Business Crimes Hotline

DISTRICT OF COLUMBIA

Charges Levied Against 91 Individuals As Part of Coordinated Medicare Fraud Strike Force Efforts

On Sept. 7, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced assorted charges against 91 individuals across eight cities nationwide, as part of the joint Department of Justice (DOJ) and HHS Medicare Fraud Strike Force. The coordinated efforts ' executed throughout late August and early September ' were tied to $295 million in alleged overbilling, the highest amount of alleged false Medicare billings targeted in a single Strike Force operation. The Medicare Fraud Strike Force operations are part of the larger joint initiative between DOJ and HHS, known as the Health Care Fraud Prevention & Enforcement Action Team (HEAT), which was first announced in May 2009.

The charged individuals, a group that includes doctors, nurses and other medical professionals, are accused of participating in a variety of Medicare fraud schemes, including schemes tied to durable medical equipment (DME), home health care, occupational and physical therapy, mental health services, and psychotherapy. In addition to health care fraud, the announced charges include conspiracy, anti-kickback statute violations, and money laundering counts.

In announcing the charges, the Attorney General stated: “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,” adding that “[o]ur 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.”

Assistant Attorney General for the DOJ's Criminal Division, Lanny A. Breuer, further added, in part: “From Brooklyn to Miami to Los Angeles, the defendants allegedly treated the Medicare program like a personal piggy bank. Today's Strike Force operations should serve as a wake-up call to would-be fraudsters nationwide. With Strike Force teams now in nine cities across the country, and employing sophisticated, data-driven law enforcement methods, we are determined to hold criminally responsible those who defraud Medicare.”

FLORIDA

Former Latin Node Inc. CEO's Conviction Leads to 46-month Prison Sentence

On Sept. 7, former Latin Node Inc. (Latin Node) CEO Jorge Granados was sentenced by Judge Joan A. Leonard of the United States District Court for the Southern District of Florida to a 46-month prison sentence, along with an additional two-year term of supervised release, after the former telecommunications executive pleaded guilty in May of this year to conspiracy to violate the Foreign Corrupt Practices Act's (FCPA) anti-bribery provisions.

The scheme to which Granados pled guilty involved more than $500,000 in bribes paid between September 2006 and June 2007. Granados admitted to authorizing the payments, in an attempt to gain business advantages for Latin Node from Empresa Hondure'a de Telecomunicaciones (Hondutel), the Honduran-state-owned telecommunications company. The payments, many of which were laundered through Guatemalan subsidiaries of Latin Node or made to accounts controlled by Honduran government officials, were discovered by eLandia International Inc. and subsequently disclosed by the company to the U.S. government, after its 2007 acquisition of Latin Node. In connection with the scheme, Latin Node pled guilty to a single-count of violating the FCPA in April 2009 and agreed to pay a $2 million fine. In addition, Latin Node's former CFO, vice president for business development, and chief commercial officer each also previously pled guilty to conspiracy to violate the FCPA for their respective roles in the Honduran bribery scheme. The three former employees separately await sentencing later this year.

RHODE ISLAND

Google Agrees to $500 Million Forfeiture Tied to Canadian Online Pharmacies

On Aug. 24, the DOJ announced that Google Inc. had agreed to forfeit $500 million as part of a settlement relating to advertisements by online Canadian pharmacies that were posted on the online search engine. According to the government, its investigation originated via a separate, unrelated financial fraud investigation.

Specifically, the government alleged that Google allowed the Canadian pharmacies to make targeted advertisements, via its AdWords program, to U.S. consumers. These advertisements led to the unlawful importation of controlled and uncontrolled prescription drugs into the U.S. The government noted that, as far back as 2003, Google was aware of the general prohibitions against shipment of prescription drugs from Canada into the U.S., under the Federal Food, Drug, and Cosmetic Act and the Controlled Substances Act. The forfeiture amount represents Google's gross revenue from the advertising, along with the Canadian pharmacies' gross sales revenue to U.S. customers. Google also agreed to certain reporting and compliance requirements as part of the settlement.

In announcing the settlement, the U.S. Attorney for the District of Rhode Island, Peter F. Neronha, stated: “This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google's knowledge and assistance, into the United States, directly to U.S. consumers,” adding that “[i]t is about taking a significant step forward in limiting the ability of rogue on-line pharmacies from reaching U.S. consumers, by compelling Google to change its behavior. It is about holding Google responsible for its conduct by imposing a $500 million forfeiture, the kind of forfeiture that will not only get Google's attention, but the attention of all those who contribute to America's pill problem.”

Business Crimes Hotline and In the Courts were written by Associate Editors Matthew J. Alexander and Kenneth S. Clark, respectively. Both are associates at Kirkland & Ellis LLP, Washington, DC.

DISTRICT OF COLUMBIA

Charges Levied Against 91 Individuals As Part of Coordinated Medicare Fraud Strike Force Efforts

On Sept. 7, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced assorted charges against 91 individuals across eight cities nationwide, as part of the joint Department of Justice (DOJ) and HHS Medicare Fraud Strike Force. The coordinated efforts ' executed throughout late August and early September ' were tied to $295 million in alleged overbilling, the highest amount of alleged false Medicare billings targeted in a single Strike Force operation. The Medicare Fraud Strike Force operations are part of the larger joint initiative between DOJ and HHS, known as the Health Care Fraud Prevention & Enforcement Action Team (HEAT), which was first announced in May 2009.

The charged individuals, a group that includes doctors, nurses and other medical professionals, are accused of participating in a variety of Medicare fraud schemes, including schemes tied to durable medical equipment (DME), home health care, occupational and physical therapy, mental health services, and psychotherapy. In addition to health care fraud, the announced charges include conspiracy, anti-kickback statute violations, and money laundering counts.

In announcing the charges, the Attorney General stated: “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,” adding that “[o]ur 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.”

Assistant Attorney General for the DOJ's Criminal Division, Lanny A. Breuer, further added, in part: “From Brooklyn to Miami to Los Angeles, the defendants allegedly treated the Medicare program like a personal piggy bank. Today's Strike Force operations should serve as a wake-up call to would-be fraudsters nationwide. With Strike Force teams now in nine cities across the country, and employing sophisticated, data-driven law enforcement methods, we are determined to hold criminally responsible those who defraud Medicare.”

FLORIDA

Former Latin Node Inc. CEO's Conviction Leads to 46-month Prison Sentence

On Sept. 7, former Latin Node Inc. (Latin Node) CEO Jorge Granados was sentenced by Judge Joan A. Leonard of the United States District Court for the Southern District of Florida to a 46-month prison sentence, along with an additional two-year term of supervised release, after the former telecommunications executive pleaded guilty in May of this year to conspiracy to violate the Foreign Corrupt Practices Act's (FCPA) anti-bribery provisions.

The scheme to which Granados pled guilty involved more than $500,000 in bribes paid between September 2006 and June 2007. Granados admitted to authorizing the payments, in an attempt to gain business advantages for Latin Node from Empresa Hondure'a de Telecomunicaciones (Hondutel), the Honduran-state-owned telecommunications company. The payments, many of which were laundered through Guatemalan subsidiaries of Latin Node or made to accounts controlled by Honduran government officials, were discovered by eLandia International Inc. and subsequently disclosed by the company to the U.S. government, after its 2007 acquisition of Latin Node. In connection with the scheme, Latin Node pled guilty to a single-count of violating the FCPA in April 2009 and agreed to pay a $2 million fine. In addition, Latin Node's former CFO, vice president for business development, and chief commercial officer each also previously pled guilty to conspiracy to violate the FCPA for their respective roles in the Honduran bribery scheme. The three former employees separately await sentencing later this year.

RHODE ISLAND

Google Agrees to $500 Million Forfeiture Tied to Canadian Online Pharmacies

On Aug. 24, the DOJ announced that Google Inc. had agreed to forfeit $500 million as part of a settlement relating to advertisements by online Canadian pharmacies that were posted on the online search engine. According to the government, its investigation originated via a separate, unrelated financial fraud investigation.

Specifically, the government alleged that Google allowed the Canadian pharmacies to make targeted advertisements, via its AdWords program, to U.S. consumers. These advertisements led to the unlawful importation of controlled and uncontrolled prescription drugs into the U.S. The government noted that, as far back as 2003, Google was aware of the general prohibitions against shipment of prescription drugs from Canada into the U.S., under the Federal Food, Drug, and Cosmetic Act and the Controlled Substances Act. The forfeiture amount represents Google's gross revenue from the advertising, along with the Canadian pharmacies' gross sales revenue to U.S. customers. Google also agreed to certain reporting and compliance requirements as part of the settlement.

In announcing the settlement, the U.S. Attorney for the District of Rhode Island, Peter F. Neronha, stated: “This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google's knowledge and assistance, into the United States, directly to U.S. consumers,” adding that “[i]t is about taking a significant step forward in limiting the ability of rogue on-line pharmacies from reaching U.S. consumers, by compelling Google to change its behavior. It is about holding Google responsible for its conduct by imposing a $500 million forfeiture, the kind of forfeiture that will not only get Google's attention, but the attention of all those who contribute to America's pill problem.”

Business Crimes Hotline and In the Courts were written by Associate Editors Matthew J. Alexander and Kenneth S. Clark, respectively. Both are associates at Kirkland & Ellis LLP, Washington, DC.