A “Fraud News From World” directory is a collection of news articles about fraud and scams from around the world. These directories can be a valuable resource for staying informed about the latest scams and how to protect yourself from them. The directory typically includes information about the scam, such as the type of scam, the target audience, the location of the scam, and the date of the scam. It may also include information about how to protect yourself from the scam, such as how to identify a phishing email or how to report a scam to the authorities.
Today, we recognize a group of heroes deserving of our nation’s highest award for public service officers: the Medal of Valor.
These extraordinary individuals were nominated by public safety leaders from across the country because of their acts of bravery and heroism in 2021 and 2022.
I am grateful to the Justice Department’s Medal of Valor Review Board, Bureau of Justice Assistance, and Office of Justice Programs for their review and recommendations of this year’s recipients.
And I am honored to be here alongside President Biden as he confers these awards.
The nine individuals we recognize today have demonstrated “extraordinary valor above and beyond the call of duty” while acting to save or protect another person’s life.
They have acted with great courage, and at great risk to themselves.
They have shown uncommon decisiveness and presence of mind.
Two of them made the ultimate sacrifice – giving their lives in service to their communities.
To the families and loved ones of Detectives Wilbert Mora and Jason Rivera:
We know it is impossible to understand the grief you endure, or to fully comprehend your loss.
You have our deepest condolences and our unending gratitude. Through our work to keep our communities safe, we will honor the legacies of Detectives Mora and Rivera.
And to all of the family members and loved ones who are with us today – thank you for supporting these heroes as they have pursued their careers in public safety.
At the end of every shift, you are there. It is your care and encouragement that makes it possible for our public safety officers to do their jobs.
We are so grateful to you.
Every day, in communities across the country, law enforcement officers, firefighters, and emergency services officers are asked to respond to our most difficult moments.
And every day, without hesitation, you answer the call.
You are on the frontlines of our nation’s most pressing public safety challenges.
And you are the Justice Department’s indispensable partners in our shared work to keep our communities safe.
From the bottom of my heart, and on behalf of the entire Department of Justice – thank you.
I am now honored to introduce President Biden, who will confer these well-deserved awards.
Thank you, Mr. President, for bringing us together today, and for your support of the extraordinary heroes who keep our communities safe.
FOR IMMEDIATE RELEASE
Wednesday, May 17, 2023
Justice Department Secures Agreement with Cumberland County Addressing Mental Health Care, Suicide Prevention and Medication-Assisted Treatment for Opiate Withdrawal at the Cumberland County Jail
The Justice Department today filed a complaint and proposed consent decree with Cumberland County, New Jersey and the Cumberland County Department of Corrections to resolve allegations that conditions at the Cumberland County Jail violate the Constitution.
The proposed consent decree resolves the department’s claims that the jail fails to provide adequate mental health care to incarcerated individuals at risk of self-harm and suicide, and fails to provide medication-assisted treatment, where clinically indicated, to incarcerated individuals experiencing unmedicated opiate withdrawal. The proposed consent decree requires the jail to provide adequate mental health care and medication-assisted treatment in those circumstances.
“The Justice Department is committed to protecting the civil rights of everyone in our country, and under our Constitution, jails and prisons must provide adequate medical care to incarcerated individuals,” said Attorney General Merrick B. Garland. “Today’s proposed consent decree is a significant step toward improving the care of individuals incarcerated in Cumberland County who are struggling with serious mental health disorders, and toward protecting the civil rights that are guaranteed by our Constitution.”
“This consent decree marks a significant milestone in the Justice Department’s efforts to combat discrimination against those with opioid use disorder and to protect the civil rights of people in our jails and prisons,” said Assistant Attorney General for Kristen Clarke of the Justice Department’s Civil Rights Division. “Under this agreement, Cumberland County must provide adequate medical and mental health care, including access to life-saving medications, treatment for opiate withdrawal, and protection for those with a heightened risk of self-harm and suicide. We commend Cumberland County for working collaboratively with us to implement the reforms in this decree to protect the safety and constitutional rights of incarcerated people at Cumberland County Jail.”
“The opioid epidemic is a public health emergency that plagues too many communities across the country,” said U.S. Attorney Philip R. Sellinger for the District of New Jersey. “Medications are a critically important tool in combatting the opioid crisis, and they save lives. By providing medication-assisted treatment to incarcerated individuals experiencing opiate withdrawal, officials at jails and prisons can take significant steps to both combat the opioid epidemic and protect the constitutional rights of their populations.”
In June 2018, following suicides at the jail by six incarcerated people denied medication-assisted treatment, the Civil Rights Division and the U.S. Attorney’s Office for the District of New Jersey initiated the investigation under the Civil Rights of Institutionalized Persons Act. That statute authorizes the Justice Department to address a pattern or practice of deprivation of constitutional rights of individuals confined to state or local government-run correctional facilities. In January 2021, the Department found reasonable cause to believe that Cumberland County’s failure to provide medication-assisted treatment to incarcerated people with opioid use disorder, together with its failure to offer adequate mental health and suicide prevention measures, violated the rights of incarcerated individuals. The Department also identified measures necessary to remedy the unlawful conditions.
Additional information about the Civil Rights Division of the Justice Department is available on its website at https://www.justice.gov/crt/special-litigation-section. Additional information about the U.S. Attorney’s Office for the District of New Jersey’s Civil Rights Division is available at: https://www.justice.gov/usao-nj/civil-rights-enforcement. Individuals with relevant information about compliance with the agreement are encouraged to contact the Department by phone at 833-223-1547, or by email at Cumberlandcounty.jail@usdoj.gov.
Mobile phone fraud refers to any fraudulent activity that is carried out using mobile phones or mobile networks. This can include a wide range of activities, such as identity theft, phishing scams, and premium rate service fraud. Mobile phone fraud is a growing problem, with fraudsters using increasingly sophisticated methods to carry out their activities. In this article, we will explore the definition of mobile phone fraud, the different types of mobile phone fraud, and the measures that can be taken to prevent it.
Definition of Mobile Phone Fraud
Mobile phone fraud refers to any fraudulent activity that is carried out using mobile phones or mobile networks. This can include a wide range of activities, such as identity theft, phishing scams, and premium rate service fraud. Mobile phone fraud can be carried out by individuals or organized criminal groups, and can result in financial losses, identity theft, and damage to reputation.
Types of Mobile Phone Fraud
There are various types of mobile phone fraud that criminals can use to commit fraudulent activities. Some of the most common types of mobile phone fraud include:
Identity Theft
Identity theft involves stealing someone’s personal information, such as their name, date of birth, and Social Security number, with the intention of using it to commit fraud. Mobile phones are often used to carry out identity theft, as they can be used to access personal information and financial accounts.
Phishing Scams
Phishing scams involve sending fraudulent emails or text messages that appear to be from a legitimate source, such as a bank or financial institution. The message will usually contain a link that, when clicked, will take the victim to a fake website that looks like the legitimate one. The victim will then be asked to enter their personal information, which the fraudster can use to commit fraud.
Premium Rate Service Fraud
Premium rate service fraud involves sending text messages to a premium rate number, which can result in the victim being charged a significant amount of money. Fraudsters often use this tactic to encourage victims to sign up for fake services or to enter into competitions that they have no chance of winning.
SIM Swapping
SIM swapping involves a fraudster convincing a mobile phone provider to transfer the victim’s phone number to a new SIM card that is under the control of the fraudster. This can be used to gain access to the victim’s accounts and carry out fraudulent activities.
Malware
Malware is software that is designed to harm or exploit a mobile phone or its user. Malware can be used to steal personal information, access financial accounts, and carry out other fraudulent activities.
Examples Of Mobile Phone Scam
Smishing
Smishing is a type of fraud that involves sending text messages that appear to be from a legitimate source, such as a bank or financial institution. The message will usually contain a link that, when clicked, will take you to a fake website that looks like the legitimate one. The fraudster will then ask you to enter your personal information, which they can use to commit fraud.
Vishing
Vishing is a type of fraud that involves a fraudster calling you and pretending to be a representative from a legitimate company, such as a bank or financial institution. The fraudster will then ask you to provide your personal information, such as your name, date of birth, and Social Security number.
Malware
Malware is software that is designed to harm or exploit your mobile phone or steal your personal information. Malware can be downloaded onto your mobile phone when you click on a link or download an app from an untrusted source.
Fake Apps
Fake apps are apps that are designed to look like legitimate apps but are actually fraudulent. These apps can be downloaded from untrusted sources and can be used to steal your personal information or to carry out other fraudulent activities.
One-Ring Scam
One-ring scams involve a fraudster calling your mobile phone and hanging up after one ring. The fraudster is hoping that you will call the number back, which will result in your being charged a premium rate for the call.
Mobile Payment Scams
Mobile payment scams involve a fraudster requesting payment from you using a mobile payment app, such as Venmo or PayPal. The fraudster will often pretend to be a friend or family member in need of money, but once you send the payment, the fraudster will disappear.
Wi-Fi Spoofing
Wi-Fi spoofing involves a fraudster setting up a fake Wi-Fi network in a public place, such as a coffee shop or airport. When you connect to the network, the fraudster can intercept your personal information and use it to commit fraud.
Prevention of Mobile Fraud
To prevent mobile fraud, you can take the following steps:
Be Skeptical
Be skeptical of any text messages, calls, or emails that you receive from unknown sources. Do not provide your personal information unless you are certain that the request is legitimate.
Use Strong Passwords
Use strong passwords for all of your accounts and change them regularly.
Use Two-Factor Authentication
Enable two-factor authentication for your accounts to add an extra layer of security.
Install Anti-Virus Software
Install anti-virus software on your mobile phone to protect it from malware and other types of malicious software.
Download Apps from Trusted Sources
Only download apps from trusted sources, such as the Google Play Store or Apple App Store.
Be Careful with Mobile Payments
Be careful when sending money using a mobile payment app. Only send money to people that you know and trust.
Avoid Public Wi-Fi Networks
Avoid using public Wi-Fi networks, as they are often unsecured and can be easily compromised by fraudsters.
Suspicious Activity Monitoring
Mobile phone providers should monitor their networks for suspicious activity, such as a large number of text messages being sent to premium rate numbers.
Education and Awareness
Education and awareness campaigns can help to prevent mobile phone fraud by making people aware of the risks and how to protect themselves. This can include advice on how to spot phishing emails and text messages, how to protect personal information, and how to report suspicious activity.
Reporting Fraud
Victims of mobile phone fraud should report the fraud to the appropriate authorities, such as the police or the Federal Trade Commission (FTC). This can help to prevent the fraudster from carrying out further fraudulent activities.
Conclusion
Mobile fraud is a growing problem, with fraudsters using increasingly sophisticated methods to carry out their activities. To prevent mobile fraud, it is important to be skeptical of any requests for personal information, use strong passwords and two-factor authentication, install anti-virus software, download apps from trusted sources, be careful with mobile payments, and avoid public Wi-Fi networks. By taking these steps, you can protect yourself from the devastating effects of mobile fraud.
State laws that protect personal information refer to laws and regulations at the state level that are designed to safeguard the privacy and security of individuals’ personal information. These laws are typically enacted by state legislatures and may cover a range of issues related to data privacy and security, such as data breaches, identity theft, and the collection and use of personal information by businesses and other organizations.
State laws that protect personal information can vary widely from state to state, but they typically require businesses and other organizations to take certain steps to protect personal information, such as implementing security measures to prevent data breaches, providing notice to individuals in the event of a data breach, and obtaining consent before collecting or using certain types of personal information. These laws may also provide individuals with certain rights and protections related to their personal information, such as the right to access and correct their personal information held by a business or organization.
Here Are 50 Examples Of State Laws That Protect Personal Information:
These are just a few examples of state laws that protect personal information. Each state may have its own laws and regulations that address privacy and security issues, so it’s important to be aware of the specific laws that apply to your location and industry.
How Contact State Law That Protects Personal Information?
To contact the state law that protects personal information in your state, you can start by looking up the relevant government agency or department responsible for overseeing data privacy and security issues. This may be the state attorney general’s office, the department of consumer affairs, or another relevant agency or department.
Once you have identified the appropriate agency or department, you can contact them by phone, email, or through their website. Many government agencies have dedicated phone lines or email addresses for inquiries related to data privacy and security, and some may also have online forms or chat services.
When contacting the state law that protects personal information, be sure to provide as much detail as possible about your issue or concern, including any relevant documentation or evidence. You may also want to ask about your rights and options under the state’s data privacy and security laws, and what steps you can take to protect your personal information.
Remember that laws and regulations related to data privacy and security can vary widely from state to state, so it’s important to be aware of the specific laws that apply to your location and situation.
What You Need To Report To State Law?
If you need to report a data breach or other violation of state law that protects personal information, here are some key pieces of information you may need to provide:
Your contact information: You will need to provide your name, address, phone number, and email address so that the state law enforcement authorities can contact you if they need more information.
Details about the incident: You will need to provide a detailed description of the incident, including when it occurred, how it occurred, and what personal information was affected.
The type of personal information involved: You will need to specify what type of personal information was involved in the incident, such as names, addresses, Social Security numbers, or financial information.
How many individuals were affected: You will need to provide an estimate of how many individuals were affected by the incident, if known.
What actions you have taken: You will need to provide information about any actions you have taken in response to the incident, such as notifying affected individuals or taking steps to prevent further harm.
Any evidence you have: You may need to provide any evidence you have related to the incident, such as logs or records that show when and how the incident occurred.
Remember that the specific information you need to report to state law enforcement authorities may vary depending on the nature and severity of the incident. If you’re not sure what information you need to provide, you can contact the relevant state agency or department for guidance.
Justice Department Announces Court-Authorized Disruption of Snake Malware Network Controlled by Russia’s Federal Security Service
Through Operation MEDUSA, the FBI, and the U.S. Attorney’s Office for the Eastern District of New York Neutralized the FSB’s Premier Cyberespionage Malware Implant in Coordination with Multiple Foreign Governments
The Justice Department today announced the completion of a court-authorized operation, code-named MEDUSA, to disrupt a global peer-to-peer network of computers compromised by sophisticated malware, called “Snake”, that the U.S. Government attributes to a unit within Center 16 of the Federal Security Service of the Russian Federation (FSB). For nearly 20 years, this unit, referred to in court documents as “Turla,” has used versions of the Snake malware to steal sensitive documents from hundreds of computer systems in at least 50 countries, which have belonged to North Atlantic Treaty Organization (NATO) member governments, journalists, and other targets of interest to the Russian Federation. After stealing these documents, Turla exfiltrated them through a covert network of unwitting Snake-compromised computers in the United States and around the world.
Operation MEDUSA disabled Turla’s Snake malware on compromised computers through the use of an FBI-created tool named PERSEUS, which issued commands that caused the Snake malware to overwrite its own vital components. Within the United States, the operation was executed by the FBI pursuant to a search warrant issued by U.S. Magistrate Judge Cheryl L. Pollak for the Eastern District of New York, which authorized remote access to the compromised computers. This morning, the court unsealed redacted versions of the affidavit submitted in support of the application for the search warrant, and of the search warrant issued by the court. For victims outside the United States, the FBI is engaging with local authorities to provide both notice of Snake infections within those authorities’ countries and remediation guidance.
“The Justice Department, together with our international partners, has dismantled a global network of malware-infected computers that the Russian government has used for nearly two decades to conduct cyber-espionage, including against our NATO allies,” said Attorney General Merrick B. Garland. “We will continue to strengthen our collective defenses against the Russian regime’s destabilizing efforts to undermine the security of the United States and our allies.”
“Through a high-tech operation that turned Russian malware against itself, U.S. law enforcement has neutralized one of Russia’s most sophisticated cyber-espionage tools, used for two decades to advance Russia’s authoritarian objectives,” said Deputy Attorney General Lisa O. Monaco. “By combining this action with the release of the information victims need to protect themselves, the Justice Department continues to put victims at the center of our cybercrime work and take the fight to malicious cyber actors.”
“For 20 years, the FSB has relied on the Snake malware to conduct cyberespionage against the United States and our allies – that ends today,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department will use every weapon in our arsenal to combat Russia’s malicious cyber activity, including neutralizing malware through high-tech operations, making innovate use of legal authorities, and working with international allies and private sector partners to amplify our collective impact.”
“Russia used sophisticated malware to steal sensitive information from our allies, laundering it through a network of infected computers in the United States in a cynical attempt to conceal their crimes. Meeting the challenge of cyberespionage requires creativity and a willingness to use all lawful means to protect our nation and our allies,” said U.S. Attorney Breon Peace for the Eastern District of New York. “The court-authorized remote search and remediation announced today demonstrates my office and our partners’ commitment to using all of the tools at our disposal to protect the American people.”
“Today’s announcement demonstrates the FBI’s willingness and ability to pair our authorities and technical capabilities with those of our global partners to disrupt malicious cyber actors,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “When it comes to combating Russia’s attempts to target the United States and our allies using complex cyber tools, we will not waver in our work to dismantle those efforts. When it comes to any nation state engaged in cyber intrusions which put our national security at risk, the FBI will leverage all tools available to impose cost on those actors and to protect the American people.”
As detailed in court documents, the U.S. Government has been investigating Snake and Snake-related malware tools for nearly 20 years. The U.S. government has monitored FSB officers assigned to Turla conducting daily operations using Snake from a known FSB facility in Ryazan, Russia.
Although Snake has been the subject to several cybersecurity industry reports throughout its existence, Turla has applied numerous upgrades and revisions, and selectively deployed it, all to ensure that Snake remains Turla’s most sophisticated long-term cyberespionage malware implant. Unless disrupted, the Snake implant persists on a compromised computer’s system indefinitely, typically undetected by the machine’s owner or authorized users. The FBI has observed Snake persist on particular computers despite a victim’s efforts to remediate the compromise.
Snake provides its Turla operators the ability to remotely deploy selected malware tools to extend Snake’s functionality to identify and steal sensitive information and documents stored on a particular machine. Most importantly, the worldwide collection of Snake-compromised computers acts as a covert peer-to-peer network, which utilizes customized communication protocols designed to hamper detection, monitoring, and collection efforts by Western and other signals intelligence services.
Turla uses the Snake network to route data exfiltrated from target systems through numerous relay nodes scattered around the world back to Turla operators in Russia. For example, the FBI, its partners in the U.S. Intelligence Community, together with allied foreign governments, have monitored the FSB’s use of the Snake network to exfiltrate data from sensitive computer systems, including those operated by NATO member governments, by routing the transmission of these stolen data through unwitting Snake-compromised computers in the United States.
As described in court documents, through analysis of the Snake malware and the Snake network, the FBI developed the capability to decrypt and decode Snake communications. With information gleaned from monitoring the Snake network and analyzing Snake malware, the FBI developed a tool named PERSEUS which establishes communication sessions with the Snake malware implant on a particular computer, and issues commands that causes the Snake implant to disable itself without affecting the host computer or legitimate applications on the computer.
Today, to empower network defenders worldwide, the FBI, the National Security Agency, the Cybersecurity and Infrastructure Security Agency, the U.S. Cyber Command Cyber National Mission Force, and six other intelligence and cybersecurity agencies from each of the Five Eyes member nations issued a joint cybersecurity advisory (the Joint Advisory) with detailed technical information about the Snake malware that will allow cybersecurity professionals to detect and remediate Snake malware infections on their networks. The FBI and U.S. Department of State are also providing additional information to local authorities in countries where computers that have been targeted by the Snake malware have been located.
Although Operation MEDUSA disabled the Snake malware on compromised computers, victims should take additional steps to protect themselves from further harm. The operation to disable Snake did not patch any vulnerabilities or search for or remove any additional malware or hacking tools that hacking groups may have placed on victim. The Department of Justice strongly encourages network defenders to review the Joint Advisory for further guidance on detection and patching. Moreover, as noted in court documents, Turla frequently deploys a “keylogger” with Snake that Turla can use to steal account authentication credentials, such as usernames and passwords, from legitimate users. Victims should be aware that Turla could use these stolen credentials to fraudulently re-access compromised computers and other accounts.
The FBI has provided notice of the court-authorized operation to all owners or operators of the computers remotely accessed pursuant to the search warrant.
Assistant U.S. Attorney Ian C. Richardson for the Eastern District of New York is prosecuting the case, with valuable assistance provided by the National Security Division’s Counterintelligence and Export Control Section.
The efforts to disrupt the Snake malware network were led by the FBI New York Field Office, FBI’s Cyber Division, the U.S. Attorney’s Office for the Eastern District of New York, and the National Security Division’s Counterintelligence and Export Control Section. The Criminal Division’s Computer Crime and Intellectual Property Section provided valuable assistance. Those efforts would not have been successful without the partnership of numerous private-sector entities, including those victims who allowed the FBI to monitor Snake communications on their systems.
PHILADELPHIA – United States Attorney Jennifer Arbittier Williams and Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division announced that Barrie Osborne, 76, of Celebration, Florida, was charged by Indictment with with conspiracy to commit wire and bank fraud, wire fraud, bank fraud, and conspiracy to commit money laundering in connection with a scheme to fraudulently obtain more than $7 million in Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loans (EIDL) and pre-pandemic Small Business Administration (SBA) loans, and to launder the proceeds of the illegal scheme.
The Indictment alleges that, beginning in about January 2018 until August 2021, the defendant, a professional tax preparer, conspired with at least eight California-based individuals to apply for SBA, PPP, and EIDL loans on behalf of their respective businesses. All of the businesses in question were dormant companies or companies with limited business operations. In exchange for fees, Osborne allegedly made the businesses appear to be functioning companies with operations and employees by creating fake documents, including fake bank statements and fictitious tax documents. The defendant also provided a “script” to scheme participants to use in calls with lenders. Osborne and the California co-conspirators allegedly obtained over $7.3 million in PPP, EIDL, and SBA loans.
The Indictment further alleges that the defendant created “forgiveness plans” which were designed to disguise the fraud proceeds as payroll expenses in order to make it appear that each loan recipient was meeting the SBA requirement to devote a percentage of the PPP funds to payroll. This increased the likelihood that each loan recipient – including one of the defendant’s own companies – would qualify for loan forgiveness.
“PPP, SBA and EIDL funds are intended to help American small-businesses continue paying their employees, even if revenues have dropped dramatically,” said U.S. Attorney Williams. “Thieves who attempt to take these funds are taking advantage of others’ misfortune – ripping them off while also ripping off all taxpayers who fund the program. As alleged, Osborne led a conspiracy to fraudulently obtain $7 million in funds that could have helped struggling businesses and individuals.”
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
This case was investigated by the Small Business Association Office of Inspector General, IRS-Criminal Investigation Philadelphia, Homeland Securitu Investigations’ Philadelphia Field Office, and the FBI’s Philadelphia Field Office, and is being prosecuted by trial attorneys David A. Stier and Patrick B. Gushue of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant United States Attorney Judy G. Smith for the Eastern District of Pennsylvania.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Florida Tax Preparer Charged in Connection with $7 Million Loan Fraud Scheme
PHILADELPHIA – United States Attorney Jennifer Arbittier Williams and Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division announced that Barrie Osborne, 76, of Celebration, Florida, was charged by Indictment with with conspiracy to commit wire and bank fraud, wire fraud, bank fraud, and conspiracy to commit money laundering in connection with a scheme to fraudulently obtain more than $7 million in Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loans (EIDL) and pre-pandemic Small Business Administration (SBA) loans, and to launder the proceeds of the illegal scheme.
The Indictment alleges that, beginning in about January 2018 until August 2021, the defendant, a professional tax preparer, conspired with at least eight California-based individuals to apply for SBA, PPP, and EIDL loans on behalf of their respective businesses. All of the businesses in question were dormant companies or companies with limited business operations. In exchange for fees, Osborne allegedly made the businesses appear to be functioning companies with operations and employees by creating fake documents, including fake bank statements and fictitious tax documents. The defendant also provided a “script” to scheme participants to use in calls with lenders. Osborne and the California co-conspirators allegedly obtained over $7.3 million in PPP, EIDL, and SBA loans.
The Indictment further alleges that the defendant created “forgiveness plans” which were designed to disguise the fraud proceeds as payroll expenses in order to make it appear that each loan recipient was meeting the SBA requirement to devote a percentage of the PPP funds to payroll. This increased the likelihood that each loan recipient – including one of the defendant’s own companies – would qualify for loan forgiveness.
“PPP, SBA and EIDL funds are intended to help American small-businesses continue paying their employees, even if revenues have dropped dramatically,” said U.S. Attorney Williams. “Thieves who attempt to take these funds are taking advantage of others’ misfortune – ripping them off while also ripping off all taxpayers who fund the program. As alleged, Osborne led a conspiracy to fraudulently obtain $7 million in funds that could have helped struggling businesses and individuals.”
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
This case was investigated by the Small Business Association Office of Inspector General, IRS-Criminal Investigation Philadelphia, Homeland Securitu Investigations’ Philadelphia Field Office, and the FBI’s Philadelphia Field Office, and is being prosecuted by trial attorneys David A. Stier and Patrick B. Gushue of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant United States Attorney Judy G. Smith for the Eastern District of Pennsylvania.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Home Health Agency and Former Owner to Pay $5.8 Million to Settle False Claims Act Allegations
Doctor’s Choice Home Care, Inc. and its former owners, Timothy Beach and Stuart Christensen, have agreed to pay $5.15 million to resolve allegations that the home health agency provided improper financial inducements to referring physicians through sham medical director agreements and bonuses to physicians’ spouses who were Doctor’s Choice employees, the Department of Justice announced today.
Timothy Beach and Stuart Christensen founded Doctor’s Choice and formerly served as its top executives. Doctor’s Choice is a home health agency based in Sarasota, Florida, with branches throughout the state.
Doctor’s Choice will pay $3,856,000 to settle these allegations and Beach and Christensen will each pay $647,000. Doctor’s Choice will pay an additional $675,000 to resolve separate allegations that employees pressured clinical personnel to increase the number of home visits for Medicare patients to avoid the Medicare Low Utilization Payment Adjustment that would have decreased the reimbursement Doctor’s Choice received from Medicare in the absence of these unnecessary services.
“The Department of Justice will continue to hold companies and individuals accountable for the payment of illegal remuneration in any form,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “Improper inducements have no place in our federal healthcare system, which relies on healthcare providers making decisions based on the healthcare needs of their patients and rather than their personal financial interests.”
“Operating an illegal referral scheme and providing medically unnecessary services places patients at risk and jeopardizes millions of taxpayer dollars,” said Special Agent in Charge of the FBI Tampa Division Michael McPherson. “This settlement highlights the FBI’s commitment to protect the integrity of the federally funded healthcare system.”
The Anti-Kickback Statute prohibits the offering or payment of remuneration to induce or reward referrals for services paid for by federal healthcare programs. The Stark Law forbids certain medical providers, including home health agencies, from submitting claims to Medicare for services provided to patients who were referred by a physician with whom the provider has a prohibited financial relationship, unless that relationship falls within an applicable exception.
This settlement resolves allegations that Doctor’s Choice, Beach, and Christensen violated the Anti-Kickback Statute and the Stark Law by entering into sham medical director agreements with physicians as a means of providing remuneration for referrals, and also violated the Stark Law by providing bonuses to employees based on referrals to Doctor’s Choice by the employees’ physician spouses. In addition, the agreement resolves allegations that Doctor’s Choice provided unnecessary services to Medicare patients in order to increase the number of skilled services provided during a home health visit to avoid the Low Utilization Payment Adjustment which otherwise would have decreased Doctor’s Choice Medicare reimbursement. This adjustment is triggered when a home health patient has a treatment episode consisting of less than five skilled service visits and results in the provider receiving a standardized per visit payment rather than the higher payment for a full home health episode.
The allegations resolved in this settlement were originally brought in two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act; one case was filed by Corina Herbold and the second case was filed by Sara Billings, Misty Sykes, and Marina Eschoyez-Quiroga, all of whom are former employees of Doctor’s Choice. The Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. Billings, Sykes, and Eschoyez-Quiroga will jointly receive a share of approximately $145,000 arising from the government’s recovery for the Low Utilization Payment Adjustment allegations. Herbold’s share has not yet been determined.
The government’s intervention in these matters illustrates its emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).
The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Middle District of Florida, the Office of Inspector General of the Department of Health and Human Services, and the FBI.
The cases are captioned United States ex rel. Herbold v. Doctor’s Choice Home Care Inc., et al., No. 8:15- cv-01044 (M.D. Fla.) and United States ex rel. Billings, Sykes, and Eschoyez-Quiroga v. Doctor’s Choice Home Care Inc., No. 8:16-cv-3112 (M.D. Fla.).
The claims resolved by the settlement are allegations only; there has been no determination of liability.
VA Employee Found Guilty Of Corruption Charges And Defrauding VA Of Nearly $19 Million In A Year
United States Attorney Jason R. Dunn announced that yesterday a jury sitting in U.S. District Court in Denver found former Veterans Affairs (VA) employee Joseph Prince, age 60, of Aurora, Colorado guilty of felony health care fraud, conspiracy, payment of illegal kickbacks and gratuities, money laundering charges and conflict of interest. The verdict is the result of an eight-day jury trial before U.S. District Court Judge Raymond P. Moore. Prince’s bond was continued and he was ordered to home incarceration pending his sentencing.
According to the indictment and evidence presented at trial, Prince was a Beneficiary Provider Relationships Specialist with the VA’s Spina Bifida (SB) Health Care Benefits Program, which covers medical needs of children of certain veterans of the Korea and Vietnam wars suffering from SB. Prince worked for a VA call center in Denver, and spoke with health care providers and SB beneficiaries or their families regarding their health care needs and care reimbursement.
Prince defrauded the VA’s Spina Bifida Health Care Benefits Program by signing up the family members of the program’s beneficiaries as home health “contractors” with sham home health entities run by Prince’s associates. Prince knew that the sham home health entities were not authorized providers by the VA. He nonetheless encouraged the family members to submit bills despite the fact that they were not approved providers and to include the bills for services that either were not provided or were not allowed by the VA. He then accepted payments from the associated home health entities for referrals he himself made to those agencies. Prince’s referrals led to payments totaling approximately $20 million from the VA to the Prince-related home health agencies, which were run by associates including his wife, his brother-in-law, his half-sister, and friends.
Ultimately Prince referred approximately 45 SB beneficiaries to the sham home health entities. The total amount of fraudulent claims paid by the SB Health Care Benefits Program to the five Home Health Entities totaled approximately $19 million. Of that amount, Prince received approximately $1.5 million in kickbacks from two home health entities between December 2017 and June 2018.
“To steal from a program that is intended to help our veterans and their children who suffer from serious medical conditions is reprehensible,” said U.S. Attorney Jason Dunn. “Mr. Prince was also harming the American taxpayers and will now pay a significant price for his actions.”
“The crimes perpetrated by Joseph Prince and his associates were especially troubling since Prince was a VA official,” said Gregg Hirstein, Special Agent in Charge, VA Office of Inspector General. “The Department of Veterans Affairs Office of Inspector General is committed to holding accountable those who illegally enrich themselves using VA programs intended to help our nation’s veterans and their dependents, who deserve to be served by a workforce of the highest integrity. I am thankful for the close coordination of the investigative agencies and the United States Attorney’s Office to quickly end this massive fraud.”
“The sizeable amount of false claims Joseph Prince submitted and subsequent kickbacks he received are an affront to government programs intended to help the public,” said Andy Tsui, IRS Criminal Investigation Special Agent in Charge, Denver Field Office. “It is unacceptable to abuse a position of trust for personal financial gain and for those that do, IRS-Criminal Investigation will seek justice on behalf of the true beneficiaries of government benefits programs.”
“The recent conviction of Joseph Prince is significant and highlights the FBI’s collaboration with the United States Attorney’s Office as we hold this defendant accountable for abusing his position as an official at the Department of Veteran’s Affairs to manipulate government contracts for personal gain,” said FBI Denver Special Agent in Charge Dean Phillips. “The FBI will continue to use all available tools to detect illegal conflicts of interest and bribery schemes in government entities.”
Long-time friend of Prince and co-conspirator Roland Vaughn pled guilty to paying an illegal gratuity to a public official on August 1, 2019, and is scheduled to be sentenced by Judge Moore on April 9, 2020. Glenn and Catherine Beach, who were also friends of Mr. Prince, pleaded guilty to paying an illegal gratuity to Prince. The Beaches will be sentenced on April 1, 2020.
Prince will be sentenced on June 11, 2020. Felony Conflict of Interest carries a penalty of not more than five years in prison and a fine of not more than $250,000 or two times the gain or loss from the offense per count. Health care fraud carries a penalty of not more than 10 years in prison and a fine of not more than $250,000 or two times the gain or loss from the offense per count. Conspiracy to Commit an Offense against the United States carries a penalty of not more than five years in prison and a fine of not more than $250,000 or two times the gain or loss from the offense. Soliciting/Receiving an Illegal Gratuity carries a penalty of not more than two years in prison and a fine of not more than $250,000 or two times the gain or loss from the offense per count. Unlawful Monetary Transactions carries a penalty of not more than 10 years in prison and a fine the greater of $250,000 or two times the value of the property involved in the transaction per count. Money Laundering carries a penalty of not more than 20 years in prison and a fine the greater of $500,000 or twice the value of property involved in the transaction per count.
The government will seek forfeiture of specific assets and restitution to the Veterans Health Administration in the amount of approximately $19 million.
Federal Jury finds Defendants Guilty of Submitting False Claims to Medicare under Civil False Claims Act
Jury verdict results in recovery of more than $10.85 million to the Medicare program
Gulfport, Miss. – Following a nine week trial, a federal jury in Gulfport returned a guilty verdict yesterday against Ted and Julie Cain of Ocean Springs, Ted Cain’s companies, Stone County Hospital (Wiggins) and Corporate Management, Inc. (Gulfport), and Tommy Kuluz, Chief Financial Officer of Corporate Management, Inc. for violating the Civil False Claims Act, announced U.S. Attorney Mike Hurst and Derrick Jackson, Special Agent in Charge of the Office of Inspector General for the U.S. Department of Health and Human Services.
“This verdict is a victory for the American taxpayer and all the beneficiaries of Medicare and other government programs,” said U.S. Attorney Mike Hurst. “This was one of the most egregious cases of Medicare fraud we have litigated in the State of Mississippi, and I am grateful to our prosecutors and DOJ attorneys and investigators for tenaciously pursuing and holding these fraud takers accountable. We will remain vigilant in protecting American taxpayer dollars and rooting out waste, fraud and abuse throughout government.”
The Government’s complaint and evidence at trial established that these defendants used Stone County Hospital, formerly a 25-bed critical access hospital and Medicare provider, to defraud Medicare of more than $10.85 million through fraudulent annual Medicare cost reports for the years 2004 through 2015. The majority of the damages sustained by the Government resulted from Ted Cain’s multi-million dollar compensation, billed to Medicare through Stone County Hospital and Corporate Management, Inc. For years, Corporate Management, Inc. passed on the vast majority of Ted Cain’s multi-million dollar compensation to Stone County Hospital, which Medicare reimbursed for costs at 101% from 2004 through April 1, 2013, and 99% from April 1, 2013 through 2015 under special reimbursement principles for critical access hospitals that help rural, underserved areas. For the cost reporting years 2004 to 2015, Corporate Management, Inc., through Ted Cain and Tommy Kuluz, assisted by Julie Cain, requested more than $17.69 million in compensation for Ted Cain despite no evidence that Ted Cain did any work for Stone County Hospital that qualified for Medicare reimbursement and that his compensation was unreasonable. In total, Medicare reimbursed Stone County Hospital nearly $11.8 million for Ted Cain’s compensation. The jury awarded the Government nearly $9.62 million in damages for Ted Cain’s fraudulent compensation.
Ted Cain’s wife, Julie Cain, who Ted Cain placed in the position of Administrator for Stone County Hospital from 2003 to 2012, also fraudulently received more than $704,454 in compensation reimbursed by Medicare. The evidence at trial showed that Julie Cain rarely worked at Stone County Hospital, while others ran the hospital, and Julie Cain’s compensation was unreasonable. After Julie Cain resigned as the Administrator of Stone County Hospital, she immediately started receiving compensation from Corporate Management, Inc. for alleged consulting work and director’s fees. Neither Julie Cain nor any other defendant could identify any consulting work she did for Stone County Hospital. Medicare reimbursed $149,510 in Julie Cain’s fraudulently obtained compensation for consulting and director’s fees. The jury awarded the Government a total of $853,964 in fraudulent compensation paid for Julie Cain.
Moreover, an audit conducted by the Mississippi Division of Medicaid found that for 2012 and 2013, Corporate Management, Inc., self-disallowed home office costs on its Medicaid home office statement but charged those costs on its Medicare home office statement, despite that Medicare and Medicaid follow the same reimbursement rules. Chief Financial Officer Tommy Kuluz could provide no explanation for this discrepancy, and despite the fact that he knew about the discrepancies at least by 2016 when Medicaid conducted an audit, defendants made no effort to repay Medicare for the over-allocation to Stone County Hospital. Because of this fraud, Medicare reimbursed Stone County Hospital more than $381,866 in fraudulent costs that it should not have.
The jury made a number of findings in its verdict, resulting in recovery of more than $10.85 million to the Medicare program. Damages are trebled under the False Claims Act. The Court also imposes a statutory penalty of $5,500 to $11,000 for each false claim for cost report years 2004 to 2014 and $11,181 to $22,363 for the 2015 cost report. Accordingly, the total amount of defendants’ civil liability will be determined by the Court, using the findings in the jury’s verdict.
The jury’s verdict resolves a lawsuit that was filed by James Aldridge under the qui tam or “whistleblower” provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Government investigated and intervened in the lawsuit and prosecuted the case. The case is captioned United States ex rel. Aldridge v. Corporate Management, Inc., et al., Case No. 1:16cv369-HTW-LRA (S.D. Miss.). The United States appreciates the relator’s interest in program integrity and his assistance with this successful outcome. The United States also appreciates the assistance of the Mississippi Division of Medicaid and Manuel Pilgrim, who heads its audit program. The Department of Health and Human Services Office of Inspector General also provided assistance in the case.
The case was prosecuted by Assistant U.S. Attorney Angela Givens Williams and Attorneys Tom Morris and Elspeth A. England with the Civil Fraud Section of the Commercial Litigation Branch of the U.S. Department of Justice in Washington, D.C.
Former Senior Alstom Executive Sentenced to Prison for Role in Money Laundering Scheme to Promote Foreign Bribery
A former senior executive with Alstom S.A. (Alstom), a French power and transportation company, was sentenced in federal court in New Haven, Connecticut, to 15 months in prison today for his role in a multi-year, multimillion-dollar money laundering scheme designed to promote violations of the Foreign Corrupt Practices Act (FCPA).
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney John H. Durham of the District of Connecticut and Assistant Director in Charge Paul D. Delacout of the FBI’s Los Angeles Office made the announcement.
Lawrence Hoskins, 69, was sentenced on charges of conspiracy and money laundering, following his conviction in November 2019, after a one-week jury trial before U.S. District Judge Janet Bond Arterton, who imposed today’s sentence. In addition to his prison term, Hoskins was fined $30,000.
According to the evidence presented at trial, Hoskins was a senior vice president for Alstom’s International Network, who engaged in a conspiracy to promote the payment of bribes to officials in Indonesia in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for Alstom Power Inc. of Connecticut and its consortium partner, Marubeni Corporation, to provide power-related services for the citizens of Indonesia. The officials in Indonesia included a high-ranking member of the Indonesian Parliament and the President of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia. To conceal the bribes, Hoskins and his co-conspirators retained two consultants purportedly to provide legitimate consulting services on behalf of Alstom Power Inc., in connection with the Tarahan project. The primary purpose of hiring the consultants was to conceal the bribes to Indonesian officials, the evidence showed.
The first consultant retained by Hoskins and other members of the conspiracy received hundreds of thousands of dollars in his Maryland bank account to be used to bribe the member of Parliament, the evidence showed. The consultant then transferred the bribe money to a bank account in Indonesia for the benefit of the official. According to emails admitted at trial, Hoskins and other co-conspirators discussed in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project, including referring to him as a “cashier.”
The trial evidence further showed that, in the fall of 2003, Hoskins and his co-conspirators determined that the first consultant was not effectively bribing key officials at PLN, who expressed concerns that the first consultant was just going to give them “pocket money” and “disappear” after Alstom Power Inc. won the project. As a result, the co-conspirators retained a second consultant to more effectively bribe PLN officials. Evidence revealed that Hoskins and his co-conspirators pressed Alstom Power Inc. to front-load the second consultant’s terms of payment in order to “get the right influence” due to upcoming elections. Hoskins and his co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.
The FBI’s Los Angeles Field Office is investigating the case with assistance from the FBI’s Meriden, Connecticut, Resident Agency. The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia, Switzerland’s Office of the Attorney General and the United Kingdom, as well as authorities in France, Germany, Italy, Singapore and Taiwan.
Senior Deputy Chief Daniel S. Kahn and Assistant Chief Lorinda Laryea of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut are prosecuting the case.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.
Westfield Woman Pleads Guilty To Stealing Thousands Of Dollars From Health Care Agency
BUFFALO, N.Y. – U.S. Attorney James P. Kennedy, Jr. announced today that Alicia Raynor, 42, of Westfield, NY, pleaded guilty before U.S. District Judge John L. Sinatra, Jr. to wire fraud and filing a false tax return. The charges carry a maximum penalty of 20 years in prison, and a $250,000 fine.
Assistant U.S. Attorney John D. Fabian, who is handling the case, stated that the defendant was hired as a business manager for Compassion at Home, Inc. Her duties included, among other things, managing company finances and payroll. At various times during the company’s operation, payroll and other financial payments were made from different company bank accounts.
While working as a business manager for the company, Raynor opened an account with Intuit, Inc., a payroll and payment processing service located outside the state of New York. The Intuit account enabled Compassion at Home, by way of wire transfers, to direct deposit payroll into employees’ bank accounts and otherwise make other direct deposit payments related to Compassion at Home’s business expenses. The payments were made using an accounting software package known as Quickbooks, which linked to Compassion at Home’s bank account.
While employed with Compassion at Home, the defendant diverted money from Compassion at Home’s bank accounts to accounts that she controlled. In order to avoid detection, Raynor disguised Quickbook entries to make it appear that the payments were to Bank of America, Capital One, or Compassion at Home employees.
Between August 2015 and June 2016, the defendant fraudulently diverted approximately $238,871.58 from the company’s bank account. This amount includes funds to which she was not entitled for compensation or reimbursement for expenses. For example, on May 19, 2016, Raynor caused a wire transfer in the amount of $2,978.19 from Intuit’s account to a joint checking account with her husband, with an entry in Quickbooks indicating that the payment was to Bank of America.
In addition, for the tax years 2013 through 2016, the defendant received $1,214,444 in payments from Compassion at Home that she did not report as income on her tax returns for those years. The Internal Revenue Service estimates tax owed for these tax years is $370,005. On May 15, 2017, the defendant caused the filing of a U.S. Individual Income Tax Return, Form 1040, for the 2015 tax year, falsely claiming a total income of $52,290, and income from Compassion at Home in the total amount of $29,615.14.
The plea is the culmination of an investigation by Special Agents of the Federal Bureau of Investigations, under the direction of Special Agent-in-Charge Gary Loeffert, the Internal Revenue Service, Criminal Investigation Division, under the direction of Jonathan D. Larsen, Special Agent in Charge, New York Field Office, and the Westfield Police Department, under the direction of Chief Rob Genther.
Sentencing is scheduled for July 8, 2020, at 2:00 p.m. before Judge Sinatra.
Husband And Wife Plead Guilty to Social Security Fraud Scheme
OAKLAND – Erick and Kimberly Dominguez pleaded guilty in federal court today to conspiracy to commit wire fraud in connection with their scheme to defraud the Social Security Administration (SSA), announced United States Attorney David L. Anderson and SSA Office of Inspector General Special Agent in Charge Robb Stickley. The plea was received by the Honorable Haywood S. Gilliam Jr., U.S. District Judge.
According to the defendants’ plea agreements, Kimberly Dominguez, 37, of Vallejo, Calif., was an employee at the SSA’s Oakland Teleservice Center. From September 2015 until October 2019, Ms. Dominguez used her employment at the SSA to divert Social Security direct deposit payments from recipients’ bank accounts to bank accounts that she controlled. After the diverted benefits were deposited, Erick Dominquez, 39, withdrew money from the accounts, primarily via ATM cash withdrawals. In two instances, Ms. Dominguez reinstated suspended Social Security benefits before diverting them. In total, Ms. Dominguez diverted at least $247,784.70 in Social Security payments from more than 30 recipients.
A federal grand jury indicted the defendants on November 7, 2019, charging them both with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and Ms. Dominguez with an additional seven counts of wire fraud, in violation of 18 U.S.C. § 1343. Both defendants pleaded guilty to the conspiracy count; and if Ms. Dominquez complies with her plea agreement, the additional charges against her will be dismissed at sentencing.
Judge Gilliam scheduled the defendants’ sentencing hearing for July 13, 2020, in Oakland, Calif. The maximum statutory penalty for conspiracy to commit wire fraud is twenty years’ imprisonment, a $250,000 fine, and a three-year term of supervised release. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Special Assistant United States Attorney Christopher Vieira is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of an investigation by the SSA Office of the Inspector General with assistance from the FBI.
The defendants charged in this case are among the 400 defendants charged nationwide by federal prosecutors this year in connection with financial schemes that targeted or largely affected seniors.
Today Attorney General William P. Barr announced the launch of a National Elder Fraud Hotline, which will provide services to seniors who may be victims of financial fraud. The Hotline will be staffed by experienced case managers who can provide personalized support to callers. Case managers will assist callers with reporting the suspected fraud to relevant agencies and by providing resources and referrals to other appropriate services as needed. When applicable, case managers will complete a complaint form with the Federal Bureau of Investigation Internet Crime Complaint Center (IC3) for Internet-facilitated crimes and submit a consumer complaint to the Federal Trade Commission on behalf of the caller. The Hotline’s toll free number is 833-FRAUD-11 (833-372-8311).
Two Chinese Nationals Charged with Laundering Over $100 Million in Cryptocurrency from Exchange Hack
Forfeiture Complaint Details Over $250 Million Stolen by North Korean Actors
WASHINGTON – Two Chinese nationals were charged with laundering over $100 million worth of cryptocurrency from a hack of a cryptocurrency exchange. The funds were stolen by North Korean actors in 2018, as detailed in the civil forfeiture complaint also unsealed today.
In the two-count indictment unsealed today in the District of Columbia, 田寅寅 aka Tian Yinyin, and 李家东aka Li Jiadong, were charged with money laundering conspiracy and operating an unlicensed money transmitting business.
“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” said U.S. Attorney Timothy J. Shea of the District of Columbia. “These charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity here and abroad, and charge those responsible for unlawful acts and seize illicit funds even when in the form of virtual currency.”
“North Korea continues to attack the growing worldwide ecosystem of virtual currency as a means to bypass the sanctions imposed on it by the United States and the United Nations Security Council. IRS-CI is committed to combatting the means and methods used by foreign and domestic adversaries to finance operations and activities that pose a threat to U.S. national security,” said IRS-CI Chief Don Fort. “We will continue to push our agency to the forefront of complex cyber investigations and work collaboratively with our law enforcement partners to ensure these nefarious criminals are stopped and that the integrity of the United States financial system is preserved.
“The FBI will continue to actively work with our domestic and international law enforcement partners to identify and mitigate illicit movement of currency,” said Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division. “Today’s indictment and sanctions send a strong message that the United States will not relent in holding accountable bad actors attempting to evade sanctions and undermine our financial system.”
“This case shows how important robust partnerships across the U.S. Government are in disrupting criminal actors,” said Acting Assistant Director Robert Wells of the FBI’s Counterintelligence Division.
“This indictment shows what can be accomplished when international law enforcement agencies work together to uncover complex cross-border crimes,” said Acting Executive Associate Director Alysa Erichs of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). “HSI is committed to upholding the rule of law and investigating those that would steal cryptocurrency for their illicit purposes.”
According to the pleadings, in 2018, North Korean co-conspirators hacked into a virtual currency exchange and stole nearly $250 million worth of virtual currency. The funds were then laundered through hundreds of automated cryptocurrency transactions aimed at preventing law enforcement from tracing the funds. The North Korean co-conspirators circumvented multiple virtual currency exchanges’ know-your-customer controls by submitting doctored photographs and falsified identification documentation. A portion of the laundered funds was used to pay for infrastructure used in North Korean hacking campaigns against the financial industry.
The pleadings further allege that between December 2017 and April 2019, Yinyin and Jiadong laundered over $100 million worth of virtual currency, which primarily came from virtual currency exchange hacks. The defendants operated through independent as well as linked accounts and provided virtual currency transmission services for a fee for customers. The defendants conducted business in the United States but at no time registered with the Financial Crimes Enforcement Network (FinCEN).
The pleadings further allege that the North Korean co-conspirators are tied to the theft of approximately $48.5 million worth of virtual currency from a South Korea-based virtual currency exchange in November 2019. As with the prior campaign, the North Korean co-conspirators are alleged to have laundered the stolen funds through hundreds of automated transactions and submitted doctored photographs and falsified identification documentation. The pleadings identify how the North Korean co-conspirators used infrastructure in North Korea as part of this campaign.
The civil forfeiture complaint specifically names 113 virtual currency accounts and addresses that were used by the defendants and unnamed co-conspirators to launder funds. The forfeiture complaint seeks to recover the funds, a portion of which has already been seized.
The charges in the pleadings are merely allegations, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) also imposed sanctions on Yinyin, Liadong, and numerous cryptocurrency addresses related to their involvement in activities facilitating North Korean sanctions evasion based on their services and support for malicious cyber enabled activities linked to North Korean actors.
The investigation was led by the IRS-CI, the FBI, and HSI. The Korean National Police of the Republic of Korea provided assistance and coordinated with their parallel investigation.
The cases are being handled by Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section, Trial Attorney David Recker of the National Security Division’s Counterintelligence and Espionage Section, and Assistant U.S. Attorneys Zia Faruqui and Christopher B. Brown, Paralegal Specialists Brian Rickers, and Legal Assistant Jessica McCormick of the U.S. Attorney’s Office for the District of Columbia. Additional assistance has been provided by former Assistant U.S. Attorney Youli Lee.
Two Connecticut Physicians Pay over $4.9 Million to Settle False Claims Act Allegations
U.S. Attorney John H. Durham, Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services, Office of Inspector General, Special Agent in Charge Brian C. Turner of the New Haven Division of the Federal Bureau of Investigation, and Connecticut Attorney General William Tong today announced that DR. CRISPIN ABARIENTOS and his wife, DR. ANTONIETA ABARIENTOS, have entered into a civil settlement agreement with the federal and state governments in which they will pay $4,927,903 to resolve allegations that they violated the federal and state False Claims Acts.
Crispin and Antonieta Abarientos owned and operated Middlesex Rheumatology in Middletown, a medical practice that specialized in the diagnosis and treatment of arthritis, autoimmune diseases and related conditions. Crispin Abarientos was the treating physician at the practice and Antonieta Abarientos was a part owner of the practice.
One of the medications that Crispin Abarientos prescribed to his Middlesex Rheumatology patients was Remicade, an injectable prescription medication used to treat rheumatoid arthritis. When treating Medicaid patients with Remicade, Crispin Abarientos was required to submit a claim to Connecticut Medicaid for Remicade on behalf of each member patient. Medicaid then sent payment to Caremark Massachusetts Specialty Pharmacy in Massachusetts, which delivered the quantity of Remicade contained in the claim directly to Middlesex Rheumatology for the Medicaid patient without any out-of-pocket cost to the practice.
The government alleges that Crispin and Antonieta Abarientos submitted false claims to Medicaid for the delivery to Middlesex Rheumatology of Remicade that Crispin Abarientos represented was to be provided to his Medicaid patients, when he knew that those Medicaid patients were not being treated with Remicade. Crispin Abarientos then proceeded to infuse the fraudulently obtained Remicade he had obtained for free from Medicaid, into Medicare patients and patients covered by the Connecticut State Employees Health Plan, submit claims for reimbursement for the cost of the Remicade to those insurance programs, and keep the profits for himself and the practice.
To resolve the allegations under the federal and state False Claims Acts, Crispin and Antonieta Abarientos have agreed to pay $4,927,903, which covers claims submitted to the Medicaid program from September 2013 through January 2018, and claims submitted to the Medicare program and the Connecticut State Employees Health Plan from July 2013 through June 2017.
In a related federal criminal case, Crispin Abarientos pleaded guilty to health care fraud and, on October 30, 2019, was sentenced to 37 months of imprisonment.
“Physicians who participate in the Medicare and Medicaid programs must bill their services honestly, and the failure to do so increases the cost of health care for all of us,” said U.S. Attorney Durham. “Health care providers who submit false claims to federal health care programs face serious consequences.”
“We take very seriously our responsibility to safeguard taxpayers by eliminating fraud, waste and abuse in our public health care programs, and I appreciate the continued partnership with the Connecticut U.S Attorney’s Office to protect public funds,” HHS-OIG Special Agent in Charge Coyne.
“We will not tolerate medical professionals stealing precious dollars from our federal health care programs,” said FBI Special Agent in Charge Turner. “Together with our state and federal law enforcement partners, we will continue to swiftly investigate these schemes, to ensure that waste, fraud and abuse in our Medicaid program is uncovered and those responsible are punished accordingly.”
This matter was investigated by the Office of Inspector General for the Department of Health and Human Services and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Richard M. Molot, and by Assistant Attorney General Michael Cole of the Connecticut Office of the Attorney General.
People who suspect health care fraud are encouraged to report it by calling 1-800-HHS-TIPS or the Health Care Fraud Task Force at (203) 777-6311.
Two Blight Elimination Program Indictments Unsealed
Two criminal indictments were returned today for criminal violations related to the U.S. Treasury Department’s Blight Elimination Program, announced U.S. Attorney Kirsch.
Mahmoud Alshuaibi, 38, of Hickory Hills, Illinois, has been charged with wire fraud, theft from a local government receiving federal funds, and making a false and fraudulent statement. According to court documents, between January 2016 and March 2017, Alshuaibi, owner and officer of IESCO Construction, Inc., submitted false and fraudulent documents to support his claim for payment from the City of Hammond, Indiana, for demolition work through the Blight Elimination Program funded by the U.S. Treasury Department.
In a separate indictment, Gary Hayden, Sr., 60, of Logansport, Indiana has been charged with theft from a local government receiving federal funds. According to court documents in this case, between December 2015 and February 2016, Hayden, owner and officer of B&G Construction, submitted false and fraudulent documents to the City of Logansport, Indiana, in support of his claims for payment for demolition work through the Blight Elimination Program.
US Attorney Thomas L. Kirsch II said, “The Blight Elimination Program was designed to help stabilize communities. We will continue to work with SIGTARP and other law enforcement entities to investigate and prosecute individuals who commit acts of fraud against the Blight Elimination Program and any other program designed to help the communities in the Northern District of Indiana.”
“The Blight Elimination Program is part of the Troubled Asset Relief Program (TARP). The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) investigates related fraud,” said Special Inspector General Christy Goldsmith Romero. “Those that defraud the program will be caught and prosecuted. I thank U.S. Attorney Thomas L. Kirsch II and Assistant U.S. Attorney Toi Houston for standing with SIGTARP in the fight against TARP-related crimes.”
The United States Attorney’s Office emphasized that an Indictment is merely an allegation and that all persons charged are presumed innocent until, and unless, proven guilty in court.
If convicted in court, any specific sentence to be imposed will be determined by the judge after a consideration of federal sentencing statutes and the Federal Sentencing Guidelines.
The case was the result of an investigation by SIGTARP and is being prosecuted by Assistant United States Attorney Toi Denise Houston.
Ten Defendants Charged With Illegally Conducting Multi-Million Dollar Sports Gambling Business
Ten defendants have been charged in federal court with conspiring to illegally conduct a multi-million dollar sports gambling business in the Chicago area.
VINCENT DELGIUDICE, also known as “Uncle Mick,” directed an operation that accepted wagers from as many as 1,000 gamblers on the outcome of professional and amateur sporting events, according to a nine-count indictment returned Wednesday in U.S. District Court in Chicago. Delgiudice paid a service fee to a foreign sportsbook for use of its platform, and recruited gamblers to place wagers on a website, www.unclemicksports.com, according to the charges. Delgiudice sometimes communicated with representatives of the sportsbook via an anonymous, end-to-end encrypted messaging application to ensure their communications remained secret, the indictment states.
The indictment alleges that Delgiudice also recruited several individuals to work on behalf of his gambling operation. These agents enlisted new gamblers and worked with Delgiudice to collect or pay out cash depending on the outcome of wagers, the indictment states. Delgiudice paid the agents a commission based on a percentage of losses incurred by the gamblers they recruited, the charges allege.
A law enforcement search of Delgiudice’s residence in Orland Park seized more than $1.06 million in cash; silver bars and jewelry valued at $347,895; and gold coins valued at $92,623. The indictment seeks forfeiture of these items, as well as Delgiudice’s residence. It also seeks a personal money judgment against Delgiudice of $8 million.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago office of the FBI; and Kathy A. Enstrom, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. The government is represented by Assistant U.S. Attorneys Ankur Srivastava, Terry Kinney, and Abigail Peluso.
The FBI’s Integrity in Sport and Gaming Initiative (ISG) is designed to tackle illegal sports gambling and combat threats of influence from criminal enterprises.
The indictment charges Delgiudice, 54, with one count of conspiracy to conduct an illegal gambling business, one count of conducting an illegal gambling business, one count of conspiracy to commit money laundering, and six counts of money laundering.
The indictment charges eight alleged agents of Delgiudice’s operation with one count of participating in the gambling conspiracy and one count of conducting an illegal gambling business: MATTHEW KNIGHT, also known as “Sweaters” and “McDougal,” 46, of Mokena; JUSTIN HINES, 40, of Algonquin; KEITH D. BENSON, 49, of Lemont; TODD BLANKEN, 43, of Cary; NICHOLAS STELLA, 42, of Chicago; MATTHEW NAMOFF, 23, of Midlothian; CASEY URLACHER, 40, of Libertyville; and VASILIOS PRASSAS, 37, of Chicago. The tenth defendant, EUGENE DELGIUDICE, also known as “Gino,” 84, of Orland Park, allegedly assisted in the collection or paying out of cash to gamblers recruited by Vincent Delgiudice. Eugene Delgiudice is charged with one count of participating in the gambling conspiracy and one count of conducting an illegal gambling business.
Arraignments in federal court in Chicago have not yet been scheduled.
The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Each money laundering count carries a maximum sentence of 20 years in federal prison, while the other counts in the indictment are each punishable by up to five years. If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.
Man Charged with Defrauding Banks and Investors of $5 Million
A Tulsa man was charged this week in U.S. District Court with defrauding five federally insured financial institutions and two investor families of more than $5 million dollars, announced U.S. Attorney Trent Shores
William Brian Mulder, 61, is charged with 26 counts of Bank Fraud; 41 counts of Causing the Interstate Transmission of Moneys Taken by Fraud, and five counts of Engaging in Unlawful Monetary Transactions.
According to a superseding indictment returned by a grand jury, Mulder is alleged to have repeatedly represented himself to banks and investors as a person of high net worth who owned and controlled assets that, in fact, did not exist. Mulder pledged these assets as collateral for loans and lines of credit that totaled approximately $4 million. Among the phony assets were life insurance policies that Mulder represented to have been worth hundreds of thousands of dollars.
The superseding indictment also charged Mulder with having fraudulently obtained over $1 million from investors. Mulder allegedly told the investors that they could invest through his own family trust and also in specific ventures, such as the financing of a doctor’s home that, Mulder claimed, was being built in the Joplin, Missouri, area. The superseding indictment alleges that, in fact, the purported investment opportunities were bogus and that Mulder used the investor funds for his own purposes.
“The superseding indictment in the Mulder case touches upon two important aspects. First, Mr. Mulder is alleged to have defrauded financial institutions that are the mainstay of commercial activity in our communities. Second, Mr. Mulder is alleged to have defrauded individuals who sought to invest in commercial ventures,” said U.S. Attorney Trent Shores. “Our next step is to hold this white collar criminal accountable in a court of law, and we are prepared to do so.”
The return of an indictment is a method of informing a defendant of alleged violations of federal law, which must be proven in a court of law beyond a reasonable doubt to overcome a defendant’s presumption of innocence.
Mulder faces a maximum penalty of 30 years in prison and fines of twice the amount of loss caused by his actions, if convicted at trial.
The FBI, IRS-Criminal Investigation, Department of Treasury-Office of Inspector General, and Federal Deposit Insurance Corporation (FDIC)-Office of Inspector General are the investigative agencies. Assistant U.S. Attorney Kevin Leitch is prosecuting the case.
Construction Company Owner Charged With Fraudulently Obtaining More Than $2.75 Million in Chicago Housing Authority Contracts
The owner of a construction company has been indicted for allegedly fraudulently obtaining more than $2.75 million in Chicago Housing Authority contracts designed to benefit minority-owned businesses.
LESTER COLEMAN owned Coleman Development Corp., a Chicago-based construction company and certified minority-owned business. From 2010 to 2018, Coleman falsely represented to the CHA that his company would perform construction work sufficient to satisfy the agency’s minority-owned business requirements, which mandated that a certain percentage of work on CHA properties be performed by minority or women-owned enterprises, according to an indictment returned Thursday in U.S. District Court in Chicago. In reality, Coleman subcontracted nearly all of the work to a company that was not certified as a minority-owned business, the indictment states. Coleman, through his company, fraudulently obtained more than $2.75 million in payments from the CHA contracts, including for construction or rehab work on properties in the Chicago neighborhoods of West Ridge, North Park, Albany Park, Archer Heights, and Oakland, the indictment states.
The charges also allege that Coleman falsely represented and certified to the CHA that the employees performing the work were paid the prevailing wages required by federal labor laws, when, in fact, they were not paid the prevailing wages.
The indictment charges Coleman, 62, of Chicago, with three counts of wire fraud. An arraignment date in federal court in Chicago has not yet been scheduled.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Elissa Rhee-Lee, Inspector General of the CHA; Brad Geary, Special Agent-in-Charge of the U.S. Department of Housing and Urban Development’s Office of Inspector General in Chicago; and Irene Lindow, Special Agent-in-Charge of the U.S. Department of Labor’s Office of Inspector General in Chicago. The government is represented by Assistant U.S. Attorney Stephen Heinze.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Each count of wire fraud is punishable by up to 20 years in federal prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
Pelham- And Bronx-Based Tax Preparer Pleads Guilty In White Plains Federal Court To Preparing And Filing False Income Tax Returns
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today that MICHAEL MAGNALDI, a former Pelham resident and an owner and operator of a Bronx-based tax preparation business, pled guilty to one count of aiding and assisting in the filing of false tax returns for tax years 2014 to 2017 and one count of subscribing to a false tax return for tax year 2016. MAGNALDI pled guilty before U.S. Magistrate Judge Paul E. Davison.
U.S. Attorney Geoffrey S. Berman said: “After serving in the New York City Department of Finance for 15 years, Michael Magnaldi betrayed the public’s trust by engaging in a years-long pattern of preparing false returns for clients and falsely understating his own income the same year he bought a $705,000 home in Pelham. Magnaldi’s fraudulent conduct undermined the government’s ability to fund its mandates and cost the government $476,184 in tax revenue. As we enter tax filing season, Magnaldi now stands convicted of two counts of criminal tax charges and awaits sentencing for his crimes.”
IRS-CI Special Agent-in-Charge Jonathan D. Larsen said: “As the tax season heats up, this is an important reminder to taxpayers to beware of unscrupulous tax return preparers. Fraudulent tax return preparers harm taxpayers, legitimate businesses, and the American public. IRS-CI is steadfast in its commitment to ending such tax fraud and today’s guilty plea shows the serious consequences for violating this nation’s tax laws.”
According to the allegations contained in the Information to which MAGNALDI pled guilty, MAGNALDI’s plea agreement, and statements made in court:
MAGNALDI has years of audit experience in the New York City Department of Finance. Since at least 2014, MAGNALDI owned and operated MGM Tax Solutions, a tax preparation business located in the Bronx, New York.
As charged in Count One of the Information, for the 2014 through 2017 tax years, MAGNALDI prepared for clients 37 false Forms 1040 containing, among other false information, false Schedule D capital losses, false Individual Retirement Account (“IRA”) contribution deductions, and false Education Tax credits. MAGNALDI unsuccessfully attempted to conceal his role in preparing these fraudulent tax returns by not listing his or any name as the return preparer, to make it seem as if the returns were self-prepared. In response to IRS correspondence audits, MAGNALDI caused additional false forms to be sent to the IRS, in an attempt to substantiate the false losses, deductions, and credits claimed on the tax returns. The total tax loss for the 37 false individual income tax returns of MAGNALDI’s clients is $232,767.
As charged in Count Two of the Information, in addition to the false filings prepared on behalf of his clients, MAGNALDI also falsely understated his own and his business’s income on their 2016 tax returns, the same year he bought a roughly $705,000 home in Pelham. Specifically, MAGNALDI falsely understated income on MGM Tax Solutions’ 2016 Form 1120S, which understated flow-through income on MAGNALDI’s 2016 Form 1040. The tax loss for MAGNALDI’s understatement of flow-through income is $243,417.
The total tax loss resulting from both schemes is $476,184.
MAGNALDI, 54, formerly of Pelham, New York, and currently living in St. Augustine, Florida, pled guilty to one count of aiding and assisting in the filing of false tax returns for tax years 2014 to 2017 and one count of subscribing to a false tax return for tax year 2016, each of which carries a maximum sentence of three years in prison. As part of the plea agreement, MAGNALDI has agreed to pay restitution to the IRS in the amount of at least $476,184 plus interest and penalties. Sentencing is scheduled for May 8, 2020, at 10:00 a.m., before U.S. District Judge Vincent L. Briccetti.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Berman praised the outstanding work of IRS Criminal Investigation in this case.
This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorney David R. Felton is in charge of the prosecution.
Rap Artist “Chad Focus” Pleads Guilty to Federal Wire Fraud Conspiracy
Used His Company Credit Card to Make More Than $4.1 Million in Unauthorized Purchases to Promote His Brand and Enrich Himself and His Co-conspirators
Baltimore, Maryland – Chad Arrington, a/k/a “Chad Focus,” age 32, of Randallstown, Maryland, pleaded guilty today to a federal wire fraud conspiracy in connection with a scheme to use a company credit card to make over $4.1 million in unauthorized purchases.
The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur and Special Agent in Charge Jennifer C. Boone of the Federal Bureau of Investigation, Baltimore Field Office.
According to his plea agreement, Arrington was employed by Company 1 as a Search Engine Optimization (“SEO”) Specialist from approximately 2011 to August 2018. As an SEO Specialist, Arrington was responsible for promoting and marketing Company 1’s products and services online. Company 1 assigned Arrington an American Express company credit card (the “credit card”) after Arrington signed an agreement in which he agreed to use the credit card only for business expenses related to Company 1.
Arrington admitted that from at least January 2015 through August 2018, Arrington and four co-conspirators used the credit card for fraudulent purchases, including to promote his hip-hop artist alter-ego, Chad Focus and Focus Music Entertainment and to make unauthorized purchases that benefitted them each personally. The co-conspirators were from Owings Mills, Maryland; York, Pennsylvania; Alexandria, Virginia; and Sarasota, Florida, respectively. According to the plea agreement, Arrington used the credit card to make over $1.5 million in unauthorized purchases from entities and accounts controlled by Co-Conspirator 2 and Co-Conspirator 3, and then Co-Conspirator 2 and Co-Conspirator 3, in turn, kicked back hundreds of thousands of dollars to Arrington by funneling cash payments to Arrington and to accounts controlled by Arrington.
For example, Arrington admitted that he used the credit card to purchase sound equipment, studio kits, instruments, and music technology, which he then used to create an artist alter-ego “Chad Focus,” and produce a number of hip-hop songs through the company he formed, Focus Music Entertainment LLC. Arrington then used the credit card to make additional unauthorized purchases: from online streaming platforms that offered services for artists to pay to have the platforms artificially increase Arrington’s song play counts on other music platforms; to purchase “likes,” “followers,” “tags,” and “views” across social media and viewing platforms; to purchase services from a company that promoted mixtape videos and singles, his image, and music; and to make unauthorized payments to multiple billboard companies to display images of Arrington and his website throughout the United States and to promote Chad Focus and Focus Music Entertainment LLC. From January 2015 through August 2018, Arrington charged the credit card over $300,000 for unauthorized international and national travel expenses, hotels, airfares, night life and other miscellaneous expenses for himself and for Co-Conspirators 1 and 2. In addition, Arrington made over $100,000 in unauthorized purchases of clothing and accessories, including hats that displayed his artist name “Focus,” and other apparel, which he provided to his associates free of charge. Arrington also admitted that he utilized the credit card to make more than $275,000 in purchases related to a bike-sharing business, including electric bikes, hover boards, and scooters. Arrington also admitted that he used the credit card for concert tickets, various unauthorized international and national travel expenses, including hotels, airfare, restaurant bills, luxury vehicle rentals, and nightlife expenses, and for travel expenses and airline tickets for the benefit of Co-Conspirators 1 and 2.
In order to conceal the scheme, Arrington asked Co-Conspirator 1 and Co-Conspirator 4 to use computer software to make false entries on the credit card billing statements in order to conceal the recipient of the payments from Arrington’s supervisor and Company 1. In addition, Arrington forged the signature of his supervisor on his credit card billing statements to make it appear as though he had received approval for certain purchases when, in fact, he had not. Arrington then sent those false payment authorizations to other employees who relied on the authorizations to ultimately pay off the outstanding balance of the credit card.
As detailed in his plea agreement, Arrington will be required to pay restitution in the full amount of the victim’s losses, $4,142,435.31.
Arrington faces a maximum sentence of 20 years in prison for the wire fraud conspiracy. U.S. District Judge Richard D. Bennett has scheduled sentencing for May 14, 2020 at 3:00 p.m.
United States Attorney Robert K. Hur commended the FBI for its work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Derek E. Hines and Mary W. Setzer, who are prosecuting the case.
