Month: July 2024

Source: United States Department of Justice Criminal Division

A California woman pleaded guilty today to devising a multi-year scheme to defraud the U.S. government by submitting fake invoices for supplies that were never purchased and converting the stolen funds for her personal use.

According to court documents, Zelene Charles, 42, of Monterey, a then-civilian employee of the Department of Defense, at the Defense Language Institute in Monterey, California, perpetrated a scheme to defraud the U.S. government by creating fake purchase requests and invoices for government purchases from both fictitious and legitimate business entities. The items listed in these invoices were never actually purchased or received by the government. Between December 2016 and April 2020, Charles placed approximately 185 fraudulent charges, causing a total loss to the government of $624,250. To conceal that she was the recipient of the stolen funds, Charles frequently renamed the business names associated with intermediary accounts and, in total, used at least 78 different account names.

Charles pleaded guilty to wire fraud and theft of government money and property. She faces a maximum penalty of 20 years in prison for the wire fraud charge and 10 years in prison for the theft charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Charles also agreed to pay $624,500 in restitution and forfeit numerous stolen government computers and tablets as part of her plea.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Ismail J. Ramsey for the Northern District of California; Special Agent in Charge Bryan Denny of the Defense Criminal Investigative Service (DCIS) Western Field Office; Special Agent in Charge Keith K. Kelly of the Department of the Army Criminal Investigation Division’s (Army-CID) Fraud Field Office; Special Agent in Charge Shawn Dionida of the Department of Agriculture Office of Inspector General (USDA-OIG) Western Region; and Special Agent in Charge Terry Pfeifer of the General Services Administration Office of Inspector General (GSA-OIG) Western Division made the announcement.

The DCIS Western Field Office, Army-CID Fraud Field Office, USDA-OIG Western Region, and GSA-OIG Western Division are investigating the case.

Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Anne C. Hsieh for the Northern District of California are prosecuting the case.

Source: United States Department of Justice

The Department of Justice is drafting an Environmental Justice Strategic Plan that will specify DOJ’s vision, goals, and priority actions to advance environmental justice, as directed by Executive Order 14096, revitalizing our nation’s commitment to environmental justice for all. Draft goals and objectives for DOJ’s EJ strategic plan are posted on the OEJ website at: https://www.justice.gov/oej.

DOJ is seeking your input on several questions so that it can continue to improve its EJ strategic plan. You may provide your input on DOJ’s EJ strategic plan in three ways:

• Complete the electronic survey located on our website.
• Email the Office of Environmental Justice at: OEJ@USDOJ.gov
• Attend an in-person community listening session if there is one scheduled near you.

All comments are due by Monday July 22, 2024. DOJ appreciates your time and looks forward to your input.

Source: United States Department of Justice Criminal Division

The U.S. Marshals Service (USMS), along with federal, state, and local agencies in seven federal judicial districts and geographical locations across the United States, led a six-week national operation that resulted in finding 200 critically missing children, which includes endangered runaways and those abducted by noncustodial persons.

Operation We Will Find You 2 (OWWFY2), the second-of-its-kind nationwide missing child operation, was conducted from May 20 to June 24 and focused on geographical areas with high clusters of critically missing children. Children who go missing may be in serious danger and can be vulnerable to child sex trafficking, abuse, exploitation, and other crimes against children.

With technical assistance from the National Center for Missing and Exploited Children (NCMEC), OWWFY2 resulted in the recovery and removal of 123 children from dangerous situations. An additional 77 missing children were located and found to be in safe locations, according to law enforcement or child welfare agencies. Of the 200 children found, 173 were endangered runaways, 25 were considered otherwise missing, one was a family abduction, and one was a non-family abduction. The youngest child recovered was five months old. 14 of the children were found outside the city where they went missing. Additionally, of the missing children recovered, 57% were recovered within seven days of the USMS assisting with the case.

“There are no words to describe the terror felt by missing children, their families, and their communities,” said Attorney General Merrick B. Garland. “I am grateful to the dedicated professionals of the U.S. Marshals Service and the National Center for Missing and Exploited Children who worked to find 200 critically missing children during this six-week operation, and who work every day to keep children safe.”

“One of the most sacred missions of U.S. Marshals Service is locating and recovering our nation’s critically missing children,” said USMS Director Ronald L. Davis. “This is one of our top priorities as there remain thousands of children still missing and at risk.”

“Operation We Will Find You is a shining example of the results we can achieve when we unite in our mission to find missing children,” said President and CEO Michelle DeLaune of NCMEC. “We are grateful that vulnerable children have been recovered as part of this operation, and we commend the U.S. Marshals Service and all the agencies involved for their commitment to protect youth and ensure these children are not forgotten. Behind every statistic, there is a child who deserves to grow up safe from harm.”

The operation was conducted from the following locations: District of Arizona (Phoenix, Glendale, Goodyear, Tucson, South Tucson, and Pima counties); Eastern District of California (San Joaquin County, Stockton, and Sacramento County); Southern District of Florida (Broward, St. Lucie, Martin, Palm Beach and Miami-Dade counties); Western District of Michigan (Kent, Lake, Ingham, and Ottawa counties); Eastern District of North Carolina (New Hanover, Brunswick, Harnett, Onslow, Pitt, Wake, Johnston, Robeson, Cumberland, Sampson, Nash, and Pender counties); Southern and Eastern Districts of New York (New York City); and District of Oregon (Multnomah, Washington, and Deschutes counties, as well as Portland and Eugene, and the Warm Springs Reservation).

The goal of OWWFY2 was to highlight partnerships amongst government and non-government agencies to develop a multi-disciplinary team whose focus was to pull together resources to find critically missing children and to bring more attention to the epidemic of missing children in America. During the operation, the USMS worked with their respective federal, state, and local law enforcement partners, NCMEC, the Department of Children and Family Services, and other agencies to safely find missing children at risk of endangerment. These missing children were considered some of the most challenging recovery cases in the area, based on indications of high-risk factors such as victimization of child sex trafficking, child exploitation, sexual abuse, physical abuse, and medical or mental health conditions. In addition, other children who had been reported missing were located at the request of law enforcement to ensure they were safe and to confirm the child’s location.

The Justice for Victims of Trafficking Act of 2015 enhanced the USMS’ authority to assist law enforcement with recovering endangered missing children, regardless of whether a fugitive or sex offender was involved. The USMS established a Missing Child Unit to oversee and manage the implementation of its enhanced authority under the Act. Members of the USMS Sex Offender Investigations Branch, Behavioral Analysis Unit, and Missing Child Unit began training personnel in the participating locations months before the operation to ensure that case selection, vetting, and all pre-operational requirements were met.

Operation We Will Find You Links:

Significant Recoveries:

Western District of Michigan:

On Jan. 11, a 16-year-old female child was reported missing from her home in Edwardsburg, Michigan, by her legal guardian. Information obtained through interviews showed the child was likely with a 30-year-old adult male somewhere in the state of Indiana.  The investigation showed the child was likely being controlled and abused by the adult male.  During the investigation, operation personnel learned information that the child had either attempted to get away from the adult male multiple times or the child wanted to do so. The child was in a difficult and dangerous situation, especially since she had traveled across state lines and was now in a new state, a long distance from where she was first reported missing. The adult male had recent photos of cash and firearms on his social media profile, including one photo where the adult male is apparently pointing a handgun with an extended magazine at the missing child.  USMS identified multiple warrants for the adult male from multiple states, including Michigan.  The USMS determined a likely location for the adult male and the child in Indiana.  A collateral lead request was sent by the Western District of Michigan to the Northern District of Indiana and the Great Lakes Regional Fugitive Task Force.  On June 13, USMS personnel attempted to arrest the adult male and recover the child at an apartment in Hammond, Indiana.  The adult male jumped out of a window and attempted to flee the area—but was apprehended by a Police K-9 before his eventual arrest.  USMS personnel located the child safely inside the apartment and released her to child protective services.

Southern District of Florida:

On May 13, a 15-year-old female was reported missing by her legal guardian. Information indicated that she might be staying at other people’s houses or sleeping in parks in Miami-Dade, Florida. During the investigation, it was discovered the child had become a victim of human trafficking in the Miami-Dade area. On June 7, personnel from the U.S. Marshals Service, in collaboration with detectives from the Miami Police Department, located the child in an apartment complex in Miami-Dade after an extensive investigative search throughout the city. Upon being recovered, she was debriefed by Florida State Attorney’s Office Human Trafficking personnel and subsequently returned to the Florida Department of Child and Family Services custody.

District of Arizona:

On April 16, a 16-year-old was reported missing after she ran away from her group home in Phoenix. The female has a history of being sex trafficked. The investigation revealed the child was in Los Angeles, possibly being sex trafficked. The suspected trafficker was murdered in Los Angeles on May 25. The child told a family member she was going on vacation to Miami but when she got there her new “trafficker” dropped her off at the beach and told her to make money. On June 11, the child was located by USMS in Flint, Michigan, in a hotel, and was taken into custody on an outstanding arrest warrant for a probation violation. Her male associate was arrested on local charges for driving without a license and insurance. An additional 20-year-old female was identified in the hotel. The suspected trafficking case was referred to Homeland Security Investigations and they will continue to investigate the case.

New York/New Jersey Regional Task Force:

On Nov. 3, 2023, a 16-year-old female was reported in the National Crime Information Center as missing from New York City, New York Administration for Children’s Services (ACS), and was a prior victim of human trafficking. On May 1, 2024, the New York City Police Department Missing Persons Unit (NYPD MPU) requested USMS assistance in recovering the missing child. On June 3, New York USMS Regional Fugitive Task Force Members executed two arrest warrants for a 27-year-old male who was the primary subject of an ongoing investigation into the whereabouts of the missing minor who was being sexually exploited by the adult male. Upon execution of the warrant, the child was found in the male’s bedroom, and evidence of sexual exploitation was found at the premise. The child was placed in the care of ACS and transported to the hospital for medical treatment.

Eastern District of North Carolina:

On April 29, a one-year-old was reported missing to the Raleigh, North Carolina, Police Department (RPD), after her mother neglected to surrender her to the Department of Social Services (DSS). The RPD requested assistance from the USMS in finding the missing child. The child’s mother was previously convicted for her actions in the strangulation, assault, and death of one of her children, a four-year-old boy. Additionally, she was wanted on a felony probation violation pertaining to the original charge of cruelty toward a child. On May 15, USMS personnel and RPD personnel arrested the child’s mother without incident in Raleigh. The missing one-year-old was subsequently safely recovered in Raleigh by USMS investigators and handed over to DSS custody.

Eastern District of California:

On Oct. 26, 2023, a 17-year-old female was reported missing by her legal guardian. Information obtained revealed that she was likely staying with her older adult sister who was a known prostitute. The child’s older sister was recently arrested and on pretrial release for Human Trafficking, Pimping, and Pandering. On May 30, USMS personnel determined that the child and her adult sister were staying at a known prostitution and trafficking motel in Oakland, California. USMS personnel from the Eastern District of California coordinated with USMS personnel in the Northern District of California to establish a location for the child and her sister. Management at the hotel confirmed that both sisters had two rooms and had been staying there for some time with an unknown adult male. At one point, USMS observed the three individuals leave the rooms and begin packing their car. Once inside the vehicle, the USMS was able to safely move in and detain all three individuals. The child was then turned over to authorities.

District of Oregon

On May 21, a 12-year-old female went missing from her family home in Portland, Oregon, and had reported allegations of sexual abuse by family members. Law enforcement officers contacted the child through her cell, and she agreed to meet them at a grocery store in the Portland area. The officers received a call back from the child and a friend stating that her father was trying to pull her into his car, and she was scared. USMS investigators were able to intervene and separate the endangered child from her father. The child told law enforcement that she had been raped by two Hispanic males and that her father touched her inappropriately. On May 24, the child was safely recovered and placed in a foster home while the Oregon Department of Human Services (DHS) investigated the allegations. Within 24 hours of being placed in foster care, the foster family kicked the child out of their home. The child then called a Deputy U.S. Marshal (DUSM) that had built rapport with her to ask for assistance. The DUSM subsequently contacted DHS to report the incident. As a result, DHS placed the child in a state-run shelter.

Additional information about the USMS can be found at www.usmarshals.gov.

Source: United States Department of Justice Criminal Division

Three former executives of Outcome Health (Outcome), a Chicago-based health technology start-up company, were sentenced 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.

• Rishi Shah, 38, a co-founder and former CEO of Outcome, was sentenced on June 26 to seven years and six months in prison.
• Shradha Agarwal, 38, a co-founder and former president of Outcome, was sentenced yesterday to three years in a half-way house.
• Brad Purdy, 35, the former chief operating officer and chief financial officer of Outcome, was also sentenced yesterday to two years and three months in prison.

“Outcome’s former executives deceived their clients, their auditor, their lenders, and their investors for years,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Their sentences should serve as yet another reminder that ‘faking it until you make it’ is not an acceptable practice for any business, whether that company is a technology start-up or a well-established corporation. Lying about your revenue to obtain customers or financing is fraud, plain and simple. The Criminal Division is committing to holding companies and their executives accountable for their misconduct.”

“The defendants’ vast scheme defrauded the clients, investors, and lenders who supported their business,” said Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois. “Although they sought to hide the fraud by silencing whistleblowers and duping auditors, a jury rightly held the defendants accountable for their extensive fraud scheme. Our office will continue to work tirelessly with our law enforcement partners to deliver justice for the victims of complex fraud schemes.”

According to court documents and evidence presented at trial, Outcome, which was founded in 2006 and known as Context Media prior to January 2017, installed television screens and tablets in doctors’ offices across the United States and then sold advertising space on those devices to clients, most of which were pharmaceutical companies. Shah, Agarwal, and Purdy sold advertising inventory the company did not have to Outcome’s clients and 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 and lasted until 2017, and resulted in at least $45 million of overbilled advertising services.

“This was an elaborate, billion-dollar fraud scheme by three people who were supposed to be leaders of the company,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response, and Services Branch. “Instead, these now former executives attempted to illegally line their own pockets. This type of fraud and abuse takes critical resources out of our health care system, and the FBI will always work with our law enforcement partners to investigate and prosecute anyone who intends to defraud the American public.”

Shah, Agarwal, and Purdy also defrauded 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. The $110 million debt financing resulted in a $30.2 million dividend to Shah and a $7.5 million dividend to Agarwal, and the $487.5 million in equity financing resulted in a $225 million dividend that benefited Shah and Agarwal.

“The defendants in this case have been brought to justice for their actions in deceiving Outcome Health’s clients and fraudulently obtaining approximately $1 billion from its lenders and investors,” said Assistant Inspector General for Investigations Shimon R. Richmond of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG). “The FDIC-OIG will continue to work alongside our law enforcement partners to hold accountable individuals who harm lenders, investors, and clients by committing such fraudulent acts.” 

A federal jury convicted Shah, Agarwal, and Purdy in April 2023. 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 of 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.

Three other former Outcome employees pleaded guilty prior to trial. Ashik Desai, the former chief growth officer, pleaded guilty to one count of wire fraud. Kathryn Choi, a former senior analyst, and Oliver Han, a former analyst, both pleaded guilty to conspiracy to commit wire fraud. Desai will be sentenced on Sept. 20. Choi and Han will be sentenced on Oct. 4 and Oct. 11, respectively.

The FBI and FDIC-OIG investigated the case. The U.S. Securities and Exchange Commission provided assistance in the case. 

Assistant Chief Kyle C. Hankey of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason Yonan, Corey Rubenstein, and William Hogan for the Northern District of Illinois prosecuted the case. Former Assistant Chief William E. Johnston of the Criminal Division’s Fraud Section and former Assistant U.S. Attorneys Matthew F. Madden and Saurish Appleby-Bhattacharjee for the Northern District of Illinois also prosecuted the case through trial.

Source: United States Department of Justice Criminal Division

Guardian Health Care Inc., Gem City Home Care LLC and Care Connection of Cincinnati LLC, home health agencies operating in Texas, Ohio and Indiana, along with their owner Evolution Health LLC (together, the Companies), have agreed to pay $4,496,330 to resolve allegations that they violated the False Claims Act by knowingly providing illegal kickbacks to assisted living facilities and physicians in exchange for Medicare referrals.

This settlement resolves allegations that, from 2013 to 2022, Guardian Health Care, Gem City Home Care and Care Connection of Cincinnati provided lease payments and other valuable benefits, including wellness health services, sports tickets and meals, to numerous assisted living facilities and their residents, as well as certain health care providers, in exchange for referrals of Medicare beneficiaries. The home health agencies then billed Medicare for the home health services they provided to the referred patients.

The Anti-Kickback Statute prohibits the provision of remuneration with the intent to induce referrals of government health care program business. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives. Claims that are knowingly submitted in violation of the Anti-Kickback Statute are ineligible for payment and can violate the False Claims Act.

“It is imperative to ensure that improper financial incentives play no role in decisions regarding patient care,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s resolution demonstrates the department’s commitment to protecting the integrity of federal health care programs and the medical treatment received by their beneficiaries.”

The Companies received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases. Among other actions, the Companies disclosed the conduct to the government, identified the individuals involved and assisted in the determination of losses caused to Medicare.

The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare 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 800-HHS-TIPS (800-447-8477).

Trial Attorney Elizabeth A. Strawn of the Civil Division’s Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorney Brandi Stewart for the Southern District of Ohio handled the matter.

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