets for illicit use. Dr. Noel pleaded guilty in November 2020 to conspiracy to dispense a controlled substance and was sentenced to eight years federal prison.