Articles Posted in Whistleblower Cases

 Wagdy Guirguis and Michael Higa have been convicted of conspiracy to defraud the United States .In addition to the conspiracy conviction, Guirguis was also convicted of three counts of filing false corporate income tax returns, one count of failure to file a corporate income tax return, three counts of tax evasion, one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws and one count of witness tampering. Higa was convicted of the conspiracy and one count of aiding and assisting in the preparation of a false tax return for one of Guirguis’ business entities. The convictions arise from a scheme to divert funds from Guirguis’ business entities for his own personal benefit and to avoid the payment of federal employment and income taxes.

“Employers who withhold employment taxes from their employees’ paychecks and choose to pocket those funds violate the trust of their employees and the United States,” said Principal Deputy Assistant Attorney General Zuckerman. “The Department of Justice will continue to identify and prosecute employment tax offenders, ensuring that such businesses and executives are held to account and do not gain an unfair advantage over honest employers who follow the law and pay their fair share.”

“Mr. Guirguis owed the Internal Revenue Service employment taxes and with the help of Mr. Higa, conspired to obstruct the Internal Revenue Service’s attempts to collect the tax by concealing income using a nominee entity and preparing false corporate and individual income tax returns,” said Acting Special Agent in Charge Troy Burrus. “The defendants’ actions to obstruct the Internal Revenue Service’s collection efforts are very serious. IRS-Criminal Investigation will continue to pursue employers, who collect these taxes and use the funds for personal gain.”

UCLA researchers using a unique genetic sequencing test say that their work reveals that Sushi mislabeling is pervasive. The new monitoring project of UCLA researchers and partners aims to take “fake sushi” off Los Angeles diners’ plates. The Los Angeles Seafood Monitoring Project team — which includes university researchers, students, sushi restaurants and government regulators — is working to reduce sushi fraud and the mislabeling of fish.

Since April, scientists along with 80 UCLA students and several others at Loyola Marymount University and Cal State University, Los Angeles, have been purchasing small pieces of sushi  monthly from 10 restaurants. Back in the laboratory, they extract DNA and analyze the fish.

The researchers and the students, who are enrolled in an introduction to marine biology course taught by lecturer Timery DeBoer, study the DNA to distinguish one fish species from another using a tool called DNA barcoding. One example is red snapper often sold is a fish called red sea bream.

Jacklyn Price, the owner of two Detroit health clinics was sentenced to 13 years in prison for her role in an $8.6 million scheme involving fraudulent Medicare claims.  Price owned Patient Choice Internal Medicine and Metro Mobile Physicians, two Detroit-based Medicare providers. Reports say Price and several others had a scheme of falsified claims for home health care and other physician services that were obtained through kickbacks, weren’t medically necessary, provided by an unlicensed physician or weren’t performed. The defendants offered to pay kickbacks and bribes in the form of cash payment and prescription narcotics to Medicare beneficiaries in exchange for the use of their Medicare beneficiary numbers, according to a grand jury indictment. Price specifically would provide prescriptions for medically unnecessary controlled substances, including oxycodone, to Medicare beneficiaries. She then would submit claims for services purportedly provided by Metro Mobile and Patient Choice that were medically unnecessary and not provided to those beneficiaries, according to the federal complaint.

Price pleaded guilty in April 2017 to one count of conspiracy to commit health care fraud and one count of health care fraud. Her  co-defendant, Millicent Traylor, 47, of Detroit, was ordered in September to serve more than 11 years in prison. According to evidence presented at trial, Traylor and co-conspirators worked to defraud the program through fake home health and physician claims from 2011-16. The evidence revealed they conspired to cause Medicare to be billed for services never rendered, but falsified medical records and signed false documents to make it appear they were. Traylor was convicted in May 2018 of one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive health care kickbacks, and five counts of health

Three Companies Agree to Plead Guilty and Pay a Total of $236 Million in Criminal Fines and Civil DamagesS outh Korea-based companies SK Energy Co. Ltd., GS Caltex Corporation, and Hanjin Transportation Co. Ltd. have agreed to plead guilty to criminal charges and pay criminal and civil fines for their involvement in a decade-long bid-rigging conspiracy that targeted contracts to supply fuel to United States Army, Navy, Marine Corps, and Air Force bases in South Korea, the Department of Justice announced today.  South Korean petroleum and refinery companies and their agents, including the defendants and their co-conspirators, participated in a combination and conspiracy to suppress and eliminate competition during the bidding process for these fuel supply contracts.  SK Energy, GS Caltex, and Hanjin have agreed to cooperate with the department’s ongoing criminal investigation.  The plea agreements are subject to court approval.
In separate civil resolutions, SK Energy, GS Caltex, and Hanjin have agreed to pay a total of approximately $154 million to the United States for civil antitrust and False Claims Act violations related to the bid-rigging conspiracy.  These settlements reflect the important role of both Section 4A of the Clayton Act and the False Claims Act to ensure that the United States is fully compensated when it is the victim of anticompetitive conduct.

The Criminal Case:

Offshore art purchaser Porsal Equities Ltd. will pay $10.75 Million for tax fraud in connection with over $50 million of artwork and other goods purchased in New York from prominent art institutions. The settlement is the latest in the Attorney General’s continuing investigation into the abuse of resale certificates in the purchase and sale of artwork.

From 2010 through 2015, Porsal Equities Ltd., a company based in the British Virgin Islands, certified it was exempt from paying sales tax on the basis that the art was purchased for resale. In reality, Porsal Equities purchased the artwork for personal use, including for display at New York City apartments belonging to the company’s sole director. Porsal Equities also failed to pay use tax on artwork purchased outside New York and shipped into New York for display at the same apartments.

New York law requires sellers of goods to charge sales tax on sales of goods. A purchaser may claim an exemption where it is also a seller that is purchasing retail property exclusively for resale. In such cases, the purchaser may submit a document known as a resale certificate to certify its intent to purchase for resale. If, after purchase, the purchaser ends up using the goods it initially bought exclusively for resale, then it must pay a compensating use tax at the same aggregate rate as the sales tax. Use tax may also be due where state sales tax was not collected at the time of purchase because property was delivered outside the state, but the property was subsequently used within the state.

 A Greensboro woman was sentenced Thursday to more than three years in prison for making fraudulent Medicaid claims in 2013 and 2014.

 Renee Christine Borunda, 36,  who managed a behavioral healthcare company will also have to pay back more than $225,000 to the  Medicaid program. She pleaded guilty to conspiracy to commit health fraud conspiracy and aggravated identity theft, according to a news release from the U.S. Attorney’s Office of the Eastern District of N.C.  In 2013 and 2014, she used one of the company’s therapist’s personal information to submit fraudulent electronic claims which were submitted from two different companies. The claims falsely represented that the therapist had provided $225,339.08 worth of behavioral services to over 200 different Medicaid recipients who lived in Beaufort, Edgecombe, Greene, Guilford, Lenoir, Mecklenburg, Pitt, and Wilson Counties. No such services were rendered. The therapist was unaware that her information was being used to commit fraud.

In August of this year, former defense contractor from Tennessee was setenced 41 months in federal prison for selling Chinese boots to the military withfraudulent “Made in the USA” labels. Vincent Lee Ferguson, the former president of Wellco Enterprises, pleaded guilty to his part in the fraud conspiracy, according to a U.S. Department of Justice news release. Wellco’s former Senior Vice President of Sales, Matthew Lee Ferguson, 41, of Geneva, Illinois, and former Director of Marketing and Communications, Kerry Joseph Ferguson, 36, of Houston, Texas, were sentenced in June 2018 to each serve six months in federal prison for the same crime.Wellco was a major manufacturer and supplier of military footwear to the U.S. Department of Defense (DoD) and to civilian customers. Over several years, the Department of Defense paid over $138 million to Wellco for the supply of combat boots.   According to the indictment, Wellco deceptively sold sell those boots to DoD, government contractors, and the general public as “Made in the USA” and as compliant with the Berry Amendment and the Trade Agreements Act (TAA).

Wellco required the Chinese manufacturer acility to include “USA” on labels of boot uppers. Two shipments of these deceptively marked boots were seized by the U.S. Department of Homeland Security’s Customs and Border Protection.

These activities violated the federal Berry Amendment, which bars the Defense Department from buying foreign-made clothing.  The Berry Amendment states that the Department of Defense may not purchase any food, clothing and materials used to make clothing, tents and other goods that were not produced in the United States. Representing foreign made goods as American made qualifies as a False Claims Act violation as the vendor certifies that the products conform with all contract provisions.

The Food and Drug Administration has come under harsh criticism for approving a painkiller called Dsuvia which is 1,000 times stronger than morphine.  FDA commissioner Scott Gottlieb, MD, addressed the timing in a statement released late last week. “The crisis of opioid addiction is an issue of great concern for our nation,” he said. “Addressing it is a public health priority for the FDA. The agency is taking new steps to more actively confront this crisis while also paying careful attention to the needs of patients and physicians managing pain.”

Critics cite the fact that the opioid epidemic is still rising and has resulted in the deaths of over 72,000 people in the U.S.

Dsuvia is taken under the tongue and is a synthetic opioid that is delivered through a disposable, pre-filled, single-dose applicator, the FDA says. It is restricted to being used in certified medically supervised healthcare settings like hospitals, surgical centers, and emergency departments. Dsuvia works like  morphine and other opioids do by binding to opioid receptors in the body to block pain . However, it is 1,000 times stronger.

The Justice Department announced today that Northrop Grumman Systems Corporation (NGSC) has agreed to settle civil allegations that it violated the False Claims Act (FCA), 31 U.S.C. §3729, by overstating the number of hours its employees worked on two battlefield communications contracts with the United States Air Force.  Under the settlement, NGSC, headquartered in Falls Church, Virginia, will make a payment of $25.8 million, which, combined with earlier repayments, will result in a civil recovery of approximately $27.45 million.

The Air Force entered into two contracts with NGSC for battlefield communications services: the Battlefield Airborne Communications Node contract and the Dynamic Re-tasking Capability contract.  Today’s settlement resolves allegations that NGSC billed the Air Force for labor hours purportedly incurred between July 1, 2010, and December 31, 2013, by individuals stationed in the Middle East who had not actually worked the hours claimed.  NGSC also entered into a separate agreement with the Criminal Division of the U.S. Attorney’s Office for the Southern District of California related to these contracts under which it has agreed to forfeit an additional $4.2 million.

The civil settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of California, the Defense Contract Audit Agency, the Air Force Office of Special Investigations, the Defense Criminal Investigative Service, and the Air Force Materiel Command Law Office Fraud Division.

A federal agency, the National Toxicology Program has released the results of the largest experiments to date and it has found evidence that radio waves from some type of cellphones could raise the risk of development of brain cancer. The study was performed on rats but some researchers point out that the implications are significant as billions of people are using cell phones. findings of the study — 384 pages devoted to rats, 260 to mice — had been conveyed to the Federal Communications Commission and the Food and Drug Administration, which regulate cellphones and gauge any risks to human health. Dr. Bucher declined repeatedly to assess the hazard. “We believe that the link between radio-frequency radiation and tumors in male rats is real,” John Bucher, a senior scientist at the National Toxicology Program, said in a statement.

Rats in the studies were exposed to radiation nine hours a day for two years — far longer even than heavy users of cell phones. The exposures started before birth and continued until they were about 2 years old.  2 to 3 percent of the male rats exposed to the radiation developed malignant gliomas, a deadly brain cancer, compared to none in a control group that received no radiation. Many epidemiologists see no overall rise in the incidence of gliomas in the human population. The study also found that about 5 to 7 percent of the male rats exposed to the highest level of radiation developed certain heart tumors, called malignant schwannomas, compared to none in the control group. Malignant schwannomas are similar to acoustic neuromas, benign tumors that can develop in people, in the nerve that connects the ear to the brain. The rats were exposed to radiation at a frequency of 900 megahertz — typical of the second generation of cellphones that prevailed in the 1990s, when the study was first conceived.

Current cellphones represent a fourth generation, known as 4G, and 5G phones are expected to debut around 2020. They employ much higher frequencies, and these radio waves are far less successful at penetrating the bodies of humans and rats. See the article in the New York Times on the study .