Tag Archives: Fraud

Harris County judge charged with fraud

Judge Alexandra Smoots-Thomas has been indicted on allegations of wire fraud. Since 2009, she has served as the presiding judge for the 164th District Court for the State of Texas. She has jurisdiction of Texas civil cases located within Harris County.



Beginning in early 2013, the indictment alleges that Smoots-Thomas used funds donated to her campaign for personal expenses unrelated to the campaign. She then hid her misuse of these funds by filing false campaign finance reports with the Texas Ethics Commission and concealing her activity from her campaign manager.

The indictment lists 7 transactions for a total of $24,890 where Smoots-Thomas allegedly used the campaign account for personal use. $11,809 was used to pay a home mortgage and $9,942 to The Regis School for tuition. An airfare, a Prada handbag and a ring from Zales comprise the other transactions.

Each of the seven counts of wire fraud carries a possible sentence of up to 20 years in federal prison as well as a maximum $250,000 fine.

Smoots-Thomas was the presiding judge over the initial phase of the TechnipFMC – McDermott lawsuit involving COO Sumit Mukherjee. Smoots-Thomas was replaced as the judge on the case just before the parties were set to go to trial as she was diagnosed with breast cancer. She is still receiving treatment for the cancer.

Smoots-Thomas indictment

https://www.justice.gov/usao-sdtx/pr/local-judge-charged-fraud

80-year-old man convicted in $19 million medicare fraud

Bobby Rouse Sr, an 80-year-old former Houston man, has pleaded guilty to conspiring to pay and receive kickbacks and money laundering related to the Medicare program.



Mr Rouse becomes the 14th and final person convicted in relation to the scheme. Rouse and three others were part of the executive team for Continuum Healthcare LLC. They owned the Westbury Community Hospital (now closed) in Houston. The company also owned mental health centers in Hornwood, Baytown and Missouri City.

Each location operated a partial hospitalization program (PHP), a short-term intensive treatment program but without 24-hour daily care. Numerous people were referred to treatment in exchange for payment. However the vast majority did not qualify for PHP services because they were not experiencing an acute psychotic episode or were actually suffering from dememtia or Alzheimer’s.

Six of the defendants owned personal care homes while four were marketers for Continuum. Each admitting payments to refer the patients, receiving amounts ranging from $130,000 to $2.6 million each.

In all, Continuum billed Medicare approximately $189 million for fraudulent PHP claims and Medicare paid $66 million on these claims. Mr Rouse admitted to causing Medicare to pay $18.8 million based on false and fraudulent claims. For Mr Rouse, the scheme ran from March 2005 through May 2012.

Mr Rouse will be sentenced in January 2020. He faces up to 10 years in prison and a possible $250,000 maximum fine.

Ten of the defendants were originally indicted in 2014 though Mr Rouse was not charged until 2017. This followed an investigation by the Houston Chronicle back in 2011.

https://www.justice.gov/usao-sdtx/pr/final-defendant-convicted-189-million-health-care-fraud-scam

Monaco-based brothers plead guilty to bribery scheme

Cyrus Ahsani and Saman Ahsani, CEO and COO of Monaco-based Unaoil, have pleaded guilty in a scheme to make millions of dollars in bribe payments to officials in multiple countries. The countries included Algeria, Angola, Azerbaijan, the Democratic Republic of Congo, Iran, Iraq, Kazakhstan, Libya and Syria.



Guilty plea in March

The pair pleaded guilty in the Southern District of Texas back in March, but the Department of Justice only announced the news today. It’s not clear why there has been a delay. However it does answer the question of why the United Kingdom’s Serious Fraud Office suddenly dropped its fraud investigation into Unaoil back in June.

Cyrus and Saman Ahsani are set for sentencing April 20, 2020.

Companies involved

Unaoil is an intermediary company that provided services for multinational companies operating in the energy sector. The information sheet lists two companies specifically;

  • Rolls Royce plc (paid £170 million in fines to the UK authorities in 2017, specifically related to Unaoil)
  • SBM Offshore NV (paid $475 million in fines worldwide in 2017 – some related to Brazil which don’t involve Unaoil)

A further 25 companies are unnamed, of which 5 have their head office in Houston.

Many of these companies have been named through previous press reports. They include;

  • TechnipFMC (paid SEC $5m to settle bribery allegations in Iraq)
  • KBR (allegedly paid Unaoil over $10 million to help it win contracts in Kazahkstan. DOJ and SEC investigations still ongoing)
  • Baker Hughes (investigation ongoing)
  • Weatherford
  • Cameron
  • Core Labs (investigation closed – no action taken)

Other companies involved include Honeywell, ABB, Samsung and Hyundai.

Downfall

Unaoil’s downfall started as a result of a 2013 court case involving an Australia company, Leighton Holdings. It had entered into an agreement with Unaoil with the aim of securing a $500 million Iraq pipeline contract but later referred the deal to the police for possible bribery.

Nick McKenzie, an Australian journalist started following the case and was soon contacted by a whistleblower who gave him a hard drive containing 10 years’ worth of internal Unaoil emails.

You can read the investigative report by The Age newspaper here

Ahsani charges filed by DOJ

https://www.justice.gov/opa/pr/oil-executives-plead-guilty-roles-bribery-scheme-involving-foreign-officials

Freight forwarding company owner pleads guilty to price fixing

Francis Alvarez, owner of a freight forwarding company, has pleaded guilty to an antitrust charge for her role in a multi-year, nationwide conspiracy to fix prices for international freight forwarding services.



The original charges were filed in the Southern District of Florida in Miami. According to the charges Alvarez and her co-conspirators agreed to fix prices, primarily for shipments to Honduras between September 2010 and August 2014. They held meetings where they discussed prices to be charged for freight services, exchanged pricing information and raised prices in accordance with the agreement.

Alvarez has agreed to pay a criminal fine and cooperate with the ongoing investigation. She will be sentenced at a later date. Alvarez owns Servicios Hondurenos which is based just north-east of downtown Houston.

Roberto Dip (who owned Dip Shipping, a freight forwarding company in New Orleans) and Jason Handal (a company manager for Dip) pleaded guilty in November 2018. In June, they were sentenced to 18 months and 15 months prison terms, respectively. The individuals each paid a $20,000 fine while the company paid a $488,250 criminal fine.

The ongoing investigation into price fixing in the international freight forwarding industry is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s New Orleans Field Office.

https://www.justice.gov/opa/pr/third-freight-transportation-executive-pleads-guilty-antitrust-charge

Houston sports manager to plead guilty in college admissions bribery scheme

Martin Fox has agreed to plead guilty to one count of conspiracy to commit racketeering in connection with his role in the Rick Singer college admissions bribery case. The case also ensnared actresses Felicity Huffman and Lori Laughlin.

The prosecutors will recommend a sentence at the low end of the sentencing guidelines (range is 21-27 months). Mr Fox could have received up to 20 years in prison. He will also face a fine and restitution.



The bribery scheme

Fox introduced Rick Singer to Michael Center, the tennis coach at the University of Texas in Austin, who facilitated the admission of a student to UT as a purported athletic recruit in exchange for a bribe. Singer paid Fox $100,000. Fox also arranged two similar bribes with a coach at the University of San Diego. He was paid $100,000 for one and $10,000 for the other (the second student ended up not going to USD).

Center has pled guilty and will be sentenced in February 2020.

Adidas Grass Roots Director

Mr Fox is described by the Federal Government as a former President of a private tennis club. He may have been that, but is primarily a sports money man/entrepreneur.  His twitter feed (before it was made private) was full of pictures of Fox with famous sporting figures. In 2011, Sports Illustrated had described Fox as an “Adidas ‘Grass Roots Director of Houston’ (in that article they estimated that Fox had lost $249,000 in the Ponzi scheme run by Houston money manager, David Salinas).

Fox’s name turned up late last year in court proceedings concerning the college basketball corruption trial involving two Adidas officials and aspiring agent. The defense lawyers in that trial had argued that $40,000 of the money paid to Kansas basketball players, came, not from Adidas but from Martin Fox (who didn’t directly work for Adidas). No wrongdoing was alleged against Fox in that trial. The defendants were found guilty after a three-week trial.

SAT administrator

The other Houston-based defendant is Lisa ‘Niki’ Williams. She was a Teachers Assistant at a high school in Houston. She was also an administrator for the ACT and SAT exams which were held in the same school.  Fox introduced Williams to Singer. The case against her is still pending.

Weatherford

There is a third defendant with Houston connections. John Wilson lives in Lynnfield, Massachusetts but was arrested at George Bush airport in Houston. He is a Harvard business school graduate who runs a financial services firm, Hyannis Port Capital. He is also a former CFO at Staples.

Mr Wilson was one of the lead McKinsey management consultants involved in trying to turn around Weatherford before it filed for bankruptcy. Wilson allegedly paid Singer $1.5 million to facilitate his daughter’s admissions to Stanford and Harvard. The case against Mr Wilson is still ongoing.

https://www.justice.gov/usao-ma/pr/former-president-private-tennis-academy-agrees-plead-guilty-college-admissions-case

Former Wells Fargo employee admits $63k embezzlement

Natasha Hudgeons, a 33-year old Brenham resident and a former Wells Fargo employee has pleaded guilty to a $63k embezzlement.

From December 2014 through March 2019, she embezzled $63,500 while employed as a teller. She took the money in $500 to $1,000 increments. She concealed the theft by putting falsified entries into the bank’s books and records and “selling” back and forth between the cashbox and coin machine cash lines. Both were considered “single control” cash lines, meaning tellers could conduct transactions on that account line without a second person.

She was arrested in September and waived her right to be indicted. She will be sentenced on January 9, 2020. Ms Hudgeons faces up to 30 years in federal prison and a possible $1 million maximum fine.

https://www.justice.gov/usao-sdtx/pr/former-employee-admits-guilt-63k-bank-embezzlement-scheme

Two nurses charged in $2.1 million medicare fraud

Another week, another Medicare fraud indictment in Houston. Joseph Nwankwo of Houston and Stacey Ajaja of Richmond have been arrested. They appeared in court in the Southern District of Texas last Friday.



According to the indictment, Mr Nwankwo and Ms Ajaja owned Hefty Healthcare Services from 2009 through 2017. The company was based off the Westpark Tollway in Mission Bend. From July 2013 through November 2016, the company billed Medicare $1.6 million for home health services that were never provided and not medically necessary. The pair obtained patient referrals by paying marketers and patients. They bribed physicians to authorize medically unnecessary home health services. Medicare paid out $2.1 million on these claims.

Nwankwo and Ajaja are both charged with one count of conspiracy to commit health care fraud, five counts of health care fraud and one count of conspiracy to pay and receive health care kickbacks.

If convicted, they face up to 10 years in prison for the fraud charge and up to 5 years for the kickback charge. They also face fines of $250,000 and $25,000 for the charges.

Earlier this month, a Houston doctor was convicted in a $16 million fraud scheme.

https://www.justice.gov/usao-sdtx/pr/two-nurses-charged-health-care-fraud-and-illegal-kickback-scheme

 

Houston doctor convicted in $16 million medicare fraud scheme

Yolanda Hamilton, M.D., has been found guilty of participating in a $16 million Medicare fraud scheme. After a six-day trial, she was convicted of

  • one count of conspiracy to commit health care fraud,
  • one count of conspiracy to solicit and receive health care kickbacks and,
  • two counts of false statements relating to health care matters.



Dr Hamilton was the owner and operator of HMS Health and Wellness Center, based in SW Houston. Between January 2012 and August 2016, Hamilton signed false and fraudulent plans of care and other medical documents to make it appear that patients of Hamilton and her co-conspirators qualified and received home-health services under Medicare. In fact, Hamilton paid patients to sign up and charged home-health agencies an illegal kickback in the form of a $60 patient ‘fee’ for certifying patients for home-health services.

The scheme resulted in approximately $16 million in false and fraudulent claims.

Hamilton will be sentenced at a later date.

This is not the first time Dr Hamilton has been in trouble. Back in August 2013, the Texas Medical Board and Hamilton entered into an Agreed Order requiring Dr Hamilton to refrain from treating chronic pain patients. Another physician was also required to monitor her practice. The Board found that Dr Hamilton failed to maintain adequate medical records. In addition, in some instances, she lacked full justification for the continued prescriptions of opiates and muscle relaxers.

https://www.justice.gov/opa/pr/texas-physician-convicted-16-million-medicare-fraud-scheme

Husband and wife charged with $3.5 million tax evasion

Asim Lodhi and wife Naila Lodhi have been charged with tax evasion of $3.5 million of diverted corporate income.

The Lodhis owned and operated US Loss Prevention Inc and Vanguard Detective & Security Agency. The companies provided contract security services for commercial clients in the Houston and Dallas/Fort Worth metropolitan areas. The principal office was in SW Houston.



The indictment alleges that, between 2008 and 2011, the couple diverted and cashed approximately $3.5 million in customer checks through two checking cashing services. One was located in a Chevron gas station in Spring, the other was in a Valero gas station in Cypress!

However, the couple only deposited $2 million into the company bank accounts during that time. Furthermore the couple told an unnamed Cypress CPA who prepared the books and tax returns that the deposits were for non-taxable shareholder loans rather than taxable sales.

When the couple found out that they were under IRS investigation, they hired another CPA firm to prepare amended tax returns that showed the $2 million as taxable sales. These amended returns were presented to the IRS in July 2013. They didn’t disclose the missing $1.5 million.

The couple have been charged with seven counts of tax evasion. If convicted, Asim and Naila Lodhi face a maximum of five years in federal prison on each count. They also face a possible $250,000 maximum fine.

https://www.justice.gov/usao-sdtx/pr/husband-and-wife-charged-tax-evasion

Lodhi indictment

 

Houston energy broker to pay $1.5 million penalty

Matt Webb, the owner of Classic Energy LLC, has agreed to pay a $1.5 million penalty following the settlement of charges brought by the US Commodity Futures Trading Commission (CFTC).  The company is based near downtown Houston and is a broker of trades in energy futures.



According to the order, on 63 occasions between April 2014 and September 2015, Webb misused material, nonpublic block trade order information provided to him by Classic’s customers. Instead of using this information to facilitate trades with other market participants, as customers expected, Webb took the other side of these block trades in his proprietary trading account.

According to the order, Webb further deceived Classic’s customers by creating the false impression that he was acting only as a broker, not as a trading counter-party. Webb charged brokerage commissions. Through this scheme, Webb realized profits over of $400,000.

The order also finds multiple failures of supervision and record keeping.

Penalties

Webb agreed to settle without admitting or denying any of the findings or conclusions of the order. In addition to the $1.5 million penalty, he agreed to pay disgorgement of $413,065. Mr Webb is also banned from trading until January 3, 2022.

Earlier settlement with ICE

Mr Webb executed most of those trades on an electronic trading operated by Ice Futures US (‘ICE’) which is part of a public company that is itself regulated by CFTC. Back in December 2016, Mr Webb settled with ICE over allegations that he entered into 52 fictitious transactions. (I think the 52 is a subset of the 63 trades cited by the CFTC). He agreed to pay disgorgement of $303,627 and a penalty of $503,627. In addition the company agreed to pay a fine of $250,000. An employee of Classic Energy also agreed to pay a fine of $100,000 for entering some fictitious transactions.

The CFTC stated that the $413,065 disgorgement would be reduced by whatever Webb had paid ICE in relation to the $303,627 from the December 2016 settlement.

Settlement with NFA

Mr Webb has also had issues with National Futures Association. In December 2016 he settled with the NFA over inadequate record keeping and misreporting the time of trades ($250,000 penalty). In June 2019 he settled charges of inadequate record keeping ($200,000 penalty).

Commodity Futures Trading Commission – press release