Two Dallas-Area Residents Charged in Nationwide Medicare Fraud Strike Force Takedown

September 8, 2011

The Federal Bureau of Investigation on September 7, 2011 released the following:

“DALLAS—A Dallas-area doctor appeared in federal court today on charges related to his alleged participation in a scheme to defraud the Medicare and Medicaid programs, announced the Departments of Justice and Health and Human Services (HHS). His physician’s assistant, who joined the scheme at a later date, appeared in federal court with the doctor.

These charges are part of a nationwide takedown by Medicare Fraud Strike Force operations that led to charges against 70 defendants for their alleged participation in schemes to collectively submit more than $263.6 million in false billings to the Medicare program. As part of takedown operations last week, 18 additional defendants were charged in Detroit and one defendant was charged in Miami, in cases unsealed on Sept. 1, 2011, for their alleged roles involving Medicare fraud schemes involving approximately $29.4 million in fraudulent claims. This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in Strike Force history.

“The defendants charged in this takedown are accused of stealing precious taxpayer resources and defrauding Medicare—jeopardizing the integrity of our health care system and our nation’s most critical health care program for personal gain,” said Attorney General Holder. “Our highly coordinated, nationwide Strike Force operations are working aggressively to combat Medicare fraud and our anti-health care fraud efforts have never been more innovative, collaborative, aggressive—or effective. We will continue to work with our law enforcement partners and partners across government to fight against health care fraud.”

U.S. Attorney Jacks said, “The Dallas Strike Force continues to aggressively root out and prosecute those involved in committing heath care fraud, which costs taxpayers, patients and private insurers millions of dollars each year. Health care fraud has infiltrated every layer of the health care industry, and in this case, as in many, a physician is allegedly at the core of the scheme. Health care providers should take heed—these strike forces mean business and are committed to prosecuting those who cheat the system.”

Physician Daniel K. Leong, 53, and his physician’s assistant, Cal Graves, 31, are charged in a seven-count indictment with conspiracy to commit health care fraud and health care fraud for their roles in a Medicare and Medicaid fraud scheme involving prescription drugs and diagnostic testing at their practice in the South Dallas Community Medical Center, on Martin Luther King Blvd.

Since their inception in March 2007, Strike Force operations in nine districts have obtained indictments of more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The results of the nationwide takedown were announced today by Attorney General Holder, HHS Secretary Kathleen Sebelius, FBI Director Robert S. Mueller, Assistant Attorney General Lanny A. Breuer of the Criminal Division and Inspector General Daniel R. Levinson of the HHS Office of Inspector General (HHS-OIG). The Dallas indictments were announced by U.S. Attorney James T. Jacks of the Northern District of Texas; Special Agent in Charge Robert E. Casey, Jr. of the FBI’s Dallas Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS-OIG, Office of Investigations; and the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU).

An indictment is merely a charge and defendants are presumed innocent until proven guilty. Leong and Graves are each charged with one count of conspiracy to commit health care fraud. In addition, Leong is charged with six substantive counts of health care fraud and Graves is charged with four substantive counts of health care fraud. If convicted, each count carries a maximum statutory sentence of 10 years in prison and a $250,000 fine. In addition, restitution could be ordered.

The case is being prosecuted by Assistant U.S. Attorney Michael McCarthy.”

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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Kenneth Wayne Brown, Duane Milford Stailey, and Sharon Ware Stailey are Indicted by a Dallas Federal Grand Jury and Are Each Charged Conspiracy to Commit Theft From a Program Receiving Federal Funds

August 25, 2011

The U.S. Attorney’s Office Northern District of Texas on August 24, 2011 released the following:

“FEDERAL GRAND JURY INDICTS ADDITIONAL DEFENDANTS FOR ROLE IN CONSPIRACY TO EMBEZZLE FROM CITY OF GARLAND, TEXAS

Former City of Garland Employee, Patricia Leathers, is Currently Serving a 57-Month Prison Sentence for Her Role in the Conspiracy

DALLAS — A federal grand jury in Dallas has indicted three defendants for their role in a conspiracy to embezzle from the City of Garland, Texas, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Kenneth Wayne Brown, 50, of Denison, Texas; Duane Milford Stailey, 44, and his wife, Sharon Ware Stailey, 45, both of Leonard, Texas, are each charged with one count of conspiracy to commit theft from a program receiving federal funds.

Patricia Leathers, 63, of Rowlett, Texas, a former risk management adjustor for the City of Garland, pleaded guilty in December 2010 to the same offense. She is presently serving a 57-month sentence at the Federal Medical Center Carswell in Fort Worth, Texas. Leathers was also ordered to pay $1,968,479 in restitution to the City of Garland. Leathers’ sister, Connie M. Powell, 60, of Garland, also pleaded guilty to her role in the conspiracy. She was sentenced to a three-year term of probation and ordered to pay $64,142 in restitution.

The indictment alleges that from August 1999 through March 2008, the three defendants conspired with each other and others to embezzle from the City of Garland by creating false claims for damage and repairs to personal and real property. The reimbursement checks, issued in the true names of the defendants, as well as fictitious names, were cashed by the defendants who then shared the proceeds with Leathers.

According to the indictment, Brown endorsed and negotiated at least 14 City of Garland checks, totaling more than $102,000. In addition, Duane and Sharon Stailey fraudulently negotiated and shared in the proceeds of City of Garland checks totaling at least $482,000 of which they deposited more than $129,000 into their joint bank account.

An indictment is an accusation by a federal grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. However, if convicted, each face a maximum statutory sentence of five years in prison and a $250,000 fine. Restitution could be ordered.

The investigation was conducted by the FBI, the Garland Police Department, and the Garland Offices of the City Attorney and Internal Auditor. Assistant U.S. Attorney Katherine Miller is prosecuting the case.”

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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Texas Man Pleads Guilty to Commodities Fraud in Foreign Currency Ponzi Scheme

June 9, 2010

Ray M. White, 51, pleaded guilty today before U.S. Magistrate Judge Paul D. Stickney in Dallas to a criminal information charging him with one count of commodities fraud, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney James T. Jacks of the Northern District of Texas.

According to court documents, White admitted that in July 2008 he contracted with an investor to sell $50,000 in commodities through CRW Management LP, which White operated in Mansfield, Texas. White admitted that, from July 2008 until January 2009, he knowingly and willfully cheated and defrauded, made false statements to, and deceived the investor by making several misrepresentations in connection with the contract to sell commodities.

Specifically, according to court documents, White represented to the investor that his funds would be used to trade off-exchange foreign currency contracts and that CRW averaged 7 percent per week returns through off-exchange foreign currency trading. According to the court documents, White provided written account statements showing purported returns, and represented to this investor that CRW would maintain separate bank accounts for each investor. White admitted that in fact, these account statements were false and that he did not maintain separate bank accounts for the investors.

According to the criminal information, the vast majority of the funds were never used to trade off-exchange foreign currency. White admitted that he either misappropriated investor funds or paid them to other investors in the form of Ponzi payments. White admitted losing more than $86,500 on off-exchange foreign currency trading, rather than making the 7 percent per week profits he claimed.

According to March 2009 emergency civil enforcement actions filed in the Northern District of Texas by the U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC), White solicited at least $10.9 million from late 2006 until March 2009 from more than 250 investors to trade in the foreign currency market. The SEC and CFTC court documents also allege that CRW never traded off-exchange foreign currency, and that White lost money in the limited off-exchange foreign currency trading in which he engaged. According to the SEC and CFTC court documents, White used at most $93,900 of the $10.9 million he raised to trade in the foreign currency market. The remaining approximately $10.8 million was either misappropriated or returned to CRW customers as part of the Ponzi scheme. The complaint filed by the SEC states that White used the funds to finance his son’s car-racing career, to purchase a company called Hurricane Motorsports LLC, in Arlington, Texas, and to purchase a home and other real property.

The SEC and CFTC court documents also state that White was never registered with the SEC or the CFTC, and has never been licensed to sell securities. While White led investors to believe that his special expertise in trading foreign currencies would yield exceptional returns, in reality he was not a successful foreign currency trader and had no lucrative foreign currency trading fund or program. In fact, White filed for bankruptcy in 2003 and in 2006, a fact he concealed from investors.

White faces a maximum prison sentence of 10 years and a maximum fine of $1 million.

Foreign currency trading fraud has risen in the past few years, and the federal government is actively pursuing violations. The CFTC has jurisdiction and authority to investigate and take legal action to close down unregulated firms offering or selling foreign currency futures and options contracts to the general public. The CFTC also has jurisdiction to investigate and prosecute foreign currency fraud occurring in its registered firms and their affiliates.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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“Terri Hodge” Pleads Guilty

February 8, 2010

Gladys E. Hodge, also known as “Terri Hodge,” has pleaded guilty to various offenses related to a bribery and extortion scheme involving affordable housing developments in the Dallas area, according to U.S. Attorney James T. Jacks of the Northern District of Texas. As a condition of her plea with the government, Hodge, has agreed to resign her office and never seek or hold future public office.

Hodge entered her guilty plea before U.S. District Judge Barbara M.G. Lynn, to charges of fraud and false statements on an income tax return last Wednesday. She faces a maximum statutory sentence of three years in prison, a $100,000 fine, and restitution to the IRS.

According to the government, Hodge supported Southwest Housing Development Company, Inc. (SWH) developments which was involved with the construction of affordable housing developments in District 100. Co-defendant Cheryl L. Potashnik, who served as both chief operating officer and principal of SHW pleaded guilty to bribery in connection with benefits given to Hodge by her, her husband and SWH. 

The government also had accused Hodge of asking another co-defendant for assistance in the form of affordable housing for herself within the geographical boundaries of her political district. Beginning in April 2002, Hodge was provided with housing in one of SWH’s market-rate affordable housing development units located at Rosemont at Arlington Park in District 100. Hodge moved into the apartment and continued to renew her lease at the rental rate of $200 per month. As reflected in the executed lease agreements, the market rate for this unit was $899 per month; the difference in rent was paid by her co-defendants. The total value of the rental subsidies, and other benefits provided to Hodge by the Potashniks from 2002 through 2005 was $32,541. The plea documents further state that Hodge had additional income of $41,465, partially comprised of campaign contributions which she used for her own personal benefit.

Hodge admits to fling a tax return where she knew she had omitted income of $6,914 in 2001; $27,062 in 2002; $13,402 in 2003; $19,908 in 2004; and $6,720 in 2005.

The act of making false statements is criminalized under 18 U.S.C. § 1001. Under that section it is a crime for anyone, in any matter within the jurisdiction of the government of the United States, to knowingly and willfully falsify, conceal, or cover up by any trick, scheme, or device a material fact, or to make any materially false, fictitious, or fraudulent statements or representation. In addition, it is a crime under this statute to make or use any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry.

Those found to have violated 18 U.S.C. § 1001 can be fined, imprisoned for not more than five years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than eight years, or both.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

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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