Alabama Pain Management Clinics Under the Microscope

It has become apparent that the national push to prosecute pain management physicians under the Federal criminal drug statutes is making its way into Alabama. With the recent proliferation of heroin deaths in Alabama, it is believed that federal law enforcement within the state are looking to crack down on “pill mills” which distribute prescription pain medicine believed to be a sort of gateway drug to heroin.

Prosecutors have made it known that they are interested in speaking with drug addicts who have been arrested for unlawful possession in an attempt to make a case against doctors that are over-prescribing pain medication. It is also believed that the DEA is reviewing prescription statistics to determine which doctors are prescribing pain medication at the highest rates.

If the prosecution makes the decision that the prescriptions are being written outside the usual course of professional practice and other than for a legitimate medical purpose, charges can be brought. The question becomes, on a case-by-case basis, who is a prosecutor that is a non-physician to say what is or is not medically necessary. This will be the issue for the jury in these cases.

These prosecutions will be high-stakes and will target prominent members of the community in Birmingham and other Alabama cities. Similar cases have made national news with pain management doctors receiving sentences of up to 20 years for federal drug conspiracy, unlawful distribution of a controlled substance, and money laundering. The money laundering allegations are typically brought in to show the doctors had a profit motive for prescribing large amounts of narcotics and used the money to purchase nice cars, homes and jewelry.

Some doctors are claiming that such prosecutions could have a chilling effect on how they treat their patients, while other doctors believe these “pill mills” give the profession a bad name. In any event, we will be hearing much more about these cases in the coming months.

Texas Woman Sentenced for Bankruptcy Fraud

Estela Martinez, 54, of Dallas, was sentenced on Friday to one year and one day in federal prison for making false statements during multiple bankruptcy filings. Martinez, who pleaded guilty in August 2013 to one count of making a false statement under the penalty of perjury, failed to show up for her July 9th sentencing hearing and was arrested at her home by authorities the following day.  She was then ordered to be held in custody until receiving her sentence on July 18th.

According to the indictment, Martinez filed six voluntary bankruptcy petitions in April 2009, July 2009, January 2011, March 2011, November 2011, and in November of 2012.  In each of the 2011 and 2012 filings, Martinez falsely and fraudulently omitted information concerning previous bankruptcy filings which she was obligated to disclose, including her assigned social security number. In each case the federal judge dismissed Martinez’s Chapter 13 bankruptcy petitions because she failed to report her income and submit other information in a timely manner to the court.

The prosecution of Martinez is part of a recent Bankruptcy Fraud Initiative within the Northern District of Texas.  Since 2013, seven debtors have been charged with various felony offenses, four have entered guilty pleas, and two have been sentenced.  Another defendant is currently awaiting trial, and two others remain fugitives.

This case was investigated by the Social Security Administration and the Office of Inspector General.  Assistant United States Attorney David Jarvis led the prosecution.

Paving Company Executive Pleads Guilty in Fraud Scheme

Kevin Hicks, 43, the former Chief Financial Officer for Boggs Paving Inc., has pleaded guilty to his participation in an $87 million fraud scheme involving government funded construction projects.  Hick is one of six participants who have been indicted in the “massive” government fraud that involved a decade of state and federal road projects.

According to court documents, Boggs Paving received 37 federally funded projects worth an estimated $87.6 million dating back as far as 2004. The company wouldn’t have received these contracts without falsely claiming that minority sub-contractors, disadvantaged business enterprises (DBEs), would receive a required percentage of the work. To conceal the fraud and make it appear as if Styx Cuthbertson Trucking Company, Inc. was doing and being paid for the necessary work, the conspirators ran payments through a nominee bank account in Styx’s name, and then funneled the money back to Boggs Paving and its affiliates.  Prosecutors also believe that the owner of Styx, John Cuthbertson, received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving.

Hicks has been released on bond and will be sentenced at a later date.  He faces penalties that include up to 25 years in prison and fines up to $750,000. Arnold Mann, a former project manager for the company, pleaded guilty to conspiracy to commit wire fraud and mail fraud charges last month.  Prosecutors expect the former company vice president, Greg Tucker, to plead guilty today to one count of conspiracy to defraud the highway department.  All three men are expected to cooperate in the ongoing investigation against their company.

This case was investigated by the United States Department of Transportation-Office of Inspector General, the Federal Bureau of Investigation, and the Internal Revenue Service. Assistant United States Attorneys Jenny G. Sugar and Michael E. Savage handled the prosecution.

Guard Recruiting Assistance Program (G-RAP) Fraud

In what is steadily becoming one of the U.S. Army’s largest financial scandals, the G-RAP recruitment program is being heavily investigated. G-RAP, short for “Guard-Recruiting Assistance Program,” is a financial incentive program to encourage active members to recruit civilians and mentor them through their experience in the National Guard. However, due to the financial benefits available to active members, numerous fraudulent schemes and scandals have recently come to light and have people across the country calling for redress.

What was G-RAP?

Beginning in late 2005 and early 2006, all 50 states and 4 U.S. territories implemented the G-RAP program. Essentially, the program allowed certain active members (with actual recruiters and other members in special positions excepted) to recruit and mentor enlistees for cash bonuses. The only main requirement for who could receive bonuses for recruiting potential enlistees was that the recruit had to be in the active member’s “Sphere of Influence.” Just as the ambiguous term “Sphere of Influence” suggests, there was no concrete definition or requirement for who a recruiter could receive bonuses for supposedly “recruiting.” These cash bonuses would vary from $2,000-$7,500 depending on whether the recruit completes BASIC Training, the position obtained by the recruit, and the current National Guard’s need at the time of enlistment.

This program is referred to in the past tense because of it was shut down in 2012. During its tenure, G-RAP was considered a successful recruiting program. In 2006, the National Guard was 20,000 soldiers short of its mandated size of 350,000. However, through the use of G-RAP to incentivize recruiting efforts, the National Guard not only rectified its short-handedness, but also expanded its operations. Many people attribute this quick expansion to G-RAP due to the increased contact recruiters had with potential enlistees (up from 1 out of 18 potential recruits enlisting to 1 out of 4 G-RAP eligible recruits enlisting).

What was Wrong with G-RAP?

Despite its apparent success in assisting the National Guard with recruitment, G-RAP was a “recipe for disaster.” Beginning in 2009, the National Guard and upper echelons of the federal government began receiving allegations of internal fraud regarding the program. Because the National Guard needed recruits so desperately and wanted to offer adequate incentives to its guardsmen, the G-RAP program lacked anti-fraud measures, did not receive enough oversight, and easily manipulated by hundreds, possibly thousands of “recruiters.” Soon after the allegations began, hundreds of National Guardsmen were discovered as having scammed the program, and consequently taxpayers, out of millions of dollars.

Due to the vague nature of the “Sphere of Influence” condition, there were virtually no safeguards for verification that the recruit was actually mentored, influenced, or even met his G-RAP recruiter. While the ways to cheat such a lax program are practically endless, many active members would acquire names of men and women who were inevitably joining the National Guard and were from the active members hometown or loosely through a “friend-of-a-friend.” Moreover, many recruiters (who were ineligible for the bonuses) would find an active member who potentially met or heard of the inevitable enlistee, would forward them to the active member, and request a kickback from the G-RAP bonus. Regardless of the exact scenario, active members were lying about their involvement with the recruit, and were fraudulently obtaining numerous and large financial bonuses from the federal government. Even high –ranking officials including 18 colonels and a 2-star general were caught scamming this program. While the government’s latest estimates place the amount of falsely obtained bonuses at $70 million, more and more cases are still being uncovered. The truth is we may never know how much of the taxpayers’ money has been illegally skimmed through the program. In the words of Senator Claire McCaskill of Missouri, “[The Army was] giving out millions of dollars, no questions asked!”

What is Being Done?

Unsurprisingly, taxpayers and their political representatives are upset about this large-scale financial scandal. First, in 2012, the G-RAP program was discontinued in order to prevent any further fraud from occurring. Furthermore, Congress is currently overseeing a massive investigation into the U.S. Army and its oversight of the National Guard’s G-RAP program. The Congressional committee and its head Senator McCaskill have been conducting hearings with Guardsmen and Army officials since January 2014 in an effort to assess and minimalize the damage. One of the biggest questions on every committee member’s mind is why better anti-fraud and oversight measures were not put into place. The Army has also launched an investigation. Through its Criminal Investigation Service, the U.S. Army has begun nearly 600 investigations into over 1,200 individuals who allegedly defrauded the program. While numerous verified cases have been dismissed due to the Statute of Limitations having run, the Army is currently prosecuting scammers and is also implementing administrative punishments, such as suspensions, rank reductions, and discharges. While the process is far from over, much to taxpayers’ relief, redress is occurring.

Business Owner Pleads Guilty to Tax Evasion

Joseph Wilke, the owner of a Marinette heating and air conditioning business, pleaded guilty to federal tax evasion charges on Tuesday in federal court in Green Bay.  The announcement was made by United States Attorney James L. Santelle.

Wlike, 56, admitted that he failed to report more than $130,000 of income which he earned from a side-business during the years 2007-2009.  This caused him to underreport on federal taxes by more than $51,000 according to the United States Department of Justice.

Based on his plea agreement, Wilke faces a maximum sentence of 5 years in prison and fines up to $250,000.  He will also make restitution to the Internal Revenue Service for his unpaid taxes, interest, and penalties, which totals more than $108,000.

Wilke was released on bond and a sentencing hearing has been scheduled for September 29, 2014.

This case was investigated by the Internal Revenue Service Criminal Investigation and prosecuted by Assistant United States Attorney Matthew L. Jacobs.

Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts.  Typically, tax evasion schemes involve the misrepresentation of income to the Internal Revenue Service by underreporting income, inflating deductions, or hiding money and interest altogether in offshore accounts. The estimated federal revenue lost to tax evasion was an estimated $305 billion during the calendar year of 2010.

If you or someone you know has accused of tax evasion, it is important that you contact a white collar attorney to handle your case.  The attorneys of Parkman White, LLP are experienced in a variety of legal matters and have a history of success in the courtroom. Call to schedule a consultation today!

Mother and Two Sons Found Guilty of Mortgage Fraud

On Monday June 30th, Judge Robert J. Nightingale found a mother and her two sons guilty on charges stemming from a “complex” mortgage fraud scheme that caused over $1.2 million in losses to four banks.  Shan Lal was found guilty on two counts of fraud over $5,000 and one count of money laundering.  Her son, Allan Mohammed, was found guilty of seven counts of fraud over $5,000 and one count of money laundering. His brother, Andrew Mohammed, was found guilty of uttering forged documents and two counts of fraud over $5,000.  Andrew was acquitted on one count of fraud over $5,000

The investigation of this case started in 2008 when detectives responded to a single mortgage fraud complaint.  Police officers eventually uncovered a scheme that involved five victims of identity theft (three from Kitchener and two from Hamilton), six residential properties (one in Hamilton, one in Simcoe), seven mortgages, and one line of credit. Three other co-conspirators involved in the scheme were charged and pleaded guilty in 2010 and 2011.

This scheme saw homes purchased cheaply and then sold at an inflated price to “straw buyers,” who obtained mortgages using stolen identification.  The mortgages would immediately go into default, leaving the lending institution with significant losses.

“This was very sophisticated and one of the largest cases we’ve ever dealt with,” said major fraud unit Detective Duncan McCulloch.

Shan Lal, Allan Mohammed, Andrew Mohammed have been released from custody and are expected back in court on August 29th for sentencing submissions.

Former Treasurer Sentenced for Embezzlement

Leland Ray Kolkmeyer, the former treasurer of a northwest Missouri town’s fire and road districts, has been sentenced to three years in prison without parole for embezzling more than $1.5 million. United States District Judge Gary A. Fenner also ordered Kolkmeyer, who has already paid $1 million in restitution, to pay an additional $530,159. The sentence was announced on Monday afternoon and Kolkmeyer must surrender to federal authorities and begin serving his sentence on August 7. 2014.

Kolkmeyer, 58, of Wellington, Mo., pleaded guilty on November 20, 2013 to two counts of federal mail fraud and admitted to a total theft of $1,530,159.  He resigned from his positions as the treasurer to the road and fire districts in February of last year after serving 15 years.

The government alleges that Kolkmeyer fraudulently transferred $939,485 from the road district’s bank accounts, and $590,674 from the fire district’s bank accounts, to his own personal accounts or to pay bills on his behalf. It is also believed that he used his position as treasurer of the districts to make false statements and material omissions concerning the stolen funds.

According to court documents, Kolkmeyer used the stolen money to for home improvements, vehicles, and weddings for his children.  He told investigators that he never declared any of the stolen income to the Internal Revenue Service.

This case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Paul S. Becker.

Illinois Couple Sentenced for Money Laundering

Michael McClellan and Tina McClellan, the owners of Paragon Restaurant in Schererville, IN, were sentenced in federal court Tuesday on charges of money laundering, mail fraud, and harboring illegal aliens. Michael McClellan, 40, was convicted of three counts of mail fraud, one count of money laundering, and one count of harboring illegal aliens.  He was sentenced to 51 months in federal prison and ordered to pay restitution in the amount of $203,804.  Tina McClellan, 38, was convicted of a single count of money laundering and received a one year home confinement sentence.  She is also jointly responsible for the restitution.

The couple is guilty of receiving reimbursements of at least $200,000 from the state of Illinois and the Healthy Start program by inflating the number of children that attended T&M Daycare in Calumet City, which they operated.  The grand jury found that they then laundered part of the money by using it to buy Paragon Restaurant in December of 2008.

Michael McClellan was convicted of wire fraud and harboring illegal aliens after the government uncovered that he hired illegal immigrants for his restaurant and housed them in a home next door.  He submitted false quarterly reports that did not account for the restaurant employees that he paid in cash.  The federal government successfully argued that this tactic was all part of a scheme to defraud the Indiana Department of Workforce Development out of unemployment insurance tax contributions.

This case was investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service-Criminal Investigation Division, the US Department of Labor-Office of the Inspector General, the Social Security Administration-Office of the Inspector General, and the Indiana Department of Workforce Development.

Assistant United States Attorney Gary Bell was assigned, and led the prosecution.

Shut Up and Take the Fifth

It’s amazing how often our firm is hired by clients that have already been under a lengthy criminal investigation.  Rather than incur the costs of an attorney on the front end, they have decided to try to talk their way out of the situation.  As a result, the typical person ends up getting themselves into deeper trouble than if they had simply exerted their rights under the Fifth Amendment of the United States Constitution to just remain silent.

There are two common scenarios in which this takes place: the initial investigation and the grand jury investigation.

When law enforcement first starts investigating a possible crime, it is common for them to interview all potential witnesses and suspects.  At this point, you are not obligated to speak to the investigator, but if you do choose to speak with them, you are obligated to tell the truth.  Failure to tell the truth to an FBI agent or other law enforcement personnel can subject you to being charged with “obstruction of justice”.  It is important to understand that you can be charged with a felony for lying or misleading an investigator, even if you are not the target of their investigation.

Famous examples of people convicted of lying in the initial investigation include Martha Stewart who was sent to prison for five months for lying to federal investigators about her knowledge of a stock sale.  Likewise, Olympic gold medalist Marion Jones was convicted not of actual steroid use, but of lying to federal investigators looking into allegations of the use of performance enhancing drugs.  Observers of both cases have indicated that had both women been quiet and not spoken with investigators, they may have avoided a felony conviction altogether.

After the initial investigation, most cases are forwarded to a grand jury to determine whether or not to issue an indictment against the target of the investigation.  While you can assert your rights under the 5th Amendment to avoid self incrimination in front of the grand jury, many people appear before the grand jury and attempt to talk their way out of an indictment.  To do so only subjects you to additional charges including perjury and obstruction of justice.

Famous examples of this can be found in the famous case of baseball home run champion Barry Bonds who was convicted of obstruction of justice for giving “incomplete” answers to the grand jury investigating BALCO.  Likewise, recording artist Lil’ Kim spent 10 months in jail on a perjury conviction for lying to a grand jury about her knowledge of a shootout in front of a New York radio station.  Again, had Bonds and Kim stayed quiet, they might could have avoided jail.

The lesson to learn from these famous mistakes is when you are approached by law enforcement or receive a grand jury subpoena – say nothing.  Contact an attorney and let them do the talking for you.  You have fifth amendment rights for a reason, use them.

Four Year Insurance Fraud Investigation Leads to Arrests

Twelve individuals have been arrested in connection with a million dollar auto theft ring that cheated car dealerships and insurance companies in the Los Angeles area.  The California Department of Insurance reports that charges have been brought against a total of 17 people and more arrests are expected in this ongoing investigation.

The scheme involved the use of phony credit cards and bank accounts to purchase high end vehicles from dealerships in the Los Angeles area.  Once the vehicles were insured, the suspects staged wrecks that often involved multiple vehicles driven by members of the scheme.  They then filed fraudulent claims on the damage and defaulted on the loans.

The companies hit by the fraudulent claims include: Geico, Farmers, Progressive, Ameriprise, Unitrin, State Farm, Nationwide, Allstate and Wawenesa. The names of the dealerships will not be released to the public until the investigation concludes.

The defendants have been charged by the Los Angeles County district attorney’s office with theft of a vehicle by false pretenses, insurance fraud, grand theft from insurance companies, perjury on Department of Motor Vehicle documents, and giving false information on government documents.

Two individuals involved in this insurance fraud scheme are currently making arrangements to surrender while authorities continue the search for four others.

The investigation involved the Los Angeles Police Department’s Task Force for Regional Auto Theft Prevention, Ventura County’s Auto Theft Task Force, the California Highway Patrol, the Franchise Tax Board, and members of the San Bernardino County and Riverside County district attorney’s offices.