U.S. Attorney’s Office Collects More Than $367 Million In Civil And Criminal Actions For U.S. Taxpayers In Fiscal Year 2014

Tampa, FL - U.S. Attorney A. Lee Bentley, III announced today that the Middle District of Florida had its strongest financial year ever. In Fiscal Year 2014, which ended September 30th, the Office’s Civil, Criminal, and Asset Forfeiture Divisions collected over $367 million for taxpayers.

The Office’s Civil Division, led by Lacy R. Harwell, recovered $152,950,505 in affirmative civil fraud cases, most alleging health care fraud. In many of these cases, Middle District of Florida Assistant U.S. Attorneys worked closely with attorneys from the Department of Justice Civil Division. The total civil recovery amount was the result of settlements reached in the affirmative civil fraud cases set forth below, as well as an installment payment of approximately $20 million made as part of a settlement in an earlier case (United States ex rel. Hellein v. Wellcare Health Plans).

The Office’s Criminal Division, led by Rachelle DesVaux Bedke and Karen Gable, recovered another $19,705,136 in criminal cases, most of which was in the form of criminal fines, special assessments, and restitution. Providing restitution for the victims of crime is a top priority of the Middle District of Florida.

Finally, the Office’s Asset Forfeiture Division, led by Anita Cream, had its best year ever. Working with its partner agencies, the Middle District of Florida’s Asset Forfeiture Division collected more than $195 million in criminal and civil forfeitures. Depending on the type of case, forfeited assets are deposited into the Department of Justice Assets Forfeiture Fund or the Department of Treasury’s Assets Forfeiture Fund. Almost all of the monies recovered through asset forfeiture in Fiscal Year 2014 will be used to restore funds to crime victims. In addition, approximately $3.5 million in forfeited funds was shared with state and local law enforcement agencies. The Middle District of Florida’s most significant asset forfeiture cases are detailed below.

“Recovering monies from convicted criminals and others who have defrauded the government is critical in enforcing our nation’s laws,” said U.S. Attorney A. Lee Bentley, III. “Working in partnership with our law enforcement partners, and other federal, state, and local agencies, our efforts ensure that criminals and others committing fraud are held fully accountable for their offenses. Through these coordinated efforts, we are able to help victims recover from their losses, wherever possible, and replenish public resources.”

U.S. Attorney Bentley further stated, “In Fiscal Year 2014, the budget for our Office was approximately $23 million. That means that for every dollar we spent, the Assistant U.S. Attorneys working here recovered about $16.”

Attorney General Eric Holder announced today that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending September 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder.  “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”  

The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights, or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, the Department of Health and Human Services, the Internal Revenue Service, the Small Business Administration and the Department of Education.

Middle District of Florida Affirmative Case Highlights

United States ex rel. Baklid-Kunz v. Halifax Hospital

This whistleblower case was filed under the False Claims Act by a management hospital employee who alleged that her hospital had implemented compensation agreements with its employee physicians that violated federal law. Specifically, the whistleblower contended that the hospital had created a staffing company to employ the majority of hospital employees, and had paid the staffing company an amount equal to the exact cost of the employees= salary and benefits. In addition to a base salary, physicians also received a bonus based upon a percentage of their billings and, in some instances, upon the hospital=s profits from particular departments. These compensation agreements allegedly violated the Stark Act. The whistleblower also alleged that the defendant’s neurosurgery practice group had performed medically unnecessary spine surgery procedures that were billed to Medicare, and also had upcoded its bills for patient admissions that should have been properly billed at a lower level of service. The USAO/MDFL intervened on the Stark Act claims and filed its own complaint to address those issues.  The whistleblower pursued the medical necessity and upcoding claims on her own. The Court granted our motion for partial summary judgment on the Stark claims and set the case for trial in March 2014. On the morning trial was to commence, after months of difficult negotiations over the defendant’s claimed inability to pay, the government settled the Stark Act claims for $85 million. At the time it was announced, this was the largest civil settlement ever reached under that statute. With the government’s consent, the whistleblower subsequently settled the medical necessity and upcoding claims for $1 million. 

United States ex rel. Fuentes et al.v. Genzyme Corp.

Genzyme Corp. manufactures a product known as Seprafilm, which is approved by the FDA to prevent adhesions from forming during surgeries. Two former Genzyme employees filed a complaint under the False Claims Act alleging that Genzyme had illegally promoted off label use of the product in unapproved slurry form. Shortly thereafter, a second case was filed in the MDFL by a third whistleblower, making virtually identical allegations against Genzyme. Parallel proceedings were opened in response to the complaints and the USAO/MDFL comprehensively investigated the prevalence of Genzyme’s sales practices at a number of hospitals around the country. The investigation corroborated the whistleblowers’ allegations, and we confronted the defendant with our findings.  Settlement negotiations led to an agreement that resolved the civil claims in these cases for $22.8 million. 

United States ex rel. Wells v. Baptist Health System, et al.

          A former administrator of the Baptist Health hospital chain filed a complaint against the hospital under the False Claims Act, claiming that a neurologist employed by the hospital intentionally misdiagnosed his patients with various neurological disorders and then billed government healthcare programs for medically unnecessary services, tests, and treatments. In addition, she alleged that the defendant hospital chain did not return overpayments it had received as a result of the misdiagnoses, after discovering the neurologist’s scheme. The USAO/MDFL investigated these allegations thoroughly and corroborated them. Settlement discussions led to an agreement that resolved our civil claims against the hospital for $2.5 million, amounting to treble damages on the most egregious claims in question, and double damages on the rest. Our claims against the defendant neurologist, Dr. Sean Orr, remain pending.

United States ex rel. Stone v. Hospice of the Comforter

This case was filed by a former employee of the defendant hospice provider, who alleged that the hospice agency had submitted claims for reimbursement of hospice services rendered to patients that did not qualify for the services. To be reimbursed by Medicare, a hospice patient must suffer from a terminal condition that will result in death within six months of diagnosis. The whistleblower contended that the provider had offered hospice care to patients for periods far exceeding six months, often for years. After a lengthy investigation, the USAO/MDFL negotiated an agreement in principle with the defendant to resolve our claims for $3 million, which was approved by the Department of Justice. The whistleblower objected to the reasonableness of the settlement, but the Court overruled the objection and upheld the agreement after an evidentiary hearing. 

United States ex rel. Valenti v. Tai Shan Golden Gain Aluminum Products, Inc.

This case was filed by the CEO of an exporter of aluminum extrusion products, who alleged that a number of individuals and entities had avoided paying antidumping and countervailing duties owed on aluminum extrusions by misrepresenting the country of origin for the products as Malaysia, rather than the People’s Republic of China. The USAO/MDFL investigation into these allegations confirmed them as to five of the defendants (Robert Wingfield, Northeastern Aluminum Corporation, William Ma, Southeastern Aluminum Products, Basco Manufacturing Company, Waterfall Group, LLC, and C.R. Laurence Co.), as well as revealed other deceptive practices. The USAO/MDFL intervened and filed our own complaint against these five defendants, and declined to pursue the claims against the rest of the named defendants. Settlement discussions were eventually opened with one defendant, Basco Manufacturing Company, which led to a resolution that will pay the government $1.1 million on the claims against this exporter. This represents a recovery of double damages for the United States. The litigation over our claims against the other four defendants remains pending.

United States ex rel. Thomas v. Sarasota Pain Associates, et al.

Two former employees of a Sarasota pain management clinic filed a whistleblower complaint that alleged the clinic had systematically billed Medicare for services not rendered, and had sought reimbursement for other procedures as though they were performed by a physician, when in fact they had been performed by a registered nurse.  The whistleblowers further alleged that the defendant had upcoded bills for reimbursement of evaluation and management services by several levels of care. After investigating these claims, the USAO/MDFL intervened in the case and actively litigated it against the clinic and its proprietor, Dr. Steven Chun. The case was settled at mediation for $750,000, which amounted to a recovery of roughly double the Government’s claimed single damages.

United States ex rel. Lovell v. Sharma

This case was filed by a former office manager of a local vascular surgeon, Dr. Ravi Sharma. The whistleblower alleged that she had been instructed to perform injection procedures on patients without a supervising doctor present, even though she had no medical training. She also alleged that the defendant billed Medicare for reimbursement of these injections as though he had performed them. In addition, she claimed that the defendant had submitted false claims for services rendered at his weight loss center. The whistleblower stated that she had exclusively seen patients at the center, and that the defendant had never gone into the facility, but that he nonetheless had billed her sessions with patients as office visits with a physician. The USAO/MDFL investigated these claims and corroborated them, ultimately negotiating a settlement that paid the government $400,000 (double the amount of damages suffered as a result of the conduct in question).

Middle District of Florida Asset Forfeiture Case Highlights

United States v. Assets Described in Attachment A (262 gold bars, etc.)

As detailed in the civil forfeiture complaint, a Spanish citizen based in Spain and Panama, operated Evolution Market Group (EMG), which did business as FinanzasForex. FinanzasForex was an on-line multi-layer marketing scheme that purported to provide an investment opportunity in the Foreign Exchange (Forex) market.  However, only a small portion of the money received from investors was invested in Forex, and those investments resulted in losses. Instead, investor money was used to pay back prior investors, and to support the Orlando-based associates’ lifestyles and to pay their business expenses, including the use of $1 million in investor funds to purchase luxury vehicles and more than $50 million to pay off properties they owned. Due to the quick work of law enforcement, more than $180 million in assets purchased or funded with investor funds were seized, including gold bars valued at over $100 million, luxury vehicles, and bank accounts. 

The gold bars were purchased with investor funds that had previously been held in a bank account controlled by a business in Oregon that specialized in brokering precious metal purchases. The Oregon company, for a large fee, had allowed its accounts to be used to accept FinanzasForex investor payments and transfer money back to investors. Because of the voluminous number of incoming deposits by foreign investors into its accounts, banks ceased doing business with the company. As a result, in order to get the funds back to Cardona, the Oregon company purchased 294 gold bars with the funds in its accounts. In order to make some additional money from the transaction, the company then attempted to obtain a 20% fee to deliver the gold bars to Cardona. When the United States liquidated the gold bars, they were sold on the open market.

The United States has hired a claims administrator to help distribute the forfeited funds back to the victims of the fraud. It is believed that there are more than 15,000 victims located in over 50 countries.

United States v. David Smith

In fiscal year 2014, we completed the criminal forfeiture of $1,662,715 from David Smith. Smith operated four successive “investment clubs” in which he claimed investors’ funds would be used to engage in foreign currency trading. In 2005, Smith established Overseas Locket International Corporation in Panama and OLINT Corporation in Jamaica. In April 2006, Jamaican authorities issued a cease and desist order which barred Smith from obtaining new clients. Within weeks, Smith relocated and established two new companies, OLINT TCI and TCI FX Traders. He told investors that he traded on two foreign currency platforms, Oanda in Canada and New York, and I-Trade in Lake Mary, Florida. Evidence established that Smith had a little more than $100,000 in an account at Oanda. Smith deposited over $128 million into 4 trading accounts at I-Trade, but he engaged in little to no trading with those accounts. Most of the money was laundered through accounts opened by co-conspirators at other financial institutions, then wired back to Smith as he needed it to pay investors. Smith pleaded guilty to a wire fraud conspiracy and multiple money laundering violations. In prior years, we had criminally forfeited $3,695,905 from another trading account and obtained a $50,000 payment towards the $128 million forfeiture money judgment.

United States v. Gene Tyrell

According to court documents, Gene Tyrell and his co-defendants participated in an $18.4 million fraud scheme from late 1996 through August 2000, utilizing a succession of unregistered securities offerings to defraud hundreds of investors. The defendants were convicted and sentenced in 2005 for their roles in the fraud scheme. In FY 2013, we completed the forfeiture of Tyrell’s interest in Woodbridge International, Inc., and Woodbridge International Management, LLC, companies created by Tyrell and used by him and his co-defendants in unregistered fraudulent securities offerings that post-dated the fraud charged in the original indictment. More than a decade after his indictment, we pursued the forfeiture of these companies as substitute assets because, by virtue of their ownership, the companies were entitled to approximately $1 million in proceeds from the sale of that stock. When he was sentenced on September 22, 2005, Tyrell was ordered to serve 136 months’ imprisonment, and among other financial penalties, a $2.5 million forfeiture money judgment was included in his Judgment. By his own admission, Tyrell had small bank balances, minimal liquid assets, and significant debt; consequently, there did not appear to be any assets to forfeit. 

However, after Tyrell’s sentencing the United States was contacted by an individual interested in purchasing shares of stock in iCrossing, Inc. held by the Woodbridge entities, indicating that Gene A. Tyrell was the President of Woodbridge.  Following up on that tip, the United States learned that a law firm in Arizona was handling the sale of iCrossing to Hearst. After contacting the law firm, the United States confirmed that, according to the Common Stock Ledger, Tyrell, through the Woodbridge entities, had purchased three stock certificates (for a total of nearly 118,000 shares) for more than $350,000, and that those shares were worth approximately $1 million when acquired by Hearst. Therefore, the United States forfeited the Woodbridge entities in order to take title to the stock. 

United States v. Paul Robert Gunter, et al.
On March 10, 2009, a federal grand jury returned a superseding indictment charging Paul Robert Gunter, Zibiah Joy Gunter, Lawrence S. Hartman, Richard Sinclair Pope, Simon Andrew Odoni, Roger Lee Shoss, and Nicolette Loisel with conspiracy to commit mail fraud and wire fraud, and conspiracy to commit wire fraud and money laundering, and other substantive counts of money laundering, mail fraud, and wire fraud. In the superseding indictment, the government provided the conspirators with notice of our intent to seek forfeiture. According to the evidence and testimony presented at trial, from at least as early as July 2004 through at least March 13, 2008, Gunter, Odoni, Pope, and others engaged in a sophisticated investment fraud and money laundering scheme in which worthless stock in hijacked dormant, publicly-traded companies in the United States was sold to victim-investors, primarily in the United Kingdom. The scheme used boiler room telemarketers, mostly in Spain, who employed high pressure and misleading sales techniques. The victim-investors wired more than $127 million to Gunter's bank accounts in the Middle District of Florida. The conspirators bilked victim-investors out of another $10 million via a FOREX currency trading scheme, which also utilized the boiler rooms in Spain. On April 19, 2013, Paul Gunter and Simon Odoni were found guilty by a federal jury following a 19-day trial. Specifically, the jury returned verdicts of guilty on three counts of conspiracy to commit mail fraud, wire fraud, and money laundering, as well as 19 counts of mail and wire fraud, and 14 counts of money laundering. Prior to trial, on March 10, 2011, Richard Pope pleaded guilty to one count of conspiracy to commit wire and mail fraud. Pope cooperated with the government and testified at trial.
In addition to sentencing the defendants to serve terms of imprisonment, the Court ordered all three individuals to forfeit their interests in real property and bank accounts in the U.S. and abroad, an airplane, vessels, and vehicles purchased with proceeds of the fraud scheme and imposed forfeiture money judgments against them. As part of the investigation, federal agents seized nearly $5 million in domestic bank accounts. At the sentencing hearing, the court agreed with the government that entry of an order of restitution would be impracticable because considerable additional resources were needed to notify potential victims and determine the amount of their losses; therefore, the court agreed that the United States should be permitted to use forfeited funds to compensate victims through the remission process. The United States has retained a claims administrator to assist in this process. The last defendant to be sentenced was Lawrence S. Hartman, an American lawyer who was residing in Costa Rica, who conspired with Gunter, Odoni, Pope and others. In May 2013, Hartman was arrested on an immigration violation by Nicaraguan authorities. After being expelled and deported from Nicaragua, Hartman entered a guilty plea and was sentenced to 10 years in prison. Pursuant to his plea agreement, he has consented to the forfeiture of significant assets and has agreed to provide assistance in locating and liquidating those assets. Because most of his assets are in foreign countries, the forfeiture process is likely to be lengthy. Funds obtained from the forfeiture of his assets will also be distributed by the claims administrator. 
In a related trial that took place in May 2012, American lawyers Roger Lee Shoss and Nicolette Loisel were convicted of one count of conspiracy to commit wire fraud in connection with their participation in the corporate identity theft aspect of the scheme. A $800,000 forfeiture money judgment was entered against both defendants and Shoss’s home is the subject of a Final Order of Forfeiture.