Month: December 2024

Source: United States Department of Justice Criminal Division

A Texas physician pleaded guilty today in connection with his role in a $5.5 million over-the-counter (OTC) COVID-19 test fraud scheme.

According to court documents, Mark Mazzare M.D., 57, of Tyler, purchased Medicare beneficiary identifiers (BINs) that were used to bill Medicare millions of dollars for OTC COVID-19 test kits, many of which had not been requested by the beneficiaries. Mazzare entered into a sham agreement with a purported marketer to conceal the purchase of BINs as “lead packages,” which in reality consisted of BINs and fraudulently generated audio recordings purporting to be the voices of the beneficiaries requesting the OTC COVID-19 tests. Mazzare caused OTC COVID-19 tests to be shipped to Medicare beneficiaries whose BINs had been purchased, regardless of whether the Medicare beneficiaries had requested or needed the tests. From in or around November 2022 to in or around June 2023, Mazzare caused more than $5.5 million in claims to be submitted to Medicare for OTC COVID-19 tests that were medically unnecessary and ineligible for reimbursement. Medicare paid approximately $3.44 million on those claims.

Mazzare pleaded guilty to conspiracy to defraud the United States and to purchase, sell, and distribute Medicare beneficiary identification numbers. He faces a maximum penalty of five years in prison. A sentencing hearing will be set at a later date, when a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Damien M. Diggs for the Eastern District of Texas; Special Agent in Charge Jason E. Meadows of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Dallas Regional Office; and Inspector-in-Charge Kai Pickens of the U.S. Postal Inspection Service (USPIS) Fort Worth Division made the announcement.

HHS-OIG and USPIS are investigating the case, with significant assistance provided by the Texas Attorney General’s Medicaid Fraud Control Unit.

Assistant Chief Brynn Schiess of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Robert Austin Wells for the Eastern District of Texas are prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,400 defendants who collectively have billed federal health care programs and private insurers more than $27 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.

Source: United States Department of Justice Criminal Division

Klaus Pflugbeil, 59, of Ningbo, China, was sentenced today to 24 months in prison for conspiring to send trade secrets that belong to a leading U.S.-based electric vehicle company (Victim Company-1). Pflugbeil, a resident of the People’s Republic of China (the PRC or China) and a Canadian and German national, and his co-defendant, Yilong Shao, who remains at large, are owners of a PRC-based business (Business-1) that sold technology used to make batteries, including batteries used in electric vehicles. Pflugbeil and Shao, former employees of a company that was purchased by Victim Company-1, took trade secrets from their employer, and later used the trade secrets to build a business that they marketed as a replacement for Victim Company-1’s products.

“In stealing trade secrets from an American electric vehicle manufacturer to use in his own China-based company, Pflugbeil’s actions stood to benefit the PRC in a critical industry with national security implications,” said Assistant Attorney General for National Security Matthew G. Olsen. “The Justice Department will mobilize every available resource to prevent our adversaries from advancing their global ambitions at the expense of U.S. national security.”

“The defendant built a business in China to sell sensitive technology that belongs to a U.S. company.  His actions were bold — he even advertised that he was selling the victim’s products — because he thought, incorrectly, that he was outside the reach of U.S. prosecutors,” said U.S. Attorney Breon Peace for the Eastern District of New York. “Today’s sentencing sends a clear message to would-be offenders: my Office will do everything it can to protect American innovation and national security no matter where you try to hide.”

Victim Company-1 is a U.S.-based leading manufacturer of battery-powered electric vehicles and battery energy systems. In 2019, Victim Company-1 acquired a Canada-based manufacturer of automated, precision dispensing pumps and battery assembly. Prior to its purchase by Victim Company-1, the Canadian manufacturer sold battery assembly lines to customers who manufactured alkaline and lithium‑ion batteries for consumer use. The battery assembly lines contained or utilized a proprietary technology now owned by Victim Company-1: continuous motion battery assembly. The proprietary technology provided a substantial competitive advantage to Victim Company-1 in the lithium-ion battery manufacturing process.

Both Pflugbeil and his co-defendant Shao are former employees of the Canadian manufacturer, and Shao also worked for Victim Company-1. As detailed in court documents, by no later than 2019, Pflugbeil and Shao planned to use Victim Company-1’s trade secrets for their own business activities. Pflugbeil told Shao that he had “a lot of original documents” related to the technology and sought out more “original drawings” of the trade secrets. Shao confirmed, among other things, that, “we have all of original assembly drawings by PDF.”

The conspirators took measures to obfuscate that they had stolen trade secrets. For example, Pflugbeil wrote to Shao about a document he created based on one that Shao had stolen from Victim Company-1, “[its] in a different format, so it looks very original and not like a copy.”

In or about July 2020, Pflugbeil joined Business-1, a company previously established by Shao, which has since expanded to locations in China, Canada, Germany, and Brazil. Business‑1 makes the same precision dispensing pumps and battery assembly lines that the Canadian manufacturer developed. The battery assembly technology is related to the development of electric vehicles that can compete with U.S.-made vehicles. The potential for Chinese automakers to swamp the U.S. and global market with vehicles like those that can be built using this stolen technology presents a potential national security risk.

Business-1 was marketed by Pflugbeil as an alternative source for the sale of products that relied upon Victim Company-1’s trade secrets, publishing online advertisements on Google, YouTube, and LinkedIn. Pflugbeil repeatedly sent LinkedIn messages that named Victim Company-1 and said Business-1 was not infringing on any intellectual property:

Hello [name], I hope to get some of your busy time. As I like to introduce our company to you. We already have supplied companies such [a]s [list of U.S. Fortune 500 Companies by name] . . . We engineer and manufacture all of our products in-house, and we warrant that none of our products infringe any patents, copyrights, or other intellectual property rights of any third party.

The above reflects a blatant lie, told over and over—that Business-1’s products did not infringe on intellectual property rights of a third party. Pflugbeil also advertised products based on stolen trade secrets on Google. These ads were shown tens of thousands of times per week.

On or about September 11, 2023, undercover agents attended a trade show for the packaging and processing industries in Las Vegas, Nevada. The undercover agents posed as businesspeople who were interested in purchasing a battery assembly line from Business-1 to manufacture batteries at a facility in Long Island, New York. The undercover agents were introduced to Shao at the trade show and later to Pflugbeil via email.

Subsequently, on or about November 17, 2023, Pflugbeil sent, via email, a detailed 66-page technical documentation proposal to an undercover agent (UC-1). The proposal notes, “this technical documentation package contains [Business-1] proprietary information which must be kept confidential.”  In reality, the proposal contained battery assembly trade secret information belonging to Victim Company-1:  at least half a dozen drawings Pflugbeil used in the proposal and sent to UC-1 were, in fact, Victim Company-1’s information related to the battery assembly trade secret. The business proposal quoted the battery assembly line at over $15 million.

Assistant U.S. Attorneys Ellen H. Sise and Samantha Alessi for the Eastern District of New York and Trial Attorney Scott A. Claffee of the National Security Division’s Counterintelligence and Export Control Section prosecuted the case.

The investigation and prosecution were coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation states.

Source: United States Department of Justice Criminal Division

The Justice Department announced today its finding that Arizona’s Department of Child Safety (DCS) violates the ADA by discriminating against parents, including foster parents and other caregivers, and children with disabilities. DCS failed to communicate effectively with parents and children with hearing disabilities, failed to reasonably accommodate the needs of parents with disabilities by, for example, not providing information in a simplified form, and denied parents with disabilities an equal chance to participate in DCS services.

Related: Justice Department Finds Arizona’s Department of Child Safety Discriminates Against Parents and Children with Disabilities

Source: United States Department of Justice Criminal Division

Former Assistant Attorney General J. Stanley Pottinger of the Civil Rights Division died on Nov. 27th in Princeton, New Jersey. He was 84 years old.

Mr. Pottinger’s career was extraordinarily varied, marked by success as a banker, attorney and best-selling novelist. Before leading the Civil Rights Division at the Justice Department, he oversaw civil rights at the Department of Health, Education and Welfare under Presidents Richard Nixon and Gerald Ford. In that role, his dedication to his work was exceptional. He concluded reviewing reports would not afford him sufficient understanding of the efforts to educate children in migrant labor camps, so he and his family went to live in one for weeks.

He led the Civil Rights Division from 1973 to 1977, during the Ford and Carter Administrations. Notably, during that time he worked to ensure equal employment opportunities for people of color and women. He fought as well for school desegregation in the South. 

Mr. Pottinger’s efforts to safeguard voting rights were notable. In 1974, Mr. Pottinger raised a Section 5 objection to a redistricting map for New York City. He found that a proposed Congressional district encompassing the Bedford‐Stuyvesant section of Brooklyn would “overly concentrate[e] black neighborhoods . . . while simultaneously fragmenting adjoining black and Puerto Rican concentrations into the surrounding majority white districts.” That district was represented by Shirley Chisolm. In 1975, Mr. Pottinger testified before Congress in favor of reauthorizing Section 5 of the Voting Rights Act. Urging a five‐year extension of the Act, he applauded the increased access by Black people to electoral opportunity, but he urged strongly that “more needs to be done.”

Mr. Pottinger played a critical role in addressing many of the searing crises of his time. He served as the chief negotiator during the American Indian Movement standoff at the Pine Ridge Reservation town of Wounded Knee. He re-opened an investigation into the 1970 student protests and resulting fatalities at Kent State University and Jackson State University. And he investigated the FBI’s Counter Intelligence Program.

During dark times for the country, he understood “there was so much at stake that everything you did had impact.”

Mr. Pottinger was tenacious in all his pursuits, a quality exemplified by key piece of advice he dispensed throughout his career: “Until you exhaust your ability to ask questions, have you really done the job?” Just two years ago, on Dec. 6, 2022, Mr. Pottinger, alongside other former division leaders, joined in the celebration of the 65th anniversary of the Civil Rights Division to reflect on his time at the department.

Benjamin Disraeli said that the legacy of heroes is “the inheritance of a great example.” We have inherited a great example from Mr. Pottinger. We should draw strength and inspiration from it, from his commitment to the division’s work, and from his dedication to the principles of justice and equality under the law. 

Source: United States Department of Justice Criminal Division

A jury convicted Mohammed Azharuddin Chhipa, 35, of Springfield, Virginia, on Dec. 13 for charges relating to his efforts to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a foreign terrorist organization.

According to court records and evidence presented at trial, from at least October 2019 through October 2022, Chhipa collected and sent money to female ISIS members in Syria to benefit ISIS in various ways, including by financing the escape of female ISIS members from prison camps and supporting ISIS fighters. Chhipa would raise funds online on various social media accounts. He would receive electronic transfers of funds and travel hundreds of miles to collect funds by hand. He would then convert the money to cryptocurrency and send it to Turkey, where it was smuggled to ISIS members in Syria.

His primary co-conspirator was a British-born ISIS member residing in Syria who was involved in raising funds for prison escapes, terrorist attacks, and ISIS fighters. Over the course of the conspiracy, the defendant sent out over $185,000 in of cryptocurrency.

The jury found Chhipa guilty of one count of conspiracy to provide material support or resources to a designated foreign terrorist organization and four counts of providing and attempting to provide material support or resources to a designated foreign terrorist organization. Chhipa faces a maximum penalty of 20 years in prison per count. A sentencing hearing has been scheduled for May 5, 2025. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, Executive Assistant Director Robert Wells of the FBI’s National Security Branch, and U.S. Attorney Jessica D. Aber for the Eastern District of Virginia made the announcement.

The FBI is investigating the case.

Assistant U.S. Attorneys Anthony T. Aminoff and Amanda St. Cyr for the Eastern District of Virginia and Trial Attorneys Andrew John Dixon and Andrea Broach of the National Security Division’s Counterterrorism Section are prosecuting the case.