Business Crimes Hotline

In pleading guilty, Daws admitted that he fraudulently recorded as revenue for the fourth quarter of 1997 a $3.7 million purchase order from Data Processing Systems (DPS). Daws conceded that this transaction should not have been recorded under Generally Accepted Accounting Principles (GAAP) because Cylink had not yet received a required letter of credit from DPS guaranteeing the payment of the order. He admitted that he intentionally and fraudulently hid from Cylink's outside auditors both that a letter of credit was required and that Cylink had not received the letter of credit.

Also in pleading guilty, Daws admitted that he agreed with Cylink's former Vice President of Sales, Thomas Butler, to record as revenue for the second quarter of 1998 a $903,000 purchase by Federal Data Corporation (FDC) that should not have been recorded. Daws conceded that he knew, as a result of the terms in the “out letter” that accompanied the transaction, that the transaction could not be recorded as revenue in the second quarter because FDC had not made a firm commitment to purchase the product. Nevertheless, Daws admitted that he ordered the purchase to be recorded as revenue because the transaction allowed Cylink to meet its sales goal for the second quarter. Butler previously pled guilty to conspiring with Daws.

CONNECTICUT

Ambulance Company Pleads Guilty to Federal Health Care Fraud

Professional Ambulance Service of Norwich, Inc., an ambulance company, pled guilty to federal heath care fraud and entered into a civil settlement with the United States and the State of Connecticut to resolve its civil liability for allegedly submitting false claims to the Medicare, Medicaid, and TRICARE programs.

Medicare pays for ambulance transportation only if the patient is “non-ambulatory,” which is defined as unable to get up from bed without assistance or unable to sit in a chair or wheelchair. From 1999 through 2001, Professional Ambulance allegedly submitted claims to Medicare and TRICARE (a federal program that provides health care to members of the armed services and their families) for transportation of patients when Professional Ambulance knew the trips were not covered by Medicare. In order to obtain payment, Professional Ambulance allegedly instructed EMTs and paramedics from Professional Ambulance not to mention in medical records that a patient could walk, stand, or sit up in a chair.

CALIFORNIA

Former Cylink CFO Pleads Guilty to Conspiracy to Falsify Accounting Records and Securities Fraud

The former CFO of publicly traded Cylink Corporation, John Howard Daws, pled guilty to conspiracy to falsify accounting records and securities fraud. Cylink developed and sold network security products, and was acquired by another company in February 2003.

In pleading guilty, Daws admitted that he fraudulently recorded as revenue for the fourth quarter of 1997 a $3.7 million purchase order from Data Processing Systems (DPS). Daws conceded that this transaction should not have been recorded under Generally Accepted Accounting Principles (GAAP) because Cylink had not yet received a required letter of credit from DPS guaranteeing the payment of the order. He admitted that he intentionally and fraudulently hid from Cylink's outside auditors both that a letter of credit was required and that Cylink had not received the letter of credit.

Also in pleading guilty, Daws admitted that he agreed with Cylink's former Vice President of Sales, Thomas Butler, to record as revenue for the second quarter of 1998 a $903,000 purchase by Federal Data Corporation (FDC) that should not have been recorded. Daws conceded that he knew, as a result of the terms in the “out letter” that accompanied the transaction, that the transaction could not be recorded as revenue in the second quarter because FDC had not made a firm commitment to purchase the product. Nevertheless, Daws admitted that he ordered the purchase to be recorded as revenue because the transaction allowed Cylink to meet its sales goal for the second quarter. Butler previously pled guilty to conspiring with Daws.

CONNECTICUT

Ambulance Company Pleads Guilty to Federal Health Care Fraud

Professional Ambulance Service of Norwich, Inc., an ambulance company, pled guilty to federal heath care fraud and entered into a civil settlement with the United States and the State of Connecticut to resolve its civil liability for allegedly submitting false claims to the Medicare, Medicaid, and TRICARE programs.

Medicare pays for ambulance transportation only if the patient is “non-ambulatory,” which is defined as unable to get up from bed without assistance or unable to sit in a chair or wheelchair. From 1999 through 2001, Professional Ambulance allegedly submitted claims to Medicare and TRICARE (a federal program that provides health care to members of the armed services and their families) for transportation of patients when Professional Ambulance knew the trips were not covered by Medicare. In order to obtain payment, Professional Ambulance allegedly instructed EMTs and paramedics from Professional Ambulance not to mention in medical records that a patient could walk, stand, or sit up in a chair.