The Chronicle of Higher Education News Blog reports of a plea to one count of mail fraud by the "former chief of SUNY’s (State University of New York’s) Entrepreneurship Institute."
(esp) (w/ a hat tip to Dean Darby Dickerson)
Category: Fraud
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The extradition process for former Comverse Technology, Inc. CEO Kobi Alexander slowed even more as Namibian prosecutors requested a postponement of the first hearing on his case until June to select a new magistrate. While the extradition request by U.S. prosecutors to have him face charges related to options backdating and obstruction of justice at the company won’t be decided any time soon, Alexander has embarked on a public relations and investment campaign that appears designed to garner support from the Namibian government and people. According to an article in Israeli daily Ha’aretz (here), he has announced a scholarship fund for Namibian students of $21,000 — named after himself and his wife. A press release issued by the Education Ministry praised Alexander’s contribution. The story also notes that billboards supporting Alexander have appeared around Windhoek, the Namibian capitol where Alexander lives and has promised to invest millions in low-cost housing.
It will be interesting to see whether public sympathy generated by the campaign — organized by worldwide PR firm TBWA — will be able to outweigh pressure from the United States government on the Republic of Namibia. A report from USAID (here) notes that while Namibia has developed a democratic government and free press, it also suffers from one of the highest rates of AIDS. In 2005, USAID provided over $42 million in assistance through the President’s Emergency Plan for AIDS Relief. That level of assistance and other aid could make it hard for the Namibian government to reject an extradition request for Alexander. Don’t hold your breath for a resolution of the case any time soon. (ph)
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A DOJ Press Release reports that "[a] former high-level staffer of the U.S. House of Representatives Transportation & Infrastructure Committee has pleaded guilty to a charge of conspiracy to commit honest services wire fraud." This plea provides another individual who will provide cooperation in matters related to the investigation resulting from former lobbyist Jack Abramoff’s cooperation with the government.
(esp)
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Former Miami plaintiffs class action attorney Louis S. Robles will enter a guilty plea to mail fraud charges for defrauding asbestos clients out of over $13 million that will result in a ten-year prison sentence, according to a Daily Business Review article (here). At one time, Robles represented over 7,000 asbestos clients, and according to a press release issued by the U.S. Attorney’s Office for the Southern District of Florida at the time of his indictment in May 2006 (here), he was accused of using money from his firm’s lawyer’s trust account for "financing his movie production and waste management companies, leasing apartments in New York and Los Angeles, making mortgage payments of up to $101,000 per month on four different properties, including a 9,000 square-foot waterfront mansion in Key Biscayne, and paying his ex-wife’s alimony, as well as payments to other clients." While the court will doubtlessly require Robles to pay restitution to his numerous former clients, whether they ever see any money is an open question. This type of case imposes a particularly difficult burden on the victims because they lost their chance at obtaining some compensation for a debilitating disease. (ph)
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Love is certainly blind, and it can cause people to fall for a fast-talking scam artist out to take advantage of them. Patrick M. Giblin, who formerly frequented the casinos in Atlantic City and Las Vegas, received a 115-month sentence for defrauding more than 100 women he met through telephone dating services. After contacting women in a number of different cities and feigning interest in moving closer to them to pursue a relationship, he would get them to loan him money to help out with his moving expenses. According to a press release issued by the U.S. Attorney’s Office for the District of New Jersey (here), "Giblin admitted he spent the money he received from the women at casinos in Atlantic City and Las Vegas and for personal expenses." In addition to his nearly ten year sentence, Giblin was ordered to pay restitution of $184,000 and, perhaps even worse, must put himself on a self-exclusion list maintained by the gambling industry so that if he enters a casino he can be arrested for trespassing — an interesting way to commit a crime, that’s for sure. (ph)
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The Second Circuit overturned the insurance fraud conviction of personal injury lawyer Solomon Kaplan due to evidentiary error by the district court. Kaplan was convicted on a seven-count indictment for his role in an insurance scam involving faked accidents and victims with exaggerated injuries in which he served as the plaintiff’s counsel. In addition to the fraud counts, Kaplan was also convicted of witness tampering and making a false statement to a government agent. The appellate court overturned the conviction (opinion below) because the district judge allowed a cooperating witness to testify about his opinion of Kaplan’s knowledge of the insurance fraud scheme, which it found was impermissible lay opinion that usurped the jury’s fact-finding role. As with most white collar crime cases, intent is the key issue, so allowing a witness to testify about what he thought was in the defendant’s mind is the type of error that often leads to a reversal. The Second Circuit rejected Kaplan’s challenge to the investigative counts, however, finding that there was sufficient evidence and no error in the jury instructions. Kaplan received a 27-month sentence, but with the fraud counts overturned, he will be eligible to be resentenced. The government may decide to retry the fraud counts, which appear to be the more serious charges in the case. (ph)
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In April 2006, the New York Times reported that "Olympic sprinter" Tim Montgomery, was indicted for bank fraud and money laundering. Montgomery’s name was also mentioned during the BALCO investigation when his grand jury testimony was said to be leaked. (see here) The bank fraud and money laundering case is now resolved, as Sports Illustrated (AP) reports on the guilty plea entered by Montgomery.
(esp)(w/ a Stetson hat tip to Dean Darby Dickerson)
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Two former executives of Suprema Specialties, Inc., a publicly-traded specialty cheese company in New Jersey, were found guilty of 38 counts of conspiracy, bank fraud, and securities fraud related to fictional revenues at the company, which collapsed in 2002. Mark Cocchiola, a founder and former CEO of the company, and Steve Venechanos, its former CFO, were found guilty after the jury initially told the judge they were deadlocked, but then returned for more deliberations and returned the guilty verdicts on all counts. According to a press release issued by the U.S. Attorney’s Office (here): "The government presented evidence at trial that between July 2000 and January 2002, Suprema reported approximately $400 million in sales to its six biggest customers, which accounted for over half of its total reported sales for that period. The government’s evidence showed that over 99 percent of that $400 million in sales were entirely fictitious, with no product actually having been sold or shipped." A story in the Newark Star-Ledger (here) notes that the defendants used the "Richard Scrushy" defense at trial, that they did not know anything about the fraud and were lied to by various subordinates and customers who entered guilty pleas and cooperated with the government. While that defense worked for Scrushy, it was less successful for Cocchiola and Venechanos, who maintain their innocence and will appeal. (ph)
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Tenet Healthcare Corp. settled an SEC civil enforcement action by agreeing to an injunction and payment of a $10 million penalty for inflating its earnings by exploiting a loophole in the Medicare and Medicaid regulations called "outlier payments." According to the Litigation Release (here):
The Commission’s complaint alleges that between 1999 and 2002, Tenet engaged in an unsustainable strategy to reach its earnings targets by deliberately exploiting the Medicare reimbursement system. Tenet’s scheme involved a loophole in the Medicare reimbursement system related to “outlier payments,” which are designed to compensate hospitals for caring for extraordinarily sick Medicare patients. Tenet’s management realized that Tenet could inflate its revenue from outlier payments by simply increasing the gross charges set by its hospitals. From 1999 to 2002, Tenet’s outlier revenue more than tripled and Tenet’s earnings goals were surpassed year after year. Tenet’s outlier growth from fiscal 1999 to fiscal 2002 accounted for over 54% of its cumulative growth in earnings per share from operations. Similarly, by fiscal 2002, Tenet’s outlier revenue comprised over 40% of its earnings per share.
In addition to the company, the complaint names four individual officers as defendants: Thomas B. Mackey, former chief operating officer and co-president; Christi R. Sulzbach, former general counsel and chief compliance officer; David L. Dennis, former CFO and co-president; and Raymond L. Mathiasen, former chief accounting officer. Dennis and Mathiasen settled the case by agreeing to pay $150,000 and $240,000 civil penalties respectively, and Mathiasen agreed to a Rule 102(e) bar from practicing before the Commission as an accountant. .
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1) The U.S. Attorney’s Office of the District of Massachusetts, along with the Massachusetts Attorney General and the Office of Inspector General for the U.S. Department of Health and Human Services reports that it reached a settlement with the Tri-City Mental Health Center. The Center, a "mental health and social services provider with several facilities located in suburbs north of Boston has paid $556,687 to the state Medicaid Program and the Massachusetts Department of Mental Health (DMH) to settle allegations they billed the program for services they allegedly never rendered." The Center has also entered into a compliance program.
2) The U.S. Attorney for the Southern District of New York reports that "Cabrini Medical Center (“CABRINI”) has agreed to pay $3.4 million to resolve civil charges that it defrauded the New York State Medicaid Program in the operation of its detoxification unit during the period 1995 through 1999."
(esp)
MattBray.net 