Month: June 2022

BRUNSWICK, GA:  Two men from Canada and the United Kingdom have been indicted in the Southern District of Georgia on federal charges alleging an international operation used the Dark Web to distribute illegal drugs in the United States, with some of those drugs resulting in the deaths of two U.S. Navy petty officers.

Thomas Michael Federuik, a/k/a “Canada1,” 59, of Vancouver, British Columbia, Canada, and Paul Anthony Nicholls, a/k/a “Nico Laeser,” 44, of Surrey, England, are charged in a newly unsealed indictment with Conspiracy to Import Controlled Substances; Conspiracy to Distribute Controlled Substances; and Money Laundering Conspiracy, said David H. Estes, U.S. Attorney for the Southern District of Georgia. The charges subject Federuik and Nicholls to possible statutory penalties of a minimum of 10 years in prison, up to life, along with fines of up to $10 million and a minimum of five years of supervised release after completion of any prison term.

There is no parole in the federal system.

“The number of deaths from drug overdoses, particularly Fentanyl and its analogues, has reached a record high in the United States and every citizen of this country should be alarmed.  The prevalence of this drug is, in large part, fueled by an illicit pipeline of illegally imported drugs,” said U.S. Attorney Estes. “This investigation sought to trace that pipeline to its source to cut off its flow to our country in an effort to protect our citizens from harm.”

The investigation, dubbed Operation Canada1, began in October 2017 with the separate deaths of two U.S. Navy petty officers in Kingsland, Ga., that were attributed to Fentanyl-related drug overdoses. The source of the drugs was traced to a Dark Web vendor using Canadian-postmarked packaging labeled “East Van Eco Tours,” leading investigators from the Royal Canadian Mounted Police (RCMP) and the Calgary Police Service to target the Dark Web vendor Canada1.

The indictment alleges that Federuik and Nicholls conspired to import drugs from places including China and Hungary. Then, using business names including “East Van Eco Tours” and “Bridge City Consulting LLP,” the alleged conspirators distributed those drugs through the Dark Web in the Southern District of Georgia and elsewhere in the United States. The indictment further alleges that a shipment of those drugs packaged by the conspirators traveled from Canada to Kingsland, resulting in the deaths of B.J.T. and T.L.B. in October 2017.  

Federuik and Nicholls have been taken into custody and are awaiting extradition proceedings to bring them to the Southern District of Georgia.

Criminal indictments contain only charges; defendants are presumed innocent unless and until proven guilty.

“The importation and distribution of illicit narcotics within the United States pose a significant threat not only to our local communities but also our nation’s service members and ultimately our national security,” said Special Agent in Charge Thomas Cannizzo of the Naval Criminal Investigative Service Southeast Field Office. “Upon initiating this investigation, NCIS quickly recognized the incredible benefit of our valued collaboration with U.S. and international law enforcement partners. We are grateful for their extraordinary efforts to bring to justice those responsible for importing and distributing the illicit narcotics that led to the tragic overdose deaths of two U.S. Sailors.”

“This poison ultimately led to the deaths of two servicemembers and destroyed the lives of countless others,” said Special Agent in Charge Katrina W. Berger, who oversees Homeland Security Investigations (HSI) operations in Georgia and Alabama. “Stopping drug traffickers takes a team, and I’m proud of the work done by HSI and its law enforcement partners working together to stop this destructive epidemic.”

“The opioid crisis is affecting countless families in our communities, even those who would not otherwise be deemed at risk,” said Superintendent Richard Bergevin, Officer in Charge of the BC RCMP Federal Serious and Organized Crime Major Projects teams. “This investigation showcases the great work that is being done by our teams, using traditional as well as innovative investigative techniques, to combat the sale and distribution of these deadly drugs.”

“The metrics of the opioid crisis are staggering,” said Special Agent in Charge Justin C. Fielder, FDA Office of Criminal Investigations Miami Field Office. “We will continue to take decisive action to curtail the illegal distribution of opioids and other addictive prescription drugs, bringing to justice criminals who endanger the public’s health.”

“Pills in the underground drug market and on the Dark Web are often diluted with dangerous and deadly substances like fentanyl, as was the case in this investigation,” said Robert J. Murphy, the Special Agent in Charge of the DEA Atlanta Field Division. “There is no quality control in the process, so there’s a high chance that users will receive a deadly dose of fentanyl. The success of this investigation was made possible because of the collaborative efforts between all law enforcement agencies involved.”

“The U.S. Postal Inspection Service’s objectives are to preserve the integrity of the nation’s mail system from criminal misuse, rid the mail of illicit drugs, and to keep our communities safe,” said Juan A. Vargas, Acting Inspector in Charge of the U.S. Postal Inspection Service Miami Division. “Postal Inspectors will work with our law enforcement partners to combine resources and expertise to achieve a common goal, which is to combat the perils of illegal and dangerous drug distribution and ensure perpetrators of such attempts are brought to justice.”

The case is being investigated in Canada by U.S. Homeland Security Investigations, Vancouver; the Royal Canadian Mounted Police and its Online Undercover Operations Unit and Federal Serious and Organized Crime Unit, Cybercrime Operations Group; Calgary Police Service; and the Canada Border Service Agency; in the United Kingdom by the National Extradition Unit with the Metropolitan Police and the Staffordshire Police; and in the United States by the U.S. Naval Criminal Investigative Service; Homeland Security Investigations Savannah; the U.S. Food and Drug Administration Office of Criminal Investigations; the U.S. Drug Enforcement Administration; and the U.S. Postal Inspection Service, with assistance from the U.S. Marshals Service. The case is being prosecuted for the United States by Assistant U.S. Attorneys Frank M. Pennington II and E. Gregory Gilluly Jr.

Caris Life Sciences, Inc. (Caris) has agreed to pay $2,886,674.86 to resolve allegations that it violated the False Claims Act in an alleged nationwide scheme to improperly bill Medicare for laboratory tests known as “Caris Molecular Intelligence” and the “ADAPT Biotargeting System.” 

Breon Peace, United States Attorney for the Eastern District of New York, Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of the Inspector General, New York Region (HHS-OIG) and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the settlement.

“In this case, tests for cancer patients were delayed for no reason other than to circumvent a Medicare requirement and allow improper payment to Caris,” stated United States Attorney Peace.  “We will continue to enforce Medicare rules to protect the program and its vital role in our health care system, especially for the elderly and vulnerable.” 

Mr. Peace expressed his gratitude for the support of the United States Department of Health and Human Services for their assistance in investigating these important claims.

“This settlement is another example of our commitment to holding the health care industry accountable for proper billing practices,” stated HHS-OIG Special Agent-in-Charge Lampert.  “Along with our law enforcement partners, HHS-OIG will continue to ensure that individuals and entities billing federal health care programs do so in an honest manner.”

“Caris Life Sciences intentionally deceived the public health care system to benefit from unlawful payments. Medicare fraud, in all its many forms, puts public health at risk and hands taxpayers the bill. We will continue to work with our partners to ensure programs like Medicare remain free from fraudulent activity,” stated Assistant Director-in-Charge Driscoll.  

Caris, a molecular science company headquartered in Texas, developed a series of laboratory tests primarily for cancer patients to detect the activity of certain genes within a breast cancer tumor to predict the risk of breast cancer recurrence in patients.  These predictive genetic marker tests are used by oncologists and other physicians to assist in determining appropriate treatment options for cancer patients.

During the time period covered by the settlement, Medicare’s 14-Day Rule prohibited laboratories from separately billing Medicare for tests performed on specimens if a physician ordered the test within 14 days of the patient’s discharge from a hospital stay either in an outpatient or inpatient setting.  However, if the test was performed more than 14 days after discharge, then Medicare’s 14-Day Rule permitted laboratories to bill Medicare directly for the test.

The United States contends that Caris perpetrated a scheme to evade Medicare regulations when submitting claims to the Centers for Medicare & Medicaid Services (CMS) for its predictive marker tests to circumvent Medicare’s 14-Day Rule (which establishes who may bill Medicare for certain laboratory services) in three ways:             

• Caris sought direct reimbursement from CMS for claims on behalf of Medicare beneficiaries, when tests were ordered and submitted for testing within 14 days after an inpatient discharge.  For inpatient beneficiaries, hospitals receive a lump-sum payment CMS called the Diagnosis-Related Group (“DRG”) payment.  By submitting separate claims for the laboratory tests, Medicare paid twice for the same service, as part of the DRG and in a direct payment to Caris.
• Caris sought direct reimbursement from CMS for claims on behalf of Medicare beneficiaries, when Caris failed to discourage providers who ordered testing within 14 days after an inpatient or outpatient discharge from canceling the order and placing a new order for testing after the 14-day time period had elapsed; and
• Caris sought direct reimbursement from CMS for tests ordered within 14 days of a beneficiary’s out-patient procedure.

The civil settlement includes the partial resolution of one action and final resolution of another brought under the qui tam or whistleblower provisions of the False Claims Act against Caris.  Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendant.  The qui tam cases are captioned United States ex rel. Doe v. (UNDER SEAL) and United States ex rel. Caughron v. CDx Holdings, Inc. f/k/a Caris Life Science, Civil Action No. 18-CV-0352 (E.D.N.Y). 

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The government’s case was handled by Senior Litigation Counsel Deborah B. Zwany with assistance from Affirmative Civil Enforcement Auditor Michael Gambrell. The Office of Inspector General at the Department of Health and Human Services and the Federal Bureau of Investigation assisted in the investigation of these cases.