Month: September 2022

Source: United States Department of Justice 2

Pharmaceutical company Biogen Inc. (Biogen), based in Cambridge, Massachusetts, has agreed to pay $900 million to resolve allegations that it caused the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce them to prescribe Biogen drugs.

The settlement announced today resolves a lawsuit filed and litigated by former Biogen employee Michael Bawduniak against Biogen under the qui tam or whistleblower provisions of the federal False Claims Act, which permit a private party (known as a relator) to file a lawsuit on behalf of the United States and receive a portion of any recovery. The United States may intervene in the action or, as in this case, the relator may proceed with the lawsuit. 

In his lawsuit filed in the District of Massachusetts, Bawduniak alleged that Biogen paid kickbacks to physicians to induce them to prescribe the company’s multiple sclerosis drugs. According to the relator’s complaint, from Jan. 1, 2009, through March 18, 2014, Biogen offered and paid remuneration, including in the form of speaker honoraria, speaker training fees, consulting fees and meals, to health care professionals who spoke at or attended Biogen’s speaker programs, speaker training meetings or consultant programs to induce them to prescribe the drugs Avonex, Tysabri and Tecfidera, in violation of the Anti-Kickback Statute.

“The relator diligently pursued this matter on behalf of the United States for over seven years,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The settlement announced today underscores the critical role that whistleblowers play in complementing the United States’ use of the False Claims Act to combat fraud affecting federal health care programs.”

“We thank Mr. Bawduniak for uncovering this behavior and bringing it to light,” said U.S. Attorney Rachael S. Rollins for the District of Massachusetts. “This matter is an important example of the vital role that whistleblowers and their attorneys can play in protecting our nation’s public health care programs.”

Under the terms of the settlement, Biogen will pay $843,805,187 to the United States and $56,194,813 to 15 states. Bawduniak will receive approximately 29.6% of the federal proceeds from the settlement.

The case is captioned United States ex rel. Bawduniak v. Biogen Idec, Inc., No. 12-cv-10601-IT (D. Mass.), and was monitored by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts. 

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

Source: United States Department of Justice News

Assistant U. S. Attorney Rebecca S. Kanter (619) 546-7304    

NEWS RELEASE SUMMARY – September 23, 2022

SAN DIEGO – A former Department of Homeland Security officer and President of American Federation of Government Employees Local 2805 has been indicted by a federal grand jury for wire fraud and making false statements stemming from his alleged embezzlement of tens of thousands of dollars of union funds from Local 2805.

Felix Luciano was an Enforcement Removal Officer for Immigration and Customs Enforcement. From approximately 2011 through December 2018, Luciano served as the President of Local 2805, a labor union which represents DHS-ICE employees in San Diego and Imperial Counties. Among his legal duties were maintaining the fiscal integrity of the organization, which prohibited him from engaging in business or financial interest that conflicted with his duty to Local 2805 and its members.

The indictment alleges that Luciano embezzled union funds for his own benefit between December 2013 and continuing into January 7, 2019. Luciano retired in December 2018 in the course of an audit of Local 2805 by the Department of Labor’s Office of Labor-Management Standards (OLMS). Luciano is alleged to have used Local 2805’s union dues to enrich himself and pay for personal expenses for himself  and his spouse. Some of those expenses included luxury travel, payments to his personal credit card, payments to support his wife’s business (such as paying for the business’ website design), purchase of a custom gun safe storage, retail purchases, dining, and groceries.

The indictment alleges that Luciano carried out this scheme to defraud Local 2805 by using its debit and credit card to pay his personal expenses and by writing checks to himself from the Local’s checking account with false descriptions such as “per diem” in the memo line.

In order to conceal and obscure his embezzlement, Luciano fraudulently reported false information on Local 2805’s annual financial reports. Labor organizations are required to file financial reports with the OLMS annually. On behalf of Local 2805, Luciano prepared, signed – under penalty of perjury – and filed the financial reports (known as Form LM-3s) with false information that disguised the nature, volume, frequency and purpose of the unauthorized checks and other personal transactions. For example, on the 2017 financial report, he falsely reported that Local 2805 only disbursed $3,068 to him (directly or indirectly), when in fact the correct figure was over $20,000.

In doing so, Luciano hid the embezzlement from the Department of Labor, his fellow union officers, as well as the union membership whose dues were the source of the embezzled funds.

“When employees pay their hard-earned money into labor unions, they reasonably expect the officers of those organizations to be honest stewards of their dues,” said U.S. Attorney Randy Grossman “Our office will work diligently to pursue justice against offenders who have allegedly stolen from their own unions at the expense of members.” Grossman thanked the prosecution team and investigating agencies for their excellent work.

“The Office of Labor-Management Standards will always work hard to expose and bring to justice any official who chooses to break the law and the faith of their union members by stealing,” said Ed Oquendo, District Director, Los Angeles District Office, U.S. Department of Labor, Office of Labor-Management Standards.

Postal Inspector in Charge of the Los Angeles Division Carroll N. Harris said, “When a public official misuses the U.S. Mail for personal gain, Postal Inspectors will aggressively pursue that official to restore the public’s confidence in the mail.”

An important mission of the Office of Inspector General is to investigate allegations of fraud related to union corruption. We will continue to work with our law enforcement partners to investigate these types of allegations,” said Quentin Heiden, Special Agent-in-Charge, Los Angeles Region, U.S. Department of Labor Office of Inspector General.

Luciano was arraigned on the indictment by U.S. Magistrate Judge Michael Berg and entered a plea of not guilty. Judge Berg set Luciano’s bond at $30,000 and ordered him to appear before U.S. District Court Judge Thomas Whelan on October 3, 2022, at 9 a.m. for a motion hearing.

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

DEFENDANTS                                 Case Number 22CR2201-W                        

Felix Luciano                                      Age: 60                       San Diego, CA

SUMMARY OF CHARGES

False Statements – Title 18, U.S.C., Section 1001

Maximum penalty: Five years in prison and $250,000 fine

Wire Fraud – Title 18, U.S.C. Section 1343

Maximum penalty: Twenty years in prison and $500,000 fine

AGENCY

Department of Labor – Office of Labor-Management Standards

Department of Labor – Office of Inspector General

Homeland Security Investigations – Office of Inspector General

United States Postal Inspector

Source: United States Department of Justice News

NEWARK, N.J. – An indictment unsealed today charges three men with orchestrating a large-scale market manipulation scheme related to two publicly traded companies, U.S. Attorney Philip R. Sellinger announced.

James Patten, 63, of Winston-Salem, North Carolina; Peter Coker Sr., 80, of Chapel Hill, North Carolina; and Peter Coker Jr., 53, of Hong Kong, China, are each charged in a 12-count indictment with conspiracy to commit securities fraud, securities fraud, and conspiracy to manipulate securities prices. Patten is also charged with four counts of manipulation of securities, four counts of wire fraud, and one count of money laundering.

Patten and Coker Sr. were arrested today and are scheduled to appear before U.S. Magistrate Judge L. Patrick Auld in federal court in the Middle District of North Carolina. They will appear in court in the District of New Jersey at a date to be determined. Coker Jr. remains at large.

According to documents filed in this case and statements made in court:

From 2014 through September 2022, Patten, Coker Sr., and Coker Jr. conspired to enrich themselves through a scheme to manipulate securities prices via a pattern of coordinated trading, which injected inaccurate information into the marketplace, creating false impressions of supply and demand for these securities.

 As part of the securities fraud scheme, the defendants targeted two publicly traded companies – Hometown International Inc. and E-Waste Corp. – which were both traded on the OTC Link Alternative Trading System, also known as the OTC Marketplace. The OTC Marketplace is an alternative trading system that contains three tiers of markets, which are largely based on the quality and quantity of the listed companies’ information and disclosures.

Patten, Coker Sr., and Coker Jr. took steps to gain control of both entities’ management and stock with the ultimate intention of entering reverse mergers, a transaction through which an existing public company merges with a private operating company. A successful reverse merger  would allow the defendants to sell shares of each entity at a significant profit.

In or around 2014, two New Jersey residents began the process of opening a local deli in Paulsboro, New Jersey. One of the individuals discussed his interest in opening the deli with Patten, a long-time friend, who suggested the creation of Hometown International, an umbrella corporation, under which the deli would operate as a wholly owned subsidiary. Unbeknownst to the deli owners, almost immediately after Hometown International was formed, Patten and his associates began positioning Hometown International as a vehicle for a reverse merger that would yield substantial profit to them.

Around October 2019, Hometown International began selling shares on the OTC Marketplace. Shortly thereafter, Patten, Coker Sr., And Coker Jr. undertook a calculated scheme to gain control of Hometown International’s management and its shares from the deli owners. Patten, Coker Sr., and Coker Jr. took similar actions to gain control of E-Waste Corporation’s stock and management.

Once the defendants gained control of Hometown International and E-Waste’s shares, they arranged for the transfer of millions of shares of stock to a number of nominee entities, including entities controlled by Coker Jr., in an effort to mask their control of the shares.

In addition, the defendants transferred shares to family members, friends, and associates and gained control over their trading accounts by obtaining their log-in information in order to conceal the defendants’ involvement. The defendants then used those accounts to commit a number of coordinated trading events, often referred to as match and wash trades, to trade in Hometown International and E-Waste Corp.’s stock on both sides of the transaction.

These tactics artificially inflated the price of Hometown International and E-Waste’s stock by giving the false impression that there was a genuine market interest in the stock. Their scheme had the ultimate impact of artificially inflating Hometown International’s stock by approximately 939 percent and E-Waste’s stock by approximately 19,900 percent.

The securities fraud and manipulation of securities prices counts each carry a maximum penalty of 20 years in prison and a $5 million fine. The wire fraud and money laundering counts are punishable by a maximum penalty of 20 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. The counts of conspiracy to commit securities fraud and conspiracy to manipulate securities prices both carry a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense whichever is greatest.

In a separate civil action, the Securities and Exchange Commission today filed a complaint in the District of New Jersey charging Patten, Coker Sr., and Coker Jr. based on the allegations underlying the market manipulation scheme.

U.S. Attorney Sellinger credited special agents of the FBI’s Philadelphia Division, under the direction of Special Agent in Charge Jacqueline Maguire, and special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Tammy Tomlins in Newark, with the investigation. He also thanked special agents from FBI Charlotte, FBI Los Angeles, FBI San Francisco, FBI Denver, and FBI Knoxville, for their assistance.

The government is represented by Assistant U.S. Attorneys Lauren E. Repole, Chief of the General Crimes Unit, and Shawn P. Barnes, of the Economic Crimes Unit.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Source: United States Department of Justice News

PITTSBURGH – A former resident of Turtle Creek, Pennsylvania, has been sentenced in federal court to five years of imprisonment on his conviction of identity theft offenses, United States Attorney Cindy K. Chung announced today.

United States District Judge J. Nicholas Ranjan imposed the sentence on Iklas Reginald Davis, age 41. Davis is currently incarcerated.

According to information presented to the court, the evidence at trial established that in the summer of 2017, the Pittsburgh Bureau of Police and the Allegheny County Police investigated a series of vehicles that had been broken into while parked at various entertainment venues, including the Boyce Wave Pool, the Pittsburgh Zoo and similar venues. The victims reported the theft of their credit cards and means of identification and the use of the credit cards, typically on the same day as the break-ins. Investigators secured video of Davis using and attempting to use some of the stolen credit cards at various retail establishments. The later investigation revealed that an individual named Terry Porterfield broke into the vehicles and then transferred the credit cards to Davis and others, who then used the credit cards to purchase primarily gift cards and electronic equipment.

Assistant United States Attorney Brendan T. Conway prosecuted this case on behalf of the government.

United States Attorney Chung commended the United States Secret Service, along with the Pittsburgh Bureau of Police and the Allegheny County Police for the investigation leading to the successful prosecution of Davis.