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An experienced whistleblower attorney, successful trial attorney, former criminal prosecutor, and former reporter Representing whistleblowers reporting fraud on the Federal State Governments

IMG_0222-300x200Following allegations of fraudulent Medicaid claims, Acadia Healthcare has agreed to pay a $17 million settlement, according to a recent press release by the Department of Justice.

CRC Health operates its subsidiary, Acadia Healthcare, located in Tennessee with treatment centers in West Virginia. The treatment centers are certified to perform basic laboratory testing involving blood and urine. However, the settlement alleges that between 2012 and 2018, the treatment centers sent urine and blood samples to a San Diego laboratory for more complex testing. Then, the West Virginia based treatment centers billed Medicaid for the testing performed.

Acadia Healthcare submitted the claims through the Medicaid program in their area and received reimbursement fees for the tests. However, the San Diego laboratory was actually the center performing the tests and charged Acadia for their services. The Medicaid reimbursements were higher than the charges of the San Diego laboratory, resulting in Acadia Healthcare gaining around $8.5 million in the Medicaid scheme.

According to the Wall Street Journal and other news sources, The United StatesTreasury Department has changed how it calculates fines related to sanctions violations, which means larger penalties. The amount of the increases cannot be calculated yet. Treasury will no longer credit many fines paid to other government agencies as part of joint settlements. Two recent sanctions settlements fit the Treasury’s new approach: The Treasury and other agencies reached settlements totaling $1.1 billion with Standard Chartered Bank PLC, which was charged with violating U.S. sanctions, including those against Iran; and settlements totaling $1.3 billion reached with UniCredit Group SpA, which faced similar charges.

The Justice Department, the Federal Reserve and the New York State Department of Financial Services were part of those settlements. The U.K.’s Financial Conduct Authority also reached a separate settlement with Standard Chartered . In the settlements, the Treasury deducted penalties paid to other agencies from its own for matching conduct occurring over the same period of time. Gacki said the department was trying to balance its desire to avoid “unnecessary piling-on” with “a strategic use of its enforcement authorities.”

The Treasury Department issued new guidance on how companies should design effective sanctions compliance programs in May. The framework issued by the Treasury’s Office of Foreign Assets Control suggests that the agency wants companies to have an active sanctions compliance program, rather than a written policy alone, as the U.S. sanctions program becomes more dynamic and complex.framework_ofac_ccViolations of US sanction concerning foreign nations, including Iran, Cuba, North Korea and China are frequently the basis of whistleblower cases under The False Claims Act, which allows individuals with original information not known to the Government, to sue on behalf of the Government and if money are collected for the violations the whistleblower may collect a reward of up to 30% of what the government receives. Frequently the information known to employees of violating corporations is the only way in which the Government can find out about major violations including banks that do business with particular nations on the Treaury’s list. Here is the latest list of named nations with active US sanctions programs:

Active Sanctions Programs: Program Last Updated:
Balkans-Related Sanctions 02/03/2017
Belarus Sanctions 10/24/2018
Burundi Sanctions 06/02/2016
Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) 12/19/2018​​
Central African Republic Sanctions 12/13/2017
Counter Narcotics Trafficking Sanctions 05/23/2019
​Counter Terrorism Sanctions 06/12/2019
​Cuba Sanctions 06/04/2019
Cyber-related Sanctions ​12/19/2018
Democratic Republic of the Congo-Related Sanctions ​03/21/2019
Foreign Interference in a United States Election Sanctions 04​​/26/2019
​Global Magnitsky Sanctions 05/17/2019​​
Iran Sanctions 06/12/2019
Iraq-Related Sanctions ​12/27/2017
Lebanon-Related Sanctions ​07/30/2010
Libya Sanctions 11/19/2018
Magnitsky Sanctions ​05/16/2019
​Nicaragua-related Sanctions ​04/17/2019
Non-Proliferation Sanctions 06/07/2019
North Korea Sanctions  03/21/2019
Rough Diamond Trade Controls 06/18/2018
Somalia Sanctions ​07/19/2018
Sudan and Darfur Sanctions 06/28/2018
South Sudan-related Sanctions ​12/14/2018
Syria Sanctions 06/11/2019
Transnational Criminal Organizations 10/02/2018
Ukraine-/Russia-Related Sanctions 03/15/2019
Venezuela-Related Sanctions 06/06/​2019
Yemen-Related Sanctions 04/14/2015
Zimbabwe Sanctions ​04/12/2017
Click here for information on OFAC sanctions lists program tags and their definitions​

About santions on Iran:

  On November 5, 2018, the United States fully re-imposed the sanctions on Iran that had been lifted or waived under the JCPOA.  These are the toughest U.S. sanctions ever imposed on Iran, and will target critical sectors of Iran’s economy, such as the energy, shipping and shipbuilding, and financial sectors.  The United States is engaged in a campaign of maximum financial pressure on the Iranian regime and intends to enforce aggressively these sanctions that have come back into effect.
On November 5, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) posted to its website additional frequently asked questions (FAQs) that provide guidance on the sanctions that have been re-imposed.  In addition, OFAC amended FAQ 256 and FAQ 417, and archived outdated FAQs.
As part of the re-imposition of U.S. sanctions, in its largest ever single-day action targeting the Iranian regime, OFAC sanctioned more than 700 individuals, entities, aircraft, and vessels on November 5, 2018.  This action was a critical part of the re-imposition of the remaining U.S. sanctions that were lifted or waived in connection with the JCPOA.  For more information on this action, click here.
Additionally, on November 5, 2018, OFAC moved persons identified as meeting the definition of the terms “Government of Iran” or an “Iranian financial institution” from the List of Persons Blocked Solely Pursuant to E.O. 13599 (the “E.O. 13599 List”) to the SDN List and removed the E.O. 13599 List from its website.
Finally, OFAC also amended the Iranian Transactions Sanctions Regulations (ITSR), effective November 5, 2018 to, among other things, reflect the re-imposition of sanctions pursuant to certain sections of Executive Order 13846 and technical changes that remove references to the E.O. 13599 List.
Here is a summary from the Department of Justice about the recent billion dollar settlement with Standard Chartered Bank (SCB) relating to its charged violations of US sanctions against Iran:

Standard Chartered Bank (SCB), a global financial institution headquartered in London, England, has agreed to forfeiture of $240 million, a fine of $480 million, and to the amendment and extension of its deferred prosecution agreement (DPA) with the Justice Department for an additional two years for conspiring to violate the International Emergency Economic Powers Act (IEEPA).  This criminal conspiracy, lasting from 2007 through 2011, resulted in SCB processing approximately 9,500 financial transactions worth approximately $240 million through U.S. financial institutions for the benefit of Iranian entities. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu of the District of Columbia, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office, Chief Don Fort of the IRS Criminal Investigation (CI), and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.

The New York County District Attorney’s Office (DANY) is also announcing today that SCB has agreed to amend its DPA with DANY and extend for two additional years, and to pay an additional financial penalty of $292,210,160.  Under the amended DPA with DANY, SCB has admitted that it violated New York State law by, among other things, falsifying the records of New York financial institutions.  SCB has also entered into separate settlement agreements with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve), the New York State Department of Financial Services (DFS), and the United Kingdom’s Financial Conduct Authority (FCA) under which SCB shall pay additional penalties totaling more than $477 million.  The Justice Department has agreed to credit a portion of these related payments and, after crediting, will collect $52,210,160 of the fine, in addition to SCB’s $240 million forfeiture.

In connection with the conspiracy, a former employee of SCB’s branch in Dubai, United Arab Emirates (UAE), referred to as Person A, pleaded guilty in the District of Columbia for conspiring to defraud the United States and to violate IEEPA.  A two-count criminal indictment was unsealed today in federal court in the District of Columbia charging Mahmoud Reza Elyassi, an Iranian national, 49, and former customer of SCB Dubai, with participating in the conspiracy.

“Today’s resolution sends a clear message to financial institutions and their employees: if you circumvent U.S. sanctions against rogue states like Iran—or assist those who do—you will pay a steep price,” said Assistant Attorney General Benczkowski.  “When a global bank processes transactions through the U.S. financial system, its compliance program must be up to the task of detecting and preventing sanctions violations—and when it is not, banks have an obligation to identify, report, and remediate any shortcomings.  The Justice Department is committed to protecting our U.S. financial system and will continue to hold financial institutions and individuals to account when they violate U.S. sanctions laws.”

“SCB and the individuals whose charges were unsealed today undermined the integrity of our financial system and harmed our national security by deliberately providing Iranians with coveted access to the U.S. economy,” said U.S. Attorney Liu.  “The financial penalty announced today leaves no doubt that repeat corporate offenders with deficient compliance programs will pay a steep price.  When bank employees and customers conspire to violate U.S. sanctions and subvert our national security, we will bring them to justice no matter where they reside or operate.”

“U.S. sanctions laws exist to protect our national security and the integrity of our financial systems,” said FBI Assistant Director in Charge Sweeney.  “Global banks that facilitate transactions through our financial institutions have to play by these rules, plain and simple.  Allowing hostile nations access to our economy is dangerous business.  The deferred prosecution agreement and charges announced today make it abundantly clear that any alleged violation of IEEPA, whether on behalf of an individual or entity, will not be taken lightly.”

“The financial penalty announced today should dissuade other financial institutions around the world from thinking they can circumvent U.S. sanctions by moving money around the world through various institutions and in various forms,” said IRS-CI Chief Fort.  “Following complex money trails is what we do—so too is holding those accountable who try to avoid following the law.”

“Our office’s unique jurisdiction and expert personnel have again enabled us to deliver hundreds of millions in ill-gotten gains to the People of New York while contributing to America’s longstanding effort to promote democratic values around the world,” said Manhattan District Attorney Vance.  “We are honored and privileged to collaborate in this shared endeavor with the supremely talented public servants of the U.S. Departments of Justice and Treasury, the New York Department of Financial Services, and the Federal Reserve Bank of New York.”

A two-count felony criminal information was filed today in the District of Columbia charging SCB with illegally conspiring to violate IEEPA.  The first count alleges SCB’s participation in a criminal conspiracy from 2001 through 2007; the United States first charged SCB with this illegal conduct on Dec. 10, 2012, and under the terms of a DPA entered the same day, the government agreed to defer prosecution and SCB agreed to pay a financial penalty of $227 million.  The second count alleges SCB’s participation in a criminal conspiracy to violate IEEPA from 2007 through 2011.  This latter conspiracy resulted in SCB intentionally processing U.S. dollar transactions through the U.S. financial system for the benefit of Iranian individuals and entities worth approximately $240 million.  In the amended DPA, SCB admitted and accepted responsibility for its criminal conduct, agreed to extend the term of the agreement for an additional two years and, among other things, agreed to additional cooperation, compliance and disclosure obligations.

As part of the amended DPA announced today, SCB admitted that, from 2007 through 2011, two former employees of its branch in Dubai, willfully conspired to help Iran-connected customers conduct U.S. dollar transactions through the U.S. financial system for the benefit of Iranian individuals and entities.  One of these Iran-connected customers was Elyassi, an Iranian national who operated business accounts with SCB’s Dubai branch while residing in Iran.  SCB’s former employees helped Elyassi manage these accounts, concealed their Iranian connections, and facilitated foreign currency transactions in U.S. dollars.  SCB’s former employees knew that Elyassi’s business organizations operated from Iran and conducted U.S. dollar transactions for the benefit of Iranian interests, and helped Elyassi disguise his Iranian connections to avoid suspicion.

According to the indictment unsealed today, Elyassi and his co-conspirators registered numerous supposed general trading companies in the UAE, and used those companies as fronts for a money exchange business located in Iran.  Between November 2007 and August 2011, Elyassi used a business account at SCB’s Dubai branch to cause U.S. dollar transactions to be sent and received through the U.S. financial system for the benefit of individuals and entities ordinarily resident in Iran in violation of U.S. economic sanctions.  The charges in the indictment as to Elyassi are merely allegations, and Elyassi is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

SCB admitted to processing approximately 9,500 U.S. dollar transactions through the United States totaling approximately $240 million on behalf of Elyassi’s companies between 2007 and 2011.  More than half of these U.S. dollar transactions were the result of deficiencies in SCB’s compliance program which allowed customers to request U.S. dollar transactions from within sanctioned countries, including Iran.

Since mid-2013, SCB has engaged in significant remediation, including the comprehensive enhancement of its U.S. economic sanctions compliance program and significant improvements to its financial crime compliance program.  Once presented with evidence of potential post-2007 sanctions violations, SCB provided substantial cooperation in the government’s investigation, including by producing significant evidence of criminal wrongdoing perpetrated by its employees and customers.

This matter was investigated by the FBI’s New York Field Office and the IRS-CI’s Washington D.C. Field Division.  The cases are being prosecuted by the Criminal Division’s Money Laundering and Asset Recovery Section’s Bank Integrity Unit and the U.S. Attorney’s Office for the District of Columbia.  Trial Attorney Jennifer Wine of the Bank Integrity Unit and Assistant U.S. Attorneys Michael Friedman and Peter Lallas of the District of Columbia are handling the matters.

The Bank Integrity Unit investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions.  The Unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

The New York County District Attorney’s Office conducted its own investigation in conjunction with the Justice Department, including Assistant District Attorneys Jose Fanjul and Kevin Wilson serving as Special Assistant U.S. Attorneys in the District of Columbia.  The Justice Department expressed its gratitude to OFAC, the Federal Reserve, DFS, and the FCA.  The Justice Department’s Office of International Affairs provided assistance.

Yesterday I wrote about the CEO of a clothing company who has been charged criminally by the U.S. Attorney in the Southern District of New York for falsely stating the value of children’s clothing imported from China, to evade U.S. customs tariffs. A quick review of recent criminal and civil cases reveals that the Department of Justice is now pursuing cases involving customs tariff fraud particularly as so many goods are imported from China and so many companies are creating ways of evading the tariffs placed on those goods. The issue has become even more prominent since tariffs have been hiked recently. Here are some other cases:

  • The Virginia based home furnishing company Bassett Mirro Company paid the U.S. $10.5 million to settle allegations that it knowingly made statements on customs declarations to avoid paying duties. This involved bedroom furniture that the company imported from China.
  • Toyo Ink SC Holdings Co Ltd paid $45 million to settle charges of tariff evasion by knowingly misrepresenting the country of origin for a particular colorant product. Toyo said it was made in Japan and Mexico when it was actually imported from China.

Joseph Bailey, CEO of a children’s apparel company called Stargate apparel Inc and Rivstar Apparel Inc. has been charged with participating in a scheme to defraud I.S. Customs by understating the true value of children’s apparel made in China and resulting in a loss to the United States of over $1 million in tariff revenue. Stargate The information came to light as a result of a whistleblower case filed under seal in Apil of this year.  The case is being prosecuted by United States Attorney Geoffrey S. Berman U.S. Attorney for the Southern District of New York.  One charge against Bailey carries a maximum sentence of 20 years in prison.

According to the allegations in the indictment, from 2007 to 2015 Bailey and his companies purchased much of its products from a manufacturer in China. The indictment says they engaged in a double invoicing scheme in which they would receive two sets of invoices from the manufacturer for the same goods. One was referred to as the “pay by” invoice and this was significantly higher and had the actual price paid by the company. The other invoice had significantly lower prices for the goods and was presented to Customs and Border Patrol. The allowed Stargate to lower the amount of customs duties. Then in 2010 Bailey and Stargate created a new scheme, says the indictment in which the fraud involved invoicing “sample” goods which the manufacturer would send two set s of invoices one with the true price and one with a lower price.  The allegations assert that other manufacturers were also involved.

Congress has enacted a new law which has strong protections for tax whistleblowers which protects whistleblower privacy, advances the speed of investigation and completion of the process and builds strong new protections against whistleblower retaliation.  The changes in the IRS Whistleblower program include:

*Authorizing the IRS to communicate with whistleblowers during their claims period;

*Protecting taxpayer privacy;

IMG_0209-300x200A whistleblower in Oklahoma, Jennifferr Baird, filed a complaint against the hospital she worked at as a registered nurse for fraudulent Medicaid billing practices. Following the filing, Oklahoma Heart Hospital agreed to settle the allegations with a $2.8 million fee.

Baird was in charge of a team of seven staff members and alleged that for at least seven years the hospital consistently billed Medicaid at inpatient rates, even if the patient was being treated as an outpatient.

“First, OHH routes almost all of its Medicaid patients to inpatient treatment, when many should be classified as outpatient; in doing so OHH is able to charge significantly larger fees for the same treatment. The fraud is evidenced by the fact that OHH does not treat its Medicare or privately insured patients similarly.”, the lawsuit stated.

IMG_0201-300x200The Regulation Best Interest is a new rule proposed by the SEC which requires stockbrokers to disclose any conflicts of interest via a “new relationship summary” form. This regulation also bans any contests between brokers and dealers that offer sales-based rewards.

This rule was proposed by the SEC over a year ago and was finally approved in a 3 to 1 vote earlier this month. Initially, this regulation was opposed by investor advocates who stated that broker innovation and drive may be stifled by the confinement. However, supporters from the broker and dealer side expect the regulation to improve the current process and standards of the industry.

SEC Chairman, Jay Clayton, stated that previous regulations for this industry were not strict enough to protect investors. He also noted that the new rule should not affect innovation in this space. “You do a good job managing money, you should get paid,”, he explained.

IMG_0197-300x200Large agricultural nations, including the EU, China, and Brazil, are becoming more and more inclined to ban pesticides that pose a threat to humans and the environment, while the US maintains approval for many of the same products.

A new report published on BMC identified 500 pesticides and analyzed their approval status across the largest agricultural nations. The study found that several of the pesticides approved for use in the United States are currently banned or in the process of being banned by the EU, China, and Brazil.

The report notes that in 2016 alone, the United States used 322 million pounds of pesticides that have been banned in the EU, 26 million pounds of pesticides banned in Brazil, and 40 million pounds of pesticides banned in China. Across all agricultural nations, the EU takes the lead in the number of pesticides that have been banned, meanwhile the United States offers the worst performance in terms of pesticide regulation.

IMG_0186-300x225According to a new report published in the Environmental Science & Technology journal, Americans ingest between 74,000 to 121,000 microplastic particles each year. However, researchers estimated that these numbers are likely much higher as some forms of microplastics are harder to track. But how does plastic end up in the air we breathe?

Microplastics can make their way into the air in a variety of ways. These small particles typically start out as larger plastic pieces, however eventually break down and become invisible to the human eye. From there they can float through the air and are easily inhaled. Microplastics can also be consumed by landing on food or being ingested by the animals that we eat.

According to the study, substantial data was collected from seafood, beer, water, air, and added sugars, where microplastics were commonly found. However, beef, poultry, vegetables, and grains were found to be free of plastic particles. The highest concentration of microplastics was found in bottled water, air, and seafood. However, researchers of the study note that only a small number of foods were tested, meaning the concentrations of plastic in other types of food that we consume is still unknown.

According to a Bloomberg news report, Vietnam said on Sunday that it found dozens of fake product-origin certificates and illegal transfers by companies evading U.S. tariffs on everything from agriculture to textiles and steel. It was the first time an Asian government has publicly said this was happening since the trade war between the U.S. and China started.

Vietnam pledged to increase penalties on trade-related fraud. U.S. trading partners including Vietnam are being asked to stop on illicit exports.

Vietnam is concerned it may be punished by the U.S. for allowing mislabeled Chinese products to flow to America, Do Van Sinh, a standing member of the National Assembly’s economic committee, was quoted as saying in the government’s statement.