OIL SUPPLY COMPANY EXECS PLEAD GUILTY TO FRAUD IN KICKBACK SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, February 26, 2016

Two Former Executives of Houston-Based Oil Supply Company Plead Guilty to Fraud in Illegal Kickback Scheme

Two former executives of a Houston-based oil supply company pleaded guilty today to fraud charges for their role in a scheme to secure illegal kickbacks in connection with oil projects in Latin America.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas and Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office made the announcement.

Franklin Marsan, 51, and Eduardo Betancourt, 48, both of Spring, Texas, each pleaded guilty to one count of conspiracy to commit wire fraud.  They will be sentenced on July 1, 2016, by U.S. District Judge Melinda Harmon of the Southern District of Texas, who accepted their pleas today.  As part of their plea agreements, Marsan and Betancourt agreed to pay restitution to their former employer.

According to the plea agreements, Marsan and Betancourt worked for a Texas-based company that, among other things, manufactured and supplied products for the petroleum, oil and gas industries.  The company hired and paid third-party sales agents to promote and sell its products to customers outside the United States.  Marsan and Betancourt ran the company’s Latin American operations from offices located in Houston.  As part of their guilty pleas, Marsan and Betancourt admitted that from at least 2008 until at least March 2011, they obtained kickbacks from the commissions that these third-party sales agents received in connection with sales of the company’s products in several Latin American countries.  Marsan and Betancourt admitted that during the course of the scheme, they received a total of at least $150,000, mostly in cash, in kickbacks, which they actively concealed from the company.

The FBI’s Houston Field Office investigated the case.  Senior Trial Attorney Patrick Pericak and Trial Attorney Lorinda Laryea of the Criminal Division’s Fraud Section and Deputy Chief John Pearson of the Southern District of Texas are prosecuting the case.

The United States thanks the government of Panama for its assistance in this case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

FORMER RYAN INTERNATIONAL AIRLINES EXECUTIVE SENTENCED FOR DEFRAUDING AIRLINE

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, September 12, 2013
Former Airline Executive Sentenced to Prison for Schemes to Defraud Illinois-Based Ryan International Airlines
Executive Sentenced to Serve 87 Months in Prison

A former executive of Ryan International Airlines, a charter airline company located in Rockford, Ill., was sentenced today to serve 87 months in prison and to pay restitution for participating in kickback schemes to defraud Ryan, the Department of Justice announced.

Wayne E. Kepple, the former vice president of ground operations for Ryan, was sentenced to serve 87 months in prison and to pay $529,998 in restitution.  On Nov. 4, 2011, Kepple pleaded guilty in U.S. District Court in West Palm Beach, Fla., to three counts of conspiracy to commit wire fraud and honest services fraud and three counts of wire fraud.  The charges against Kepple stem from a kickback scheme involving Robert A. Riddell, the former owner and operator of an airline security and ground service company, as well as separate kickback schemes involving David A. Chaisson, the former owner and operator of an Indiana flight management services company, James E. Murphy, the former owner and operator of a Florida aviation fuel supply company, and others.

Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government – including the U.S. Department of Defense and the U.S. Department of Homeland Security.

“Today’s sentence should serve as a stiff deterrent to executives who might be tempted to solicit a kickback from their supplies in exchange for their honest services,” said Bill Baer, Assistant Attorney General in charge of the Antitrust Division. “The Antitrust Division is committed to ensuring that contracts are won based on competition and not collusion.”

According to court documents, Kepple was in charge of contracting with providers of goods and services on behalf of Ryan and approving the invoices submitted by the providers to Ryan for payment. From October 2005 through at least August 2009, Kepple participated in three separate conspiracies in which he received kickback payments of more than $520,000 from Riddell, Murphy, Chaisson and others in exchange for Kepple awarding them Ryan airline services and fuel contracts.  According to court documents, the payments from Chaisson and Riddell included the proceeds of fabricated invoices submitted by their companies to Ryan.

As a result of the ongoing investigation, four individuals, including Kepple, have pleaded guilty and been sentenced to prison.  On Oct. 28, 2011, Murphy was sentenced to serve 23 months in prison and to pay $42,500 in restitution and Chaisson was sentenced to serve 16 months in prison and to pay $50,742 in restitution.  On Jan. 27, 2012, Riddell was sentenced to serve 24 months in prison and to pay $131,540 in restitution. Kepple’s 87-month sentence reflects his central role in multiple kickback schemes.

On Aug. 13, 2013, a fifth individual, Sean E. Wagner, and his company, Aviation Fuel International Inc. (AFI), a Florida-based airline fuel supply company, were indicted for participating in a conspiracy to defraud Ryan by making kickback payments to Kepple in exchange for awarding business to AFI.  That case is ongoing.
         
The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General with assistance from the U.S. Attorney’s Office for the Southern District of Florida.

TWO INDIVIDUALS SENTENCED TO PRISON FOR PARTICIPATING IN KICKBACK SCHEME

FROM:  U.S. DEPARTMENT OF JUSTICE
A Pennsylvania Company and Two New York Companies Sentenced to Pay a Total of $3 Million in Criminal FinesWASHINGTON — Two individuals and three corporations were sentenced in the U.S. District Court in Manhattan by Judge George B. Daniels to serve time in prison and to pay criminal fines for their participation in an eight-year conspiracy involving kickbacks in excess of $2.3 million to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. The individuals and the corporations were convicted after a four-week trial in February 2012.

Michael Yaron, the owner of two of the companies convicted for their roles in the conspiracy—Cambridge Environmental & Construction Corp, doing business as National Environmental Associates (Cambridge/NEA) and Oxford Construction & Development Corp.—was sentenced to serve 60 months in jail, and to pay a $500,000 criminal fine. Cambridge/NEA and Oxford Construction were each sentenced to pay a $1 million criminal fine.

Moshe Buchnik, the president of an asbestos abatement company that also did business at NYPH, was sentenced to serve 48 months in jail, and to pay a $500,000 criminal fine for his role in the conspiracy.

Artech Corp., a company owned by a relative of Santo Saglimbeni, a former vice president of facilities operations at NYPH, was also sentenced to pay a $1 million criminal fine.

Two additional charged co-conspirators, Saglimbeni and Emilio "Tony" Figueroa, a former director of facilities operations at NYPH, who were convicted along with Yaron, Buchnick, Cambridge/NEA, Oxford Construction and Artech, are scheduled to appear in court on July 31, 2012.

"The sentences imposed today are consistent with the seriousness of the crimes for which the individuals and companies were found guilty," said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. "Today’s sentences hold accountable the unlawful conduct of those involved in illegal kickback conspiracies."

The department said the scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks. The kickbacks were funneled by Yaron to Saglimbeni through Artech Corp., a sham company Saglimbeni created in his mother’s name in order to conceal the kickbacks.

Yaron, Buchnik, Saglimbeni, Figueroa, Cambridge/ NEA, Oxford Construction and Artech, were each convicted of conspiracy to defraud NYPH. Additionally, Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.

The sentences announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH. Including today’s sentencings, 14 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this investigation.

NURSING HOME COMPANY EMPLOYEE SENTENCED FOR KICKBACKS AND TAX EVASION

FROM:  U.S. DEPARTMENT OF JUSTICE

Thursday, July 19, 2012

Former Employee of Nursing Home Company Operating in North Carolina and Virginia Sentenced to Serve 63 Months in Prison for Kickback Schemes and Tax Evasion

 

 

WASHINGTON – The former director of corporate maintenance and renovations at Medical Facilities of America Inc. (MFA) was today sentenced to serve 63 months in prison for accepting kickbacks from contractors and evading federal income taxes, the Department of Justice announced. MFA operates health care and nursing home facilities throughout Virginia and North Carolina.

John D. Henderson, of Colonial Heights, Va., was sentenced in U.S. District Court in Roanoke, Va., by Judge Samuel G. Wilson. In addition to his prison sentence, Henderson was ordered to pay a total of $698,088 in restitution and additional taxes, penalties and interest to the Internal Revenue Service for his participation in two separate conspiracies. The conspiracies involved steering contracts for the repair, maintenance and renovation at MFA health care and nursing home facilities. One of the conspiracies took place from about June 1998 until at least December 2006, and the other conspiracy took place from about July 2005 until at least December 2006. Henderson pleaded guilty on March 14, 2012, to two counts of conspiracy to commit mail and honest services fraud for the kickback schemes and to two counts for failing to include the kickbacks and other income he received on his federal income tax returns for years 2005 and 2006.

According to the four-count felony charge, Henderson oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities. To facilitate the conspiracies, Henderson steered contracts to several venders in return for kickbacks; created fictitious competitor bids that were higher than the quotes submitted by the venders who paid him, in order to create the appearance of competition; and directed subordinates to solicit quotes only from vendors who paid him. Henderson received more than $560,000 in kickbacks and had at least $101,000 more paid to a co-conspirator, and in return steered MFA contracts totaling more than $5 million. 

 

“Through this kickback scheme, Henderson and his co-conspirators deprived MFA of competitive pricing to its financial detriment,” said Acting Assistant Attorney General Joseph Wayland in charge of the Antitrust Division. “Today’s sentencing demonstrates the division’s commitment to holding executives accountable for disrupting the competitive bidding process for service contracts.”

Henderson is the fifth individual to plead guilty in the department's fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. On Oct. 18, 2011, both Donald R. Holland and Larry R. Sumpter pleaded guilty in U.S. District Court in Roanoke to participating in the scheme. On Jan. 31, 2012, Holland and Sumpter were each sentenced by Judge Samuel G. Wilson to serve two years of probation and were fined $50,000 and $15,000, respectively. On April 4, 2011, Edward T. Fodrey pleaded guilty in U.S. District Court in Norfolk, Va., and was sentenced by Judge Mark S. Davis on Jan. 31, 2012, to serve 37 months in prison and was ordered to pay $326,799 in restitution. Gary L. Johns pleaded guilty on Dec. 12, 2011, in U.S. District Court in Roanoke and was sentenced by Judge Wilson on March 14, 2012 to serve three years of probation and to pay $169,341 in restitution.

EDUCATION OFFICIAL SENTENCED IN SCHOOL BUS PARTS/SERVICES KICKBACK SCHEME

FROM:  U.S. DEPARTMENT OF JUSTICE
Friday, June 8, 2012
American Samoa Department of Education Official Sentenced to 35 Months in Prison for Witness Tampering and Obstruction of Justice
WASHINGTON – Paul Solofa, the former chief financial officer for the Department of Education for the government of the U.S. Territory of American Samoa was sentenced today to 35 months in prison following his conviction earlier this year for his efforts to obstruct a federal grand jury and law enforcement investigation into a bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

The sentence was imposed by U.S. District Court Judge Reggie B. Walton in the District of Columbia.  After a four-day trial in January 2012, a federal jury in the District of Columbia found Solofa, 50, guilty of one count of witness tampering and one count of obstruction of justice.

According to evidence presented at trial, in approximately early 2008, federal authorities began conducting an investigation into allegations of cash bribes and kickbacks paid by vendors to officials of the American Samoa Government in connection with the government’s purchase of school bus parts and services.

According to the trial evidence, Solofa met on April 3, 2009, with a school bus parts vendor who told Solofa that the FBI was interested in interviewing the vendor regarding the bus parts investigation.  Solofa, in a recorded meeting, allegedly told the vendor that, “They cannot do anything with cash.  Nothing.  They cannot do anything with cash.  They cannot track down you on cash.  Because even if you say you gave me cash I'll tell them ‘no.’  They cannot take your word on cash.  Because that’s hearsay.  So you know, but the best thing for you to do is ‘nope, I never give them any cash, I never’ – because that will open up the whole operation . . . You get what I am saying.  All you do is just tell them ‘no, yes, no, yes,’ period.”

In addition, according to the evidence presented at trial, Solofa met on April 14, 2009, with the same bus parts vendor, who told Solofa that a grand jury subpoena requiring production of specific documents and records, some of which related to Solofa and to the bus parts kickback scheme, would be issued shortly.  After discussing how to respond, Solofa told the vendor that, as for documents he did not want to produce, “[t]he only way to do it with those copies is burn it.  That way, they won’t see it, and you won’t worry that they might see it, you know. . . .  Just burn it, and nobody has a copy.”

The head of the School Bus Division for the American Samoa Department of Education, Gustav Nauer, 47, was also convicted for his role in the bribery scheme.  On June 4, 2012, Nauer was sentenced to 25 months in prison.

This case was prosecuted by Principal Deputy Chief Raymond N. Hulser and Trial Attorney Tim Kelly of the Public Integrity Section in the Justice Department’s Criminal Division.  The case was investigated by the FBI; the Office of the Inspector General for the U.S. Department of Education; and the Office of the Inspector General for the U.S. Department of the Interior.