Month: March 2023

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that BORIS AMINOV, CHRISTY CORVALAN, DAVID FERNANDEZ, DEZYRE BAEZ, and CRYSTAL MEDINA were charged with engaging in a years-long scheme to defraud Medicaid and other government insurance plans out of at least approximately $15 million and exploit at least hundreds of low-income individuals with HIV.  The defendants were arrested this morning and are being presented today in Manhattan federal court before United States Magistrate Judge Gabriel W. Gorenstein.  The case has been assigned to United States District Judge Mary Kay Vyskocil.

U.S. Attorney Damian Williams said: “As alleged, the defendants orchestrated a scheme to get rich by lying to Medicaid and other government insurance programs and depriving vulnerable HIV patients of legitimate and safe medications.  The defendants allegedly made millions of dollars through submitting fraudulent insurance claims, paying illegal kickbacks, and buying and selling black-market HIV medications.  Today’s arrests send a crystal-clear message to those that seek to line their pockets by lying to federal agencies tasked with providing healthcare for low-income individuals and preying on vulnerable members of society – you will not get away with it.”

FBI Assistant Director Michael J. Driscoll said: “The indictment today alleges the defendants operated a scheme designed not only to defraud Medicaid and other government insurance plans, but also take advantage of vulnerable low-income patients with HIV.  This type of criminal activity abuses taxpayer funded healthcare programs and puts those who need help at further risk.  The FBI will always do whatever is necessary to ensure the integrity of healthcare programs like Medicaid and hold those willing to exploit these programs accountable.”

According to the allegations contained in the Indictment:[1]

From at least in or about July 2020 through at least in or about February 2023, AMINOV, CORVALAN, FERNANDEZ, BAEZ, and MEDINA operated a scheme that defrauded Medicaid and other government insurance plans out of at least approximately $15 million and exploited at least hundreds of low-income individuals with HIV, jeopardizing the health and safety of those vulnerable patients.  AMINOV was a distributor of black-market HIV medications to two pharmacies located in the Bronx, New York (the “Pharmacies”), through which the scheme was perpetrated.  CORVALAN owned and operated the Pharmacies.  She purchased black-market medications from AMINOV that were then dispensed to patients, funded illegal kickbacks to be paid to patients, and additionally paid patients to sell back their HIV medications to the Pharmacies, thereby inducing patients to forego using the medications they were prescribed to treat their HIV infections.  FERNANDEZ, BAEZ, and MEDINA were employees of the Pharmacies who participated in the day-to-day operation of the scheme, including by paying illegal kickbacks to patients to obtain their HIV medications from the Pharmacies and buying-back medications from the patients.

The scheme had two sets of victims: government insurance programs and the patients of the Pharmacies.  

First, Medicaid and other government insurance programs were defrauded out of at least approximately $15 million of payments that they made to the Pharmacies to purchase prescription HIV medications for patients through legitimate channels.  CORVALAN, FERNANDEZ, BAEZ, and MEDINA, however, instead purchased HIV medications from black-market sources, including AMINOV.  Over the duration of the scheme, CORVALAN, FERNANDEZ, BAEZ, and MEDINA used the Pharmacies to pay more than $6 million to purchase black-market HIV medications from AMINOV, which were then distributed to patients.

Second, the scheme exploited low-income HIV patients of the Pharmacies and, in the process, put those vulnerable patients’ health and safety at risk by both paying patients kickbacks to fill their medications at the pharmacies, albeit with black-market drugs, and by encouraging patients to sell back their medications instead of taking them as they were prescribed to control their HIV infections.

The defendants spent the proceeds of the scheme to purchase luxury cars, including a 2021 Mercedes-Benz Maybach with an estimated fair market value of approximately $245,000, millions of dollars in waterfront real-estate, designer clothes, and jewelry.

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AMINOV, 47, of Brooklyn, New York, is charged with one count of conspiracy to commit wire fraud and health care fraud, which carries a maximum potential sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum potential sentence of 20 years in prison.

CORVALAN, 41, of the Bronx, New York, is charged with one count of conspiracy to commit wire fraud and health care fraud, which carries a maximum potential sentence of 20 years in prison; one count of conspiracy to commit money laundering, which carries a maximum potential sentence of 20 years in prison; one count of conspiracy to violate the anti-kickback statute, which carries a maximum potential sentence of five years in prison; and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.

FERNANDEZ, 24, BAEZ, 22, and MEDINA, 27, all of the Bronx, New York, are charged with one count of conspiracy to commit wire fraud and health care fraud, which carries a maximum potential sentence of 20 years in prison; one count of conspiracy to violate the anti-kickback statute, which carries a maximum potential sentence of five years in prison; and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Jeffrey W. Coyle is in charge of the prosecution.

The charges 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

Damian Williams, the United States Attorney for the Southern District of New York, Kenneth A. Polite, Jr., the Assistant Attorney General of the Justice Department’s Criminal Division, and James C. Lee, the Chief of the Internal Revenue Service – Criminal Investigation (“IRS-CI”), announced that TELEFONAKTIEBOLAGET LM ERICSSON (“ERICSSON”), a multinational telecommunications company headquartered in Stockholm, Sweden, has agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (“DPA”).

ERICSSON breached the DPA by violating the agreement’s cooperation and disclosure provisions.  Based on the same underlying criminal conduct that gave rise to the DPA, ERICSSON will plead guilty to engaging in a long-running scheme to violate the Foreign Corrupt Practices Act (“FCPA”) by paying bribes, falsifying books and records, and failing to implement reasonable internal accounting controls in multiple countries around the world.

U.S. Attorney Damian Williams said: “Ericsson engaged in significant FCPA violations and made an agreement with the Department of Justice to clean up its act.  The company’s breach of its obligations under the DPA indicate that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps.  As Ericsson’s anticipated guilty plea makes abundantly clear, the Southern District of New York will hold to account companies that fail to live up to obligations to root out and voluntarily report their misconduct to the Department of Justice.”

Assistant Attorney General Kenneth A. Polite, Jr. said: “When the Department afforded Ericsson the opportunity to enter into a DPA to resolve an investigation into serious FCPA violations, the company agreed to comply with all provisions of that agreement.  Instead of honoring that commitment, Ericsson repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement.  As a result of these broken promises, Ericsson must plead guilty to two criminal offenses and pay an additional fine.  Companies should be on notice that we will closely scrutinize their compliance with all terms of corporate resolution agreements and that there will be serious consequences for those that fail to honor their commitments.”

IRS-CI Chief James C. Lee said: “Today’s more than $200 million criminal penalty against Ericsson underscores the significant consequences that result when a DPA is breached.  Ericsson’s multiple cooperation and disclosure failures led to this breach, resulting in the company having to plead guilty and pay additional penalties.”

According to court documents:

Beginning in 2000 and continuing until 2016, ERICSSON used third-party agents and consultants to make bribe payments to government officials and to manage off-the-books slush funds in Djibouti, China, Vietnam, Indonesia, and Kuwait.  These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to the agents were improperly accounted for in ERICSSON’s books and records.  In 2019, ERICSSON resolved this criminal conduct by entering a DPA with the Department in connection with a two-count criminal information filed in the Southern District of New York.  As part of the DPA, ERICSSON paid a total criminal penalty of over $520 million and agreed to the imposition of an independent compliance monitor for three years.  An ERICSSON subsidiary, Ericsson Egypt Ltd, also pled guilty to a one-count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA. 

Following the 2019 resolution, ERICSSON breached the DPA by failing to truthfully disclose all factual information and evidence related to the Djibouti scheme, the China scheme, and other potential violations of the FCPA’s anti-bribery or accounting provisions.  ERICSSON also failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq that may constitute a violation of the FCPA.  These disclosure failures prevented the United States from bringing charges against certain individuals and taking key investigative steps.

*                *                *

Under the terms of the plea agreement, which must be accepted by the court, ERICSSON agreed to plead guilty to the original charges deferred by the 2019 DPA: one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA.  ERICSSON will also be required to serve a term of probation through June 2024 and has agreed to a one-year extension of the independent compliance monitor.  The plea agreement also requires ERICSSON to pay an additional criminal penalty of $206,728,848 – which includes the elimination of any cooperation credit originally awarded pursuant to the DPA.

Mr. Williams praised the efforts of the IRS-CI, which conducted the investigation in this case.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Justice Department’s Fraud Section.  Assistant U.S. Attorneys David Abramowicz and Juliana Murray and Trial Attorney Michael Culhane Harper are in charge of the prosecution.

Source: United States Department of Justice News

Baltimore, Maryland – U.S. District Judge Stephanie A. Gallagher has sentenced August Candeloro III, a/k/a “Nick,” age 35, of Catonsville, Maryland, today to 15 years in federal prison, followed by lifetime supervised release, for a federal charge of possession of child pornography. 

The sentence was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge James C. Harris of Homeland Security Investigations (HSI) Baltimore; Acting Superintendent of the Maryland State Police Colonel Roland L. Butler, Jr.; and Interim Chief Dennis J. Delp of the Baltimore County Police Department.

According to his guilty plea, beginning in 2019 Candeloro began using a messaging application to send images depicting the sexual abuse of children.  After additional investigation, law enforcement executed a search warrant at Candeloro’s residence and seized his cellular phone from his bedroom.  The phone was found to contain conversations between Candeloro and other users of the messaging application.  Candeloro also joined private chat groups on the messaging application, many of which had chatroom names indicative of trading child pornography.  Candeloro posted links to a secure cloud storage platform in many of the chatrooms.  The secure cloud storage platform allows the user to create links containing encrypted files and chats with keys controlled by the user.  Candeloro’s phone also revealed over 2000 images of suspected child pornography, including images involving prepubescent minors and depicting sadistic and masochistic conduct.

Candeloro was previously convicted in two cases for a second-degree sex offense involving a 13-year-old victim in Howard County and Baltimore County Circuit Courts.  As a result of those convictions, Candeloro was required to register as a sex offender.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by the United States Attorney’s Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.  For more information about Internet safety education, please visit www.justice.gov/psc and click on the “Resources” tab on the left of the page.       

United States Attorney Erek L. Barron commended the HSI, Maryland State Police, and the Baltimore County Police Department for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorney Colleen E. McGuinn, who prosecuted the case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md/project-safe-childhood and https://www.justice.gov/usao-md/community-outreach.

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Source: United States Department of Justice News

Telefonaktiebolaget LM Ericsson (Ericsson), a multinational telecommunications company headquartered in Stockholm, Sweden, has agreed to plead guilty and pay a criminal penalty of more than $206 million after breaching a 2019 Deferred Prosecution Agreement (DPA). 

Ericsson breached the DPA by violating the agreement’s cooperation and disclosure provisions. Based on the same underlying criminal conduct that gave rise to the DPA, Ericsson will plead guilty to engaging in a long-running scheme to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes, falsifying books and records, and failing to implement reasonable internal accounting controls in multiple countries around the world. 

“When the department afforded Ericsson the opportunity to enter into a DPA to resolve an investigation into serious FCPA violations, the company agreed to comply with all provisions of that agreement,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Instead of honoring that commitment, Ericsson repeatedly failed to fully cooperate and failed to disclose evidence and allegations of misconduct in breach of the agreement.  As a result of these broken promises, Ericsson must plead guilty to two criminal offenses and pay an additional fine. Companies should be on notice that we will closely scrutinize their compliance with all terms of corporate resolution agreements and that there will be serious consequences for those that fail to honor their commitments.”

According to court documents, beginning in 2000 and continuing until 2016, Ericsson used third-party agents and consultants to make bribe payments to government officials and to manage off-the-books slush funds in Djibouti, China, Vietnam, Indonesia, and Kuwait. These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records. In 2019, Ericsson resolved this criminal conduct by entering a DPA with the department in connection with a two-count criminal information filed in the Southern District of New York. As part of the DPA, Ericsson paid a total criminal penalty of over $520 million and agreed to the imposition of an independent compliance monitor for three years. An Ericsson subsidiary, Ericsson Egypt Ltd, also pleaded guilty to a one-count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA. 

Following the 2019 resolution, Ericsson breached the DPA by failing to truthfully disclose all factual information and evidence related to the Djibouti scheme, the China scheme, and other potential violations of the FCPA’s anti-bribery or accounting provisions.  Ericsson also failed to promptly report and disclose evidence and allegations of conduct related to its business activities in Iraq that may constitute a violation of the FCPA. These disclosure failures prevented the United States from bringing charges against certain individuals and taking key investigative steps.

“Ericsson engaged in significant FCPA violations and made an agreement with the Department of Justice to clean up its act,” said U.S. Attorney Damian Williams for the Southern District of New York. “The company’s breach of its obligations under the DPA indicate that Ericsson did not learn its lesson, and it is now facing a steep price for its continued missteps. As Ericsson’s anticipated guilty plea makes abundantly clear, the Southern District of New York will hold to account companies that fail to live up to obligations to root out and voluntarily report their misconduct to the Department of Justice.”

“Today’s more than $200 million criminal penalty against Ericsson underscores the significant consequences that result when a DPA is breached,” said Chief James C. Lee of the IRS Criminal Investigation (IRS-CI). “Ericsson’s multiple cooperation and disclosure failures led to this breach, resulting in the company having to plead guilty and pay additional penalties.”

Under the terms of the plea agreement, which must be accepted by the court, Ericsson agreed to plead guilty to the original charges deferred by the 2019 DPA: one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal controls and books and records provisions of the FCPA. Ericsson will also be required to serve a term of probation through June 2024 and has agreed to a one-year extension of the independent compliance monitor. The plea agreement also requires Ericsson to pay an additional criminal penalty of $206,728,848 – which includes the elimination of any cooperation credit originally awarded pursuant to the DPA. 

The IRS-CI investigated the case. 

Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys David Abramowicz and Juliana Murray for the Southern District of New York are prosecuting the case. 

The Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.