MAN SENTENCED FOR FILING $1.5 MILLION IN FALSE CLAIMS FOR TAX REFUNDS

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, May 26, 2015

Utah Man Sentenced to Prison for Filing $1.5 Million in False Claims for Tax Refunds and Presenting Fictitious Financial Instruments to the U.S. Government

A Sandy, Utah, resident was sentenced today in U.S. District Court in Salt Lake City, Utah, to serve two years in prison for tax evasion, filing false claims for federal income tax refunds, and filing fictitious financial obligations with the U.S. government, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Paul Ben Zaccardi was also ordered to pay restitution to the Internal Revenue Service (IRS) and to serve a four-year term of supervised release upon his release from prison.

“Pursuing and prosecuting individuals who refuse to comply with our nation’s tax laws and take affirmative steps to evade their obligations remains a top priority of the Tax Division,” said Acting Assistant Attorney General Ciraolo.  “Today’s sentence reflects what awaits those who engage in such criminal conduct.”

“Today’s sentencing of Paul Zaccardi again emphasizes the Internal Revenue Service and DOJ Tax Division’s aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation’s tax system,” said Special Agent in Charge John Collins of the IRS Criminal Investigation’s Las Vegas Field Office.  “Honest taxpayers have been reassured today that no one is above the law–especially when the integrity of the tax administration is at stake.”

On Oct. 29, 2014, Zaccardi pleaded guilty to the offenses charged in the superseding indictment, including one count of tax evasion, five counts of filing false claims for income tax refunds and three counts of filing fictitious obligations.  According to the superseding indictment and court documents, in April 2004, Zaccardi embarked on a scheme to evade the payment of his federal income taxes.  As part of that scheme and to avoid federal tax levies, Zaccardi transferred title to his residence to a nominee entity that he formed called Saved by Grace Christian Fellowship and caused his business receipts to be deposited into his wife’s bank account.

Zaccardi also presented five separate false tax returns to the IRS falsely claiming tax refunds totaling more than $1.5 million.  In addition, from June 2008 to October 2011, Zaccardi presented three separate fictitious financial instruments to the IRS, U.S. Department of the Treasury and the U.S. District Court of the District of Utah for a combined total of $605 million, to purportedly pay his federal income tax liabilities.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Stuart Wexler and Ryan Raybould of the Tax Division, who prosecuted the case.  She also thanked the U.S. Attorney’s Office of the District of Utah for their substantial assistance.

CONSTRUCTION CO. SETTLES ALLEGED FALSE CLAIMS CHARGES

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, March 21, 2014

Utah Construction Company to Pay Government to Settle Alleged False Claims in Connection with Program for Small and Disadvantaged Businesses
Okland Construction Co. Inc. has agreed to pay the government $928,000 to resolve allegations that it made false statements and submitted false claims under the Small Business Administration’s (SBA) Section 8(a) Program for Small and Disadvantaged Businesses, the Justice Department announced today.

“The purpose of the 8(a) Program is to assist small and disadvantaged businesses to compete in the American economy,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.   “The Justice Department is committed to making sure that those who participate in 8(a) contracts do so honestly and fairly.”

Okland Construction, a large construction company, entered into a mentor-protégé agreement with Saiz Construction Co., a participant in the 8(a) Program.   The mentor-protégé program allows a large business mentor to form an SBA-approved joint venture with a small business protégé to jointly bid on and perform 8(a) contracts, which are contracts awarded by federal agencies that are set aside solely for small businesses.   Without a qualifying joint venture, the mentor and protégé cannot jointly bid on 8(a) contracts, and the mentor cannot perform the primary functions of the contract.

The government alleged that Okland Construction did not form a qualifying joint venture with Saiz Construction and thus was not eligible to jointly bid on or perform the primary functions of eight 8(a) contracts with Saiz Construction.   Nevertheless, Okland Construction allegedly prepared the bids for the 8(a) contracts and its employees served as project managers, submitted invoices and performed payroll and other accounting functions.   Furthermore, Okland Construction allegedly concealed its extensive involvement in performing the 8(a) contracts by misrepresenting to the government that its employees were employees of Saiz Construction.

The government also alleged that Okland Construction’s relationship with Saiz Construction violated the terms of an SBA set-aside contract awarded to Saiz Construction that required Saiz Construction to perform at least 15 percent of the labor on the contract minus the cost of materials.

“Large businesses must not be allowed to fraudulently obtain access to contracts set aside for small businesses,” said SBA Inspector General Peggy E. Gustafson.   “The SBA mentor-protégé program enhances the capability of 8(a) participants to compete more successfully for federal contracts through a relationship with another successful business; however, this program must not be used as a vehicle to improperly benefit large, non-disadvantaged companies.”

“SBA’s contracting programs, including the 8(a) Business Development Program, provide small businesses with the opportunity to grow and create jobs,” said SBA General Counsel Sara D. Lipscomb.   “But SBA has no tolerance for waste, fraud or abuse in any government contracting program and is committed to working with our federal partners to ensure the benefits of these programs flow to the intended recipients.”

The civil settlement resolves a lawsuit filed by Saiz Construction and its owner Abel Saiz under the whistleblower provision of the False Claims Act, which permits private parties, known as relators, to file suit on behalf of the government for false claims and to share in any recovery.   The relators filed the lawsuit after Saiz Construction terminated its mentor-protégé agreement with Okland Construction.   Saiz Construction and Saiz will receive a total of $148,480.

This settlement with Okland Construction was the result of a coordinated effort among the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of Utah, the SBA Office of Inspector General, the SBA Office of General Counsel, the Department of the Air Force and the Army Corps of Engineers.

The civil lawsuit was filed in the District of Utah and is captioned United States ex rel. Saiz Construction Co. Inc. and Abel Saiz v. Okland Construction Co. Inc., No. 2:11-cv-00362 (D. Utah).   The claims resolved by this settlement are allegations only, and there has been no determination of liability.

HOME HEALTH AGENCY OFFICE MANAGER CONVICTED FOR ROLE IN $5.8 MILLION MEDICARE FRAUD SCHEME

FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, April 17, 2013
Detroit-Area Home Health Agency Office Manager Convicted in $5.8 Million Medicare Fraud Scheme

A federal jury in Detroit today convicted the office manager of a home health agency for her participation in a $5.8 million Medicare fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Robert D. Foley III, Special Agent in Charge of the FBI Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Detroit Office.

Nabila Mahbub, 27, the office manager of All American Home Care Inc., was found guilty in U.S. District Court for the Eastern District of Michigan of one count of conspiracy to commit health care fraud.

Mahbub was charged in a superseding indictment returned March 27, 2012. Nineteen other individuals who worked at or were associated with All American were previously convicted for their roles in the fraudulent scheme; one was acquitted at trial, but was convicted at trial for a separate, but related, scheme.

According to evidence presented at trial, the defendant and her co-conspirators caused the submission of false and fraudulent claims to Medicare through All American, a home health care company located in Oak Park, Mich., that purported to provide skilled nursing and physical therapy services to Medicare beneficiaries in the greater Detroit area.

The evidence at trial showed that the defendant and her co-conspirators used patient recruiters, who paid Medicare beneficiaries to sign blank documents for physical therapy services that were never provided and/or medically unnecessary. The owners of All American paid physicians to sign referrals and other therapy documents necessary to bill Medicare. Physical therapists and physical therapist assistants then created fake medical records using blank, pre-signed forms obtained by the patient recruiters to make it appear as if physical therapy services were actually rendered, when, in fact, they were not.

According to evidence presented at trial, Mahbub doctored and directed the doctoring of fake patient files to facilitate the commencement and billing of home health services purportedly provided by physical therapists and physical therapist assistants working for All American. Mahbub also directed the physical therapists and physical therapist assistants who created fake therapy visit notes using blank, pre-signed forms, to make it appear that physical therapy services billed to Medicare were actually provided.

All American was paid over $5.8 million from Medicare between September 2008 and November 2009.

At sentencing, scheduled for July 25, 2013, Mahbub faces a maximum penalty of 10 years in prison.

This case is being prosecuted by Deputy Chief Gejaa T. Gobena and Trial Attorney Matthew C. Thuesen of the Criminal Division’s Fraud Section. The investigation was led by the FBI and HHS-OIG, and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

LA MEDICAL EQUIPMENT SUPLIER SENTENCED FOR MEDICARE FRAUD

FROM: U.S. DEPARTMENT OF JUSTICE
WASHINGTON – A Los Angeles medical equipment supplier, who submitted almost $1 million in false claims to Medicare for expensive, high-end power wheelchairs, was sentenced today to serve 30 months in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney André Birotte Jr. of the Central District of California; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); and Timothy Delaney, Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office.

Adejare Ademefun, 57, was sentenced by U.S. District Judge John F. Walter in the Central District of California. In addition to the prison term, Ademefun was sentenced to three years of supervised release and ordered to pay $499,548 in restitution to Medicare.

In February 2010, Ademefun pleaded guilty to health care fraud. As part of his plea, Ademefun admitted that from January 2006 to his arrest in October 2009, he owned and operated Jamef Medical Supply, a fraudulent durable medical equipment (DME) supply company, which he used to submit almost $1 million in false claims to Medicare. Ademefun admitted he paid illicit kickbacks to co-conspirators for medical prescriptions and other documents he needed to defraud Medicare. Ademefun focused his fraudulent billings on power wheelchairs, which were among the most expensive DME that a Medicare provider could bill to Medicare. In fact, Ademefun admitted that approximately 95 percent of all the claims he submitted to Medicare were for power wheelchairs. Ademefun admitted he supplied these power wheelchairs to Medicare beneficiaries who were illegally solicited by patient recruiters or "marketers" for medical equipment they did not want or need.

Ademefun admitted he was deliberately indifferent to the fact that the power wheelchair claims he submitted to Medicare were false even though Ademefun knew there was a high probability that the doctors whose names appeared on the prescriptions he purchased from his co-conspirators did not prescribe the power wheelchairs. Ademefun also knew that only six doctors were supposedly responsible for referring approximately 50 percent of his business, and that approximately 60 percent of his customers lived more than 100 miles from Jamef. Ademefun admitted he submitted approximately $941,028 in false claims to Medicare during the course of the scheme.

On March 24, 2010, Ademefun’s co-conspirator Leonard Nwafor was sentenced to 108 months in prison for his role in the scheme.

The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kerry O’Neill of the Central District of California. The case is being investigated by the California Department of Justice and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.

Since its inception in March 2007, strike force operations in nine locations have charged more than 1,480 defendants who collectively have billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

LENDER TO PAY $3.9 MILLION TO RESOLVE FALSE CLAIMS LIABILITY

The following excerpt is from the Department of Justice website: Friday, February 10, 2012 “Pennsylvania-based Lender to Pay U.S. $3.9 Million to Resolve False Claims Liability Related to Two Nursing Home MortgagesCare Facilities Located in New York and California Capmark Finance LLC in Horsham, Pa., has agreed to pay the United States $3.9 million, to settle a False Claims Act lawsuit, the Justice Department announced today.   The lawsuit, filed in the Central District of California, alleges that Capmark made false statements in connection with two nursing home mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD).   Shortly after the United States filed its complaint in 2009, Capmark filed for bankruptcy protection.     The United States alleges that Capmark misrepresented material facts critical to the borrowers’ creditworthiness in the two loan applications and that Capmark’s false statements induced HUD to insure the loans, both of which defaulted, causing a loss to the government.   The two nursing homes were Canoga Care Center in Canoga Park, Calif., and Hudson Valley Care Center in Ghent, N.Y.   The allegations arise from investigation and audit work conducted by the HUD Office of Inspector General.   This case was handled by the Justice Department’s Civil Division with the assistance of HUD’s Office of General Counsel, Program Enforcement Branch.   “Today’s action should be a reminder to all FHA mortgage lenders.   Attesting to things you know to be false is not only lying, it is against the law and there will be consequences,” said Helen Kanovsky, HUD’s General Counsel.   This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force.   The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.   It includes representatives from a broad range of federal agencies, including regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.   The task force is working to improve efforts across the federal executive branch and, with state and local partners, investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial rimes.

QUANTITATIVE HEDGE FUND COMPANY HAS ASSETS FROZEN BY SEC

The following is an excerpt from the SEC website:

“Washington, D.C., Oct. 26, 2011 — The Securities and Exchange Commission today obtained an asset freeze against a Boston-area money manager and his investment advisory firm charged with misleading investors in a supposed quantitative hedge fund and diverting portions of investor money into his personal bank account.

The SEC alleges that Andrey C. Hicks and Locust Offshore Management LLC made false representations to create an aura of legitimacy when soliciting individuals to invest in a purported billion dollar hedge fund that Hicks controlled called Locust Offshore Fund Ltd. Hicks raised at least $1.7 million from several investors for the hedge fund. Among the false claims made to investors were that Hicks obtained undergraduate and graduate degrees at Harvard University, and that he previously worked for Barclays Capital, and that the hedge fund held more than $1.2 billion in assets.
“Hicks lied to investors about virtually every aspect of his fictitious hedge fund. This brazen web of lies to investors constituted an outright fraud,” said David P. Bergers, Director of the SEC’s Boston Regional Office.
“Hicks and Locust Offshore Management created this intricate scheme in order to gain credibility with investors,” said Robert Kaplan, Co-Chief of the Asset Management Unit in the SEC’s Division of Enforcement. “Even hedge fund managers who claim affiliations with well-known institutions should be thoroughly researched before making an investment.”
At the SEC’s request, Judge Richard Stearns of the U.S. District Court in Massachusetts issued a temporary restraining order that freezes the assets of Hicks, his firm, and the hedge fund.
According to the SEC’s complaint, Hicks and his firm falsely claimed that the firm’s quantitative strategies were based on mathematical models that Hicks developed while at Harvard, where he purportedly received his undergraduate degree in 2005 and a graduate degree in 2007. Unbeknownst to investors, Hicks only attended Harvard’s undergraduate college for three semesters and never graduated after twice being required to withdraw for failing to perform academically. Hicks only took one mathematics course during his time at Harvard, receiving a D- for a grade.
The SEC alleges that Hicks and his firm misrepresented in offering materials to potential investors that while purportedly at Barclays Capital, Hicks “grew his book nearly two-fold and expanded his group’s assets under management to roughly $16 [billion].” According to a search of records at Barclays Capital, the firm has no record of employing Hicks.
According to the SEC’s complaint, Hicks and his firm also falsely claimed that Ernst & Young served as the fund’s auditor, Credit Suisse served as the fund’s prime broker and custodian, and the fund was a business company incorporated under the laws of the British Virgin Islands.
The SEC’s complaint charges Hicks and Locust Offshore Management with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also names the Locust Offshore Fund as a relief defendant, alleging that it received investor funds to which it had no right.
The SEC’s expedited investigation was conducted by Boston Regional Office staff including Michele T. Perillo and Kevin M. Kelcourse of the Asset Management Unit and Amy S. Gwiazda. Richard M. Harper II will lead the SEC’s litigation. The SEC acknowledges the assistance of the Swiss Financial Market Supervisory Authority and the British Virgin Islands Financial Services Commission. The SEC’s investigation is continuing.”