Four Convicted of Scheme to Fraudulently Obtain Millions in COVID-19 Relief Programs
Friday Enforcement Wrap
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Four Convicted of Scheme to Fraudulently Obtain Millions in COVID-19 Relief Programs
After an eight-day trial, a federal jury convicted four California residents for their scheme to submit fraudulent loan applications seeking millions of dollars in the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds.
Three defendants were each found guilty of one count of conspiracy to commit bank fraud and wire fraud, eleven counts of wire fraud, eight counts of bank fraud, and one count of conspiracy to commit money laundering. Two of the defendants were also convicted of aggravated identity theft. The fourth defendant was found guilty of one count of conspiracy to commit bank fraud and wire fraud, six counts of wire fraud, three counts of bank fraud, one count of conspiracy to commit money laundering, and one count of money laundering. As a result of the convictions, the defendants will be required to forfeit bank accounts, jewelry, watches, gold coins, three residential properties, and approximately $450,000 in cash.
The evidence presented at trial demonstrated that the defendants used false identities to submit fraudulent applications for COVID-19 relief loans and submitted fictitious identity documents, tax documents, and payroll records to lenders and the Small Business Administration to substantiate their loan applications. The defendants ultimately obtained more than $18 million in COVID-19 relief funds, which they allegedly used towards down payments on expensive real estate in Tarzana, Glendale, and Palm Desert, in addition to other luxury goods. The defendants will be sentenced on September 13, 2021, and they face between 20 to 52 years in prison.
Read the press release here.
Armed Forces Services Corporation to Pay $4.3 Million to Settle False Claims Act Allegations
Armed Forces Services Corporation d/b/a Magellan Federal (AFSC), agreed to pay $4,342,651 to the federal government to resolve allegations that AFSC violated the False Claims Act and Anti-Kickback statute when three of its former executives accepted kickbacks in exchange for awarding subcontracts on government contracts. From 2010 to 2015, a former AFSC executive allegedly directed a subcontractor to inflate the cost of services provided to AFSC for various Wounded Warrior programs and distribute the proceeds between the subcontractor, the former AFSC executive, and two others in exchange for awarding the subcontracts.
AFSC self-disclosed to the US Small Business Administration and fully cooperated in the government’s investigation. The claims resolved by the settlement agreement are allegations only; there has been no determination of civil liability.
Read the press release here.
Former Commodities Trader Sentenced to Prison for Fraud Scheme
A former precious metals trader at Deutsche Bank was sentenced to 12 months and one day in prison for his role in a scheme to defraud other traders on the Commodity Exchange Inc.
In September 2020, the defendant was convicted by a federal jury for conspiracy to commit wire fraud affecting a financial institution based on evidence that he engaged in a scheme with other Deutsche Bank traders to defraud other market participants. The government presented evidence that the defendant engaged in “spoofing” tactics by placing orders that he did not intend to execute to feign market interest in the commodities, thereby inducing other traders to trade at higher prices and quantities than they otherwise would.
Read the press release here.
Prison Health Care Provider Settles False Claims Act Allegations for $695,000
Alabama-based NaphCare Inc., a prison health care provider, has agreed to pay $694,593 to resolve allegations that the company knowingly submitting false claims to the Federal Bureau of Prisons for services provided to BOP inmates in violation of the False Claims Act.
NaphCare subcontracts with physicians to provide health care services to inmates in BOP facilities throughout the United States. The government alleged that, between January 2014 and June 2020, when certain physicians did not indicate the type of service performed on onsite visit sheets, NaphCare charged BOP for higher-level services than what the physicians actually provided, thereby submitting false claims to the government.
Read the press release here.
Our Analysis
Managing Third-Party Risk: Recent FCPA Action Reflects Government’s Continued Focus on Intermediaries
Amec Foster Wheeler Energy Limited (the Company), a subsidiary of John Wood Group plc (Wood), a United Kingdom-based global engineering company, agreed to pay more than $41 million in penalties and disgorgement for alleged violations of the Foreign Corrupt Practices Act (FCPA).
According to the three-year deferred prosecution agreement (DPA) entered into by the Company, and a separate SEC Consent Order, the Company engaged in a scheme to obtain a contract from the Brazilian state-owned oil company Petroleo Brasileiro S.A. (Petrobras), known as the UFN-IV project. Specifically, from approximately 2011-2014, the Company allegedly conspired with third parties and others, including an Italian sales agent affiliated with a Monaco-based intermediary company, to pay bribes to decision-makers at Petrobras in order to win an approximately $190 million contract to design a gas-to-chemicals complex in Brazil.
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