DOJ Cracks Down with Corporate Criminal Charges in Several Cases

Betty Q. Hixson

DOJ Brings Charges Against 21 People in $150 Million COVID-19 Fraud Action 

The DOJ announced charges against 21 people across nine federal districts for their alleged role in pandemic-related fraud schemes resulting in over $149 million in false billings to federal programs. This is the largest coordinated law enforcement action targeting COVID-19 fraud brought to date.  

The defendants include individuals who allegedly manufactured and distributed fake COVID-19 vaccination record cards, including an individual who used her role as a pharmacy director to obtain real lot numbers for the Moderna vaccine that were used to falsify vaccination record cards. Another set of defendants induced patients to provide their personal identifying information and saliva or blood samples and then used this information to submit fraudulent claims to Medicare for unnecessary and expensive tests or services. Several defendants also face money laundering charges for laundering proceeds from fraudulent claims through shell corporations and then using the funds to purchase real estate and luxury items.

In addition to criminal charges, the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS) separately announced that it brought 28 administrative actions against providers for their alleged involvement in fraudulent schemes.

The DOJ’s press release can be found here.

International Waste Company Agrees To Pay $84 Million To Resolve Bribery Allegations

Stericycle Inc., an Illinois-based international waste management company, entered into a three-year deferred prosecution agreement (DPA) with the DOJ to settle criminal information charging it with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and one count of conspiracy to violate the books and records provisions of the FCPA. As part of the resolution, Stericycle has agreed to pay a criminal penalty of $52.5 million. Stericycle separately agreed to pay an additional $28 million to resolve a parallel investigation by the SEC.  

According to the DPA, from about 2011 to 2016, Stericycle conspired to pay approximately $10.5 million in bribes to foreign officials in Brazil, Mexico, and Argentina. These bribes were allegedly concealed through falsified documents, including fake or inflated invoices, that represented the bribe payments as legitimate business expenses. The bribes were allegedly paid in cash and calculated as a percentage of the value of government contracts held by Stericycle. The government claims that Stericycle earned approximately $21.5 million in profits through government contracts earned as a result of the bribes.

As part of the DPA, Stericycle has agreed to the imposition of a two-year independent compliance monitor and to continue to cooperate with the government in any ongoing or future investigations relating to the bribery scheme.

The DPA can be found here.

Former CFO of Brazilian Reinsurance Company Charged With Spreading False Information

Fernando Passos, the former CFO of publicly-traded Brazilian reinsurance company IRB Brasil Resseguros SA, was charged with one count of securities fraud and three counts of wire fraud for allegedly propping up stock prices by spreading false information about the company’s investors. Specifically, the former CFO allegedly claimed that U.S. investment firm had invested in IRB.  

According to court documents, beginning around February 2020, Passos falsified documents, such as shareholder lists, to include the investment as a purported investor, and directed others to plant media stories reporting that the investment firm had purchased IRB shares. Passos allegedly discussed his plans to spread materially false information with IRB employees. Ultimately, IRB’s stock prices dropped after the investment firm published a statement that it was not, nor did it intend to, become a shareholder of IRB.

Passos remains at large. If convicted, he faces up to 20 years in prison on each charged count.   

The superseding indictment can be found here.

2016 Congressional Candidate and Casino Executive Plead Guilty To Hiding Political Payments 

Darryl Brent Waltz, a former Indiana State Senator and 2016 candidate for U.S. Congress, and John Keeler, a former Indianapolis casino executive, pleaded guilty for their roles in a scheme to make and receive secret political contributions.  

Keeler is alleged to have funneled about $41,000 from the corporate funds of his gaming company to Maryland-based political consultant Kelley Rogers, who is currently serving a three-year prison sentence for a separate scheme to raise money from fake political action committees, for the benefit of the Marion County Republican Central Committee. The government claims that Keeler disguised the payments as consulting fees for Rogers and then reported them as tax-deductible business expenses of his gaming company.  

Waltz is alleged to have worked with Rogers to funnel $40,500 in corporate funds from the gaming company to his 2016 congressional campaign through straw contributors and then lying about the scheme during an interview with the FBI.  

Waltz faces up to 10 years in prison, and Keeler faces up three years in prison. Both men are scheduled to be sentenced at a later date.

The DOJ press release can be found here.

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