Blood Testing Laboratory to Pay $6 Million to Settle Allegations of Kickbacks and Unnecessary Testing

On April 28, 2017, Quest Diagnostics Inc. agreed to pay $6 million to resolve an alleged False Claims Act violation for paying kickbacks to physicians and patients to induce the use of Berkeley HeartLab Inc., a Quest subsidiary, for blood testing services and unnecessary medical tests.  According to the complaint, Berkeley allegedly paid kickbacks to referring physicians disguised as “processing and handling” fees and allegedly paid kickbacks to patients by waiving copayments that certain patients ... Continue Reading

Former RMBS Trader Sentenced to 2 Years in Prison, Fined $2 Million After Re-Trial

On April 26, 2017, Jesse Litvak, a former trader of residential mortgage-backed securities (RMBS), was sentenced to two years in prison followed by three years of supervised release for engaging in fraudulent RMBS trades.  Litvak was also ordered to pay a $2 million fine.  Litvak’s sentenced follows a guilty verdict on one count of securities fraud after a jury trial that concluded in January 2017.  The jury also acquitted Litvak on nine counts.  Litvak’s conviction ... Continue Reading

Pacific Pulmonary Services Agrees to Pay $11.4 Million to Resolve False Claims Act Allegations

On April 25, 2017, Branden Partners, L.P., doing business as Pacific Pulmonary Services, agreed to pay $11.4 million to resolve allegations that it and its general partner, Teijin Pharma USA LLC, violated the False Claims Act.  Pacific Pulmonary Services provides oxygen tanks and related supplies, and sleep therapy equipment, to patients’ homes.  The allegations were that, starting in 2004, Pacific Pulmonary Services began submitting claims for reimbursement to Medicare and other federal healthcare programs for ... Continue Reading

Vice President and Risk Management Specialist at Investment Bank Charged with Insider Trading

On April 24, 2017, Avaneesh Krishnamoorthy, a vice president and risk management specialist at a Manhattan-based investment bank, was arrested and charged with insider trading, in connection with making $48,000 in profits from stock and options trading based on material nonpublic information about a private equity fund’s potential acquisition of a publicly traded company.  According to the complaint, through his position at the investment bank, Krishnamoorthy had access to material nonpublic information about mergers and ... Continue Reading

Attorney General Jeff Sessions Delivers Remarks at the Ethics and Compliance Initiative Annual Conference

On April 24, 2017, Attorney General Jeff Sessions spoke at the Ethics and Compliance Initiative Annual Conference.  In his remarks, Sessions stated that he wanted to “make clear” that, under his leadership, “the Department of Justice remains committed to enforcing all the laws”  including “laws regarding corporate misconduct, fraud, foreign corruption and other types of white-collar crime.”  Sessions noted that he spent his “first weeks as Attorney General” making sure that the Department “strengthens its ... Continue Reading

Acting Principal Deputy Assistant Attorney General Trevor N. McFadden of the Justice Department’s Criminal Division Speaks at ACI’s 19th Annual Conference on Foreign Corrupt Practices Act

On April 20, 2017, Acting Principal Deputy Assistant Attorney General Trevor N. McFadden spoke at the American Conference Institute (“ACI”) about the Department of Justice’s continued focus on white collar crime.  Affirming the Department’s commitment, McFadden said, “While we are boosting our focus on violent crime prosecutions, the Criminal Division is fully engaged in combating crime in all its forms, and no matter what color collar its perpetrators wear.  McFadden highlighted the work of the ... Continue Reading

Acting Principal Deputy Assistant Attorney General Trevor N. McFadden Speaks at Anti-Corruption, Export Controls & Sanctions 10th Compliance Summit

On April 18, 2017, Acting Principal Deputy Assistant Attorney General Trevor N. McFadden addressed attendees at the Anti-Corruption, Export Controls & Sanctions Compliance Summit in Washington, D.C. about Corporate Social Responsibility.  Referencing his time working in private practice, McFadden expressed his view that “the vast majority of international business and business leaders want to get compliance right.”  He also said that the improvements in corporate compliance were “quite impressive” as compared to before the enactment ... Continue Reading

Four Individuals Arrested for Multi-Million Dollar Securities Fraud and Money Laundering Schemes

On April 14, 2017, four individuals were arrested for their involvement in a stock manipulation scheme involve BioCube, Inc. and their efforts to launder approximately $2 million in illegal proceeds.  The four individuals are Chris Messalas, Boris Rubizhevky, Michael Garnick and Dimitrios Argyros.  Messalas, a former securities brokers, Rubizhevky, the former Chief Executive Officer of BioCube, and Garnick, an attorney, were charged with securities fraud conspiracy.  In particular, they are charged with defrauding potential BioCube ... Continue Reading

Software Engineer Charged with Attempting to Steal Proprietary Trading Code from His Employer

On April 13, 2017, Dmitry Sazonov was charged with attempted theft of trade secrets for his alleged attempted theft of proprietary computer code for a trading platform from his employer, a financial services firm with an office in New York.  According to the complaint, Sazonov allegedly took various steps to attempt to steal proprietary code in advance of a February 3, 2017 meeting with a supervisor about the future of his role at the firm.  ... Continue Reading

Computer Engineer Arrested for Theft of Proprietary Trading Code from His Employer

On April 7, 2017, Zhengquan Zhang was charged with theft of trade secrets for his alleged theft of trading code associated with proprietary algorithmic trading models from his employer, a global financial services company in New York, and was arrested in Santa Clara, California.  According to the complaint, Zhang took steps to steal the code between December 2016 and March 2017, including installing code to identify encryption keys to gain access to the proprietary code, ... Continue Reading

William T. “Billy” Walters Convicted of Insider Trading

On April 7, 2017, after a four-week trial before U.S. District Court Judge P. Kevin Castel in the Southern District of New York, William T. Walters was convicted of ten counts of conspiracy, securities fraud and wire fraud charges.  The charges related to his scheme to commit insider trading.  From 2008 through 2014, Walters received material non-public information about Dean Foods Company from Thomas C. Davis, a member of the Board of Directors of Dean ... Continue Reading

Peruvian National Pleads Guilty in Manhattan Federal Court to Commodities and Wire Fraud for Running Million-Dollar Ponzi Scheme

On April 7, 2017, Pedro Jaramillo pled guilty in the Southern District of New York to one count of commodities fraud and one count of wire fraud in connection with a scheme to defraud more than two dozen investors, mostly from Latin American countries including Peru, of more than $1.2 million dollars.  According to court documents, between January 2014 and December 2016, Jaramillo solicited investments from investors, representing that investor monies would be invested in ... Continue Reading

Owners of Drug Wholesale Companies Charged in Connection with Federal ‘Structuring’ Conspiracy

On April 6, 2017, Richard Kayseryan, Derou Biglari, Jivani Markarian and Rafik Mesropyan were charged in a 20-count indictment in connection with a federal ‘structuring’ conspiracy, in which they made millions of dollars in cash deposits designed to circumvent federal reporting requirements.  Kayseryan owns the Burbank-based drug wholesale company TriMed Medical Wholesalers, Inc.—which is charged in the indictment along with the four individual defendants—and Biglari and Markarian own the Glendale-based drug wholesale business JD Pharmaceutical ... Continue Reading

Man Pleads Guilty in Connection with $5 Million Investment Fraud Scheme

On April 4, 2017, James Trolice, the president and chief marketing owner of eAgency, a California-based company that developed mobile security products, pled guilty to wire fraud and transacting in criminal proceeds in connection with a scheme to defraud investors out of more than $5 million.  Trolice was also the president and owner of Trolice Consulting Services LLC.  Along with Lee Vaccaro, Trolice sold investors interests in Trolice Consulting Services and companies that Vaccaro controlled, ... Continue Reading

Former Deputy Executive Director of Port Authority and Former Deputy Chief of Staff in New Jersey Governor’s Office Sentenced to Prison Terms

On March 29, 2017, William E. Baroni Jr., former deputy executive director of the Port Authority of New York and New Jersey, and Bridget Anne Kelly, former deputy chief of staff to New Jersey Governor Chris Christie, were sentenced to 24 months’ and 18 months’ imprisonment, respectively, in connection with their roles in a scheme to misuse Port Authority resources to create traffic problems in Fort Lee, New Jersey.  Baroni and Kelly had previously been ... Continue Reading

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