“Twists and turns in federal honey case lead to judge’s rebuke of prosecution, dismissal of charges”

July 22, 2013

The Florida Times-Union on July 20, 2013 (updated July 21, 2013) released the following:

By Jim Schoettler

“Qiao Chu sat in a federal detention center for 18 months, missing the birth of his first child and death of his grandfather, primarily based on the work of government chemist Sharon Stricklin.

Chin Shih Chou’s wife and two children suffered as he was locked up for the same period. Wei-Tang Lo’s family also missed him, though he got out in a year.

The three men were charged in 2011 with smuggling Chinese-origin honey into Jacksonville and other ports without paying $1.1 million in tariffs that would have been required for contents of more than 50 percent honey. The arrests were the latest efforts by the federal authorities to protect domestic honey producers from a surge into the country of cheaper foreign product.

A year later, a federal judge cut Stricklin as an expert witness after finding her analysis that the barrels were predominantly filled with honey had no scientific basis. The U.S. Attorney’s Office dropped the charges in May after an independent lab ruled the barrels contained syrup, as the men originally claimed, with little to no honey at all.

Stricklin wouldn’t discuss her work when reached this month by the Times-Union at her government lab in Savannah.

“I’m under kind of a hush order,” she whispered over her office phone.

Senior federal prosecutors and agents also stayed mum about jailing the men, who were from China, Taiwan and California.

But a powerful figure who had plenty to say was U.S. District Judge Marcia Howard.

Howard’s frustration with the case can be heard after prosecutors announced plans to drop the charges in May. Six months earlier, she’d struck Stricklin as an expert witness after finding that the lab tests that found the product full of honey had no scientific basis.

Prosecutors told Howard in early May they intended to dismiss the indictment. During three days of hearings, she called the case an embarrassment. She also described it as the worst miscarriage of justice she’d witnessed in 10 years as a judge.

“It’s the American justice system being everything it is not supposed to be,” she said.
Howard said the men deserved an apology from lead prosecutor Russell Stoddard for their loss of liberty. When Stoddard refused, Howard apologized instead.

She then watched them walk free on May 8 from her Jacksonville courtroom.

COMPETITION BRINGS ARRESTS

Among the many tasks of federal Customs and Border Protection is to protect American beekeepers.

In 2001, the U.S. Commerce Department slapped a tariff of more than 200 percent on any import found to contain more than 50 percent Chinese-origin honey to appease domestic producers fearful about unfair competition. The cost is now imposed based on the weight of the shipped barrels.

Federal authorities have seized multiple shipments of suspected Chinese-origin honey brought through U.S. ports in the past 12 years without paying the required tariff. Those containers include barrels labeled as rice fructose syrup and then relabeled as honey. Some importers have been convicted, imprisoned and ordered to pay restitution.

Enter Chou, 48, from Taiwan; Chu, 25, from China; and Lo, 48, from California.

The three men, acting on behalf of a number of Chinese-based importers, sold more than 50,000 55-gallon barrels labeled as honey coast-to-coast over a two-year period, said the U.S. Attorney’s Office. Federal agents began a smuggling investigation of the trio in 2011, according to hundreds of pages of court records reviewed this month by The Times-Union.

Authorities said they seized more 21,000 barrels illegally imported into Jacksonville and 10 other ports based on sample tests. A federal grand jury indicted the men in Jacksonville in November 2011.

The men faced 20 years in prison after being charged with smuggling barrels “filled with Chinese honey,” but marked as rice fructose syrup, to avoid paying the tariffs, the U.S. Attorney’s Office said in a news release at the time. They were also charged with providing false descriptions of the goods. Authorities said that once the barrels passed through customs, they were taken to a nearby warehouse, washed of all markings and relabeled as amber honey for domestic sale.

Deemed flight risks, Chu and Chou were held in a federal detention center without bond, while Lo’s was set at $1 million. The government later placed immigration detainers on Chou and Chu, keeping them in custody for deportation even if they posted bond. Chou pleaded guilty in June 2012 through his public defender after being confronted with evidence that included Stricklin’s lab findings. He sat for 11 more months in jail awaiting sentencing.

Meanwhile, private attorneys hired by Chu and Lo devoured research about the world of Chinese-origin honey. What they learned blew apart the prosecution’s case.

A FLAWED FINDING

Dana Krueger, a chemist hired by the defense, said he was bewildered that Stricklin’s conclusions were based on finding an overabundance of pollen on microscopic samples taken from the product.

The method was scientifically unproven, unpublished and non-peer reviewed, said Krueger, who runs a food processing laboratory in Massachusetts.

“The government locking up [the defendants] for months and months and months on the basis of this evidence was a travesty,” said Krueger, who earned his bachelor’s degree in chemistry from the Massachusetts Institute of Technology.

But Eric Wenger, chairman of True Source Honey LLC, said it’s not unusual for U.S. Customs laboratories like the one in Savannah to shroud their work in secrecy and remain unpublished. Wenger said the intent is to keep people who run illegal import businesses from studying such work and circumventing the process.

The attorneys for Chu and Lo used Krueger’s testimony to refute Stricklin’s findings before Judge Howard in an August 2012 Daubert hearing, where the admissibility of expert witnesses’ testimony can be challenged. Stricklin’s own testimony didn’t help. She admitted her analysis was based on looking at a book of food microscopy and reading up on methods used to study pollen.

“I am not a pollen expert,” she told Howard.

Howard ruled in November that Stricklin’s work was unreliable and inadmissible at trial, leaving the prosecution’s case on life support. The judge pointed out months later how key the lab findings were.

“It was her test and her test alone that caused this prosecution,” Howard said in a May court hearing. She declined to comment for this story.

Rob Scroggie, a Los Angeles-based attorney for Chu, applauded Howard’s ruling. He said the charges should never have been filed.

“The testing conducted by the customs laboratory was a complete sham,” said Scroggie, who served as Chu’s co-counsel with Jacksonville attorney Mark Rosenblum.

Mitch Stone, the attorney who represented Lo, said he was incensed to learn that neither Stricklin nor any of her bosses sought more input to support the new testing method.

“They did nothing other than pow-wow among themselves,” Stone said.

While the attorneys fought to dismiss the charges — Chou’s public defender later sought to withdraw his guilty plea — prosecutors fought on. Lo eventually was released on bond after nearly a year in jail, but the other men remained in custody.

The case for Chu and Lo moved toward a June trial date as Chou waited to be sentenced.
But time had just about run out for the government’s case.

CASE DISMISSED

In April, five months after they lost the Daubert motion, prosecutors sent samples of the suspected honey to an independent German laboratory. A summary of that analysis returned May 3 found it was predominantly corn or rice syrup, with little, if any, honey.

Stoddard, the prosecutor, told Howard on May 7 that the indictment was being dismissed against all three men, but didn’t say if a new indictment would be sought for fraudulently relabeling the barrels. The smuggling allegations were felonies, while the fraud charges were misdemeanors, the defense lawyers said.

Stoddard’s mention to Howard that his case was based on the Savannah lab’s findings and not any ill will on the part of the prosecution prompted this exchange:

Stoddard: “I’m not a scientist, your honor, I’m a lawyer. … Now, with the benefit of hindsight, things would have been done differently.”

Howard: “And with that, would it not be your intention to apologize to them for the fact that, with the benefit of hindsight, it’s determined that an error was made? Isn’t that what we teach our children to do?”

Stoddard: “You are asking me if I’m personally going to apologize to them or am I going to apologize to them on behalf of the United States?”

Howard: “Probably all of the above …”

Stoddard: “I do not believe so.”

Howard: “You might want to think about that.”

Fresh from their jail cells, Chu and Chou stood before Howard the next day eager to fly home and reunite with their families. Lo, out on bond, was already free and not required to be in the courtroom.

Howard told the men she didn’t believe prosecutors did anything intentionally to hurt them or acted in bad faith, but she’d hoped Stoddard would have at least expressed his regrets.

“Because it’s my view, and as I was raised, that when the facts turn out not to be what one believed and because of that another person has in some way been harmed, that they should receive an apology,” Howard said.

“It is my sincere regret that you have spent the last 18 months in custody and I truly hate that you will go back to your home country with that impression of the United States justice, because it works, and the truth is in your case it worked ultimately. It just worked slowly. But it did work in that the charges have been dismissed. I hope that will provide some solace.”

Neither Chou nor Lo could be reached by The Times-Union. Chu, in an email of somewhat broken English, called the case unfair, offered his thanks to supporters and did what prosecutors would not.

“I want to say sorry to my family, especially my grandpa and my wife,” Chu wrote from his home in China.

His message ended with a lament over missing both the birth of his first child and the death of his grandfather while locked up in a United States detention center.

“Hope my grandpa can hear me.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

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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.


Medical Business Owner Jennifer C. Alsdorf Has Been Indicted for Allegedly Committing Medicaid Fraud, Specifically Health Care Fraud and Wire Fraud

June 19, 2013

The Federal Bureau of Investigation (FBI) on June 18, 2013 released the following:

“ATLANTA— Jennifer C. Alsdorf has been indicted on charges of health care fraud and wire fraud for filing over $500,000 in fraudulent claims with the Georgia Medicaid program.

“This defendant is charged with robbing Medicaid of over half-a-million dollars intended for children in need. Her alleged fraud includes billing for medical services never performed, for patients never seen, and in the names of medical professionals who were not working for the defendant,” United States Attorney Sally Quillian Yates. “Medicaid fraud affects individuals, families, and communities in higher costs, and, as this case shows, we have a strong federal-state alliance intent on combating this serious crime.”

“The FBI continues to work hard in ensuring that federal Medicaid funds are used in the manner intended by law and will continue to work with its various law enforcement partners in identifying, investigating, and presenting for prosecution those individuals who abuse the system,” stated Mark F. Giuliano, Special Agent in Charge, FBI Atlanta Field Office. “Anyone with information regarding health care fraud should contact their nearest FBI field office immediately.”

“It appears that Ms. Alsdorf viewed Medicaid as a slush fund to enrich herself,” said Attorney General Sam Olens. “This case sends a strong message that the federal and state governments will work together to aggressively prosecute Medicaid fraud in Georgia.”

According to United States Attorney Yates, the charges, and other information presented in court: Jennifer C. Alsdorf, 43, of Tampa, Florida, is the owner, president, and CEO of Hand in Hand Speech & Language Services Inc. The medical business is located in Tampa, Florida (and prior to 2005 in Vidalia, Georgia) and offers speech-language therapy services for children covered by Medicaid. Acting on behalf of Hand in Hand, Alsdorf contracted with speech-language pathologists to perform services under independent contractor agreements. Alsdorf would bill Medicaid for the services provided by the pathologists and then send a portion of the amount she received from Medicaid to them.

In the contracts, Alsdorf agreed to pay a set fee to the pathologists for each initial evaluation and each subsequent therapy visit rendered by the pathologists to Medicaid recipients. The fees that Alsdorf paid to the pathologists for those two services were less than, but based on, the amounts that Medicaid reimbursed for the services. Alsdorf made a profit by keeping the difference between what Medicaid paid and what she remitted to the pathologists.

After rendering services to patients, the pathologists would send Alsdorf treatment notes showing which patients they had seen, how long they had provided therapy, and which services they had provided. Alsdorf was supposed to use these notes to prepare the claims to submit to Medicaid. Unbeknownst to the speech-language pathologists, however, in addition to billing Medicaid for initial evaluations and therapy visits, Alsdorf also billed Medicaid for “sensory integration” therapy, a service the pathologists had not provided. Many of the pathologists did not even know what sensory integration therapy was and had never heard of such a service. Alsdorf did not send any of the money she received from Medicaid for this service to the pathologists. She instead kept all the money she received for sensory integration therapy.

Alsdorf also submitted claims to Medicaid for patient visits that never occurred. She submitted claims under pathologists’ names for services during times when they were not working with Hand in Hand. She also submitted claims representing that the pathologists had treated certain patients when, in fact, the pathologists had never seen or treated the patients at any time. Alsdorf is alleged to have submitted over $500,000 in fraudulent claims to Medicaid.

A federal grand jury indicted the defendant on May 21, 2013, who was arraigned today on the charges before United States Magistrate Judge Justin S. Anand.

The indictment charges 74 counts of health care fraud and 10 counts of wire fraud. Each health care fraud count carries a maximum sentence of 10 years in prison, and each wire fraud count carries a maximum sentence of 20 years in prison. Each count also carries a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment contains only allegations. The defendant is presumed innocent of the charges, and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by special agents of the Federal Bureau of Investigation and Investigators from the Georgia Medicaid Fraud Control Unit and the Georgia Department of Community Health.

Assistant United States Attorney Stephen H. McClain and Georgia Assistant Attorney General Henry A. Hibbert are prosecuting the case.”

Federal Wire Fraud Crimes – 18 U.S.C. 1343

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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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.