Lake County Sheriff’s Office Deputy Charged with Civil Rights Offenses for Shooting an Unarmed Person and Lying to Investigators

A Lake County Sheriff’s Office Deputy, Richard Palmer, 58, was indicted today on charges that he used unreasonable force by shooting an unarmed woman and misleading state investigators about the circumstances of his actions, announced Assistant Attorney General Eric Dreiband of the Department of Justice’s Civil Rights Division and FBI Special Agent in Charge Rachel Rojas of FBI’s Jacksonville Division.

According to the indictment, on Oct. 11, 2016, Palmer, while on duty as a Lake County Sheriff’s Office Deputy, shot a woman whose hands were visible and empty. Palmer’s actions resulted in bodily injury to her. Palmer later misled investigators by falsely justifying the shooting, claiming that the woman’s left hand was in her pocket, that the woman was pulling her left hand out of her pocket, and that he saw a dark object in her left hand.

Palmer faces a maximum statutory penalty of 10 years in prison for his use of unreasonable force, 20 years in prison for his false statements, and fines. An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty.

The case was investigated by the FBI’s Jacksonville Division. Special Legal Counsel Mark Blumberg and Trial Attorneys Maura White and Anna Gotfryd of the Justice Department’s Civil Rights Division are prosecuting the case.

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Author: August 21, 2019

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Two Los Angeles Pharmacy Owners Found Guilty in Multimillion-Dollar Health Care Fraud and Money Laundering Scheme

A federal jury found two Los Angeles pharmacy owners guilty yesterday for their participation in a $35 million health care fraud and money laundering scheme to bill Medicare for medications that were never provided and to launder the proceeds of the fraud. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Timothy DeFrancesca of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Regional Office, Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office, Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office, and Special Agent in Charge Kurt Mueller of the California Department of Justice made the announcement.

After an 11-day trial, Aleksandr Suris, 51, and Maxim Sverdlov, 44, both of Sherman Oaks, California, were found guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.  Suris was also found guilty of one additional count of conspiracy to commit health care fraud and six additional counts of health care fraud.  Both defendants were found not guilty of three counts of healthcare fraud.  Sentencing has been scheduled for Nov. 18, 2019, before U.S. District Court Judge S. James Otero of the Central District of California, who presided over the trial.

According to the evidence presented at trial, from 2012 to 2015, Suris and Sverdlov fraudulently billed Medicare and CIGNA for prescription medications that were not actually dispensed to beneficiaries by the pharmacy they owned, Royal Care Pharmacy (Royal Care).  In order to hide the fraud, Suris and Sverdlov obtained fake invoices from a co-conspirator to make it appear as if Royal Care had purchased the medicines it had billed Medicare for when it had not.  The evidence further established that Suris and Sverdlov also used these fake invoices to launder the proceeds of the fraud through the co-conspirator.

This case was investigated by the HHS-OIG, FBI, IRS-CI, and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. Assistant Chief Daniel J. Griffin and Trial Attorney Robyn N. Pullio of the Fraud Section are prosecuting the case. 

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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Author: August 21, 2019

Florida Man Pleads Guilty to Extensive Cyberstalking and Threats Campaign

A Florida man who was charged with conducting an extensive cyberstalking campaign that targeted his former schoolmate, a 30-year-old Massachusetts woman, pleaded guilty yesterday in federal court in Boston.  The victim’s name is being withheld to protect her privacy.

Byron A. Cardozo, 35, who previously resided in Jacksonville and Tamarac, Florida, pleaded guilty to one count of cyberstalking and one count of making interstate threats.  Judge Allison D. Burroughs scheduled the sentencing hearing for Nov. 12.  Cardozo was arrested in August 2018 and has been held in custody since. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Andrew Lelling of the District of Massachusetts, and Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Field Office made the announcement. 

According to the indictment to which Carozo pleaded guilty, Cardozo engaged in an 18-month-long, multi-faceted cyberstalking and threats campaign targeting the victim.  He launched his campaign in February 2017, shortly after the victim wrote, and had published in an online magazine, an essay describing a one-time, traumatic sexual encounter she had with Cardozo when she was approximately 13 and he was approximately 17 and they attended the same school in Florida.  She used pseudonyms for Cardozo and others in the essay.  He then sent hundreds of online communications, many of which he made in the “comments” section to the essay and on the victim’s personal website.  In those communications, Cardozo claimed that the victim had fabricated her claims about the coercive nature of the 2001 sexual encounter, he provided graphic descriptions of his purported consensual sexual encounter with the victim, and he described how he continued to masturbate to the victim’s photographs.  Cardozo also made express and implicit threats to injure the victim. 

At other times, he also apologized to her for the traumatic sexual experience in 2001, asked for forgiveness, expressed his love for her, and made veiled threats to commit suicide “because of you.”  Cardozo continued to harass and threaten the victim despite the fact that she had obtained a state court order in April 2017, forbidding him from communication with her.

The investigation was conducted by the FBI’s Boston Field Office.  Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Amy Harman Burkart, Chief of Lelling’s Cybercrime Unit in the District of Massachusetts, are prosecuting the case. 

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Author: August 21, 2019

Five Fraudsters Indicted For Million Dollar Scheme Targeting Thousands of U.S. Servicemembers and Veterans

A 14-count indictment has been unsealed today in San Antonio, Texas, charging five individuals with coordinating an identify-theft and fraud scheme targeting servicemembers and veterans. The charged defendants, who were based both in the Philippines and the United States, are alleged to have used the stolen personal identifying information (PII) of thousands of military members to access Department of Defense and Veterans Affairs benefits sites and steal millions of dollars. 

The defendants, Robert Wayne Boling Jr., Fredrick Brown, Trorice Crawford, Allan Albert Kerr, and Jongmin Seok, were charged with multiple counts of conspiracy, wire fraud, and aggravated identify theft based on their alleged leading roles in the theft and exploitation of victim PII to conduct their fraud scheme. Boling (a U.S. citizen), Kerr (an Australian citizen), and Seok (a South Korean citizen) were arrested in the Philippines. Brown and Crawford, both U.S. citizens, were arrested in Las Vegas and San Diego respectively. Brown has been detained pending trial. Crawford is awaiting a detention hearing.

“The crimes charged today are reprehensible and will not be tolerated by the Department of Justice. These defendants are alleged to have illegally defrauded some of America’s most honorable citizens, our elderly and disabled veterans and servicemembers,” said Attorney General William P. Barr. “Through today’s action, the Department is honoring our pledge to target elder fraud schemes, especially those committed by foreign actors using sophisticated means, and to protect the veterans of our great country. I am proud of the quick and effective work done on this case by our Consumer Protection Branch and the U.S. Attorney’s Office for the Western District of Texas, with strong investigative support from the Departments of Defense and Veterans Affairs. We all will continue to work together to ensure that our veterans and servicemembers are protected from fraud.”

“Our message is pretty simple,” said U.S. Attorney Bash. “It doesn’t matter where on this planet you reside. If you target our veterans, we’re coming for you. Our veterans were willing to risk everything to protect this Nation from foreign threats. Now it’s our turn to seek justice for them.”

“The compromise of personally identifiable information can significantly harm our service members, veterans and their families and we will aggressively investigate such matters,” said Glenn A. Fine, Principal Deputy Inspector General, performing the duties of the Inspector General of the Department of Defense Office of Inspector General. “This indictment and the coordinated actions of our criminal investigative component, the Defense Criminal Investigative Service, demonstrate our commitment to swift action against those who attempt to enrich themselves through identify theft, money laundering, and conspiracy. The DoD OIG, working in partnership with the Department of Justice, will continue to identify, disrupt, and bring to justice those who threaten military members, retirees, and veterans through fraud and corruption.” 

“VA is working with DoD to identify any instances of compromised VA benefits accounts,” said James Hutton, VA assistant secretary for public and intergovernmental affairs. “Just as importantly, VA has taken steps to protect Veterans’ data and are instituting additional protective measures.”

According to the indictment, the defendants’ identity-theft and fraud scheme began in 2014 when Brown, then a civilian employee at a U.S. Army installation, stole thousands of military members’ PII, including names, dates of birth, social security numbers, and Department of Defense identification numbers. Brown is alleged to have then provided the stolen information to Boling, who exploited the information in various ways together with his Philippines-based co-defendants Kerr and Seok.

As asserted in the indictment, Boling, Kerr, and Seok specifically used the stolen information to compromise a Department of Defense portal designed to enable military members to access benefits information online. Once through the portal, the defendants are alleged to have accessed benefits information.  Access to these detailed records enabled the defendants to steal or attempt to steal millions of dollars from military members’ bank accounts. The defendants also stole veterans’ benefits payments. After the defendants had compromised military members’ bank accounts and veterans’ benefits payments, Boling allegedly worked with Crawford to recruit individuals who would accept the deposit of stolen funds into their bank accounts and then send the funds through international wire remittance services to the defendants and others. Evidence of the defendants’ scheme was detected earlier this year, advancing the investigation that led to the indictment.

The unsealed indictment was announced today in San Antonio by U.S. Attorney John Bash of the Western District of Texas, Deputy Assistant Attorney General David Morrell, and Director Gustav Eyler of the Department of Justice’s Consumer Protection Branch.

The Departments of Defense and Veterans Affairs are coordinating with the Department of Justice to notify and provide resources to the thousands of identified victims. Announcements also will follow regarding steps taken to secure military members’ information and benefits from theft and fraud.

An indictment merely alleges that crimes have been committed. All defendants are presumed innocent until proven guilty beyond a reasonable doubt.

The United States is represented by Trial Attorneys Ehren Reynolds and Yolanda McCray Jones of the Department of Justice’s Consumer Protection Branch and Assistant United States Attorney Joseph Blackwell of the U.S. Attorney’s Office for the Western District of Texas. The matter was investigated by agents of the Defense Criminal Investigative Service, and counsel Matthew Freund, along with substantial investigative support from the U.S. Postal Inspection Service, the U.S. Army Criminal Investigation Command, and the Veterans Benefits Administration’s Benefits Protection and Remediation Division. The U.S. Department of State’s Diplomatic Security Service, Philippine law enforcement partners, and the U.S. Attorneys’ Offices for the District of Nevada, the Southern District of California, and the Eastern District of Virginia also provided assistance. Resources from the Department of Justice’s Servicemembers and Veterans Initiative and its Transnational Elder Fraud Strike Force aided in the matter’s investigation and prosecution.

Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In particular, this past March, the Department announced the largest elder fraud enforcement action in American history, charging more than 260 defendants in a nationwide elder fraud sweep.  The Department has likewise conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.   

Additional information about the Consumer Protection Branch and its enforcement efforts can be found at www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the Western District of Texas, visit its website at https://www.justice.gov/usao-wdtx. Information about the Department of Justice’s Elder Fraud Initiative is available at www.justice.gov/elderjustice; information on the Servicemember and Veterans Initiative is at https://www.justice.gov/servicemembers.

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Author: August 21, 2019

Witness Indicted for False Declarations Before a Grand Jury and Obstruction of Justice

A federal grand jury has indicted a Washington woman for false declarations before the grand jury and obstruction of justice.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Raymond Duda of the FBI’s Seattle Field Office and Chief of Police Carmen Best of the Seattle Police Department made the announcement.

According to the indictment unsealed today in the Western District of Washington, on Feb. 28, 2018, Shawna Reid, 34, of Everett, Washington, made false material declarations to a federal grand jury when she denied before the federal grand jury that she previously told a Seattle Police Department Detective and FBI Special Agent during an interview on Aug. 23, 2017, that Suspect #1 told her that Suspect #1 bragged about involvement in the murder of a judge or attorney that lives on top of a hill.  Reid further denied before the federal grand jury that she previously told the detective and special agent on Aug. 23, 2017, that Suspect #1 bragged that the murder victim was someone of importance like a judge or an attorney general.

According to the indictment, Reid is also charged with obstruction of justice for making false material statements to law enforcement officials on Aug. 25, 2017, and Dec.7, 2017, and then on Feb. 28, 2018, before a federal grand jury.  All of the false statements pertained to whether Suspect #1 told Reid about Suspect #1’s involvement in the murder of a lawyer, judge, or attorney general who lived on a hill.

The charges and allegations contained in an indictment are merely accusations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The investigation was conducted by the FBI and the Seattle Police Department.  Section Chief David Jaffe and Trial Attorneys Joseph Wheatley and Matthew Hoff of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Steven D. Clymer are prosecuting this case.

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Author: August 20, 2019

Precious Metals Trader Pleads Guilty to Conspiracy and Spoofing Charges

A former precious metals trader at the London, Singapore and New York offices of a U.S. bank (Bank A) pleaded guilty today to conspiracy and spoofing charges, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office. 

Christian Trunz, 34, of London, England, pleaded guilty in the Eastern District of New York to an information charging him with one count of conspiracy to engage in spoofing and one count of spoofing.  Today’s pleas were accepted by U.S. District Judge Pamela K. Chen. Sentencing is scheduled for Feb. 19, 2020.  Trunz resigned from his position as an Executive Director at Bank A earlier today.

According to admissions made as part of his plea and other statements made in court, between approximately July 2007 and August 2016, Trunz placed thousands of orders that he did not intend to execute for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc.  Trunz learned to spoof from more senior traders, and spoofed with the knowledge and consent of his supervisors.

This case is the result of an ongoing investigation by the FBI’s New York Field Office. The Commodity Futures Trading Commission’s Division of Enforcement provided assistance in this case. Trial Attorneys Avi Perry and Matthew F. Sullivan of the Criminal Division’s Fraud Section are prosecuting the case.

Trunz is cooperating with the ongoing investigation.

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Author: August 20, 2019

Justice Department Sues to Block Sabre’s Acquisition of Farelogix

The Department of Justice filed a civil antitrust lawsuit today seeking to block Sabre Corporation’s $360 million acquisition of Farelogix, Inc. The Department said that Sabre and Farelogix compete head-to-head to provide booking services to airlines. Booking services are IT solutions that allow airlines to sell tickets and ancillary products through traditional brick-and-mortar and online travel agencies to the traveling public.  The Department said that the acquisition would eliminate competition that has substantially benefitted airlines and consumers.

The Antitrust Division’s lawsuit alleges that the transaction would allow Sabre, the largest booking services provider in the United States, to eliminate a disruptive competitor that has introduced new technology to the travel industry and is poised to grow significantly.

“Sabre’s proposed acquisition of Farelogix is a dominant firm’s attempt to take out a disruptive competitor that has been an important source of competition and innovation,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “If allowed to proceed, the acquisition would likely result in higher prices, reduced quality, and less innovation for airlines and, ultimately, traveling American consumers.”

As alleged in the complaint, Sabre is the dominant provider of booking services in the United States with over 50 percent of airline bookings through travel agencies.  Sabre operates a global distribution system, or GDS, which is a digital platform that provides booking services to airlines in addition to other functionality.  For many years, Sabre has operated outdated technology and resisted innovation.  Farelogix is an innovative technology company that has stepped in to address the needs of airlines and their customers. 

As alleged in the complaint, Farelogix has injected much-needed competition and innovation into stagnant booking services markets.  Airlines have successfully leveraged their ability to turn to Farelogix to negotiate lower fees with Sabre and the other GDSs, and to reduce their reliance on GDSs for booking services.  Farelogix has also pioneered the development of new technology that empowers airlines to make a wider array of offers to travelers who book tickets through travel agencies.  This new technology enables airlines to make more varied and personalized offers to consumers who book through travel agents, including bundles of ancillary products such as wi-fi, lounge passes, entertainment options, and meals – choices not available to travelers through Sabre’s legacy technology.

According to the complaint, filed in the U.S. District Court for the District of Delaware, Sabre executives have acknowledged that acquiring Farelogix would eliminate a competitive threat and further entrench Sabre in booking services.  For example, on the day Sabre announced its intention to buy Farelogix, Sabre’s chief sales officer texted a colleague that one major U.S. airline would “hate” it.  The colleague replied, “Why, because it entrenches us more?”  Similarly, a Farelogix executive observed that buying the company would allow Sabre to “tak[e] out a strong competitor vs. continued competition and price pressure.” 

As alleged in the complaint, Sabre’s attempt to acquire Farelogix follows many other attempts by Sabre to neutralize its competitor, including a campaign to “shut down Farelogix.”  Indeed, Farelogix has long complained about Sabre’s tactics, alleging that Sabre has sought to stifle competition.  For example, in 2013, Farelogix’s CEO alleged that “Sabre has wielded its monopoly power in an attempt to destroy Farelogix and prevent competition. . . .” And just last year, Farelogix’s CEO told European antitrust authorities that Sabre and the other two major GDSs “continue to leverage significant market power to preserve their market position and stifle innovation.”  Now that Farelogix has gained a foothold in booking services and is poised to grow, Sabre seeks to eliminate this scrappy competitor once and for all by acquiring it.

Sabre Corp. is a Delaware corporation headquartered in Southlake, Texas.  Sabre operates the largest global distribution system in the United States. Sabre’s 2018 revenues were approximately $3.9 billion.

Farelogix, Inc. is a Delaware corporation headquartered in Miami, Florida.  Farelogix offers a next-generation booking services solution, known as Open Connect.  In 2018, Farelogix earned approximately $42 million in revenues.

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Author: August 20, 2019

International Law Enforcement Cooperation Leads to Brazilian Takedown of Significant Human Smugglers

Earlier today, extensive coordination and cooperation efforts between United States and Brazilian law enforcement and prosecution authorities culminated in the Brazil Federal Police (DPF) conducting a significant enforcement operation to disrupt and dismantle a transnational criminal organization.  The human smuggling organization targeted is alleged to be responsible for the illicit smuggling of scores of individuals from East Africa and the Middle East, into Brazil, and ultimately to the United States.  The enforcement operation included the execution of multiple search warrants and the arrests of three prolific, Brazil-based human smugglers on Brazilian charges:  Abdifatah Hussein Ahmed (a Somalian national); Abdessalem Martani (an Algerian national); and Mohsen Khademi Manesh (an Iranian national).

“We commend today’s efforts by our Brazilian counterparts to take decisive action under their recently enacted human smuggling laws against criminal networks that threaten the national security of Brazil, the United States and other nations,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Such collaborative efforts with our foreign law enforcement partners show our collective resolve to hold international human smugglers to account to the fullest extent of the law.” 

Assistance provided by U.S. authorities was coordinated under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department, Criminal Division’s Human Rights and Special Prosecutions Section (HRSP) and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).  The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns.  ECT has dedicated investigative, intelligence and prosecutorial resources.  ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.

HSI Boston led U.S. investigative support efforts, working in concert with HSI Brasilia, HSI San Diego, the HSI Human Smuggling Unit ECT program, Enforcement and Removal Operations, the International Organized Crime Intelligence and Operations Center, the HSI Liaison to the U.S. Department of Defense, U.S. Southern Command, Operation CITADEL, BITMAP, and the National Targeting Center – Investigations.  The Justice Department, both Criminal Division’s HRSP and the Office of International Affairs, provided significant legal and other assistance in this matter.

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Author: August 20, 2019

Former Bank Executive Found Guilty in $15 Million Construction Loan Fraud Scheme

A former Kansas bank executive was found guilty by a federal jury yesterday for his participation in a bank fraud scheme to obtain a $15 million construction loan for certain bank customers based upon false and fraudulent representations.  The loan was shared among 26 Kansas banks.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Justin R. Bundy of the Federal Deposit Insurance Corporation Office of Inspector General’s (FDIC-OIG) Kansas City Regional Office, Special Agent in Charge Timothy R. Langan of the FBI’s Kansas City Field Office and Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency Office of Inspector General’s (FHFA-OIG) Central Region Office made the announcement.                                                                                                                                                           

Troy A. Gregory, 52, of Lawrence, Kansas, was found guilty of four counts of bank fraud and two counts of false statements, as charged in a November 2017 indictment.  The jury failed to reach a verdict as to one count of conspiracy.  Sentencing is scheduled for Jan. 28, 2020, before U.S. District Judge Carlos Murguia of the District of Kansas, who presided over the trial.

According to the evidence submitted at trial, Gregory was a bank executive and loan officer who had made millions of dollars in loans to a group of borrowers who were struggling to make payments on the loans.  Beginning in approximately late 2007, Gregory began the process of making a $15.2 million construction loan to build an apartment complex to that same group of borrowers.  Gregory’s bank shared this loan with 25 other Kansas banks.  Gregory made and caused others to make false statements to the banks about the strength of the borrowers, the debt status of the apartment property and the existence of approximately $1.7 million in certificates of deposit for collateral on the loan, all to get the loan approved.  Instead of using the loan funds promised for building the apartments, Gregory immediately diverted over $1 million of the loan to pay for part of the certificates of deposit pledged as collateral, pay off debt on the apartment property, and make payments on unrelated loans, the evidence showed.  Other Kansas banks that shared in this loan would not have participated in the loan without the false representations and promises. The banks ultimately wrote off millions of dollars on the $15.2 million construction loan, the evidence showed.

The FDIC-OIG, IRS-CI, FBI and FHFA-OIG are investigating this matter.  Trial Attorney Andrew R. Tyler and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case.

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Author: August 20, 2019

Former CEO of Virginia-Based Defense Contractor Agrees to Pay $20 Million to Settle False Claims Act Allegations Related to Fraudulent Procurement of Small Business Contracts

Luke Hillier, the majority owner and former Chief Executive Officer of Virginia-based defense contractor ADS, Inc., has agreed to pay the United States $20 million to settle allegations that he violated the False Claims Act by fraudulently obtaining federal set-aside contracts reserved for small businesses that his company was ineligible to receive, the Department of Justice announced today. 

“Small businesses serve a vital role in our communities and in the American economy,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We will not hesitate to take action against those who fraudulently obtain contracts intended for small businesses.”

“This action reflects the government’s steadfast commitment to hold individuals accountable who knowingly participate in schemes that take advantage of small businesses and set-aside contracts to which they are not entitled under the law,” said U.S. Attorney for the District of Columbia Jessie K. Liu.  “The government expects people to be truthful in their dealings with the government, and the United States will investigate and pursue those that fail to live up to that expectation.”

In order to qualify as a small business, companies must satisfy defined eligibility criteria, including requirements concerning size, ownership, and operational control.  The government alleged that Hillier caused ADS to falsely represent that it qualified as a small business concern when it failed to do so, including due to its alleged affiliations with a number of other entities.  The United States alleged that, as a result of Hillier’s representations, his company was awarded numerous small business set-aside contracts for which it was ineligible.       

The government previously resolved related claims against ADS for $16 million, and Charles Salle, the former general counsel of ADS, has agreed to pay $225,000 to resolve claims arising from his role in the alleged scheme.  The government has also obtained recoveries from other related entities that were involved in the alleged fraudulent scheme.  The combined settlements, totaling more than $36 million, rank as the largest False Claims Act recovery based on allegations of small business contracting fraud.  

“The settlements in this matter demonstrate the excellent results stemming from the joint efforts of federal agencies, including the Small Business Administration, working with the Department of Justice in responding to allegations of fraud perpetrated by participants in SBA’s procurement programs,” said SBA General Counsel Christopher M. Pilkerton.

“When individuals knowingly make misrepresentations to gain access to federal contracts set aside for small businesses, they will be held accountable,” said Inspector General Hannibal “Mike” Ware.  “These settlements send a strong message that allegations of wrongdoing will find their way into the open and will be investigated.  I want to thank the Department of Justice and our law enforcement partners for their support and dedication in this case.”

“GSA contractors must be honest and forthcoming when doing business with the federal government,” said GSA Inspector General Carol Fortine Ochoa.  “GSA OIG and its partners will aggressively pursue those who fraudulently obtain government contracts intended for truly small businesses.”

The settlement announced today resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery.  The lawsuit was filed by Ameliorate Partners LLP in federal district court in the District of Columbia and is captioned United States ex rel. Ameliorate Partners, LLP v. ADS Tactical, Inc. et al., Case No. 13-cv-1880 (D.D.C.).  Ameliorate Partners will receive $3.6 million from the settlement with Hillier.  

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorneys’ Offices for the District of Columbia and for the Eastern District of Virginia, with assistance from the Small Business Administration’s Office of Inspector General and the General Services Administration’s Office of Inspector General. 

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

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Author: August 20, 2019