Tag Archives: mail fraud

Lead Defendant in Health Care Fraud and Rogue Internet Pharmacy Scheme Sentenced to 12 Years in Federal Prison and Ordered to Pay $68 Million in Restitution Case Involved More Than $200 Million in Fraudulently Obtained Pharmac

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DALLAS—Rakesh Jyoti Saran, 47, of Arlington, Texas, was sentenced late yesterday by U.S. District Judge Jorge A. Solis to 144 months (12 years) in federal prison and ordered to pay $68 million in restitution for his involvement in an elaborate rogue internet pharmacy scheme, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Saran, who is the last defendant to be sentenced in this case, pleaded guilty to one count of conspiracy to commit health care fraud and other federal offenses; two counts of mail fraud; and one count of conspiracy to distribute controlled substances. He has been in federal custody since May 2009.

Saran was arrested on September 21, 2005 on charges outlined in a 201-count federal indictment alleging that from November 1999 through September 20, 2005 he and co-defendants conspired with each other and others to commit health care fraud, wire fraud, mail fraud, and money laundering and to engage in the illegal distribution of controlled substances in a drug diversion scheme.

According to plea papers filed in court, Saran operated 23 Texas-incorporated pharmacies through two companies that he owned, Carrington Healthcare Systems, Inc. and Infinity Services Group, Inc., and purchased expensive pharmaceuticals at significant discounts from pharmaceutical wholesale suppliers, including AmerisourceBergen, located in Valley Forge, Pennsylvania; Anda, Inc., located in Florida; Cardinal Health, located in Dublin, Ohio; H.D. Smith, located in Fort Worth, Texas; and Morris & Dickson Co., L.L.C. in Shreveport, Louisiana. Saran’s pharmacies purchased controlled substances such as hydrocodone (an addictive painkiller), phentermine hydrochloride (an appetite suppressant), alprazolam (used to treat anxiety, depression, panic disorder and premenstrual syndrome), and promethazine cough syrup (containing codeine) and obtained significant price discounts by obtaining fraudulent memberships in Group Purchasing Organizations (GPOs).

To qualify for the significantly discounted “contract pricing” available to GPOs, Saran fraudulently represented to wholesale suppliers that his purchases were for “institutional distribution” and signed contracts containing “own use” or “closed door pharmacy” provisions restricting his distribution of the pharmaceuticals to institutions such as prisons, long-term care facilities and rehabilitation hospitals. However, Saran sold the significantly-discounted pharmaceuticals outside the scope of the provisions, making substantial profits from the diverted transactions. Saran did not disclose to the wholesalers that the pharmacies were alter ego businesses he had created and that he had obtained individual DEA registration numbers for each one to camouflage his identity as the actual purchaser.

Saran also used his pharmacies to operate a “store front” website designed to facilitate the distribution of controlled substances to internet customers. Using the website, drug users illegally acquired controlled substances and dangerous drugs without valid prescriptions and without doctor intervention, paying up to four times the cost if the substances had been acquired legally. Saran also used his pharmacies to fill pharmaceutical orders from other Internet Facilitation Centers (IFC) involved in the illegal distribution of dangerous drugs and controlled substances. Additionally, Saran also played an integral role in providing promethazine cough syrup with codeine, hydrocodone, and alprazolam to individuals who illegally sold these drugs “on the street,” acquiring approximately $20 million in proceeds for doing so.

Guilty pleas were also entered on behalf of twenty corporations Saran controlled and used in the criminal conspiracy, including Alliance Pharmacy Services, Inc.; AMS Pharmaceuticals Group, Inc.; Carrington Health Care System, Inc.; Dalamar Services, Inc.; East Pointe Pharmacy Services, Inc.; Everest Services, Inc.; Infiniti Services Group, Inc.; Med-Care Infusion Services, Inc.; National Executive Management, Inc.; Orion Pharmacy Services, Inc.; Precision Pharmacy Services, Inc.; Premium Pharmacy Services, Inc.; Quantum Infusion, Inc.; Reliance Pharmaceutical, Inc.; Southwest Infusion, Inc.; SWS Pharmacy Services, Inc.; Texas Home Infusion, L.L.C.; Tri-Phasic Pharmacy, Inc.; Trinity Infusion Services, Inc.; and Trinity Pharmacy Services, Inc.

As part of his plea agreement, Saran forfeited assets earned from his illegal activities, including more than $1,000,000 in cash seized at his residence; more than $375,000 found in bank accounts; approximately $390,000 in cashier’s checks and money orders; several vehicles; and a custom home under construction in Arlington, which was sold by the U.S. Marshals Service (USMS) for $1,200,000 through an Internet auction, www.bid4assets.com in May 2008.

All other defendants charged in the case, including managers and employees of Saran’s various pharmacies, have pleaded guilty to their roles in the scheme and have been sentenced. Notable sentences include:

Sherman Ted Solomon, 65, currently of Plano, Texas, who operated one of the IFC’s, was sentenced on Wednesday to 60 months (five years) in federal prison and ordered to forfeit nearly $5.7 million in funds, a vehicle and two pieces of real estate in Orange, County Florida. He must surrender to the Bureau of Prisons on March 3, 2010.

Steven Rosner, 56, was sentenced to 33 months in prison for his role in the scheme. He was also ordered to pay $400,000 in restitution and forfeit approximately $385,000. He also was arrested on September 21, 2005, at his home in Boca Raton, Florida, on charges outlined in the “Saran indictment.”

Leslie Wayne Davidoff, a pharmacist, is currently serving a 96-month (eight-year) sentence for his role in the scheme. He was arrested along with most of the other defendants on September 21, 2005. He is a Lewisville, Texas, resident.

David Kaiser is currently serving a 60-month (five-year) sentence. Kaiser was the president and part owner of Saran’s Alliance Pharmacy. In addition, Saran and Kaiser represented that Kaiser was Saran’s General Manager-Pharmaceutical Services for Saran’s companies.

Cherie Ann Word is currently serving a 34-month prison sentence for her role in the scheme. She was ordered to forfeit real estate in Mansfield, Texas, which was sold by the USMS in May 2008 for more than $540,000. U.S. Cherie Word was a director of National Executive Management, Inc., a Saran business whose chief operating officer was Word’s father-in-law, Stacy Fred Word. Word also owned a portion of Collective Services, Inc., Dalamar Services, Inc., and Precision Pharmacy Services, Inc. Word was also the president of Precision Pharmacy Services, Inc. And Quantum Infusion, Inc., and was a director of Texas Home Infusion, LLC. She admitted that these pharmacies were used to disguise from the manufacturers and wholesalers Saran’s identity as the actual purchaser of large quantities of pharmaceutical products.

U.S. Attorney Jacks recognized the investigative efforts and teamwork of the U.S. Food and Drug Administration – Office of Criminal Investigations; Federal Bureau of Investigation; Drug Enforcement Administration; Internal Revenue Service – Criminal Investigation; U.S. Department Social Security Administration – Office of the Inspector General; U.S. Department of Veteran Affairs – Office of the Inspector General; U.S. Office of Personnel Management; Texas Department of State Health Services; and the Texas State Board of Pharmacy.

Assistant United States Attorneys Chad Meacham, C.S. Heath, Sean McKenna, John de la Garza and Chris Stokes prosecuted the case.

Source: FBI

Member of $19 Million Mortgage Fraud Scheme Sentenced to More Than Three Years in Prison

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BALTIMORE, MD—U.S. District Judge J. Frederick Motz sentenced Terrence White, age 35, of Oxon Hill, Maryland, today to 42 months in prison, followed by three years of supervised release for mail fraud arising from the fraudulent purchase of 25 properties in Maryland, the District of Columbia and Virginia using false mortgage and settlement documents, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Motz also entered a restitution order against White in the amount of $4,196,967.

According to his plea agreement, White, Timothy Reed, Osman Al-Bari, and others paid over 15 straw purchasers $10,000 per property to purchase houses for White and others. White created false mortgage and settlement documents, many of which misrepresented the straw purchasers’ income and assets. White, Reed, and Al-Bari also created false invoices to claim that their company, Brotherly Investment Group, performed “renovations” on some of the properties. Using these false invoices, White and his co-conspirators were “repaid” at closing for the purported renovations.

This scheme involved fraudulent loans worth over $19,021,366. Over 10 individuals and banks were harmed. The loss amount foreseeable to White is between $2.5 and $7 million. Many of the purchased properties have been foreclosed upon.

Kara McIntosh, age 47, and Sabrina Weinberg, age 44, both of Bethesda, Maryland, were sentenced to three years and two years in prison, respectively, for mail fraud. Osman Sharrieff Al-Bari, age 35, of Washington, D.C., was sentenced to 78 months in prison. Jamilah Al-Bari, age 37, of District Heights, Maryland, and Timothy Reed, age 44, of Beltsville, have pleaded guilty to mail fraud in connection with their participation in this scheme and are scheduled to be sentenced in the next two months.

This prosecution has been brought as part of the Maryland Mortgage Fraud Task Force, a group of more than 15 federal, state and local law enforcement agencies in Maryland. The Task Force was formed to promote the early detection, identification, prevention, and prosecution of various kinds of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of Maryland’s law enforcement agencies to protect consumers from fraud and help to ensure the integrity of the mortgage market and other credit markets. Information about mortgage fraud prosecutions is available on the Internet at http://www.usdoj.gov/usao/md/Mortgage-Fraud/index.html.

United States Attorney Rod J. Rosenstein thanked the U.S. Postal Inspection Service, the Federal Bureau of Investigation, the Montgomery County State’s Attorney’s Office – Economic Crimes Unit and the U.S. Secret Service for their investigative work and assistance. Mr. Rosenstein commended Assistant United States Attorney Kwame J. Manley, who prosecuted the case.

Source: FBI

President of Telemarketing Fraud Business Pleads Guilty

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PHILADELPHIA—Neal D. Saferstein, 36, of Mount Laurel, NJ, pleaded guilty today to four counts of an indictment stemming from a multi-million dollar telemarketing scam that defrauded as many as 400,000 small businesses out of as much as $75 million, announced U.S. Attorney Michael L. Levy. Saferstein was the President and Chief Executive Officer of GoInternet.net, Inc. (“GoInternet”), which did business at 20 N. Third Street, and 6 Strawberry Street, in Philadelphia. GoInternet allegedly derived more than $75 million in gross revenues from a fraudulent telemarketing scheme that lasted from 2001 to 2004. Co-defendant Tyrone L. Barr, 35, of Philadelphia, was Vice President of Customer Service and Regulatory Affairs. Co-defendant Billy D. Light, 41, of Voorhees, NJ, was Chief Information Officer. Saferstein pleaded guilty today to one count of wire fraud, one count of mail fraud, and two counts of filing false tax returns. Sentencing is scheduled for February 2010.

According to the indictment, the entire GoInternet business model was designed to defraud customers and potential customers into making monthly $29.00 payments for Internet-related services without their knowledge or authorization. GoInternet’s telemarketers duped customers into receiving a welcome packet without disclosing that the mailing would trigger monthly bills unless the customer called to cancel. The packets were then designed to look like bulk business mail to prompt it to be disregarded or thrown away. GoInternet engaged in “cramming.” It would place monthly charges on its customers’ local telephone bills, without authorization, which customers routinely paid without noticing. By approximately 2003, GoInternet employed over 1,000 telemarketers and was signing on approximately 7,500 new customers every week. By the end of 2003, GoInternet’s customer base included more than 350,000 businesses.

Saferstein prevented customers from receiving notices disclosing the cost of services, and delayed and prevented refunds from going to customers that had been defrauded and were promised refunds. Barr created fake sales-verification tapes which were purported to contain the telemarketer’s call to the customer and the customer’s consent. Barr pleaded guilty to wire fraud and is awaiting sentencing.

In 2003, the Federal Trade Commission brought a civil proceeding regarding GoInternet’s practice of billing consumers for services without their authorization, which resulted in a $58 million judgment being imposed against Saferstein and GoInternet. Light admitted that Saferstein directed him to testify falsely before the federal district court in Philadelphia during the FTC proceedings. Light pleaded guilty to conspiracy to commit perjury and is awaiting sentencing.

Saferstein also used GoInternet corporate funds as if they were in his personal bank account, paying for significant personal expenses. He also failed to report income from the years 2000 to 2003 allegedly exceeding $1.7 million. In addition, the indictment charges defendant Saferstein with failing to pay over to the Internal Revenue Service more than $2.8 million in payroll taxes while he ran GoInternet.

Saferstein faces a maximum penalty of 46 years imprisonment with a maximum fine of $1 million.

Barr faces a maximum penalty of 20 years imprisonment with a maximum fine of $250,000.

Light faces a maximum penalty five years imprisonment with a maximum fine of $250,000.

The case was investigated by the Federal Bureau of Investigation, the Federal Trade Commission, the Federal Bureau of Investigation, the Internal Revenue Service and the U.S. Postal Inspection Service. It is being prosecuted by Assistant United States Attorneys Jennifer Arbittier Williams and Jason P. Bologna, and by FTC Special Assistant United States Attorney Larissa L. Bungo.

Source: FBI

Man Sentenced to Four Years for Fraud

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Steven E. Tennies, 52, of Kooskia, Idaho, was sentenced on Tuesday to 48 months in prison for operating a Ponzi scheme in which Tennies stole approximately $1.6 million from investors through an investment fund he managed, the United States Attorney’s Office announced. U.S. District Judge Edward J. Lodge also ordered Tennies to served three years of supervised release following his prison term and to pay approximately $1.6 million in restitution to the victims. Tennies had pled guilty to four counts of mail fraud in July 2009, and had agreed to forfeiture of approximately 1.51 million dollars.

An FBI investigation showed Tennies and his company, Price Geld & Company, fraudulently obtained millions of dollars from dozens of investors in several states by selling limited partnership interests in his now defunct Adeona Fund. Instead of investing the money as he said he would, Tennies siphoned money out of the fund for personal use. To conceal his fraud, Tennies gave investors fabricated tax documents and account statements claiming phony returns.

Tennies told investors that they could expect positive returns during all market cycles through a proprietary trading strategy in liquid and exchange-traded securities. Tennies then led investors to believe their money was invested in the Adeona Fund and that the fund was posting consistent, positive returns. Tennies had actually commingled investor funds with his personal accounts and used fund assets to pay his personal expenses which included hundreds of thousands of dollars towards a divorce settlement, the mortgage on a custom-built home, rare first-edition books and artwork, and financing a car business. Tennies then paid investors in Ponzi-like fashion to keep his scheme afloat, using funds from new investors to pay returns to other investors.

Source: FBI

Roberto Heckscher Pleads Guilty to Mail Fraud Bay Area Bookkeeper Defrauded Investors Out of at Least $20 Million

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SAN FRANCISCO—Pursuant to a plea agreement, Roberto Heckscher, a resident of San Mateo, Calif., pleaded guilty today before U.S. District Court Judge Susan Illston to one count of mail fraud, announced United States Attorney Joseph P. Russoniello.

On Oct. 16, 2009, the United States charged Heckscher, 55, with mail fraud, charging that between approximately 1979 and June 2009, he defrauded investors by promising to arrange and broker a series of commercial loans between his clients and himself and represented that the funds would in turn be loaned to other businesses. Heckscher promised that these loans would generate regular interest payments to his investors. Instead, Heckscher operated a sophisticated ponzi scheme whereby new investment money was transferred to existing investors as interest payments and/or repayment of principal upon request. Heckscher used the remaining portion of investors’ funds for his own, unauthorized purposes, including gambling at Nevada casinos as well as speculative investments in the equities and commodities markets.

In addition to pleading guilty to this charge, Heckscher agreed to pay restitution in connection with his misuse of funds.

The plea agreement provides for a calculation of imprisonment between no less than 151 months and up to life imprisonment. However, the sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. The maximum statutory penalty for mail fraud in violation of 18 U.S.C. Section 1341 is 20 years imprisonment and a fine of $250,000 or up to twice the defendant’s gain or the victims’ loss, plus restitution if appropriate. The defendant is next scheduled to appear in U.S. District Court in San Francisco on May 14, 2010. At that time, Judge Illston will determine whether to accept the plea agreement and impose sentencing.

Timothy J. Lucey is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Ponly Tu. The prosecution is the result of an investigation by the Federal Bureau of Investigation.

Further Information:

Case #: CR 09-0998 SI

A copy of this press release may be found on the U.S. Attorney’s Office’s Web site at www.usdoj.gov/usao/can.

Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.

Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s Web site at www.cand.uscourts.gov.

All press inquiries to the U.S. Attorney’s Office should be directed to Jack Gillund at (415) 436-6599 or by e-mail at [email protected]&/p

Source: FBI