5 Are Charged in Alleged Schemes at Agency on Housing

June 6, 2012

The New York Times on June 5, 2012 released the following:

“By JOSEPH GOLDSTEIN

By the time Wendell B. Walters, a former top official at a New York City agency that builds affordable housing, pleaded guilty to accepting bribes in March, he was known to be cooperating with the F.B.I. and federal prosecutors.

On Tuesday, details of what Mr. Walters has so far told the authorities began to emerge, as federal prosecutors in Brooklyn charged five more people in bribery and kickback schemes involving the city’s Department of Housing Preservation and Development, where Mr. Walters was an assistant commissioner until last year.

The charges provide further details about the $2.5 million in bribes and other benefits Mr. Walters has pleaded guilty to accepting, and also assert that he was not the only corrupt official with oversight of the city’s affordable housing program.

A criminal complaint charged one Brooklyn contractor, Panayiotis Papanicolaou, who had received contracts for several Department of Housing Preservation and Development projects, with paying $12,390 to send Mr. Walters on a honeymoon trip to Greece. A real estate developer, William B. Clarke, subsidized $50,000 worth of renovations to Mr. Walters’s home, according to a second criminal complaint, which charges that Mr. Walters promised to help Mr. Clarke’s company secure subsidies for an affordable housing project in the Bronx in return.

Prosecutors also charged a current department official, Michael Provenzano, 49, with receiving a $10,000 annual retainer between 2004 to 2009 from a contractor who wanted inside information from the agency. Mr. Provenzano supervised the inspectors who visit work sites and began providing the contractor with paperwork from the agency’s site inspections, prosecutors said.

This allowed the contractor to tailor his payrolls to match what the housing agency had observed at the job sites, prosecutors said. In fact, prosecutors said, laborers at the contractor’s job sites were routinely paid less than the required prevailing wage, and the remaining money was used to hire illegal immigrants.

Prosecutors also charged a housing official who left the agency earlier this year, Luis Adorno, 48, with participating in a kickback scheme.

The five criminal complaints unsealed against the various defendants on Tuesday in Federal District Court in Brooklyn do not mention Mr. Walters by name. But several of the complaints mention a cooperating witness who appears to be Mr. Walters; the witness is described as someone who began working at the housing agency in 1998 and rose to the level of assistant commissioner before pleading guilty this year.

“Instead of fulfilling their charge to create affordable housing for deserving New Yorkers, these defendants looked for ways to line their own pockets,” the United States attorney in Brooklyn, Loretta E. Lynch, said in a statement. The five defendants were in court on Tuesday afternoon and entered pleas of not guilty, Robert Nardoza, a spokesman for the United States attorney’s office, said.”

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

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

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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.


Men Indicted For Allegedly Defrauding Lions Gate Entertainment

March 26, 2012

The Federal Bureau of Investigation (FBI) on March 24, 2012 released the following:

“LOS ANGELES—Two men were arrested Friday by special agents with the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation after being indicted for their roles in a $2 million kickback scheme involving the Santa Monica-based film and distribution company Lions Gate Entertainment (Lionsgate), announced André Birotte, Jr., United States Attorney for the Central District of California; Steven Martinez, the Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Leslie P. DeMarco, Special Agent in Charge of IRS Criminal Investigation in Los Angeles.

Roccio James Cuccia, 31, of Downey; and Larry D. Collins, 50, of Northridge, were charged in a 14-count indictment returned by a federal grand jury in Los Angeles on Thursday, March 22, 2012. The indictment includes allegations of wire fraud, money laundering, and tax evasion.

According to the indictment, Cuccia started working as a senior buyer at Lionsgate in January 2006 and was responsible for acquiring cardboard advertising used to display Lionsgate DVDs and Blu-ray Discs at retail stores. Cuccia is alleged to have used Collins as a vendor to supply the display cases to retail stores from 2006 through 2011.

Cuccia and Collins allegedly devised a scheme whereby Lionsgate was overbilled for the number of display cases provided by Collins. The indictment alleges that by accessing Lionsgate’s computer system, Cuccia would inflate the number of previously approved display cases ordered from Collins by Lionsgate. Collins would then generate fraudulent invoices for the inflated purchase orders, the indictment alleges.

Lionsgate sent payment for the inflated purchase orders to a third party, who would then wire a substantial percentage of the Lionsgate funds to Collins. The indictment alleges that Collins would then wire a portion of these funds to Cuccia’s bank account. The indictment alleges that Cuccia and Collins caused losses to Lionsgate totaling approximately $2,064,000.

The indictment lists 10 wire transfers totaling over $745,000, which represents funds received by Collins as part of the scheme, a portion of which were then wired to Cuccia. Cuccia is alleged to have used part of the funds to purchase a 2007 Toyota Camry Hybrid and a 2006 Mercedes Benz R350, both of which were seized on Friday by federal agents. The indictment further alleges that Cuccia failed to report his portion of the fraudulently received funds as income on his 2006 and 2007 federal tax returns.

Cuccia and Collins are each charged with 10 counts of wire fraud. In addition, Cuccia is charged with two counts of conducting a monetary transaction in criminally derived property of a value greater than $10,000 and two counts of subscribing to false tax returns.

Cuccia and Collins had an initial appearance before a federal magistrate in U.S. District Court in Los Angeles Friday afternoon and were granted bond.

If convicted of all charges alleged in the indictment, Cuccia faces a statutory maximum sentence of 226 years in federal prison, and Collins faces 200 years in federal prison.

This investigation was conducted by the Federal Bureau of Investigation, IRS-Criminal Investigation, and the Santa Monica Police Department. Lions Gate Entertainment cooperated with the investigation.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.”

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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 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 C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


FBI Arrests Two For Allegedly Defrauding Lionsgate Entertainment in a Kickback Scheme

March 26, 2012

Chicago Tribune on March 26, 2012 released the following:

“FBI arrests two for defrauding Lionsgate

Joshua L. Weinstein
Reuters

LOS ANGELES (TheWrap.com) – The FBI has arrested two California men on charges of defrauding Lionsgate Entertainment of more than $2 million in a kickback scheme that bought one of them a Mercedes, the bureau said Saturday.

Roccio James Cuccia, 31 of Downey, worked at Lionsgate as a senior buyer.

He and Larry D. Collins, of Northridge, had a kickback scheme that cheated the studio out of more than $2 million.

Cuccia, who joined Lionsgate in 2006, bought cardboard advertising for Lionsgate DVD and Blu rays at retail stores. The FBI says Cuccia used Collins as a vendor, supplying display cases to retail stores for five years.

In an indictment filed in U.S. District Court in Los Angeles on Thursday, federal prosecutors say that after the Lionsgate marketing department asked for display cases, Cuccia would go into the company’s computer system and change the number of cases requested.

He would then tell Collins, who would generate phony invoices, according to the indictment.

Lionsgate paid the inflated purchase orders to a third party, who gave much of that money to Collins, the FBI says.

“Collins would kick back a portion of these funds to … Cuccia by wiring money into … Cuccia’s bank account,” the indictment says. “Cuccia and Collins caused losses totaling approximately $2,064,000.”

The FBI says Cuccia used part of the money to buy a 2007 Toyota Camry Hybrid and a 2006 Mercedes Benz R350. Federal agents seized both cars on Friday.

The indictment also accuses Cuccia of failing to report the income on his 2006 and 2007 income tax statements.

Cuccia and Collins each are charged with 10 counts of wire fraud. Cuccia is also charged with two counts of “conducting a monetary transaction in criminally derived property of a value greater than $10,000,” and two counts of filing false tax returns.

The two appeared before a U.S. magistrate in federal court in Los Angeles Friday and were released on bond.

If convicted, Cuccia faces up to 226 years in prison and Collins faces up to 200 years in federal prison.

The FBI, IRS and Santa Monica Police Department conducted the investigation with the cooperation of Lionsgate.

The arrest came on the same day that Lionsgate released its biggest movie ever, “The Hunger Games.””

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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 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 C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Nine Health Care Professionals, Including Five Doctors, Charged in Alleged Kickback Scheme

January 25, 2012

The Federal Bureau of Investigation (FBI) on January 24, 2012 released the following:

“GRAND RAPIDS, MI— U.S. Attorney Donald A. Davis and Michigan Attorney General Bill Schuette announced today the federal indictment of eight individuals, including four licensed physicians and one licensed physician’s assistant, for conspiracy to violate the federal Anti-Kickback Statute. Additionally, a state charge was filed against a Jackson, Michigan physician for allegedly accepting kickbacks to refer his patients to certain rehabilitation facilities. All eight federally charged defendants appeared today before U.S. Magistrate Judge Hugh W. Brenneman for an initial appearance on the charge, which carries a penalty of up to five years’ imprisonment, a $250,000 fine, three years of supervised release, and restitution.

The federal indictment alleges that Babubhai Rathod owned and operated medical clinics, outpatient rehabilitation facilities, and home health care companies that paid employees and outside health care providers for the referral of patients. The Indictment identifies many of Rathod’s companies, which include Lakeshore Spine & Pain, P.C., with clinics in cities including Ludington and Edmore, Michigan, and U.S. Rehab Services, P.C., with facilities around the state, including in Mt. Pleasant, Michigan. The indictment identifies Rajesh Makwana as an administrator of Lakeshore Spine & Pain and Raju Nakum as a manager of U.S. Rehab Services.

The indictment alleges that Rathod, Makwana, and Nakum paid health care providers agreed rates for the referral of patients for electrodiagnostic testing, physical therapy, and home health care services. The indictment identifies Lino S. Dial, Jr., D.O., Natalie Schutte, P.A., Niti Thakur, M.D., Andre Blair Smith, M.D., and Muhammad Salman Rais, M.D. as health care providers who referred Medicare and Medicaid patients to companies operated by Rathod in return for illegal kickback payments. The indictment further alleges that the kickback payments were falsely disguised as reimbursement for other purported expenses, including mileage, medical director fees, continuing medical education, and contractual labor.

Kevin S. Witt, D.O., 51, is charged in 54B District Court in East Lansing, Michigan with two felony violations of MCL 400.604, which makes it a crime to receive kickbacks in exchange for referring patients for treatment elsewhere. The charge is a four-year felony. Witt was arrested this morning by Attorney General investigators and was arraigned this afternoon.

U.S. Attorney Davis stated that the state and federal charges result from a joint investigation with the Health Care Fraud Division of Michigan Attorney General Bill Schuette’s office. Special agents from the Bay City, Michigan Office of the Federal Bureau of Investigation and the Grand Rapids, Michigan Office of the U.S. Department of Health and Human Services, Office of Inspector General are coordinating the federal investigation.

U.S. Attorney Davis noted, “The federal Anti-Kickback Statute prohibits the payment of any remuneration that is designed to induce or reward medical referral decisions involving Medicare, Medicaid, and other federally-funded health care programs. In passing the anti-kickback legislation, Congress intended that medical decisions be made with the patient’s best interest in mind and not because the referral of a patient will result in a financial benefit to the referring physician. Because our health care system relies heavily on the trust and integrity of medical professionals to provide services under the appropriate conditions and in the interests of patients, we will continue to aggressively investigate allegations of fraud and kickbacks and prosecute cases where professionals have abused this trust.”

“Patients deserve to know that when a doctor refers them for additional treatment, the decision to do so is based upon quality health advice—not what is best for the doctor’s bank account,” said Attorney General Schuette. “Kickbacks with the Medicaid program don’t just hurt patients, they affect the taxpayers who support the bottom line. Medically unnecessary treatments drive up the costs of Medicaid, and taxpayers ultimately pay the price.”

Lamont Pugh III, Special Agent in Charge of the Chicago Region of the U.S. Department of Health & Human Services, Office of Inspector General echoed U.S. Attorney Davis and Attorney General Schuette’s comments. “Patients trust that their physicians are making referrals to other health care providers so they can obtain the highest quality of care, not because they financially benefit from it,” said Pugh. “Paying kickbacks and bribes in exchange for such referrals is illegal, and the OIG will aggressively investigate allegations of this nature in order to protect Medicare and Medicaid beneficiaries and taxpayer dollars.”

Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation, Detroit Field Division emphasized that, “The FBI will remain vigilant in stopping health care fraud in the State of Michigan. This type of crime affects all of our health care premiums and serves as a drain on society. The indictments of these physicians and others send a strong message that abuse of the health care system will not be tolerated.”

The charges in an indictment, as well as state charges, are merely accusations, and the defendants are presumed innocent until and unless proven guilty in a court of law.”

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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

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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.


FBI sting nabs 13 in alleged kickback scheme

December 2, 2011

The Boston Globe on December 1, 2011 released the following:

“By Todd Wallack

The US government yesterday charged 13 corporate executives, lawyers, and penny stock promoters with agreeing to pay illegal kickbacks, the result of a yearlong FBI sting operation run out of Massachusetts.

As part of the sting, an undercover FBI agent pretended to work for a local office of a New York hedge fund in an unnamed Boston suburb, according to government documents. The agent then approached both companies and intermediaries, offering to arrange for his fund to invest up to $5 million in the firms – under the condition that the companies secretly kick much of the money back to him.

Authorities said the agent met with about 30 individuals in the Boston area office from October 2010 through August 2011.

The government filed criminal charges against executives of two Massachusetts companies: Michael Lee, 51, of Hingham, chief executive of ZipGlobal Holdings Inc., a former telecommunications firm in Hingham now focused on lighting products; and Paul Desjourdy, 50, of Medfield, chief executive of Symbollon Corp./Symbollon Pharmaceuticals Inc., a specialty biotechnology firm in Medfield. Both were charged with mail fraud and conspiracy to commit securities fraud.

Eleven other defendants from across the country were charged with fraud, including Edward Henderson, 69, of Lincoln, R.I. Henderson, who helps firms obtain financing, allegedly arranged for the agent posing as a hedge fund representative to meet Desjourdy in hopes of receiving a portion of the kickback.

The Securities and Exchange Commission also filed civil charges against Lee, Desjourdy, and Henderson, alleging they manipulated trading in microcap stocks – shares of companies with a small market value that are typically traded over the counter, rather than on better-known exchanges such as Nasdaq Stock Market or the New York Stock Exchange.

Lee’s attorney, Thomas Brant, said his client was “shocked and devastated’’ by the charges, but declined to comment further. Desjourdy’s lawyer declined to comment. Henderson’s attorney could not be reached.

As result of the investigation, the SEC suspended trading of Symbollon, ZipGlobal, and five other thinly traded public companies. ZipGlobal last traded at 3 cents a share before being suspended. Symbollon last traded for less than a penny a share.

David Bergers, director of the SEC’s Boston office, said it is important to thwart kickback schemes – even involving small companies – because they can hurt investors. A tainted hedge fund investment could artificially drive up a firm’s stock price, forcing other investors to pay more for shares or misleading them about the company’s potential.

“Although the stock price for these companies may be low, the damage can be very high,’’ Bergers said.

US Attorney Carmen Ortiz said the case was novel because FBI agents were able to partner with the SEC to use undercover strategies more common to drug and public corruption cases than securities.

“It’s really important that the markets operate in a fair and honest fashion,’’ Ortiz said. “We hope it serves a deterrent factor so that others will not engage in this kind of criminal activity.’’”

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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

————————————————————–

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.


Seven Krahl Construction Executives and Employees and Two Others Indicted in Alleged Billing Fraud and Kickback Scheme

November 14, 2011

The Federal Bureau of Investigation (FBI) on November 11, 2011 released the following:

“CHICAGO— The principal owner and six top executives and employees of a former general contractor, together with two former employees of client companies, were indicted for allegedly engaging in a fraudulent billing and kickback scheme. The seven defendants affiliated with the former contractor, Krahl Construction, allegedly caused losses of $9 million and $400,000 respectively to the two client companies, while the former employees of those firms allegedly received kickbacks valued at $645,000 and $119,500, respectively. All nine defendants were charged together in a 16-count indictment returned late yesterday by a federal grand jury, 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, announced today.

Krahl Construction, which specialized in interior construction, closed its Chicago office at 322 S. Green St., in January 2010 after FBI agents executed a federal search warrant. The company also had an office in Denver.

The indictment alleges that between 2005 and 2009, certain defendants fraudulently inflated the cost of renovation projects performed by Krahl and caused the creation of false documents to support the inflated costs, resulting in overbilling at least $15 million to Company A, which suffered actual losses of at least $9 million, and losses of approximately $400,000 to Company B. At the same time, the two clients’ employees secretly used their positions to solicit and accept bribe/kickback payments and home improvements in exchange for favorable action to help Krahl obtain contracts with those companies, the indictment charges.

Company A is identified as a San Francisco-based real estate investment trust that hired Krahl to renovate portions of an eight-story building located at 350 E. Cermak, Chicago. Company B is identified as a property management firm located on Michigan Avenue, Chicago, that hired Krahl to develop commercial property in Bolingbrook known as the Tallgrass project.

Defendant John Paderta, 52, of Fontana, Wis., and formerly of Burr Ridge, the president of Krahl who owned approximately 85 percent of the company, was charged with one count of mail fraud. Also indicted were:

Thaddeus Stepniewski, 50, of Lisle and formerly of Lombard, Krahl’s chief financial officer, who was charged with 15 counts of mail and wire fraud;

Doug Harner, 47, of Chicago, Krahl’s executive vice president and part owner, who was also charged with 15 counts of mail and wire fraud;

Scott Mousel, 48, of New Orleans and formerly of Lisle, a Krahl project manager for two portions of the Cermak project, who was charged with five counts of mail fraud;

John Bak, 37, of Ringwood, Ill., also a Krahl project manager on portions of the Cermak project, who was charged with one count of mail fraud;

Heather Ellis, 34, of Midlothian, a Krahl project manager assistant on portions of the Cermak project, who was charged with one count of mail fraud;

Erin Scott, 36, of Clarendon Hills, also a Krahl project manager assistant on the Cermak project, who was charged with four counts of mail fraud;

Scott Solano, 40, of Burr Ridge, property manager for the Cermak building, first as an employee of Company C, which managed the building for Company A, and then, beginning in April 2009, as an employee of Company A, who was charged with one count of mail fraud; and

Timothy Scannell, 48, of Chicago, vice president of Company B, who managed a three-story office building and warehouse in Bolingbrook, known as the Tallgrass building, which Krahl was hired to remodel, and who was charged with one count of mail fraud.

Each defendant will be arraigned at a later date in U.S. District Court.

The indictment also seeks forfeiture from Paderta, Stepniewski and Harner of at least $9 million. Separately, it seeks forfeiture of approximately $645,000 from Solano, and approximately $119,500 from Scannell, representing the value of the bribes/kickbacks they each allegedly received.

The indictment alleges that certain defendants engaged in aspects of the scheme as follows:

  • budgets: during the budgeting phase of the Cermak projects, Paderta, Stepniewski, Harner, Mousel, Bak and Solano fraudulently identified and included fictitious costs to be added to the project budgets to generate additional profits for Krahl;
  • spreadsheets: Paderta, Stepniewski, Mousel, Bak, Ellis and others created financial spreadsheets to keep track of the fraud, identifying the actual amounts owed to subcontractors along with the inflated amounts that were billed by Krahl. Stepniewski reviewed those spreadsheets on a regular basis, and he and others manually input the inflated amounts into the accounting records;
  • sham companies: Paderta instructed Stepniewski to set up sham companies that could be used to fraudulently obtain payment from customers, and Stepniewski arranged for those companies to be incorporated, knowing that they would be shell corporations used for fraudulent billing purposes;
  • creation of false documents: Paderta, Stepniewski, Harner, Mousel, Bak, Ellis, Scott and others created documents containing false information to support the inflated prices being charged by Krahl. Those documents included fraudulent invoices, change orders, lien waivers, applications and certifications for payment, and numerous documents from the sham companies. Certain documents were created by cutting and pasting information and signatures. Some documents contained forged signatures and falsely notarized signatures. Krahl maintained two sets of files; one containing legitimate documents, and the other containing false and fraudulent documents;
  • inflated amounts: Paderta decided on the inflated amounts that should be added to certain invoices, and he gave Mousel, Bak and others that information. Mousel and Bak created inflated invoices or made handwritten changes on documents to inflate the charges and gave those documents to Stepniewski Ellis and Scott, who then created new documents using the inflated numbers. On some occasions, Harner told Mousel and Bak to inflate certain costs for Company A projects;
  • inflated bids: Paderta, Stepniewski, Harner, Mousel, Bak, Ellis, Scott and others inflated bids to support the overstated invoices that were submitted for payment. They also inflated bids in order to make it appear that certain sham companies had submitted lower bids, which justified awarding the work to the sham companies. Paderta gave Bak inflated amounts to include in certain bid proposals, which Bak did;
  • false documents to Company A: Paderta, Stepniewski, Harner, Mousel, Bak, Ellis, Scott, Solano and others caused false and fraudulent invoices to be submitted to Company A, as well as other false documents, resulting in over-billing of at least approximately $15 million. Paderta, Stepniewski and Harner received substantial salary and bonus payments as a result of the overstated charges paid by Company A to Krahl;
  • Company A’s request: in December 2009, in response to Company A’s request for documents pertaining to the Cermak projects, Paderta, Stepniewski, Mousel and Ellis provided to Company A copies of numerous false and fraudulent documents, which had previously been submitted to Company A, showing inflated and fictitious costs, knowing that they were false and fraudulent; and
  • Company B: Paderta, Stepniewski, Harner and others submitted false and fraudulent documents to Company B, including invoices, payment applications, and lien waivers, falsely representing that at least three of the sham companies—Harvey Glass, Everygreene Electric, and Great Lakes Illinois Supply—had provided services and materials. In fact, Paderta, Stepniewski and Harner knew that those sham companies had not provided such services or materials.

Regarding bribes and kickbacks, the indictment alleges that Solano solicited and accepted kickbacks from Krahl, including payments totaling approximately $520,000 and renovations on Solano’s home totaling approximately $125,000. The renovations included work on the basement, general repairs, new windows, and installation of a generator and new televisions. In exchange for the kickbacks, Solano promised to, and did, take favorable action on behalf of Krahl as requested and as opportunities arose, including helping Krahl obtain contracts from Company A, while Solano was employed at Company A and elsewhere.

Scannell allegedly solicited and accepted kickbacks from Krahl, including payments totaling approximately $100,000, as well as renovations on his home totaling approximately $19,500. In exchange for the kickbacks, Scannell promised to take favorable action on behalf of Krahl as requested and as opportunities arose, including agreeing to help Krahl obtain contracts from Company B, while Scannell was employed at Company B.

The government is being represented by Assistant U.S. Attorneys Stephen Heinze, Jacqueline Stern and John Kness.

Each count of mail and wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, or a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory United States Sentencing Guidelines.

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.”

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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 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.


4 arrested in alleged government bribery case

October 4, 2011

The Associated Press (AP) on October 4, 2011 released the following:

“WASHINGTON (AP) — Two employees of the U.S. Army Corps of Engineers and two others have been arrested in a bribery and kickback scheme.

The top federal prosecutor for the District of Columbia, Ronald Machen, plans to announce the arrests at a news conference Tuesday afternoon.

The names of the defendants were not immediately released.

The other two under arrest are the director of contracts for a Virginia-based company and the son of one of the Army Corps employees.

A law enforcement official who spoke on the condition of anonymity says the scam involved more than $20 million in bribes and kickback payments, and promised payments.

The official was not authorized to discuss specifics about the case before the U.S. attorney’s announcement.”

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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