Month: August 2024

Source: United States Department of Justice Criminal Division

A Taiwanese national, Pen Yu, 51, was sentenced today to three years and eight months in prison, followed by three years of supervised release, for conspiracy to commit wire fraud. As part of his sentence, the court also entered an order of forfeiture in the amount of $100,000, the proceeds of the wire fraud.

Yu pleaded guilty on May 2. Co-conspirator Gregory Muñoz pleaded guilty on May 9, and co-conspirator Jonathan Thyng pleaded guilty on July 23.

According to court documents, beginning in at least July 2016 and continuing through at least May 2023, Yu ordered biochemical products from MilliporeSigma, a subsidiary of multinational science and technology company Merck KGaA, Darmstadt, Germany, with help from Muñoz, a MilliporeSigma salesperson, by falsely representing that Yu was affiliated with a biology research lab at a large Florida university. This fictitious affiliation led MilliporeSigma to provide Yu over $4.9 million worth of discounts and other benefits, such as free overnight shipping, not available to the public. Yu gave Muñoz thousands of dollars in gift cards for facilitating these fraudulent discounted orders. When the products arrived at the university stockroom, a stockroom employee diverted the products to Yu, who repackaged them and shipped them to China. To avoid scrutiny, Yu made false statements about the value and contents of these shipments in export documents.

This scheme continued until MilliporeSigma compliance personnel identified certain orders as suspicious, prompting the company to retain outside counsel who voluntarily disclosed the misconduct to the Department of Justice’s National Security Division only a week later. MilliporeSigma made the disclosure well before its counsel had completed their investigation and understood the full nature and extent of the scheme. MilliporeSigma offered exceptional cooperation to the prosecution team, including by proactively identifying and producing documents to the Department that established probable cause to search residences and electronic devices of culpable individuals. MilliporeSigma’s cooperation allowed investigators to quickly identify the individuals responsible for the scheme, including Yu, Muñoz and Thyng, and secure their felony guilty pleas.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Roger B. Handberg for the Middle District of Florida, Special Agent in Charge John Johnson for the Department of Commerce Bureau of Industry Security (BIS) Miami Field Office and Colonel Kelly Frushour of the Marine Corps Embassy Security Group.

The Defense Criminal Investigative Service, BIS and Homeland Security Investigations investigated the case.

Assistant U.S. Attorney Daniel J. Marcet for the Middle District of Florida and Trial Attorney Garrett Coyle of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the cases.

Source: United States Department of Justice Criminal Division

The Justice Department issued the following statement from Deputy Assistant Attorney General Michael Kades of the Justice Department’s Antitrust Division after International Consolidated Airlines Group S.A. (IAG) announced that it would abandon its proposed acquisition of sole control of Air Europa Holding S.L. (Air Europa):

“The Antitrust Division is committed to protecting competition in the airlines industry. As a result of this abandonment, travelers between the United States and Europe will benefit from an industry rivalry that lowers prices, boosts quality and promotes choice. I am grateful to our enforcement partner, the European Commission, for its close and constructive collaboration with our staff on this important matter to safeguard competition.”

IAG, headquartered in the United Kingdom, is the parent company of Iberian, Vueling and British Airways, among other air carriers. Air Europa is headquartered in Spain.

Source: United States Department of Justice Criminal Division

A federal grand jury in Los Angeles has returned an indictment charging six defendants for their participation in a years-long scheme to steal millions of dollars from American consumers’ bank accounts.

According to court documents, Henry LoConti, 63, of Chardon, Ohio; John Flynn, 43, of Canada; Shoaib Ahmad, 64, of Canada; Timothy Munoz, 57, of Wilmington, California; Eric Crespin, 61, of Canada; and Lezli St. Hill, 53, of Canada, were members and associates of a racketeering enterprise that unlawfully debited money from the bank accounts of unknowing U.S. consumer-victims.

Through various members and associates, the enterprise obtained identifying and banking information for victims, and created shell entities that claimed to offer products or services, such as cloud storage. The enterprise then executed unauthorized debits against victims’ bank accounts, which it falsely represented to banks were authorized by the victims. Some of the unauthorized debits resulted in returned transactions, which generated high return rates. To both conceal and continue conducting unauthorized debits, the enterprise’s shell entities also generated “micro debits” against other bank accounts controlled and funded by or for the enterprise. The micro debits artificially lowered shell entities’ return rates to levels that conspirators believed would reduce bank scrutiny and lessen potential negative impact on the enterprise’s banking relations.

Combined with a prior indictment, 19 conspirators are currently charged in the Central District of California for their participation in the scheme. Three other defendants have been convicted and/or sentenced in the District of Nevada, Southern District of California and District of Maryland.

“The scheme alleged in the indictment involved an elaborate plot to steal consumers’ hard-earned savings directly from their bank accounts,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department will use all of the tools at its disposal to prosecute such schemes.”

“Criminals are utilizing technology to devise increasingly sophisticated methods to steal from victims,” said U.S. Attorney Martin Estrada for the Central District of California. “My office will continue to use all available tools to prosecute and apprehend these fraud networks, but I also urge everyone to regularly check your accounts for any unauthorized activity – no matter how small. Prevention is key.”

“The U.S. Postal Inspection Service (USPIS), along with our partners, remain committed to shutting down these types of scammers,” said Inspector in Charge Eric Shen of USPIS’ Criminal Investigations Group. “Dismantling this syndicate, and the arrests and prosecutions of those involved, should send a clear message that fraudulent schemes that exploit innocent victims, many of whom have suffered not only financial losses but also emotional distress and a breach of trust, will not be tolerated. The Postal Inspection Service will make sure that justice is served and that those responsible for these types of crimes feel the full weight of justice.”

All six defendants are charged with racketeering conspiracy and wire fraud. Some defendants made their initial court appearances yesterday. If convicted, each defendant faces a maximum penalty of 20 years in prison for racketeering conspiracy and 30 years in prison for each count of wire fraud. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Ahmad was separately charged in a second indictment with conspiracy to commit bank and wire fraud related to his participation in a similarly-structured conspiracy that also stole money from U.S. consumer-victims.

The department urges individuals to be on the lookout for unauthorized debits to their accounts. Regularly check your bank, credit card and other financial statements and contact your financial institution if you see a charge you do not recognize. Report any fraudulent debit you identify to law enforcement. Reports may be filed with the FTC at www.reportfraud.ftc.gov or at 877-FTC-HELP.

USPIS is investigating the case.

Trial Attorneys Wei Xiang, Meredith Healy and Amy Kaplan of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Monica Tait for the Central District of California are prosecuting the case.

The Consumer Protection Branch, in conjunction with the USPIS, is pursing wrongdoers who disguise the unlawful nature of business activities by, among other methods, artificially lowering financial account return rates. These tactics are designed to deceive banks, resulting in bank accounts remaining open and facilitating fraud schemes and other illegal activities, including schemes that debit consumers’ bank accounts without authorization, tech support scams and subscription traps.

For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice Criminal Division

The Justice Department, together with the Federal Trade Commission (FTC), today filed a civil lawsuit in the U.S. District Court for the Central District of California against TikTok Inc., ByteDance Ltd., and their affiliates (together, TikTok) for violations of the Children’s Online Privacy Protection Act and its implementing regulations (COPPA) in connection with the popular TikTok app.

COPPA prohibits website operators from knowingly collecting, using, or disclosing personal information from children under the age of 13, unless they provide notice to and obtain consent from those children’s parents. It also requires website operators to delete personal information collected from children at their parents’ request. In 2019, the government sued TikTok’s predecessor, Musical.ly, for COPPA violations, and since then the defendants have been subject to a court order requiring them to undertake specific measures to comply with COPPA.

According to the complaint, from 2019 to the present, TikTok knowingly permitted children to create regular TikTok accounts and to create, view, and share short-form videos and messages with adults and others on the regular TikTok platform. The defendants collected and retained a wide variety of personal information from these children without notifying or obtaining consent from their parents. Even for accounts that were created in “Kids Mode” (a pared-back version of TikTok intended for children under 13), the defendants unlawfully collected and retained children’s email addresses and other types of personal information. Further, when parents discovered their children’s accounts and asked the defendants to delete the accounts and information in them, the defendants frequently failed to honor those requests.  The defendants also had deficient and ineffectual internal policies and processes for identifying and deleting TikTok accounts created by children.  

The defendants engaged in the above-described conduct despite being subject to a court order barring them from violating COPPA and imposing measures designed to ensure their compliance. TikTok is one of the most popular social media platforms in the world. The defendants’ COPPA violations have resulted in millions of children under 13 using the regular TikTok app, subjecting them to extensive data collection and allowing them to interact with adult users and access adult content. The complaint seeks civil penalties and injunctive relief.

“The Department is deeply concerned that TikTok has continued to collect and retain children’s personal information despite a court order barring such conduct,” said Acting Associate Attorney General Benjamin C. Mizer. “With this action, the Department seeks to ensure that TikTok honors its obligation to protect children’s privacy rights and parents’ efforts to protect their children.”

“The Justice Department is committed to upholding parents’ ability to protect their children’s privacy,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This action is necessary to prevent the defendants, who are repeat offenders and operate on a massive scale, from collecting and using young children’s private information without any parental consent or control.”

“TikTok knowingly and repeatedly violated kids’ privacy, threatening the safety of millions of children across the country,” said FTC Chair Lina M. Khan. “The FTC will continue to use the full scope of its authorities to protect children online — especially as firms deploy increasingly sophisticated digital tools to surveil kids and profit from their data.”

The United States is represented in this action by Assistant Directors Rachael L. Doud and Zachary A. Dietert, and Trial Attorneys Ben Cornfeld and Marcus P. Smith, of the Civil Division’s Consumer Protection Branch. Jonathan W. Ware, Iris Micklavzina, Sarah Choi, and Michael Sherling represent the FTC.

For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch.

The claims made in a complaint are allegations that, if the case were to proceed to trial, the government must prove by a preponderance of the evidence. Certain allegations in the complaint linked to below are redacted due to defendants’ request that the government file these allegations under seal while the Court considers defendants’ intended motion to seal. The court’s ruling on defendants’ motion will determine whether and to what extent these allegations in the complaint become public. 

Source: United States Department of Justice Criminal Division

A federal court prohibited a Sandusky, Ohio-area physician from prescribing opioids and other controlled substances and ordered him to pay $4.7 million in a case alleging violations of the Controlled Substances Act (CSA) and the False Claims Act (FCA).

In a civil complaint filed in August 2018, the United States alleged that Dr. Gregory Gerber, MD, who operated an office in Sandusky, unlawfully issued prescriptions without a legitimate medical basis for opioids and other controlled substances in violation of the CSA and the FCA. The complaint alleged that one patient died from an overdose of fentanyl patches prescribed by Gerber. The complaint further alleged that Gerber received kickback payments from a drug manufacturer as part of a scheme to unlawfully prescribe Subsys, a powerful opioid drug containing fentanyl, in violation of the FCA.

“Medical professionals who knowingly facilitate the abuse of opioids violate their legal obligations,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “The department will pursue justice against anyone who seeks to profit from unlawfully prescribing opioids.”

“All doctors must follow the law when prescribing opioids — their patients, and the public more generally, rely on such compliance,” said U.S. Attorney Rebecca C. Lutzko for the Northern District of Ohio. “Gerber’s patients trusted him. But instead of safeguarding that trust, Gerber accepted payments from a drug company in exchange for prescribing dangerous, addictive drugs and wrote thousands of prescriptions that were not for a legitimate medical purpose. Our office will use all available tools — civil and criminal — to fight the opioid epidemic and protect patients and their families so that doctors like Gerber do not profit from abusing our healthcare system.” 

“Dr. Gerber betrayed the trust placed in him and willfully violated his oath to protect the public and the provisions of the Controlled Substance Act,” said Special Agent in Charge Orville O. Greene of the Drug Enforcement Administration (DEA)’s Detroit Field Division. “His reckless behavior contributed to the opioid crisis gripping the nation and brought suffering to many communities in northern Ohio. This ruling will hopefully deter other medical practitioners who are inclined to put profit over patient health and safety.”

“Health care professionals who exploit opioid addiction for financial gain do so at the risk of endangering their patients and undermining critical public health efforts to address the opioid epidemic,” said Deputy Inspector General Christian J. Schrank of Investigations of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG). “Working with our law enforcement partners, we will continue to work to ensure that bad actors are held accountable for such schemes in order to protect both patients and taxpayers.”

“Ignoring the law by distributing prescriptions to opioids for illicit profit harms the communities that physicians are meant to help,” said Executive Assistant Director Michael D. Nordwall of the FBI’s Criminal, Cyber, Response and Services Branch. “The FBI is glad that Gerber will not be able to prescribe controlled substances ever again.”

Gerber agreed to a consent judgment to settle the allegations in the complaint. The order entered by the court permanently prohibits Gerber from prescribing opioids or other controlled substances, permanently prohibits him from managing, owning or controlling any entity that dispenses controlled substances and requires Gerber to pay approximately $4.7 million under the FCA. Gerber was also sentenced in March to 42 months in prison and one year of home confinement in a related criminal case brought by the United States Attorney’s Office.

U.S. District Judge Jeffrey J. Helmick entered the judgment and permanent injunction in U.S. District Court for the Northern District of Ohio. In August 2018, Judge Helmick issued a temporary restraining order and preliminary injunction prohibiting Gerber from prescribing opioids or other controlled substances.

The DEA, FBI, HHS-OIG, Ohio Attorney General’s Medicaid Fraud Control Unit,  State of Ohio Board of Pharmacy and State Medical Board of Ohio investigated the case.

Assistant U.S. Attorneys Patricia Fitzgerald and Angelita Cruz Bridges for the Northern District of Ohio and Trial Attorney Scott B. Dahlquist of the Civil Division’s Consumer Protection Branch handled the case.

The claims made in the complaint are allegations that the United States would need to prove by a preponderance of the evidence if the case proceeded to trial.