Tag Archives: Fraud

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

 

Former employee charged with $10 million fraud

James Camp has been charged with $10 million fraud from his former employer, Lubrizol Corporation, based in Deer Park.

The 10-count indictment for wire fraud was returned in the Southern District of Texas. The indictment remains under seal. Therefore many details of the scheme have not been released.



Lubrizol is a provider of specialty chemicals. It was a public company until it was acquired by Berkshire Hathaway in 2011. Its corporate head office is in Ohio.

Mr Camp allegedly defrauded the company of $9,256,713 between April 1998 and November 2017. Camp submitted fraudulent invoices for laboratory services from two companies he owned. He then allegedly caused Lubrizol to issue payments to those companies. The indictment further alleges that he used the fraudulently obtained payments for his own personal benefit.

If convicted, Camp faces up to 20 years imprisonment on each count as well as a possible $250,000 fine.

https://www.justice.gov/usao-sdtx/pr/former-employee-indicted-nearly-10-million-fraud-scheme

 

 

TechnipFMC pays SEC $5 million to settle Iraq bribery violations

TechnipFMC, has agreed to pay the Securities and Exchange Commission (SEC) $5 million to settle bribery allegations in Iraq.

Between 2008 and 2013, FMC Technologies (based in Houston) made over $794,000 in payments to a third-party consultant, who used some of these funds to pay bribes to Iraqi government officials to procure metering technology contracts with Iraq state-owned oil companies.



Back in June, the Department of Justice announced that TechnipFMC had agreed to pay $296 million to settle bribery allegations in Brazil and Iraq. $214 million of that was to be paid to the Brazilian authorities, with $82 million going to the DOJ.  In June, Technip issued a press release announcing a $301 million settlement. I noted, at the time, the $5 million discrepancy. I presume the $301 million includes the $5 million just announced.

The FMC sales manager who played an active role in the bribery scheme was based outside the US. However personnel in the US sent numerous documents and approved payments to Unaoil, the consultancy firm based in Monaco. The company disguised the payments as site installation expenses.

TechnipFMC did not self-report to the SEC until after being contacted by the DOJ. It has agreed to pay $4.3 million (representing profits on the contracts won) plus interest of $0.7 million.

Technip and FMC merged in January 2017. Last month, the company announced plans to split into two having spent $231 million on integration costs since 2016.

https://www.sec.gov/enforce/34-87055-s

 

 

SEC charges former CEO of Houston company with creating fictitious CFO

The Securities and Exchange Commission (SEC) has announced fraud charges against Tom Simeo. He is the former Chairman and CEO of Houston-based Viking Energy Group. The charges are for making materially misleading disclosures regarding Viking’s purported CFO.

Viking Energy is traded over-the-counter. At the time of the alleged fraud, it had a market cap of around $5 million.



Company had no CFO

The SEC alleges that Simeo, a resident of New York, created the false impression to the public that Viking had an experienced financial professional involved in its operations and financial reporting as its CFO, when in reality, the Company had no CFO.

According to the complaint, between November 2014 and May 2016, Viking’s public filings falsely disclosed that Guangfang “Cecile” Yang was Viking’s CFO.  Internal control certifications required by Sarbanes-Oxley falsely represented that Yang had performed an evaluation of Viking’s internal controls over financial reporting.

According to the SEC ‘there is no evidence that Yang performed any activities as Viking’s CFO from at least November 2014 through Yang’s resignation in July 2016. Indeed, other than a single email to Simeo from someone purporting to be “Cecile,” neither Viking nor Simeo has produced any documentary evidence that anyone from Viking, or its auditors, had ever communicated with Yang’.

Chinese Incubator 

Simeo served as Chairman of Viking from August 2008 until May 2017. Until 2014 Viking operated as an incubator for Chinese companies. Simeo’s former wife introduced him to Yang in Shanghai in 2013 and hired her as the company’s CFO shortly afterwards.

At the time she was appointed, Yang provided to Simeo a ‘standing resignation letter’ and a power of attorney in favor of Simeo, authorizing him to affix Yang’s signature to any and all documents that Yang was required to review and sign as CFO.

In 2014, Simeo converted the business to an Exploration and Production company. In 2016 he moved the head office from New York to Houston.

False Biography

Simeo provided Yang’s unverified resume to Viking’s outside counsel to use in the senior management biography disclosed in the annual report. The biography claimed that Yang had;

  • worked at KPMG from 1998 to 2006,
  • participated in audits of the Sinopec and China Mobil IPO’s,
  • a business degree from the Hult International Business School in London

According to the SEC, she didn’t work at KPMG for the years listed, she didn’t work on the IPO’s and she never graduated from the business school.

According to the annual reports, Ms Yang received no compensation over than a grant of 25,000 shares worth $3,914 in 2014.

$2 million raised from investors

During this period, the company raised approximately $2 million from investors. Viking and Simeo continued to disclose Yang as the company’s CFO until the securities had been sold.

https://www.sec.gov/litigation/litreleases/2019/lr24599.htm

 

 

Houston healthcare executive sentenced to 10 years for $16m fraud

Starsky Bomer of Houston has been sentenced to 10 years in prison for his role in a $16 million Medicare fraud scheme.

Mr Bomer was convicted in October 2018 of one count of conspiracy to pay and receive healthcare kickbacks, two counts of violating the Anti-Kickback Statute and one count of conspiracy to commit health care fraud.



Mr Bomer was the CFO & COO of Atrium Medical Center in Sugar Land and Pristine Healthcare in Pasadena. Between 2011 and February 2013, Bomer and others engaged in a scheme to defraud Medicare by submitting false and fraudulent claims for partial hospitalization program (PHP) services. A PHP is a form of intensive outpatient treatment for severe mental illness.

Mr Bomer orchestrated a scheme by which he paid bribes and kickbacks (typically around $1,500) to group home owners and patient recruiters in exchange for sending patients to Atrium and Pristine. Mr Bomer disguised the bribes and kickbacks as salary payments and transportation payments. In addition, Mr Bomer knew that most of the patients admitted to Atrium and Pristine’s PHP did not qualify for and were never provided legitimate partial hospital services.

Mr Bomer has to pay back $6.3 million in restitution and forfeit $158,000.

https://www.justice.gov/opa/pr/texas-hospital-administrator-sentenced-10-years-prison-role-16-million-health-care-fraud

Houston attorney convicted of offshore tax evasion scheme

Jack Stephen Pursley, a.k.a Steve Pursley has been convicted in an offshore tax evasion scheme. After a four day trial, he was convicted of one count of conspiracy to defraud the US and three counts of tax evasion.

Mr Pursley was friends with Shaun Mooney from college at Texas Christian University. Mr Mooney ran a company that, until 2009, provided personnel services to clients who owned offshore oil rigs, primarily in the Middle East.  However, Mr Mooney had a problem. He had $18 million held in an offshore bank account in the Isle of Man. He wanted to remit it back to the US without paying tax on it.



Mooney and Pursley created a company in which Mooney owned 76% and Pursley 24%. Mr Pursley used that company to transfer the money back to the US. He disguised the transfers as stock purchases in US corporations that they owned. Mr Pursley evaded taxes by claiming the withdrawal of funds were non-taxable loans and returns of capital.

At trial, the government proved that Mr Pursley received more than $4.8 million and didn’t pay taxes on this income between 2007 and 2010. Instead he used the money to buy two houses in Houston and a vacation home in Vail, Colorado.

Court documents suggested that Mooney provoked the federal investigation when he disclosed the tax scheme to the authorities in 2013 under the Offshore Voluntary Disclosure Program.

Sentencing will occur in December. He faces a maximum of five years in prison for the conspiracy count and five years for each count of tax evasion. He also faces a period of supervised release, monetary penalties and restitution.

https://www.justice.gov/opa/pr/houston-attorney-convicted-offshore-tax-evasion-scheme