Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

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Scott Allen, of Atlanta, was charged last week with securities fraud and insider trading in the U.S. District Court Southern District of New York, according to the Wall Street Journal. The government alleges that Mr. Allen and John Bennett of Norwalk, Connecticut, conspired to make more than $2.6 million in profits on insider trades of pharmaceutical stocks. Mr. Allen was a former employee of Mercer, a gloabl human resources consulting firm, and Mr. Bennett was an independent film producer and stock trader. The criminal complaint against the defendants charges that Mr. Allen allegedly obtained information regarding acquisitions by pharmaceutical companies in 2008 and 2009, and gave the information to Mr. Bennett. Mr. Bennett is charged with using the information to make $2.6 million in trades, while paying Mr. Allen $100,000 in kickbacks.

For exceptional criminal representation, drawing on decades of Federal prosecutorial and defense experience, contact Gillen Withers & Lake LLC.

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The Washington Post reports today that Patrick Nagle, of Marietta, Georgia, pled guilty last week in the U.S. District Court for the District of Rhode Island to conspiracy to commit bribery. Nagle was formerly the Chief Executive Officer of Advanced Solutions for Tomorrow (AST), which was awarded contracts by the U.S. Navy. The prosecution alleged that Nagle paid inflated invoices by two subcontractors who were given work on Navy contracts by AST. The charges against Nagle allege that the kickback scheme cost the Navy between $7 and $20 million.

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The U.S. Supreme Court yesterday denied the petition for certiorari by former international media mogul, Canadian citizen and British Lord, Conrad Moffat Black, as reported in the Washington Post.

Mr. Black was the CEO of Hollinger International, Inc., which owned newspapers worldwide. He was indicted (in an indictment made available by FindLaw which may be viewed here) with other officers and employees of Hollinger in the Northern District of Illinois in November of 2005 on 11 counts, in an original indictment which charged mail fraud conspiracy, wire fraud conspiracy and substantive counts of mail and wire fraud. The counts all referenced the "honest services" fraud statute, 18 United States Code section 1346. Testifying to the vigorousness of his defense, on July of 2007, a jury acquitted Mr. Black on 9 counts but convicted him on three others.

Mr. Black then challenged his convictions on appeal. In June of last year, the Supreme Court handed down its three "honest services" decisions, Skilling v. U.S., Black v. U.S., and Weyrauch v. U.S. In Skilling, the main decision involving former Enron President Jeffrey Skilling, the Court rejected the old "intangible right" to an employee's honest services theory and held that, in order to avoid being unconstitutionally vague, section 1346 applies to bribery or kickback schemes, and not to mere self-dealing by an employee. In Mr. Black's case, the Court unanimously held that the jury had not been properly instructed on honest services fraud at trial, and vacated his convictions and remanded. Then in October of last year, the Seventh Circuit Court of Appeals, in an opinion authored by distinguished Judge Richard Posner, struck two of the three remaining counts against Mr. Black, leaving him convicted on a single fraud count and a count for obstruction of justice. Mr. Black again appealed these two remaining convictions to the Seventh Circuit, which upheld them last December, and then to the Supreme Court, which has now declined to review them. Mr. Black is scheduled to be resentenced on June 24.

Source: McLean's.ca

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Ernesto Angel Montaner, aged 70, a member of a prominent Miami Cuban family, is facing healthcare fraud charges for the second time, according to the South Florida Sun Sentinel. Montaner was the sole defendant acquitted in a vast healthcare fraud prosecution in the 1990s for an alleged $15 million in false claims to Medicare. 

The government alleges that, from 2006 to 2008, Montaner submitted approximately $6.2 million in false claims to Medicare at rehabilitation clinics which he operated, including Infinity Therapy and Miami Dade Medical Group. Montaner and others are alleged to have bribed or paid kickbacks to assisted-living facilities, home health care agencies, patient recruiters and patients in exchange for referrals. Many of the patients referred to Montaner did not require physical therapy/occupational therapy services.

Montaner fled to Costa Rica in early 2009 after government agents raided his offices, where he lived on a farm worth $1 million. However, the government successfully extradited Montaner back to the U.S. in February. The current set of charges against Montaner arose out a sting operation by the FBI using a registered nurse and convicted felon posing as a patient recruiter, as well as a physician convicted of Medicare fraud and other ex-felons and recruits posing as patients with ailments. Montaner allegedly paid the informants cash to refer Medicare patients to him. The informants also signed off on claims for 17 rehabilitation sessions which were never given.

The government has also charged Montaner's business partner and his son, Ernesto Montaner Jr., 45, who entered a guilty plea to manipulating Medicare billing codes to maximize patient visits, was sentenced to four years in prison and is cooperating with authorities. Montaner's partner, Jose A. Varona, 39, a patient recruiter, has been sentenced to three years imprisonment and has also given information to the FBI.

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New York Senator Joseph L. Bruno was indicted in January of 2009 on eight counts of fraud. A jury in the U.S. District Court for the Northern District of New York acquitted Bruno, who is now 81 years old and the former Republican Majority Leader of the New York State Senate, on five of the remaining charges and deadlocked on the sixth in December of 2009. The charges were based on allegations that Bruno allegedly took approximately $3 million in kickbacks from businesses seeking to do business in New York, as well as labor unions. In particular, Bruno s alleged to have accepted $280,000 in "consulting fees" from companies associated with Loudonville, New York, businessman Jared Abbruzzese. Bruno was sentenced to two years' imprisonment last May, but has remained free pending his appeal in the U.S. Court of Appeals for the Second Circuit.

Now the U.S. Attorney's Office has filed a brief with the Court of Appeals requesting that the dismiss the charges against Bruno and remand his case for a new trial, as reported in the Saratogan. The prosecution argued that Bruno's convictions under 18 United States Code Section 346--the honest services fraud statute--cannot stand following the U.S. Supreme Court's decision in U.S. v. Skilling, the case against former Enron executive Jeffrey Skilling, as the Blog has noted here. However, it maintains that it can obtain another indictment of Bruno under the statute, as amended by Skilling. The government contends that it will be able to prove a quid pro quo if Bruno is ordered retried. Bruno and his counsel have filed a brief with the Court of Appeals arguing that any retrial of Bruno would violate double jeopardy.

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 The Washington Examiner reports that Anjan Dutta-Gupta of Roswell, Georgia, and Ralph M. Mariano of Arlington, Virginia, have been charged in the U.S. District Court for the District of Rhode Island on bribery and kickback charges. Mariano was a senior engineer at the Washington Navy Yard. Gupta was the founder of Advanced Solutions for Tomorrow (AST), a Georgia technology company. The charges assert that Mariano and Gupta allegedly engaged in a scheme to defraud the U.S. Navy dating back to 1998 and resulting in approximately $10 million in losses in inflated costs to the Navy. During this time, AST gained 10 contracts with the Navy totalling $120 million. Gupta and AST allegedly paid kickbacks to Mariano, who allegedly distributed the gains to his father, brother, girlfriend and associates. Prosecutors claim to have recorded conversations in which Mariano describes the alleged scheme.

Gupta also allegedly contributed to U.S. Democratic Senator Jack Reed, a member of the Senate Appropriations Committee. Senator Reed allegedly helped earmark military funding for ASFT. Senator Reed has pledged to donate the contributions from Gupta to charity.

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We have commented on the case of Alfredo and Niurka Rasco of South Georgia, who were charged in a $6.5 million Medicare fraud scheme. Well, despite a heated and well-founded defense against the charges based upon illegal use of immunized evidence by the government, Mr. Rasco and his wife pled guilty to the charges against them last week during their trial, according to a press release by the U.S. Attorney's Office for the Southern District of Georgia. Mr. and Mrs. Rasco face maximum terms of imprisonment of 12 years and 6 months respectively.

In other news, the U.S. Senate will convene next week to hold an impeachment trial of U.S. District Judge G. Thomas Porteous, Jr., of the Eastern District of Louisiana according to the National Law Journal. Judge Porteous is charged with corruption. Specifically, Judge Porteous is charged with accepting meals, trips and other gifts from bail bondsman Louis Marcotte III and his sister Lori Marcotte in return for giving the Marcottes and their clients special treatment while he was a state court judge. Judge Porteous is also alleged to have made false statements to the Senate and to the FBI in 1994 regarding his past.

Judge Porteous' attorneys are vigorously defending him, however, pointing out that much of the conduct charged against Judge Porteous occurred prior to his appointment to the bench. Furthermore, a federal grand jury had investigated Judge Porteous as part of wide-ranging probe into Louisiana corruption, however no charges resulted. The U.S. Department of Justice also decided to drop the case against Judge Porteous. Judge Porteous' attorneys have denied any wrongdoing by Porteous, and state that he has done nothing to justify his removal from office.  The defense also contends that the FBI and the Senate were aware of the allegations against Judge Porteous prior to voting to confirm his appointment.

A fascinating fact is that Congress is also the nation's least used court. The trial of Judge Porteous will be the Senate's first since the impeachment trial of President William Jefferson Clinton (who appointed Judge Porteous to the bench) in 1999, and the first of a federal judge since 1989. The U.S. House of Representatives has considered bringing impeachment proceedings against federal judges in the interim, but the judges had resigned before the proceedings could be brought. Judge Porteous was referred to the Senate for impeachment by the Judicial Conference of the United States, led by Supreme Court Chief Justice John Roberts Jr., in June of 2008. A committee of 12 senators will serve as both judges and jurors at his trial. Members of the House will serve as prosecutors, or "managers." The Senators will vote on whether to convict Judge Porteous, with a two-thirds majority required to convict. Any of the Senators may question witnesses following examination and cross-examination by counsel. The Senate Committee will first gather evidence for consideration by the full Senate. Each side will have 20 hours to put on evidence. The Senate can only vote to impeach Judge Porteous, and cannot impose any sentence of imprisonment or fine. The trial will take place in the same chamber the Senate uses for confirmation hearings.

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On June 24, the United States Supreme Court rendered its decision in the case of former Enron executive Jeffrey Skilling. The majority in U.S. v. Skilling, No. 08-2349, in an opinion authored by Justice Ruth Bader Ginsberg (which may be read in its 114 page entirety here), held that the "honest services" mail fraud statute, 18 U.S.C. §1346, applies to bribery and kickback schemes, and not to mere "undisclosed self-dealing by a public official or private employee," alone. The majority held that Skilling did not violate §1346 since, although the Government charged Skilling with conspiring to de-fraud Enron’s shareholders by misrepresenting the company’s financial health and therefore profiting, the government never alleged that Skilling solicited or accepted any payments from third parties in exchange for making the misrepresentations.

The recent Skilling decision is already having an impact on federal prosecutions. As reported by Law.com, this week, Judge Ellen Segal Huvelle of the U.S. District Court for the District of Columbia told the parties in the prosecution of Kevin Ring, a former associate of convicted lobbyist Jack Abramoff, that the Court would grant Ring more time to file a motion for judgment of acquittal in light of Skilling. Ring was charged with bribery and tried last year, however the trial ended in a hung jury. The Court intentionally delayed Ring's retrial to await the Supreme Court's decision in Skilling and the cases of Black v. U.S. and Weyhrauch v. U.S. The prosecution has announced its intent to push forward with a second trial of Ring.

In Georgia news, attorney M. Dewey Bain, of Sugar Hill, Georgia, was sentenced to 5 years and 3 months imprisonment today in the U.S. District Court for the Northern District of Georgia for defrauding clients--including a 97 year-old woman--out of $4.3 million, as reported by the Atlanta Journal-Constitution. Bain entered into trust agreements with clients in which Bain falsely promised he would invest their monies in safe accounts, but instead fraudulently diverted the monies to his own personal use.

In Southeastern news, Snamprogetti Netherlands B.V.--yes, that Snamprogetti Netherlands B.V.--has agreed to pay $240 million in penalties to the government for alleged violations of the Foreign Corrupt Practices Act (FCPA) for allegedly bribing officials in Nigeria to obtain engineering, procurement and construction (EPC) contracts to build liquefied natural gas (LNG) facilities on Bonny Island, Nigeria, according to an FBI press release. Snamprogetti is a Dutch corporation and a wholly owned subsidiary of Snamprogetti S.p.A., an Italian corporation. Snamprogetti was alleged, along with Kellogg Brown & Root Inc. (KBR), Technip S.A. (Technip), and a Japanese engineering and construction company to have engaged in a joint venture that was awarded four EPC contracts by Nigeria LNG Ltd. (NLNG), between 1995 and 2004 to build LNG facilities on Bonny Island. Snamprogetti allegedly caused the venture to hire two agents, Jeffrey Tesler and a Japanese trading company, to pay approximately $172 million in bribes to Nigerian officials. The deferred prosecution agreement was filed today in the U.S. District Court for the Southern District of Texas. Snamprogetti also reached a settlement of a related civil action by the SEC.

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The Federal government has massively ramped up enforcement against domestic and foreign corporations for violation of the Foreign Corrupt Practices Act (FCPA), essentially an anti-bribery or kickback statute applicable to overseas transactions. The latest target to fall to FCPA allegations, according to an SEC press release, is German automotive giant Daimler AG. The Securities and Exchange Commission had alleged that Daimler allegedly paid bribes to foreign government officials to secure business in Eastern Europe, Africa and Asia. Last Thursday, the SEC announced that Daimler had entered into a settlement agreement with the SEC in which Daimler agreed to pay $91.4 million in disgorgement. Daimler also agreed to pay $93.6 million in fines to settle alleged criminal charges which were announced by the Department of Justice last week.

The SEC complaint, filed on March 22, charges that Daimler allegedly paid $56 million in improper payments, involving more than 200 transactions in 22 countries, over a period of 10 years. The government contends that Daimler allegedly earned $1.9 billion in revenue and at least $90 million in illegal profits as a result of the payments. Included in the government's allegations are allegations that Daimler paid kickbacks to Iraqi officials in relation to sales of vehicles and spare parts to Iraq under the United Nations Oil for Food Program. The complaint also alleges that Daimler kept ledger accounts of credit balances for the benefit of foreign government officials.

Daimler allegedly made bribes or kickbacks through several methods. Amounts of alleged discounts or rebates on sales contracts were allegedly kicked back to foreign officials. Daimler also alleged used false sales intermediaries, corrupt business partners and cash desks to funnel bribes to officials. The government alleges that Daimler's management sanctioned the practices.

Daimler has issued a press release relating to the settlement. The company notes that it cooperated with SEC and DOJ during their investigations, entering into a consent agreement with the SEC and a deferred prosecution agreement with DOJ. The release also notes that Daimler North East Asia Ltd., also entered into a deferred prosecution agreement with DOJ and Mercedes-Benz Russia SAO and Daimler Export und Trade Finance GmbH pled guilty to charges of violations of the FCPA in the U.S. District Court for the District of Columbia.

Daimler also states that it has taken steps to ensure that its future conduct will comply with all applicable laws and Daimler's "Integrity Code." Daimler states that under its deferred prosecution agreements, it must maintain a comprehensive compliance program and not commit any further violations of the FCPA for two years. If Daimler successfully complies with these terms, the charges against the corporation and its subsidiaries will be dismissed.

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The culture of corruption of some foreign nations may heavily influence to U.S. companies doing business abroad to play along in order to be competitive. Regardless of the competitive disadvantages, the Foreign Corrupt Practices Act (FCPA) stands as a serious deterrent to engaging in bribery or kickbacks in business transactions abroad. The force of the FCPA was demonstrated once again on Thursday, when two former executives of Willbros International, a subsidiary of Willbros Group, an engineering-construction firm headquartered in Houston, were sentenced in the U.S. District Court for the Southern District of Texas for participating in a $6 million bribe of Nigerian officials to secure a contract for a major natural gas pipeline. As reported by the Houston Chronicle, Jason Edward Steph and Jim Bob Brown had pled guilty to violating the FCPA. U.S. District Judge Sim Lake sentenced Steph to 15 months imprisonment and Brown to a year and a day. Willbros Group has also agreed to pay $32.3 million under a deferred adjudication settlement.

The bribe was made in relation to a $387 million natural gas pipeline project in the Niger Delta known as the Eastern Gas Gathering System. Steph and Brown gave bribes to Nigerian officials to ensure that Willbros was awarded the contract, at one point keeping $1 million in a suitcase.

The prosecution requested consideration for Steph and Brown based on their cooperation with and assistance to the government. Steph told the court that he was doing what his superiors had told him to do.

Brown's attorney pointed out at the sentencing hearing that Brown had been threatened, kidnapped, beaten and shot at while in Nigeria. The court noted the corrupt conditions in Nigeria, observing that one of the Nigerian officials bribed is currently running for office. However, the court stated that it wanted to send a message to the business community in sentencing Steph and Brown.

Another former executive, Kenneth Tillery, remains a fugitive in the case.

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We at FCDB read H.R.3200, “America's Affordable Health Choices Act of 2009,” earlier this year (well okay, perhaps we didn’t “read” it all, maybe skimmed is a better description) and were surprised to find that it appeared to add nothing to our nation’s ever-growing corpus of criminal provisions. Well, yesterday, Montana Senator Max Baucus released the long-awaited America’s Healthy Future Act, better known as the “Baucus Bill,” the text of which can be read here, which does contain an alteration of note to existing criminal law . We’ll leave it to others to outline all the proposed changes to the nation’s healthcare industry.
 

The most notable change by the Baucus Bill is amends the Medicare Anti-Kickback statute, 42 U.S.C. § 1320a-7b(b), which makes it illegal to “knowingly and willfully” solicit or receive any remuneration for referring an individual to a person for the purpose of furnishing any item or service for which payment may be made in whole or in part under a Federal health care program; or in return for purchasing, leasing or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program; or to “knowingly and willfully” refer an individual to a person for the furnishing any item or service for which payment may be made in whole or in part under a Federal health care program; or purchase, lease or order any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program. The Bill proposes to “amend the Anti-kickback statute to add language defining “willfully” as “a person acted voluntarily and purposefully to do what the law forbids and the person need not have actual knowledge of the law or specific intent to violate that law.” The Bill does not give the reason for the change, but it is undoubtedly to foreclose some defense or close some loophole which has arisen in practice or actual cases.

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According to Law.com, a jury in the U.S. District Court for the Central District of California found Gerald and Patricia Green guilty of conspiracy, money laundering and violation of the Foreign Corrupt Practices Act (FCPA).

The Greens were film producers based in Beverly Hills. They were charged and found guilty of conspiring to bribe a government official of Thailand in exchange for being awarded contracts, including for control of the annual Bangkok International Film Festival. The Government alleged that the Greens paid approximately $1.8 million in bribes to Juthamas Siriwan, the former Governor of the Tourism Authority of Thailand, between 2002 and 2007, in exchange for contracts. The kickbacks were paid to Siriwan's daughter through banks in the United Kingdom and SIngapore. The Greens used different business names, with false addresses and telephone numbers, to conceal the payments. It alleged that the Greens' businesses earned approximately $13.5 million from the contracts.

The Greens' trial was the first involving the FCPA and the film industry, and lasted nearly three weeks. They will be sentenced in December. Mr. Green is 77 and Mrs. Green is 52. They face a maximum of up to 20 years in prison.

The Green case once again raises the dilemma of the interplay of U.S. laws and corrupt foreign customs and practices in some cases. Bribery, corruption and graft can be deeply ingrained in some foreign countries (fully recognizing that some areas of the U.S. suffer from the same!) and U.S. nationals and businesses operating in those countries may be expected or required to play along. For industries such as the U.S. film industry which frequently operates abroad, these situations can carry serious consequences under U.S. law. Individuals and businesses operating overseas which are confronted with such situations should consult counsel before determining how to act or respond.

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