Month: April 2023

Source: United States Department of Justice News

The Department of Justice has issued a final rule granting discretion to the Director of the Bureau of Prisons to allow individuals placed in home confinement under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to remain in home confinement after the expiration of the covered emergency period.

“The Justice Department is committed to protecting the safety of our communities and continuing to support the successful transition of those on home confinement back to society,” said Attorney General Merrick. B. Garland. “This final rule makes clear that the Director of the Bureau of Prisons has the discretion to ensure that those who have made rehabilitative progress and complied with the conditions of home confinement are not unnecessarily returned to prison.”

The final rule provides the Bureau the discretion and flexibility to impose proportional and escalating sanctions for individuals who commit infractions, including returning them to prison. It also allows the Bureau to move individuals into Residential Reentry Centers when needed, including instances when home residence is no longer viable or due to either minor accountability issues or non-significant disciplinary issues.

Consistent with the final rule, the Director of the Bureau of Prisons today also instructed that any individual placed on home confinement under the CARES Act will remain on home confinement under the CARES Act for the remainder of their sentence, provided that they are compliant with the rules and regulations of community placement.

The final rule comes after the Attorney General issued a statement directing the Department to engage in a rulemaking process to ensure that individuals placed in home confinement under the CARES Act are not unnecessarily returned to prison. The proposed rule was published on June 21, 2022, and the comment deadline concluded on July 21, 2022. Prior to the publication of the proposed rule, the Office of Legal Counsel issued an opinion interpreting the CARES Act to give the Bureau of Prisons discretion to permit individuals on home confinement to remain there after the COVID-19 emergency has ended.

Since the enactment of the CARES Act on March 26, 2020, the Bureau of Prisons has placed more than 12,000 individuals in home confinement under CARES Act authority. Of those, only a fraction of one percent have been returned to secure custody due to new criminal conduct.

Source: United States Department of Justice News

      The United States Attorney’s Office for the District of North Dakota, through Jennifer Klemetsrud Puhl, acting under authority conferred by 28 U.S.C. § 515, announced today that the Department of Justice has started delivering payments to individuals harmed by the lack of accessible features at West Fargo and Grand Forks properties that were the subject of a recent federal lawsuit alleging violations of the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA). Those individuals were identified through a process established in a settlement between the United States and the defendants in the case.

      The federal lawsuit, filed in March 2020 by the Department of Justice, alleged that Hampton Corporation Inc. and several other individuals and entities violated the FHA and ADA by failing to design and construct multifamily residential properties and an associated rental office so that they are accessible to people with disabilities. As part of settlement agreements resolving this lawsuit, the defendants agreed to contribute to a settlement fund totaling $120,000 for people who suffered harm due to the lack of accessible features at the properties; it is from this fund that the Department of Justice is distributing compensation to the individuals who suffered harm.

      As required by the settlement agreement, the defendants are also in the process of correcting inaccessible features in the common areas of the properties and within the individual units, including: removing steps; installing handrails on ramps; replacing steeply-sloped walkways; adding accessible routes to mailboxes and site arrival points; ensuring that obstacles do not protrude into the circulation path; installing lever handles on doors; widening doorways; retrofitting bathrooms so they are accessible for wheelchair users; and relocating outlets and controls to within a wheelchair user’s reach range. The defendants have also attended fair housing training and agreed that any future housing they design or construct will comply with the FHA.

      “The people receiving compensation as a result of this settlement were harmed by accessibility violations at these properties in profound ways,” said Assistant United States Attorney Tara Iversen. “Steps leading up to apartment building entrances forced some to use unsafe, homemade ramps to get into their homes, or rely on others to lift them and their wheelchair over a step. Too narrow doorways led some residents using walkers or wheelchairs to remove interior bathroom and bedroom doors entirely. And in addition to daily hardships, some individuals suffered real physical injury related to inaccessible features. While we applaud the defendants for their monetary contributions to the settlement fund, timely retrofits to the properties to ensure their accessibility are also critical. Those improvements already completed have positively impacted residents’ experiences at the properties. We encourage the defendants to continue to comply with the requirements of the settlement agreement so residents and their guests can safely enjoy their homes.”

      The properties included in the settlement agreement include:

• Townhomes at Charleswood, located at 1908 Burlington Drive in West Fargo, North Dakota;

• Steeples Apartments, located at 2850 and 2950 36th Avenue South in Grand Forks, North Dakota;

• South Hampton Townhomes, located at 3174, 3274 and 3374 36th Avenue South in Grand Forks, North Dakota;

• Carrington Court Townhouse Apartments, located at 3383 Primrose Court in Grand Forks, North Dakota; and

• The rental office serving Carrington Court Townhouse Apartments, South Hampton Townhomes, and Steeples Apartments, located at 3001 36th Avenue South in Grand Forks, North Dakota.

      The Justice Department, through the U.S. Attorney’s Offices and the Civil Rights Division, enforces the Fair Housing Act, which prohibits discrimination in housing based on race, color, religion, national origin, sex, disability, and familial status. Among other protections, the FHA requires that multifamily housing buildings with four or more units constructed after March 13, 1991, have basic physical accessibility features, including, among other things, accessible routes without steps to all single-story, ground-floor units and to all units in a building served by an elevator. The ADA protects individuals with disabilities from discrimination in public accommodations, including the rental office at issue in this case. The full and fair enforcement of the FHA, the ADA, and their mandates to integrate individuals with disabilities are major priorities of the United States Attorney’s Office for the District of North Dakota and the Civil Rights Division.

      More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov, or submit a report online at www.civilrights.justice.gov.

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Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, and Patricia Tarasca, the Special Agent in Charge of the New York Regional Office of the Federal Deposit Insurance Corporation’s Office of the Inspector General (“FDIC-OIG”), announced the unsealing of a criminal Complaint charging CHARLIE JAVICE with falsely and dramatically inflating the number of customers of her company, Frank, in order to fraudulently induce J.P. Morgan Chase (“JPMC”) to acquire Frank for $175 million.  JAVICE, who appeared on the Forbes 2019 “30 Under 30” list, stood to gain over $45 million from the fraud.

JAVICE was arrested last night in New Jersey and will be presented later today before U.S. Magistrate Judge Barbara Moses.

U.S. Attorney Damian Williams said: “As alleged, Javice engaged in a brazen scheme to defraud JPMC in the course of a $175 million acquisition deal.  She lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company.  This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law.”

FDIC-OIG Special Agent in Charge Patricia Tarasca said: “The allegations described in today’s criminal Complaint exemplify the many ways banks can be defrauded.  The FDIC-OIG remains committed to holding individuals accountable who threaten the integrity of financial institutions, and we thank our law enforcement partners for their diligence and dedication to investigating such crimes.”

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

In or about 2017, JAVICE founded TAPD, Inc., d/b/a Frank (“Frank”), a for-profit company that offered an online platform designed to simplify the process of filling out the Free Application for Federal Student Aid (“FAFSA”).  FAFSA is a federal government form, available free of charge, that students use to apply for financial aid for college or graduate school.  JAVICE was Frank’s CEO.

In or about 2021, JAVICE began to pursue the sale of Frank to a larger financial institution.  Two major banks, one of which was JPMC, expressed interest and began acquisition processes with Frank.  JAVICE represented repeatedly to those banks that Frank had 4.25 million customers or “users.”  JAVICE explicitly defined “users” — to both banks — as individuals who had signed up for an account with Frank and for whom Frank therefore had at least four identified categories of data (i.e., first name, last name, email address, and phone number).  In fact, Frank had less than 300,000 users.

When JPMC sought to verify the number of Frank’s users and the amount of data collected about them — information that was critical to JPMC’s decision to move forward with the acquisition process — JAVICE fabricated a data set.  To do this, JAVICE and a co-conspirator (“CC-1”) first asked Frank’s director of engineering to create an artificially generated data set (a so-called synthetic data set).  The director of engineering raised concerns about the legality of the request, to which JAVICE responded, in substance and in part, “We don’t want to end up in orange jumpsuits.”  The director of engineering declined the request.

JAVICE then approached an outside data scientist and hired him to create the synthetic data set.  After the data set was created, JAVICE provided that synthetic data set to an agreed-upon third-party vendor in an effort to confirm to JPMC that the data set had over 4.25 million rows.  JAVICE then caused the third-party vendor to convey to JPMC that the data set had over 4.25 million rows, consistent with JAVICE’s misrepresentations that Frank had 4.25 million users.

In reliance on JAVICE’s fraudulent representations about Frank’s users, JPMC agreed to purchase Frank for $175 million.  As part of the deal, JPMC hired JAVICE and other Frank employees.  JAVICE received over $21 million for selling her equity stake in Frank and, per the terms of the deal, was to be paid another $20 million as a retention bonus.

Unbeknownst to JPMC, at or about the same time that JAVICE was creating the fabricated data set, JAVICE and CC-1 sought to purchase, on the open market, real data for over 4.25 million college students to cover up their misrepresentations.  JAVICE and CC-1 succeeded in purchasing a data set of 4.5 million students for $105,000, but it did not contain all the data fields that JAVICE had represented to JPMC were maintained by Frank.  JAVICE then purchased an additional set of data on the open market in order to augment the data set of 4.5 million users.  After JPMC acquired Frank, JPMC employees asked JAVICE and CC-1 to provide data relating to Frank’s users so that JPMC could begin a marketing campaign to those users.  In response, JAVICE provided what was supposedly Frank’s user data.  In fact, JAVICE fraudulently provided the data she and CC-1 had purchased on the open market at a small fraction of the price that JPMC paid to acquire Frank and its purported users.

*                *                *

JAVICE, 31, of Miami Beach, Florida, is charged with one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, and one count of bank fraud, each of which carry a maximum sentence of 30 years in prison, and one count of securities fraud, which carries a maximum sentence of 20 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 defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the Special Agents from the U.S. Attorney’s Office for the Southern District of New York and from FDIC-OIG.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit, and Assistant U.S. Attorneys Micah F. Fergenson and Dina McLeod are in charge of the prosecution.

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

Source: United States Department of Justice News

Genotox Laboratories Ltd., of Austin, Texas, has agreed to pay at least $5.9 million to resolve False Claims Act allegations that it paid volume-based commissions to third party marketers in violation of the Anti-Kickback Statute and submitted claims to federal health care programs for unnecessary drug tests. In parallel proceedings, the U.S. Attorney’s Office for the Western District of Texas and Genotox entered into an eighteen-month Deferred Prosecution Agreement to resolve a criminal investigation regarding the same conduct.

“Laboratories are prohibited from paying kickbacks to third parties to arrange for laboratory orders,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will hold accountable companies that violate the rules intended to protect the integrity and resources of federal health care programs.”

The settlement announced today resolves allegations that, from 2014 to 2020, Genotox paid kickbacks to independent contractor sales representatives and marketing firms to arrange for or recommend the ordering of Genotox’s laboratory testing, in violation of the Anti-Kickback Statute. As part of the settlement, Genotox admitted and accepted responsibility for paying independent contractor marketers, whom Genotox referred to as “1099” representatives, a percentage of the revenue Genotox received from billing Medicare, the Railroad Retirement Board (RRB), and TRICARE for laboratory testing orders facilitated or arranged for by the 1099 representatives.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare and other federally funded health care programs. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

In addition, the settlement resolves allegations that, from 2014 to 2022, Genotox submitted claims to Medicare, RRB, and TRICARE for laboratory tests that were not covered and/or not reasonable and necessary, including blanket orders and routine standing orders of drug testing for all patients in a provider’s practice. As part of the settlement, Genotox admitted and accepted responsibility for offering health care providers order forms known as “custom profiles” for each provider to pre-select the tests to order, which Genotox then performed and billed, for all or nearly all of the provider’s patients, generally at the highest reimbursement categories, such as definitive drug testing for 22 or more drug classes.

Under the settlement with the United States, Genotox has agreed to pay $5.9 million, plus additional amounts if certain financial contingencies occur. The settlement amount was based on the company’s ability to pay.

In connection with the settlement, Genotox entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Genotox maintain a compliance program, implement a risk assessment program, and hire an Independent Review Organization to review Medicare and Medicaid claims at Genotox.

“Kickbacks harm the integrity of federal programs and unnecessarily increase costs to taxpayers,” said  U.S. Attorney Jill E. Steinberg for the Southern District of Georgia. “Patients should know that decisions concerning their health are based on their needs, not the profit margins of providers.”

“The Deferred Prosecution Agreement ensures that Genotox will live up to its compliance obligations,” said U.S. Attorney Jaime Esparza for the Western District of Texas. “My office is committed to the effort to root out fraud and abuse in the health care system.”

“Health care companies that engage in kickback schemes can undermine the public’s trust in medical institutions and the financial integrity of the programs billed,” said Special Agent in Charge Tamala E. Miles of HHS-OIG. “Working with our law enforcement partners, our agency will continue to investigate such allegations in order to detect and deter illicit activity targeting federal health care programs.”

“The Department of Defense (DOD) Office of Inspector General’s Defense Criminal Investigative Service (DCIS) is committed to rooting out fraud schemes that not only waste valuable taxpayer resources, but also impact mission readiness,” said Special Agent in Charge Michael Mentavlos of the DCIS Southwest Field Office. “DCIS, along with our law enforcement partners, will aggressively pursue and hold those accountable who undermine the integrity of DOD’s taxpayer funded health care program, known as TRICARE, which is intended for our service members, retirees, and their families.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Alex DiGiacomo, Genotox’s former billing manager. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. DiGiacomo v. Genotox Laboratories, Ltd., et al., No. 2:20-cv-97 (S.D. Ga.). As part of the settlement, DiGiacomo will receive approximately $1 million.

The civil resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Southern District of Georgia, with assistance from HHS-OIG and DCIS.

The matter was handled by Fraud Section attorneys Douglas Rosenthal and Christopher Terranova and Assistant U.S. Attorney Bradford C. Patrick for the Southern District of Georgia. Assistant U.S. Attorneys G. Karthik Srinivasan and Alan Buie handled the criminal matter in the Western District of Texas.

The government’s pursuit of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 1-800-HHS-TIPS (800-447-8477).

Except to the extent of the facts admitted by Genotox, the claims resolved by the settlement are allegations only and there has been no determination of liability.

Source: United States Department of Justice News

Baltimore, Maryland – A federal criminal complaint has been filed charging Adam Michael Nettina, age 34, of West Friendship, Maryland, for using the telephone to threaten a group that advocates for LGBTQ individuals.  The criminal complaint was filed on March 31, 2023, and Nettina was arrested later that evening.  Nettina had his initial appearance on April 3, 2023, in U.S. District Court in Baltimore before U.S. Magistrate Judge Matthew J. Maddox and was ordered to be detained pending a detention hearing scheduled for April 7, 2023, at 1:30 p.m.

The federal charge was announced by United States Attorney for the District of Maryland Erek L. Barron; Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division; and Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office.

According to the affidavit filed in support of the criminal complaint, on the evening of March 28, 2023, the victim organization received a threatening voicemail from a phone number, which investigators identified as belonging to Adam Michael Nettina.  The message referenced the March 27, 2023, mass shooting at a school in Nashville, Tennessee, involving multiple shooting fatalities, where the perpetrator was publicly identified as being transgender.  During the call, numerous threats were made including, “…We’ll cut your throats.  We’ll put a bullet in your head….You’re going to kill us?  We’re going to kill you ten times more in full.”

If convicted, Nettina faces a maximum sentence of five years in federal prison for interstate communications with a threat to injure.  Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors. 

A criminal complaint is not a finding of guilt.  An individual charged by criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings. 

United States Attorney Erek L. Barron and Assistant Attorney General Kristen Clarke commended the FBI for its work in the investigation.  Mr. Barron and Ms. Clarke thanked Assistant U.S. Paul E. Budlow and Deputy Chief Bobbi Bernstein of the Justice Department’s Civil Rights Division, who are prosecuting the federal case.

The U.S. Attorney’s Office for the District of Maryland (USAO-MD) is launching the national Department of Justice initiative, United Against Hate, this spring.  Together with our local partners, USAO-MD’s United Against Hate campaign will empower local residents and communities to combat unlawful acts of hate, stand against racism and discrimination and alter the course of growing intolerance. 

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 and https://www.justice.gov/usao-md/community-outreach.

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