Category: US Department of Justice

Source: United States Department of Justice Criminal Division

The Justice Department, Department of Labor (DOL), Federal Trade Commission (FTC) and National Labor Relations Board (NLRB) have signed an interagency memorandum of understanding (MOU) to further communication and coordination between the agencies to protect American workers and promote fair competition in labor markets.

Acting Secretary of Labor Julie Su, Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division, FTC Chair Lina Khan and NLRB General Counsel Jennifer Abruzzo all signed the MOU as part of the agencies’ coordinated efforts to ensure that mergers between employers do not threaten harm to competition for workers.

“Workers are the backbone of our economy, and it’s critical that the impact on workers and the labor market are given due consideration when analyzing mergers and acquisitions,” said Acting Secretary Su. “The Department of Labor is committed to providing information and data to strengthen the Department of Justice and Federal Trade Commission’s understanding of labor markets and we look forward to deepening our work to protect workers by promoting fair competition in the labor markets.”

“Competition in labor markets means higher wages, better working conditions and more opportunities for workers and their families,” said Assistant Attorney General Kanter. “Our partnership with the FTC, NLRB and DOL will help us identify and take action against mergers that threaten to harm competition for workers. The Antitrust Division did just that when we successfully challenged a merger between book publishers that would have decreased compensation for authors. Promoting workers’ right to earn a fair wage is central to the mission of each of our agencies, and we look forward to deepening our collaboration together.”

“Congress passed the antitrust laws to ensure that all Americans benefit from free and fair competition. When businesses vigorously compete for workers, workers enjoy better wages and working conditions as well as greater opportunity and freedom,” said FTC Chair Khan. “By deepening partnerships with the National Labor Relations Board, Department of Labor and Justice Department’s Antitrust Division, the FTC will keep building on our whole-of-government efforts to ensure that all Americans can get a fair shot in our economy, free from unlawful coercion.”

“Taking a whole-of-government approach to enforcing workers’ rights is critically important, and we’re thrilled to be partnering with the antitrust agencies to enhance their ability to obtain important information on the potential effects of mergers on workers,” said NLRB General Counsel Abruzzo.

This MOU supplements existing bilateral agreements between the Antitrust Division and DOL and the Antitrust Division and NLRB. Key provisions of the MOU support the Antitrust Division and FTC’s (together, the Antitrust Agencies) work to review mergers that may threaten harm to competition. Those resources include the DOL and NLRB’s (together, the Labor Agencies) organizational contacts and experts, data on labor markets and jobs and enforcement information.

In addition, the MOU supports further training, meetings and coordination among all four signatories. Through this MOU, the Antitrust Agencies and Labor Agencies commit to working together to ensure the Antitrust Agencies have access to all relevant and appropriate information when they evaluate the potential impacts on labor markets from mergers and acquisitions between businesses.

Source: United States Department of Justice Criminal Division

The City of Atlanta’s former chief financial officer (CFO) was sentenced today to 36 months in prison, three years of supervised release, and ordered to pay restitution in the amount of $177,197.48 and a fine of $10,000 for abusing his position to steal public money and obstruct the IRS.

According to court documents, from 2011 to 2018, Jimmie Anthony “Jim” Beard, 60, of Fort Lauderdale, Florida, oversaw the City of Atlanta’s Department of Finance, in which his primary responsibility was to manage the city’s financial condition. At least as early as 2015, Beard devised and executed a scheme to use his authority as CFO to obtain money and property from Atlanta for his own use, including to pay for thousands of dollars in personal travel expenses for himself, his family, and his travel companions, and to buy and possess restricted machine guns.

Further, while CFO, Beard submitted years of fraudulent tax returns in which he claimed personal business expenses to lower what he owed in taxes. During a 2015 audit of one of those returns, Beard lied to the IRS and obstructed auditors by submitting receipts for transactions that were actually paid by the City of Atlanta in connection with Beard’s official duties. The investigation later revealed that Beard had no personal business, and years of tax deductions were based on a lie. 

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Ryan Buchanan for the Northern District of Georgia; Executive Director Michael Nordwall of the FBI’s Criminal, Cyber, Response, and Services Branch; Special Agent in Charge Keri Farley of the FBI Atlanta Field Office; Special Agent in Charge Demetrius Hardeman of the IRS Criminal Investigation (IRS-CI) Atlanta Field Office; and Assistant Special Agent in Charge Alicia D. Jones of ATF Atlanta Field Division made the announcement.

The FBI, IRS-CI, and ATF investigated the case.

Trial Attorney Trevor Wilmot of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Garrett Bradford, Tiffany Johnson, and former Assistant U.S. Attorney Jeffrey Davis for the Northern District of Georgia prosecuted the case.

Source: United States Department of Justice Criminal Division

A Mississippi seafood distributor and two company managers pleaded guilty today to conspiring with others to mislabel seafood and to commit wire fraud by marketing inexpensive and frozen imported substitutes as more expensive and premium local species. 

Quality Poultry and Seafood Inc. (QPS), the largest seafood wholesaler on the Mississippi Gulf Coast, has agreed to pay the United States $1 million in forfeitures and a criminal fine of $150,000. QPS sales manager Todd A. Rosetti and business manager James W. Gunkel, both of Ocean Springs, Mississippi, also pleaded guilty to misbranding seafood to facilitate QPS’ fraud. 

QPS admitted to participating in this fish substitution scheme from as early as 2002 and continuing through November 2019. The indictment alleges that QPS recommended and sold to its restaurant customers foreign-sourced fish that could serve as convincing substitutes for the local species the restaurants advertised on their menus. QPS also labeled the cheap imports that it sold to customers at its own retail shop and café as premium local fish.

“QPS and company officials went to great lengths in conspiring with others to perpetuate fraud for more than a decade, even after they knew they were under federal investigation,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “Mislabeling seafood harms local wholesalers and fishermen who compete to sell locally sourced, premium fish in a market unfairly flooded with less expensive fish, frozen and imported from overseas.”

“When imported substitutes are marketed as local domestic seafood, it depresses the value of authentic Gulf Coast seafood, which means that honest local fishermen and wholesalers have a harder time making a profit,” said U.S. Attorney Todd W. Gee for the Southern District of Mississippi. “This kind of mislabeling fraud hurts the overall local seafood market and rips off restaurant customers who were paying extra to eat a premium local product. These convictions should serve as a warning: restaurants and wholesalers will face criminal prosecution if they are not honest with customers about what they are actually buying.”

“U.S. consumers expect their seafood to be correctly identified. When sellers purposefully substitute one fish species for another, they deceive consumers and cause potential food safety hazards to be overlooked or misidentified by processors or end users,” said Special Agent in Charge Justin Fielder of the Food and Drug Administration (FDA)’s Office of Criminal Investigations, Miami Field Office. “We will continue to investigate and bring to justice those who put profits above public health.”

The indictment alleges that even after agents from the FDA executed a criminal search warrant at QPS to investigate its sale of mislabeled fish, QPS continued for over a year to sell frozen fish imported from Africa, South America and India for use as substitutes for local premium species.

Mary Mahoney’s, which pleaded guilty in May, admitted that between December 2013 and November 2019, it fraudulently sold, as local premium species, approximately 58,750 pounds (over 29 tons) of fish that was not the species identified on its menu. QPS supplied seafood to Mary Mahoney’s and many other restaurant restaurants and retailers.

QPS, Rosetti and Gunkel will be sentenced on Dec. 11. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

FDA’s Office of Criminal Investigations is investigating the case.

Senior Trial Attorney Jeremy F. Korzenik of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Andrea Jones for the Southern District of Mississippi are prosecuting the case.

Source: United States Department of Justice Criminal Division

A California man was sentenced today to 37 months in prison for his role in a $2.8 million fraud scheme in which Medicare was billed for hospice services that the patients did not need.

According to court documents and evidence presented at trial, John Thropay, M.D., 75, of Arcadia, was the medical director of multiple hospice companies, including Blue Sky Hospice Inc., located in Van Nuys, California. From October 2014 to March 2016, Thropay fraudulently certified Medicare patients of Blue Sky Hospice as having terminal illnesses that the patients did not have so that the company could bill Medicare for hospice services. In 2015, Thropay was listed as attending provider for more hospice claims paid by Medicare than any other provider in the nation.

Thropay was convicted at trial in the Central District of California of one count of conspiracy to commit health care fraud and four counts of health care fraud on Feb. 15.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, U.S. Attorney E. Martin Estrada for the Central District of California, Acting Assistant Director in Charge Akil Davis of the FBI Los Angeles Field Office and Special Agent in Charge Timothy DeFrancesca of the Department of Health and Human Services, Office of Inspector General (HHS-OIG)’s Los Angeles Regional Office made the announcement.

The FBI and HHS-OIG investigated the case.

Assistant Deputy Chief Niall M. O’Donnell and Trial Attorney Eric C. Schmale of the Criminal Division’s Fraud Section prosecuted 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

The founder and chief executive officer of a California-based company that marketed stem cell-based products linked to multiple hospitalizations pleaded guilty today to a felony violation of the Federal Food, Drug and Cosmetic Act.

John W. Kosolcharoen, 53, most recently of Orange County, California, pleaded guilty to introducing an unapproved new drug into interstate commerce with the intent to defraud and mislead. Kosolcharoen is currently in custody serving a sentence for a separate, unconnected conviction. U.S. District Judge Otis D. Wright II for the Central District of California presided over the hearing pursuant to a plea agreement with the government. The court set Kosolcharoen’s sentencing for Sept. 23.

According to court documents, beginning in 2016, Kosolcharoen created two companies, Liveyon LLC and Genetech Inc., to manufacture and distribute injectable stem cell products made from human umbilical cord blood. Liveyon marketed the products under different brand names, including “ReGen.” In pleading guilty, Kosolcharoen admitted that he and others misrepresented ReGen as suitable for the treatment of a variety of conditions, such as lung and heart diseases, autoimmune disorders, Alzheimer’s disease, Parkinson’s disease and others. Liveyon marketed the products throughout the United States until about April 2019 using advertising materials that contained multiple false and misleading statements about their purported safety and effectiveness.

In recent years, the U.S. Food and Drug Administration (FDA) has warned consumers that patients seeking cures and remedies for serious diseases and conditions may be misled about unapproved stem cell products that are illegally marketed, have not been shown to be safe or effective, and, in some cases, may have significant safety issues that put patients at risk. Stem cell products are regulated by FDA, and generally they must have FDA approval before being introduced into interstate commerce.

As part of the plea agreement, Kosolcharoen admitted that to mislead FDA about Liveyon’s activities, he directed Liveyon’s purchase orders to falsely state that the stem cell products were being sold “for research purposes only.” In 2018, FDA and the Centers for Disease Control and Prevention (CDC) received reports of patients in multiple states requiring hospitalization for bacterial infections after receiving Liveyon products. Kosolcharoen admitted that he and others fraudulently induced customers into purchasing stem cell-derived Liveyon products by, among other things, misleading the public about the cause and severity of adverse events suffered by Liveyon patients, and falsely reporting and concealing material facts regarding the outcome of an FDA inspection of Genetech. According to FDA records, that inspection documented evidence of significant deviations from good manufacturing and tissue practices.

“Unapproved stem cell treatments not only endanger public health but also exploit the hopes of patients who seek relief from the most serious of diseases,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “The Department of Justice is committed to safeguarding the public from these schemes and will vigorously pursue legal action to hold accountable those who unlawfully market and sell these unproven therapies.”

“This defendant recklessly put people’s lives in danger, giving false hope to patients with serious illnesses,” said U.S. Attorney Martin Estrada for the Central District of California. “Today’s guilty plea shows that we will hold accountable corporate executives and healthcare professionals who put profits over patients.”

“We are grateful for the work by the Department of Justice to hold accountable establishments that prey upon vulnerable populations by marketing potentially dangerous stem cell products with false and misleading claims about their safety and effectiveness,” said Director Peter Marks, M.D., Ph.D. of FDA’s Center for Biologics Evaluation and Research.

“When unscrupulous providers offer umbilical cord blood stem cell products and treatments that are both unapproved and unproven, they put consumers’ health at risk, and multiple users of this firm’s products in fact suffered adverse events,” said Special Agent in Charge Robert Iwanicki of FDA Office of Criminal Investigations Los Angeles Field Office. “FDA will continue to investigate and bring to justice those who endanger the public’s health for material gain.”

“This investigation was a joint effort between multiple federal agencies and state and local health departments to quickly put a stop to the distribution of unsafe, contaminated products,” said Director Michael Bell, M.D. of CDC’s Division of Healthcare Quality Promotion. “The rapid response by our public health system identified products marketed as stem cell treatments to be the source of serious infections in dozens of patients. Our message to all consumers and providers is to heed the warning against the use of unapproved products like these with unproven claims of effectiveness for conditions like joint disease, chronic pain, or COVID-19. Please don’t let products like these put you or your patients’ health at risk.”

FDA’s Office of Criminal Investigations, FBI, Amtrak Office of Inspector General, Defense Criminal Investigative Service, Department of Health and Human Services Office of Inspector General, Department of Labor Employment Benefits Security Administration and California Department of Health Care Services investigated the case.

Assistant U.S. Attorneys Mark Aveis and David Chao for the Central District of California, Assistant Director Ross S. Goldstein and Trial Attorneys Meredith B. Healy, Kathryn A. Schmidt and Peter J. Leininger of the Justice Department’s Consumer Protection Branch are prosecuting the case.

Additional information about the Consumer Protection Branch and its enforcement efforts can be found at www.justice.gov/civil/consumer-protection-branch.