FBI: “Chicago Defense Attorney Indicted for Perjury and Conspiracy to Obstruct Justice”

August 25, 2014

The Federal Bureau of Investigation (FBI) on August 21, 2014 released the following:

“James L. Santelle the United States Attorney for the Eastern District of Wisconsin announced today the indictment in the Northern District of Illinois of Attorney Beau B. Brindley (age: 36) and Marina Collazo (age: 30) of Chicago in connection with a scheme to present perjured testimony in the 2009 trial of United States v. Alexander Vasquez, in federal district court in Chicago.

Although the crime is alleged to have occurred in Chicago, the United States Attorney’s Office there has recused itself in the matter and it has been transferred to the United States Attorney’s Office for the Eastern District of Wisconsin, in Milwaukee. However, all legal proceedings in this case will take place in Chicago.

The indictment is based upon allegations that Mr. Brindley, a Chicago criminal defense attorney, caused Ms. Collazo to commit perjury in the trial of Mr. Vasquez, a Brindley client. The indictment contains five counts:

  • Count One charges both defendants with a conspiracy to obstruct justice through the presentation of false testimony, in violation of 18 U.S.C. § 371. The maximum possible penalty for this offense is a fine of not more than $250,000, imprisonment for not more than five years, or both, plus a mandatory $100 special assessment and up to three years of supervised release to follow any term of incarceration.
  • Counts Two through Four charge both defendants with perjury, in violation of 18 U.S.C. § 1623(a). The maximum possible penalty for each of those counts is a fine of not more than $250,000, imprisonment for not more than five years, or both, plus a mandatory $100 special assessment and up to three years of supervised release to follow any term of incarceration.
  • Count Five charges Mr. Brindley with obstruction of justice, in violation of 18 U.S.C. § 1512(c)(2). The maximum possible penalty for this offense is a fine of not more than $250,000, imprisonment for not more than 20 years, or both, plus a mandatory $100 special assessment and up to three years of supervised release to follow any term of incarceration.

This case is being investigated by the Federal Bureau of Investigation. The case will be prosecuted by Assistant United States Attorneys Michael J. Chmelar and Mel S. Johnson.

The public is cautioned that an indictment is merely an accusation and the defendants are presumed innocent unless and until proven guilty.”

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Attorney and Former Edgewater Hospital Owner Indicted for Allegedly Lying and Obstructing Justice to Impede U.S. and Bank Efforts to Collect Judgements Totaling More Than $188 Million

October 4, 2011

The Federal Bureau of Investigation (FBI) on October 3, 2011 released the following:

“CHICAGO— An Indiana attorney was arrested today in Florida on federal charges alleging that he and his onetime client, the former owner and chief executive of the bankrupt Edgewater Hospital and Medical Center in Chicago, committed perjury and obstruction of justice to thwart efforts by the government and a bank creditor to collect civil judgments totaling approximately $188 million involving fraud that resulted in Edgewater’s collapse. The lawyer, Frederick M. Cuppy, was charged for the first time in a 10-count indictment that follows a criminal complaint that was unsealed in May 2008 against his former client and Edgewater’s former owner, Peter G. Rogan. The indictment, which was returned by a federal grand jury last Wednesday, was unsealed today following Cuppy’s arrest, announced Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation.

Cuppy, 70, of Ft. Lauderdale, Fla., and Rogan, 65, currently residing in Vancouver, British Columbia, were each charged with one count of conspiracy to obstruct justice. Cuppy was also charged with three counts of perjury and three counts of obstruction of justice. He appeared this morning before a magistrate judge in Federal Court in Ft. Lauderdale and remains in custody pending further court proceedings.

Rogan, formerly of Valparaiso, Ind., who was also charged with two counts of perjury and one count of obstruction of justice, remains free on bond in Vancouver, where he was detained in 2008 by the Canada Border Services Agency upon returning from a trip to China. Rogan was denied admission to Canada based on Canadian immigration law, but he was allowed to remain there while contesting the denial of admission and he continues to face Canadian immigration proceedings to determine whether or not he may be admitted or must leave.

Rogan once owned Edgewater Hospital and later sold it, but continued to control the hospital and medical center through various management companies he owned. The hospital, located at 5700 North Ashland, closed in December 2001 and entered bankruptcy in 2002, about the same time four doctors, a vice president, and the management company pleaded guilty to federal criminal health care fraud charges involving the payment of kickbacks for patient referrals and medically unnecessary hospital admissions, tests, and services.

Rogan was not charged criminally at that time, but in 2002, the United States filed a civil lawsuit against him alleging that was responsible for Edgewater’s submission of millions of dollars of false claims for reimbursement under the Medicare and Medicaid programs, United States v. Peter Rogan, et al., 02 C 3310 (N.D. Il.). In September 2006, following a bench trial, U.S. District Judge John Darrah entered a judgment against Rogan for $64,259,032, and found that Rogan had testified falsely, destroyed documents and obstructed justice, United States v. Rogan, 459 F. Supp.2d 692 (N.D. Il. 2006). The judgment was upheld on appeal in 2008, United States v. Rogan, 517 F. 3d 449 (7th Cir. 2008).

Also in 2002, Dexia Crédit Local, a bank that extended credit financing to Edgewater Medical Center, filed a civil fraud lawsuit against Rogan and his companies. Dexia Crédit Local v. Rogan, et al., 02 C 8288 (N.D. Il.). In 2007, Dexia was awarded a judgment of more than $124 million.

The United States and Dexia separately pursued legal remedies to enforce their judgments and collect the money that Rogan and his companies owed. These post-judgment procedures included depositions, citations, and subpoenas to discover the nature, extent and location of any assets Rogan owned or controlled, including offshore trusts that Rogan controlled. In 1996, Rogan created the “Peter G. Rogan Irrevocable Trust 001” (the Rogan Trust), in the Bahamas to protect his assets from future judgments. By approximately 2002, the Rogan Trust had assets of approximately $28 million, according to the indictment. Cuppy and an unnamed Florida lawyer helped Rogan create the trust, establish its terms, and choose an offshore location. Oceanic Bank and Trust Ltd., (Bahamas), served as a successor trustee of the Rogan Trust.

The indictment alleges that between 2002 and October 2010, Rogan and Cuppy conspired to obstruct justice in both the government’s and Dexia’s cases in federal court in Chicago by impeding the courts and the parties from obtaining complete and accurate information as to the nature, operation and control of the Rogan Trust, its assets, and its distributions. Between 2002 and 2006, more than $11 million was distributed from the trust for the benefit of Rogan and Rogan’s wife, the indictment alleges.

As part of the conspiracy, Rogan and Cuppy allegedly made incomplete, inaccurate, and misleading statements in depositions and to the judges, the United States, and Dexia about the Rogan Trust; filed an affidavit (Rogan) and a declaration (Cuppy) containing incomplete, inaccurate, and misleading information; and caused the trustee to withhold trust-related documents.

In December 2006, Rogan responded to the government’s collection efforts by filing an affidavit with the court in which he denied that he exercised any control over the Rogan Trust and its income or assets, asserted that he had no control over distributions from the trust, and asserted that he did not have ready access to the assets of the trust. The indictment alleges that those statements were false and that, in fact, Rogan controlled the trust and its income and assets and had ready access to its funds.

In 2009 and 2010, Cuppy allegedly impeded collection efforts by falsely stating that he did not have authority to instruct the trustee about the disposition of assets; did not cause the trustee to distribute funds to Rogan’s wife; and had not taken steps to ensure that the trustee would not produce documents in response to Dexia’s discovery efforts. Cuppy also allegedly lied to the court when he testified under oath that he did not remember telling an employee of the trustee to tell an unnamed Chicago lawyer that no information would be given out about the Rogan Trust.

The United States is being represented by Assistant U.S. Attorneys Andrew S. Boutros and Daniel Gillogly.

Conspiracy to obstruct justice and obstruction of justice carry a maximum penalty of 20 years in prison on each count and each count of perjury carries a maximum of five years, and all of the charges carry a maximum fine of $250,000 on each count. If convicted, the court must impose a reasonable sentence under the advisory United States Sentencing Guidelines and federal sentencing statutes.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Joseph F. Skowron III Pled Guilty in Manhattan Federal Court to conspiracy to Engage in Insider Trading and Obstruction of Justice

August 16, 2011

The U.S. Attorney’s Office Southern District of New York on August 15, 2011 released the following:

“FORMER HEDGE FUND PORTFOLIO MANAGER JOSEPH “CHIP” SKOWRON PLEADS GUILTY IN MANHATTAN FEDERAL COURT TO INSIDER TRADING SCHEME INVOLVING CLINICAL DRUG TRIAL

Inside Tips Allowed Fund to Avoid $30 Million in Losses

PREET BHARARA, the United States Attorney for the Southern District of New York, announced that JOSEPH F. SKOWRON III, a/k/a “Chip Skowron,” a former portfolio manager of the health care unit of a hedge fund group (the “Hedge Fund”), pled guilty today to conspiracy to engage in insider trading and obstruction of justice. SKOWRON used material, non-public information (“Inside Information”) that he received from YVES BENHAMOU, a doctor who served as an advisor on a clinical drug trial, to avoid approximately $30 million in trading losses. SKOWRON obstructed justice by urging BENHAMOU to lie to the U.S. Securities and Exchange Commission (“SEC”) during an investigation into his trading. SKOWRON pled guilty in Manhattan federal court before U.S. District Judge DENISE L. COTE.

Manhattan U.S. Attorney PREET BHARARA said: “Chip Skowron is the latest example of a portfolio manager willing to pay for proprietary, non-public information that gave him an illegal trading edge over the average investor. He seized upon the opportunity presented by his advance knowledge to avoid $30 million in losses on the basis of information concerning just one stock. The integrity of our market is damaged by people who, like Chip Skowron, engage in insider trading, and they will continue to be prosecuted by this office.”

According to the Information, a Complaint previously filed in this case, other court filings, and statements made during today’s guilty plea proceeding:

During the period of the insider trading scheme, SKOWRON was responsible for the Hedge Fund’s investment decisions in public companies, including the biopharmaceutical company Human Genome Sciences, Inc. (“HGSI”), that were involved in the development of drugs to treat hepatitis C. BENHAMOU was a medical doctor with an expertise in hepatitis treatment who served on an HGSI steering committee that oversaw a clinical trial of a drug called Albuferon. At the same time, BENHAMOU also worked as a consultant for an expert networking firm that, for a fee, put him in contact with portfolio managers and other investors at hedge funds, including SKOWRON, who purchased and sold securities in the healthcare sector.

Beginning in April 2007, SKOWRON developed a personal and financial relationship with BENHAMOU independent of the expert networking firm. For example, SKOWRON gave BENHAMOU 5,000 euros in cash during a meeting in Barcelona, Spain. He also paid some of BENHAMOU’s expenses, including $4,624.83 in September 2007 for a New York City hotel room for him and his wife. SKOWRON also offered to hire BENHAMOU as a consultant or permanent advisor to a new hedge fund. SKOWRON gave these benefits to BENHAMOU to encourage him to provide Inside Information about the Albuferon clinical drug trial. BENHAMOU understood that SKOWRON would buy or sell HGSI stock on the basis of the Inside Information.

For example, on January 18, 2008, after learning from BENHAMOU that HGSI’s independent safety committee had recommended to discontinue a portion of the clinical trial following serious adverse side effects suffered by two patients, SKOWRON directed a trader at the Hedge Fund to “sell the hgsi,” “all of it.” On January 22, 2008, the day before HGSI announced it would discontinue a portion of the trial, BENHAMOU disclosed this information, as well as the potential of a press release from HGSI, to SKOWRON. While on the phone with BENHAMOU, SKOWRON sent an instant message to a trader at the Hedge Fund, urging him to sell the remaining HGSI shares more quickly. As a result of those communications, SKOWRON caused the Hedge Fund to sell more than 6 million shares of HGSI, thereby avoiding approximately $30 million in losses.

In addition, SKOWRON and BENHAMOU undertook efforts to conceal the insider trading scheme from regulatory authorities. Specifically, beginning in February 2008 after the SEC began investigating the Hedge Fund’s trading in HGSI stock, SKOWRON induced BENHAMOU to lie to the SEC by falsely denying that they had discussed the serious adverse events before they were made public.

SKOWRON, 42, of Greenwich, Connecticut, pled guilty to one count of conspiracy to commit securities fraud and obstruct justice. He faces a maximum penalty of five years in prison and a maximum fine of $250,000 or double the gain or loss arising from his conduct. In addition, he agreed to forfeit $5,000,000 to the United States. He is scheduled to be sentenced by Judge COTE on November 18, 2011, at 10:00 a.m.

BENHAMOU previously pled guilty in April 2011 to charges of conspiracy to commit securities fraud, securities fraud, conspiracy to obstruct justice, and making false statements to the FBI related to the scheme. He is scheduled to be sentenced by U.S. District Judge GEORGE B. DANIELS on October 20, 2011, at 10:00 a.m.

Mr. BHARARA praised the investigative work of the Federal Bureau of Investigation. He also thanked the SEC for its assistance.

This case was brought in coordination with President BARACK OBAMA’s Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage anaggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys PABLO QUIÑONES, REED M. BRODSKY, and DAVID B. MASSEY are in charge of the prosecution.”

To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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