Month: April 2023

Source: United States Department of Justice News

A federal jury convicted three former executives of Outcome Health, a Chicago-based health technology start-up company, for their roles in a fraud scheme that targeted the company’s clients, lenders, and investors and involved approximately $1 billion in fraudulently obtained funds.

The individuals convicted by jury verdict today were:

• Rishi Shah, 37, the co-founder and former CEO of Outcome Health (Outcome), which was founded in 2006 and known as Context Media prior to January 2017;
• Shradha Agarwal, 37, the former president of Outcome, who was described as a co-founder; and
• Brad Purdy, 33, the former chief operating officer and chief financial officer.

Outcome installed television screens and tablets in doctors’ offices around the United States and then sold advertising space on those devices to clients, most of whom were pharmaceutical companies. According to evidence presented at trial, Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients, then under-delivered on its advertising campaigns. Despite these under-deliveries, the company still invoiced its clients as if it had delivered in full. Shah, Agarwal, and Purdy lied or caused others to lie to conceal the under-deliveries from clients and make it appear as if the company was delivering advertising content to the number of screens in the clients’ contracts. Purdy and others at Outcome also inflated metrics that purported to show how frequently patients engaged with Outcome’s tablets installed in doctors’ offices. According to the trial evidence, the scheme targeting Outcome’s clients began in 2011, lasted until 2017, and resulted in at least $45 million of overbilled advertising services.

Shah, Agarwal, and Purdy were also convicted of defrauding Outcome’s lenders and investors. The under-delivery to Outcome’s advertising clients resulted in a material overstatement of Outcome’s revenue for the years 2015 and 2016. The company’s outside auditor signed off on the 2015 and 2016 revenue numbers because Purdy caused others to fabricate data to conceal the under-deliveries from the auditor. Shah, Agarwal, and Purdy then used the inflated revenue figures in Outcome’s 2015 and 2016 audited financial statements to raise $110 million in debt financing in April 2016, $375 million in debt financing in December 2016, and $487.5 million in equity financing in early 2017.

Shah, Agarwal, and Purdy lied to investors and lenders to conceal their ongoing under-delivery of advertising campaigns for clients. Shah and Purdy also misrepresented to investors the efficacy of Outcome’s advertising campaigns by concealing the fact that it had failed to meet return-on-investment commitments to clients.  

The $110 million debt financing resulted in a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal; the $487.5 million in equity financing resulted in a $225 million dividend to Shah and Agarwal.

Three other former employees of Outcome pleaded guilty prior to trial. Ashik Desai, the former chief growth officer pleaded guilty to one count of wire fraud; and Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud. Desai, Choi, and Han will be sentenced at a date to be determined.

Shah was convicted of five counts of mail fraud, 10 counts of wire fraud, two counts of bank fraud, and two counts of money laundering. Agarwal was convicted of five counts of mail fraud, eight counts of wire fraud, and two counts of bank fraud. Purdy was convicted on five counts of mail fraud, five counts of wire fraud, two counts of bank fraud, and one count of false statements to a financial institution. The defendants face a maximum penalty of 30 years in prison for each count of bank fraud and 20 years in prison for each count of wire fraud and mail fraud. Purdy faces a maximum penalty of 30 years in prison for the count of false statements to a financial institution. Shah faces a maximum penalty of 10 years in prison for each count of money laundering. A sentencing hearing will be scheduled at a date to be determined. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Morris Pasqual for the Northern District of Illinois, and Assistant Inspector General for Investigations Shimon Richmond of the Federal Deposit Insurance Corporation-Office of Inspector General (FDIC-OIG) made the announcement.

The FBI and FDIC-OIG investigated the case.

Assistant Chiefs William E. Johnston and Kyle C. Hankey of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Matthew F. Madden and Saurish Appleby-Bhattacharjee for the Northern District of Illinois are prosecuting the case.

Source: United States Department of Justice News

A Georgia man pleaded guilty today to evading the proper assessment of his personal federal income taxes.

According to court documents, from 1999 to 2021, Samir Patel of Statesboro, Georgia, was a tax return preparer at a national return preparation business. In 2015, Patel purchased a franchise of the business in Claxton, Georgia. As the owner, he hired, trained and supervised tax preparers, and continued to prepare returns for customers. Patel, however, willfully filed false income tax returns that underreported his income and evaded proper assessment of his personal taxes for years 2015, 2016, and 2017.

He faces a maximum penalty of five years in prison, as well as a period of supervised release, restitution and monetary penalties. U.S. District Court Chief Judge J. Randall Hall for the Southern District of Georgia will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Jill E. Steinberg for the Southern District of Georgia made the announcement.

IRS-Criminal Investigation is investigating the case.

Trial Attorneys Matthew C. Hicks and Richard J. Hagerman of the Justice Department’s Tax Division and Assistant U.S. Attorney John P. Harper III of the Southern District of Georgia are prosecuting the case.

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 the unsealing today of a four-count Indictment charging DARIUS A. PADUCH, a New York–area urologist, with inducement of a person to travel to engage in unlawful sexual activity and inducement of a minor to engage in unlawful sexual activity for his yearslong sexual abuse of two victims who were his patients and who were minors during part of the period of abuse.  PADUCH was arrested this morning and will be presented before U.S. Magistrate Judge Sarah L. Cave this afternoon.  The case has been assigned to U.S. District Judge Ronnie Abrams.

U.S. Attorney Damian Williams said: “As alleged, for years, Darius Paduch abused the trust of patients, including minors, who saw him for sensitive medical problems.  Paduch took advantage of his victims for his own deviant satisfaction.  Thanks to this morning’s arrest, Paduch’s abuse of his patients ends today.” 

FBI Assistant Director Michael J. Driscoll said: “The indictment unsealed today against Paduch, a New York-area doctor, details alleged systemic abuse of a number of patients, to include minors, over the course of several years.  Sexual abuse of anyone at any age for any reason is a horrific crime that carries strict penalties.  If you have been victimized by Darius Paduch in any way or have any additional information about his alleged illegal behavior, please call us at 1-800-CALL-FBI, or reach out to us at www.tips.fbi.gov.”

According to the allegations in the Indictment unsealed today in Manhattan federal court:[1] 

Over the course of several years, PADUCH sexually abused multiple male patients, including minor male patients, while conducting purported urological examinations in his capacity as a medical doctor employed by a prestigious medical institution in New York, New York (“Medical Institution-1”).

From at least in or about 2015 through at least in or about 2019, PADUCH, while working as a urologist, enticed and induced multiple victims to travel to his medical offices at Medical Institution-1, so PADUCH could, among other things, sexually abuse the victims.  In or about 2019, PADUCH began practicing at a different hospital located in Long Island, New York (“Medical Institution-2”), where he continued to sexually abuse patients.  PADUCH used his position as a urologist at prominent medical institutions in New York to make or attempt to make the victims believe that the sexual abuse he inflicted on them was medically necessary and appropriate, when, in fact, it was not.  PADUCH often directed the victims to schedule follow-up visits, and he instructed victims to return to see him again.  As a result, some of the victims attended many appointments with PADUCH over the course of multiple years, at which PADUCH repeatedly abused them.

After appointments, PADUCH sent certain victims — including minor victims — text messages from his personal cellphone.  In those messages, he made inappropriate and sexual comments and jokes, and he directed the victims to schedule follow-up appointments or to visit his office after regular business hours. 

As alleged, PADUCH induced two victims to travel to New York, New York, from or through another state to engage in unlawful sexual activity — in other words, his abuse of the victims.  PADUCH also used a telephone and other means of interstate commerce to induce two minor victims to engage in the unlawful sexual activity.

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PADUCH, 55, of North Bergen, New Jersey, is charged with inducement of a victim (“Minor Victim-1”) to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison;  inducement of a victim (“Minor Victim-2”) to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison; inducement of Minor Victim-1 to engage in unlawful sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and inducement of Minor Victim-2 to engage in unlawful sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. 

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

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

The prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Marguerite B. Colson, Elizabeth A. Espinosa, and Jun Xiang are in charge of the prosecution. 

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Source: United States Department of Justice Criminal Division

Two men were sentenced yesterday for their participation in a COVID-19 fraud scheme, which involved fraudulent applications for $1.6 million in loans through the Paycheck Protection Program (PPP).

Dumarsais Blaise Jr., 45, of Stonecrest, Georgia, was sentenced to two years and three months in prison. His brother, Alexander Blaise, 41, of Plantation, Florida, was sentenced to two years and six months in prison.

According to court documents, Dumarsais Blaise and Alexander Blaise worked together to submit fraudulent PPP applications. Dumarsais Blaise used his expertise as a tax preparer to create fake tax documents that were submitted in support of the fraudulent applications. The conspiracy involved fabricating information about three purported companies, two of which did not exist. For the third company, the brothers falsely inflated the number of employees and payroll costs, claiming the company employed 41 people when in fact it employed only one person.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Markenzy Lapointe for the Southern District of Florida, Special Agent in Charge Kyle A. Myles of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) Atlanta Region, and Special Agent in Charge Jeffery Veltri of the FBI Miami Field Office made the announcement.

The FDIC-OIG and FBI Miami Field Office investigated the case.

Trial Attorney Edward Emokpae of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kiran Bhat for the Southern District of Florida prosecuted the case.

The Fraud Section leads the Criminal Division’s prosecution of fraud schemes that exploit the PPP. Since the inception of the CARES Act, the Fraud Section has prosecuted over 200 defendants in more than 130 criminal cases and has seized over $78 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at https://www.justice.gov/criminal-fraud/ppp-fraud.

Source: United States Department of Justice News

EL PASO, Texas – An El Paso woman pleaded guilty Monday to 11 counts related to wire fraud and impersonation of a federal employee.

According to court documents, Ana Maria Hernandez, 53, portrayed herself to be a U.S. Citizenship and Immigration Services (CIS) employee and defrauded numerous undocumented noncitizen victims and their family members by falsely representing that she would process their immigration applications for a substantial fee. Hernandez’s victims provided her with the documentation required to file and adjust their immigration status.  She was not an employee of CIS and never took any actions to adjust the victims’ status. Investigation revealed that Hernandez had amassed thousands of dollars of unexplained wealth within the 18 months coinciding with her fraudulent activity.  Following her arrest on Jan. 23, 2023, the U.S. Attorney’s Office for the Western District of Texas and the Homeland Security Investigations (HSI) El Paso Division began receiving calls from dozens of potential victims in Hernandez’s fraud scheme.

Hernandez pleaded guilty to 10 counts of wire fraud and one count of impersonating an employee of the United States. She faces a maximum penalty of 20 years imprisonment on each wire fraud count and three years on the impersonation count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.  A sentencing date has not yet been set.

U.S. Attorney Jaime Esparza of the Western District of Texas and Special Agent in Charge Francisco B. Burrola of the HSI El Paso Division made the announcement.

HSI is investigating the case.

Assistant U.S. Attorney Patricia Aguayo is prosecuting the case.

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