Business Crimes Hotline

The 107 individuals, several of whom were previously charged with additional counts as a part of prior enforcement efforts of the strike force in April 2012, are accused of participating in a number of schemes that involved submitting claims for reimbursement from Medicare for services or treatments that are alleged to have been medically unnecessary and/or, in some cases, never administered. The schemes spanned a variety of treatments and services, home health care, mental health services, physical/occupational therapy, and psychotherapy. Based on these allegations, the individuals face a host of charges that include health care fraud and conspiracy to commit health care fraud, as well as anti-money laundering counts and violations of the anti-kickback statutes.

In announcing the charges, Attorney General Eric Holder commented that According to the government, in connection with alleged false billing of Medicare in excess of $4 billion, the Medicare Fraud Strike Force has charged more than 1,330 defendants since it began its operations more than five years ago.

VIRGINIA

Reinsurance Bond Fraud Leads to Conviction of

Company President

On April 30, the DOJ announced the conviction of Costa Rican citizen and resident Minor Vargas Calvo, by a federal grand jury in the United States District Court for the Eastern District of Virginia, for his role in a $500 million financial guarantee bond fraud scheme that the government alleged affected over 2,000 individuals, both within and outside the United States. Vargas is the president and majority shareholder of reinsurance bond company Provident Capital Indemnity (PCI) Ltd. Specifically, the government's case demonstrated how Vargas, along with PCI's purportedly independent auditor, Jorge Castillo, mislead clients of PCI, by falsely claiming ' including via audited financial statement prepared by Castillo ' that PCI had executed reinsurance contracts with several major reinsurance companies, as a means of backstopping the majority of PCI's insurance risk. For his role, Vargas was convicted of a single count of conspiracy to commit mail and wire fraud, along with three counts each of mail fraud, wire fraud, and money laundering. Both Castillo and the corporation had previously entered related guilty pleas.

In announcing the conviction, United States Attorney for the Eastern District of Virginia Neil H. MacBride commented, “Mr. Vargas lied to investors across the globe to sell almost half a billion dollars worth of 'guaranteed' bonds, which turned out to be worthless,” adding that “[h]is fraud affected thousands of victims around the world, many of whom invested their life savings with life settlement companies because of the worthless guarantees PCI made. Mr. Vargas may have thought he was safe operating his scheme from overseas, but his conviction is yet another example to global fraudsters: You can run, but you can't hide. This verdict demonstrates our ability to pursue justice on behalf of U.S. victims regardless of where the fraudsters may be hiding.”

Vargas' sentencing is scheduled for Oct. 23, 2012. He faces a 20-year maximum term of imprisonment for each of his fraud convictions, along with a 10-year maximum term of imprisonment for each money-laundering count.

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

DISTRICT OF COLUMBIA

Charges Against 107 by Medicare Fraud Strike Force

On May 2, the Department of Justice (DOJ) announced charges against 107 individuals in connection with approximately $452 million in alleged false billing. Additionally, the Department of Health and Human Services (HHS) took related administrative action against 52 health care providers, including, but not limited to, suspension of payments pending further investigation. The announced charges, which result from coordinated efforts by the Medicare Fraud Strike Force ' a joint initiative of the DOJ and HHS ' in seven cities nationwide, comprise the highest amount of alleged Medicare false billings in the strike force's history. Specifically, the enforcement actions included charges levied in Miami and Tampa Bay, FL; Baton Rouge, LA; Houston; Los Angeles; Detroit; and Chicago.

The 107 individuals, several of whom were previously charged with additional counts as a part of prior enforcement efforts of the strike force in April 2012, are accused of participating in a number of schemes that involved submitting claims for reimbursement from Medicare for services or treatments that are alleged to have been medically unnecessary and/or, in some cases, never administered. The schemes spanned a variety of treatments and services, home health care, mental health services, physical/occupational therapy, and psychotherapy. Based on these allegations, the individuals face a host of charges that include health care fraud and conspiracy to commit health care fraud, as well as anti-money laundering counts and violations of the anti-kickback statutes.

In announcing the charges, Attorney General Eric Holder commented that According to the government, in connection with alleged false billing of Medicare in excess of $4 billion, the Medicare Fraud Strike Force has charged more than 1,330 defendants since it began its operations more than five years ago.

VIRGINIA

Reinsurance Bond Fraud Leads to Conviction of

Company President

On April 30, the DOJ announced the conviction of Costa Rican citizen and resident Minor Vargas Calvo, by a federal grand jury in the United States District Court for the Eastern District of Virginia, for his role in a $500 million financial guarantee bond fraud scheme that the government alleged affected over 2,000 individuals, both within and outside the United States. Vargas is the president and majority shareholder of reinsurance bond company Provident Capital Indemnity (PCI) Ltd. Specifically, the government's case demonstrated how Vargas, along with PCI's purportedly independent auditor, Jorge Castillo, mislead clients of PCI, by falsely claiming ' including via audited financial statement prepared by Castillo ' that PCI had executed reinsurance contracts with several major reinsurance companies, as a means of backstopping the majority of PCI's insurance risk. For his role, Vargas was convicted of a single count of conspiracy to commit mail and wire fraud, along with three counts each of mail fraud, wire fraud, and money laundering. Both Castillo and the corporation had previously entered related guilty pleas.

In announcing the conviction, United States Attorney for the Eastern District of Virginia Neil H. MacBride commented, “Mr. Vargas lied to investors across the globe to sell almost half a billion dollars worth of 'guaranteed' bonds, which turned out to be worthless,” adding that “[h]is fraud affected thousands of victims around the world, many of whom invested their life savings with life settlement companies because of the worthless guarantees PCI made. Mr. Vargas may have thought he was safe operating his scheme from overseas, but his conviction is yet another example to global fraudsters: You can run, but you can't hide. This verdict demonstrates our ability to pursue justice on behalf of U.S. victims regardless of where the fraudsters may be hiding.”

Vargas' sentencing is scheduled for Oct. 23, 2012. He faces a 20-year maximum term of imprisonment for each of his fraud convictions, along with a 10-year maximum term of imprisonment for each money-laundering count.

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