2019 – WHITE COLLAR CASES REVIEWED

FEDERAL HEALTH CARE FRAUD – “Pill Mills,” Medicare “Anti-Kickback” Frauds

This year, the U.S. Department of Justice brought charges against numerous doctors and health care professionals alleging illegal distribution of millions of opioids through “pill mill” clinics and the writing of prescriptions which the government deemed not to be “medically necessary.” Often the physicians were employed by various pain management clinics. In a case filed in the federal court in the Eastern District of Pennsylvania, the government also charged an office manager and physician’s assistants with conspiracy to operate a drug premises and illegal distribution of controlled substances. United States v. Nikpovar-Fard, et al, Crim. No. 18-10.

In addition, the government continued to target corporate health care fraud involving fraudulent telemedicine companies and the solicitation of illegal kickbacks and bribes from health care suppliers in exchange for the referral of Medicare beneficiaries for medically unnecessary durable medical equipment and other testing. Owners of durable medical equipment companies (DME’s) as well as telemedicine company owners, doctors and genetic testing companies have been charged with violations of the Medicare Anti-Kickback statutes.

These prosecutions were led and coordinated by the Health Care Fraud Unit of the Criminal Division’s Fraud Section in conjunction with its Medicare Fraud Strike Force (MFSF), as well as the U.S. Attorney’s Offices around the country. The MFSF is a partnership among the Criminal Division, U.S. Attorney’s Offices, the FBI and U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG). In addition, IRS-Criminal Investigations (IRS-CI), Department of Defense-Defense Criminal Investigative (DoD-DCIS), Food and Drug Administration-Office of Inspector General (FDA-OIG), U.S. Postal Service-Office of Inspector General (USPS-OIG), the Medicaid Fraud Control Unit and other federal and state law enforcement agencies participate in the operations.

CONSPIRACY, SECURITIES FRAUD, WIRE FRAUD, MONEY LAUNDERING

A New York federal jury acquitted Privinest group executive Jean Boustani of conspiracy to commit securities fraud, wire fraud, and money laundering (FCPA) in connection with an alleged fraud and kickback scheme involving $2 billion in Mozambican government-backed loans for maritime projects. The government alleged that Boustani and others diverted over $200 million from the loan funds for bribes and kickbacks to Credit Suisse bankers and Mozambican government officials to ensure the projects went forward. Ultimately, over $700 million in loan payments were defaulted on. Boustani took the stand and admitted to bribery but denied defrauding investors. United States v. Boustani, Crim. No. 18-00681 (E.D.N.Y.)

A major issue for the jury was whether the case was properly brought in the United States, as Boustani, a Lebanese citizen, had never set foot in the U.S. before he was arrested. The jurors later said that the issue came down to one of venue and that they could not find a nexus to New York.

SECURITIES FRAUD, WIRE FRAUD, CONSPIRACY

A Brooklyn federal jury acquitted three former executives at hedge fund Platinum Partners on charges of defrauding investors by concealing cash flow problems at their funds. Later, following their convictions of securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud, in connection with Black Elk Offshore Operations LLC, the trial judge acquitted David Levy, co-chief investment officer, granting Levy’s Rule 29 motion on the grounds that the prosecution failed to prove the requisite criminal intent and that the government’s evidence was “too speculative,” and granted co-founder Mark Nordlicht’s Motion for New Trial. United States v. Nordlicht, Crim. No. 16-00640 (E.D.N.Y.)

CONSPIRACY, WIRE FRAUD AFFECTING A FINANCIAL INSTITUTION

In United States v. Bogucki, Crim. No. 18-00021 (N.D. CA), Bogucki was charged with one count of conspiracy to commit wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1349, and six counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. §§ 1343 and 2. The trial Judge granted a Rule 29, acquitting the defendant of all charges, stating:

‘Here, the government has pursued a criminal prosecution on the basis of conduct that violated no clear rule or regulation, was not prohibited by the agreements between the parties, and indeed was consistent with the parties’ understanding of the arms-length relationship in which they operated.’

This case is extremely significant in that the government is increasingly attempting to criminalize American business transactions where no rules or regulations govern the business conduct and by manufacturing duties of trust that do not exist. The trial judge, recognizing this, granted the motion for acquittal.

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