Category: US Department of Justice

Source: United States Department of Justice Criminal Division

On Feb. 21, Texas pharmacist Dehshid “David” Nourian, 62, of Plano, was sentenced to 17 years and six months in prison and ordered to pay over $115 million in restitution for his role in a $145 million scheme to defraud the Department of Labor through the submission of fraudulent claims for prescription compound creams. On March 6, the court also forfeited $405 million in assets tied to Nourian’s fraud and money laundering schemes.

According to court documents and evidence presented at trial, Nourian and others conspired to pay doctors to prescribe medically unnecessary compound creams to injured federal workers. Nourian and others owned and operated three pharmacies located in Fort Worth and Arlington, Texas. Over the course of the scheme, they paid doctors millions of dollars in illegal bribes and kickbacks for referring expensive compound medications to be filled by those pharmacies. Evidence at trial showed these compounds were being mixed in the back rooms of the pharmacies by untrained teenagers at a cost to the defendants of around $15 per prescription and then billed to the Department of Labor’s Office of Workers’ Compensation Programs (DOL-OWCP) for as much as $16,000 per prescription. Patients who received the creams testified at trial to the creams’ ineffectiveness and, in some instances, that using the creams resulted in painful, irritating skin rashes.

“Protecting victims and safeguarding the public fisc are two of the Criminal Division’s highest priorities,” said Matthew R. Galeotti, head of the Justice Department’s Criminal Division. “This 17-year sentence sends a clear message that our prosecutors, working shoulder-to-shoulder with our investigative partners, will identify, investigate, and prosecute even the most sophisticated fraud schemes that target taxpayer money and endanger patients. As a result of our tireless efforts, this defendant was tried, convicted, and ordered to forfeit more than $400 million – the highest forfeiture ever obtained in a health care fraud case in the Department’s history – and now his ill-gotten proceeds will be returned to the taxpayers and programs designed to care for our most vulnerable citizens.”

“This sentence sends a strong message to those who would defraud our federal health care programs for personal gain,” said Inspector General Tammy Hull of the U.S. Postal Service. “The outstanding work by the legal and investigative teams stopped a multi-year health care fraud scheme responsible for tens of millions of dollars in fraudulent billing to government agencies. Along with the Department of Justice and our federal law enforcement partners, the USPS Office of Inspector General will remain committed to investigating those who would engage in this type of fraud and abuse.”

“Dehshid Nourian defrauded the U.S. Department of Labor’s (DOL) Office of Workers’ Compensation Programs (OWCP) by submitting false claims for medically unnecessary services. His actions placed illegal profits above patient safety,” said Special Agent in Charge Casey Howard of the U.S. Department of Labor Office of Inspector General (DOL-OIG) Central Region. “We will continue to work with our law enforcement partners and OWCP to protect the integrity of DOL’s worker compensation programs.”

In less than three years, between May 2014 and March 2017, the pharmacies billed the DOL-OWCP and Blue Cross Blue Shield more than $145 million and were paid more than $90 million for unnecessary prescriptions referred by medical providers in exchange for the illegal bribes and kickbacks. Nourian and others then attempted to conceal their ill-gotten gains by laundering the money through purported holding companies and attempted to evade paying $24 million in federal income taxes on the illicit proceeds.

In November 2023, a federal jury in the Northern District of Texas convicted Nourian of one count of conspiracy to commit health care fraud, eight counts of health care fraud, one count of conspiracy to launder money, five counts of money laundering, and one count of conspiracy to defraud the United States by failing to report and attempting to evade the collection of taxes owed to the IRS.

In an order issued following Nourian’s sentencing, the court also ruled that Nourian will forfeit $405 million in seized assets tied to his crimes. Evidence at trial demonstrated that Nourian and his co-conspirators used a complex web of bank accounts and shell companies to launder their fraud proceeds, ultimately depositing tens of millions of dollars into Nourian’s and other family members’ bank and investment accounts. The forfeiture order returned that money to the taxpayers and included the forfeiture of $395 million in brokerage accounts, over $2 million in bank accounts, real estate in Dallas and Austin worth $8 million, and a BMW luxury vehicle.

Supervisory Official Matthew R. Galeotti of the Justice Department’s Criminal Division; Acting U.S. Attorney Chad E. Meacham for the Northern District of Texas; Inspector General Tammy Hull of the U.S. Postal Service; Special Agent in Charge Casey Howard of the DOL-OIG Central Region; Special Agent in Charge Kris Raper of the Department of Veteran’s Affairs Office of Inspector General (VA-OIG), South Central Field Office; and Acting Special Agent in Charge Lucy Tan of the IRS Criminal Investigation (IRS-CI) Houston Field Office made the announcement.

The U.S. Postal Service Office of Inspector General, DOL-OIG, VA-OIG, and IRS-CI investigated the case.

Trial Attorney Ethan Womble and Senior Litigation Counsel Catherine Wagner of the Criminal Division’s Fraud Section prosecuted the case. Assistant U.S. Attorney Dimitri Rocha for the Northern District of Texas handled the criminal forfeiture for 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 5,800 defendants who collectively have billed federal health care programs and private insurers more than $30 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, 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

View plea agreement. View factual basis.

A Florida woman, and dual U.S. and Colombian citizen, pleaded guilty today to conspiring to defraud the United States by, among other things, concealing tens of millions of dollars in undeclared foreign financial accounts, filing false tax returns, and evading taxes.

According to court documents and statements made in court, between 2010 and 2022, Gilda Rosenberg, of Golden Beach, Florida, conspired with two family members to conceal from the IRS more than $90 million in assets and income held in undeclared bank accounts in Andorra, Israel, Panama and Switzerland.

Rosenberg’s family had maintained offshore accounts since the 1970s. By the late 1990s, Rosenberg — who was identified as an owner and an authorized signer on some of the accounts — knew that she and her family members had not disclosed their ownership of these foreign financial accounts to the U.S. government and that they had not paid any taxes on the income earned from the assets in those accounts as was required by law.

Starting in the early 2000s, the family consolidated their assets at accounts with Credit Suisse in Switzerland and the United Kingdom. Family members told Credit Suisse employees that they were U.S. persons and seeking to hide their assets from U.S. authorities. The assets remained at Credit Suisse until 2013, when Credit Suisse closed the accounts because the family members were U.S. persons.

When Credit Suisse closed their accounts, the family moved their assets, which were typically titled in the names of nominee entities, to new accounts located at Bank Leumi in Israel, Union Bancaire Privée (UBP) and PKB Privat Bank SA in Switzerland, and an Andorran bank. Rosenberg was documented as the beneficial owner of accounts at UBP and the Andorran bank. She also signed false account opening documents that claimed she was a Colombian resident and not a U.S. citizen.

Rosenberg, as well as her relatives, did not file Reports of Foreign Bank and Financial Accounts (FBARS) disclosing their foreign financial accounts, as they were required to do. In addition, Rosenberg and her relatives continued to file false tax returns that omitted income generated by their offshore assets.

In or about 2017, as part of a scheme to continue to evade their U.S. tax and reporting obligations, Rosenberg and the family members divided the family’s assets and signed documents to make it appear that Rosenberg and a relative gifted the offshore assets to another relative after he had renounced his U.S. citizenship. Rosenberg and her relatives then tried to covertly transfer assets to Rosenberg in the United States and to conceal their ongoing and historical tax evasion. To do so, Rosenberg and her relatives, among other things, created fake loan and investment documents to make it appear that transfers to and from Rosenberg were loans and business investments.

*From 2010 through 2017, Rosenberg filed false tax returns that did not report income she earned from assets in the account she concealed at UBP. For the 2009 through 2017 tax years, unreported income belonging to Rosenberg and two of her co-conspirators totaled more than $5.5 million, causing a tax loss of $1,927,342.

Rosenberg is scheduled to be sentenced on May 30. She faces a maximum penalty of five years in prison as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Rosenberg previously pleaded guilty in the Eastern District of Texas to an information charging her with conspiracy to commit wire fraud related to a scheme to defraud the Army and Air Force Exchange Service (AAFES), by making and presenting false reports in order to avoid fully paying contractually required commissions. See United States v. Rosenberg, 4:24-cr-00062-ALM-AGD (E.D. Tex.)

Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division and U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida made the announcement.

IRS Criminal Investigation’s International Tax & Financial Crimes Unit is investigating the case. The Justice Department’s Office of International Affairs provided critical assistance in obtaining important evidence.

Senior Litigation Counsel Mark Daly and Stan Okula, and Trial Attorney Marissa Brodney of the Tax Division, as well as Assistant U.S. Attorney Ana Maria Martinez for the Southern District of Florida, are prosecuting the case.

*Paragraph has been updated to include additional information and context.

Source: United States Department of Justice Criminal Division

Today, the Justice Department, on behalf of the Environmental Protection Agency (EPA), dismissed a lawsuit against Denka Performance Elastomer LLC (Denka) concerning its neoprene manufacturing facility in LaPlace, Louisiana. The dismissal fulfills President Trump’s day one executive order, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” signed to eliminate ideological overreach and restore impartial enforcement of federal laws. Concurrently, EPA withdrew its referral of the case to the Justice Department to align with Administrator Lee Zeldin’s pledge to end the use of “environmental justice” as a tool for advancing ideological priorities.

The lawsuit, originally filed by the Biden Administration on Feb. 28, 2023, relied on the Clean Air Act’s rarely invoked “Emergency Powers” provision (42 U.S.C. § 7603). That statute authorizes EPA to seek immediate restraints on pollution sources presenting “an imminent and substantial endangerment” to public health or the environment. In an effort to satisfy this standard, the Biden-era complaint alleged a marginally increased risk of harm after prolonged exposure. The complaint did not allege that emissions from Denka’s LaPlace plant violated any regulatory air quality standard. The prior administration framed the case as part of its “ongoing effort to advance environmental justice in overburdened communities.” The Biden Administration EPA used its EJScreen tool to define such areas partly by the percentage of “people of color” present — a clear example of the racial preferencing now prohibited by President Trump’s executive order.

“Today’s dismissal reflects ENRD’s renewed commitment to enforce environmental laws as Congress intended — consistently, fairly and without regard to race,” said Acting Assistant Attorney General Adam Gustafson of the Justice Department’s Environment and Natural Resources Division (ENRD). “We do not regulate through litigation, nor do we stretch statutes beyond their plain meaning to advance political agendas.”

“The dismissal of this case is a step toward ensuring that environmental enforcement is consistent with the law,” said EPA Administrator Lee Zeldin. “While EPA’s core mission includes securing clean air for all Americans, we can fulfill that mission within well-established legal frameworks, without stretching the bounds of the law or improperly implementing so-called ‘environmental justice’.”

Denka’s LaPlace facility produces neoprene, a synthetic rubber essential for products like orthopedic braces, wetsuits and automotive components. Following a 2017 settlement with the State of Louisiana, Denka invested over $35 million to cut chloroprene emissions by 85 percent. Despite this progress, the Biden Administration sought a preliminary injunction to halt operations, a request effectively denied when the court deferred a hearing on the preliminary injunction to the bench trial.

On Feb. 21, ENRD reinstated enforcement principles which require that complaints be “well founded in existing law,” avoid “regulation by litigation,” and “seek relief authorized by . . . law.” By ending United States v. Denka, the Justice Department and EPA are delivering on President Trump’s promise to dismantle radical DEI programs and restore integrity to federal enforcement efforts.

Source: United States Department of Justice Criminal Division

A federal jury in Cleveland convicted a Texas man today for writing and deploying malicious code on his former employer’s network.

According to court documents and evidence presented at trial, Davis Lu, 55, of Houston, was employed as a software developer for the victim company headquartered in Beachwood, Ohio, from November 2007 to October 2019. Following a 2018 corporate realignment that reduced his responsibilities and system access, Lu began sabotaging his employer’s systems. By Aug. 4, 2019, he introduced malicious code that caused system crashes and prevented user logins. Specifically, he created “infinite loops” (in this case, code designed to exhaust Java threads by repeatedly creating new threads without proper termination and resulting in server crashes or hangs), deleted coworker profile files, and implemented a “kill switch” that would lock out all users if his credentials in the company’s active directory were disabled. The “kill switch” code — which Lu named “IsDLEnabledinAD”, abbreviating “Is Davis Lu enabled in Active Directory” — was automatically activated upon his termination on Sept. 9, 2019, and impacted thousands of company users globally. Lu named other code “Hakai,” a Japanese word meaning “destruction,” and “HunShui,” a Chinese word meaning “sleep” or “lethargy.” Additionally, on the day he was directed to turn in his company laptop, Lu deleted encrypted data. His internet search history revealed he had researched methods to escalate privileges, hide processes, and rapidly delete files, indicating an intent to obstruct efforts of his co-workers to resolve the system disruptions. Lu’s employer suffered hundreds of thousands of dollars in losses as a result of Lu’s actions.

The jury convicted Lu of causing intentional damage to protected computers, for which he faces a maximum penalty of 10 years in prison. A sentencing date has not been set. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Supervisory Official Matthew R. Galeotti of the Justice Department’s Criminal Division, Acting U.S. Attorney Carol M. Skutnik for the Northern District of Ohio, and Special Agent in Charge Gregory D. Nelsen of the FBI Cleveland Field Office made the announcement.

The FBI Cleveland Field Office investigated the case.

Senior Counsel Candina S. Heath of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Daniel J. Riedl and Brian S. Deckert for the Northern District of Ohio are prosecuting the case.

Source: United States Department of Justice Criminal Division

View the complaint affidavit.

Michael Charles Schena, 42, of Alexandria, Virginia, was arrested on criminal charges related to his alleged participation in a criminal conspiracy to gather, transmit, or lose national defense information.

According to court documents, Schena is employed by the U.S. Department of State (DOS) working out of DOS Headquarters in Washington, D.C. Schena held a top secret security clearance and had access to information up to the secret level within his DOS workspace. Beginning in or about April 2022, Schena allegedly communicated with people he met online through various communication platforms and provided them with information they were not authorized to receive. In return, Schena received payments. On Feb. 27, Schena allegedly used a cellphone to take images of multiple documents, which were displayed on the monitor of his classified computer and marked as “SECRET.” Schena then allegedly left work and returned to his home in Alexandria, where the cellphone was seized.        

Schena is charged with conspiracy to gather, transmit, or lose national defense information and faces a penalty of up to 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI Washington Field Office investigated the case with assistance from the FBI Richmond Field Office, the Department of Justice’s Office of Enforcement Operations, and the Department of State’s Diplomatic Security Service Office of Counterintelligence.

Assistant U.S. Attorneys Michael Ben’Ary and Gavin R. Tisdale for the Eastern District of Virginia and Trial Attorney Maria Fedor of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

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