TEXAS BUSINESS TO FORFEIT OVER $1.3 MILLION FOR FAILING TO FILE IRS FORM 8300

FROM:  U.S. JUSTICE DEPARTMENT

Wednesday, October 29, 2014

Texas Electronics Business Sentenced for Violating Cash Reporting Requirement

A Texas electronics business was ordered today to forfeit more than $1.3 million for failing to report that amount in cash transactions to the IRS, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

D-Tronics, a McAllen, Texas, electronics business, was sentenced today by U.S. District Judge Micaela Alvarez of the Southern District of Texas for failing to file an IRS Form 8300 corresponding to a cash transaction of more than $10,000.  In addition, in accordance with its plea agreement, D-Tronics will forfeit more than $1.350 million, which represents the amount of unreported currency.  The forfeiture is among the highest against a trade or business for violating the Form 8300 filing requirement.  A Form 8300 filing is required to be filed when anyone engaged in trade or business receives more than $10,000 in U.S. currency in one or two or more related sales transactions.

In addition, Pedro Diaz, 45, the owner of D-Tronics, was sentenced to one year of probation for failing to supply information concerning foreign bank accounts in which he had an interest.  Both Diaz and D-Tronics entered guilty pleas in July 2014.

The case was investigated by the Internal Revenue Service – Criminal Investigation and prosecuted by Trial Attorney Keith Liddle in the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section.

CONTRACTOR TO PAY OVER $220,000 TO WORKERS FOR PRESHIFT AND POSTSHIFT HOURS WORKED

FROM:  U.S. DEPARTMENT OF LABOR 

Carpentry business to pay more than $220K in back wages and damages to workers

Employer failed to record and pay for preshift and postshift hours worked
LOS ANGELES — A southern California carpentry contractor has agreed to pay $111,305 in overtime back wages and the same amount in liquidated damages to 29 workers.

An investigation by the U.S. Department of Labor's Wage and Hour Division in Orange found Next Level Door & Millwork Inc. in violation of the Fair Labor Standards Act's overtime and record-keeping provisions for failure to record and compensate workers for all hours worked.

"It is an employer's responsibility to record and pay for all work hours. Failure to do so adversely impacts not only employees and their families, but provides an unfair competitive edge over those employers who abide by the rules," said Rudy Cortez, the director of the division's San Diego District Office. "We are pleased that Next Level Door & Millwork has agreed to include Wage and Hour Division contact information and information about recording preshift and postshift work in all new hire packages it distributes."

Investigators found that employees were required to report to the shop to pick up materials and tools or to drive the company truck to the job site. Workers were also required to return the items to the shop after leaving the job site. The employer failed to pay for that time.

Next Level Door & Millwork is a licensed interior and exterior finish carpentry contractor with approximately 50 employees working at headquarters in Indio. At the time of the investigation, the company worked as a subcontractor for Pulte Home Corp. at the Hawthorne development project in Irvine. The company has satellite locations in Riverside and in Las Vegas.

The FLSA requires that covered employees be paid at least a minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers are required to provide employees with a notice about FLSA's tip credit provisions, to maintain accurate time and payroll records and to comply with the hours, hazardous orders and other restrictions applying to workers under age 18. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for back wages and an equal amount in liquidated damages.

ROBOCALLING, MOBILE CRAMMING SCHEME DEFENDANTS TO PAY $10 MILLION TO SETTLE FTC CHARGES

FROM:  U.S. FEDERAL TRADE COMMISSION 

October 22, 2014

Defendants in Massive Spam Text Message, Robocalling and Mobile Cramming Scheme to Pay $10 Million to Settle FTC Charges

A series of defendants will pay approximately $10 million to the Federal Trade Commission to settle charges that they operated a massive scam that sent unwanted text messages to millions of consumers, many of whom later received illegal robocalls, phony “free” merchandise offers, and unauthorized charges crammed on their mobile phone bills.

The settlement marks the completion of a major effort by the FTC to crack down on the senders of unwanted text messages offering consumers “free” gift cards to retailers such as Best Buy, Walmart and Target. The messages contained links to websites that led consumers through a process that the FTC alleges was designed to get consumers’ personal information for sale to marketers, their mobile phone numbers to cram unwanted charges on their bill, and to drive them to paid subscriptions for which the scammers received affiliate referral fees.

“The operators of this scam bombarded consumers for months with deceptive text messages offering ‘free’ items, but the costs to consumers were very real – including the misuse of their personal information to cram unwanted charges on  their phone bills,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “I am pleased that these scammers will be forced to turn over millions of the dollars they took from consumers and banned from repeating these actions in the future.”

The settlement resolves the FTC’s allegations against three groups of defendants:

The first set of defendants is required to pay the FTC $7.8 million. The FTC alleged that this group of defendants was responsible for millions of illegal text messages, made deceptive claims about “free” merchandise, was responsible for unauthorized charges on mobile phone bills, and assisted and facilitated the sending of illegal robocalls. Under the terms of the settlement, these defendants will be banned from sending consumers unwanted text messages, as well as from placing charges of any kind onto a consumer’s telephone bill, whether landline or mobile. The settlement also bans the defendants from misrepresenting whether a product is free through a text message or webpage, and also requires the defendants to ensure that any affiliates working for them abide by the same provisions. In addition, the settlement requires the defendants to obtain consumers’ express informed consent before billing them and bans them from participating in illegal telemarketing. The defendants in this settlement are Acquinity Interactive, LLC; 7657030 Canada Inc., Garry Jonas, Gregory Van Horn, Revenue Path E-Consulting Pvt, Ltd.; Revenuepath Ltd.; and Sarita Somani.

The second set of defendants is required to pay the FTC $1.4 million. The FTC alleged that this set of defendants was responsible for cramming unauthorized charges on consumers’ mobile phone bills. Under the terms of the settlement, the defendants will be banned from placing charges of any kind on consumers’ telephone bills, as well as being banned from making any misrepresentations to consumers about a product or service, including the cost or a consumer’s obligation to pay. In addition, the defendants will be required to obtain consumers’ express informed consent before billing them for any good or service. The defendants in this settlement are Burton Katz, individually and also doing business as Polling Associates Inc. and Boomerang International, LLC, and Jonathan Smyth, individually and also doing business as Polling Associates Inc.

In the third settlement, an $8 million judgment is being suspended due to the defendants’ inability to pay, after they turn over available assets. The FTC alleged that this set of defendants was responsible for making millions of illegal robocalls. Under the settlement, the defendants are required to pay the FTC $100,000, as well as the surrender value of a life insurance policy and proceeds from the sale of: a 2013 Cadillac Escalade, two motorcycles, and a real estate holding in Southern California. The settlement also bans the defendants from illegally telemarketing consumers through robocalling. The defendants in this settlement are Firebrand Group S.L., LLC, Worldwide Commerce Associates, LLC, and Matthew Beucler.

In addition to these settlements, the Commission dropped charges against two defendants in the cases, Joshua Greenberg and Scott Modist.

The Commission vote approving the proposed stipulated final orders was 5-0. Judge Robert N. Scola, Jr. of the U.S. District for the Southern District of Florida entered the stipulated final orders on Oct. 16, 2014

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

FOUNDER DETROIT-AREA HOME HEALTH AGENCIES PLEADS GUILTY FOR ROLE IN HEALTH CARE FRAUD CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, October 22, 2014

The founder of three Detroit-area home health agencies pleaded guilty today in federal court for his role in a $22 million home health care fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office made the announcement.

Tayyab Aziz, 45, of Homer Glen, Illinois, pleaded guilty today before U.S. District Judge Bernard A. Friedman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  His sentencing is scheduled for March 3, 2015.

According to admissions in his plea agreement, Aziz founded three Detroit-area home health care agencies, Prestige Home Health Services Inc. (Prestige), Royal Home Health Care Inc., and Platinum Home Health Services Inc. (Platinum).  Using these companies, Aziz admitted that he orchestrated a conspiracy to defraud Medicare through fraudulent billings for home health care services.  

Specifically, Aziz admitted that he and his co-conspirators submitted fraudulent claims to Medicare for services that were medically unnecessary or never performed.  They also submitted claims for services purportedly provided to Medicare beneficiaries who were recruited through illegal kickbacks paid to the patients and recruiters.  To conceal the fraud, Aziz admitted that he and his co-conspirators created fictitious physical therapy files to document physical therapy and other services that had not actually been provided and were not medically necessary.  Aziz also created and submitted falsified records to the Michigan Community Health Accreditation Program (CHAP) in order for Prestige and Platinum to remain accredited Medicare providers.

As a result of Aziz’s fraudulent conduct, Medicare paid approximately $1,915,513.  Five of six other defendants in this case have also previously pleaded guilty.

This case was investigated by the FBI, HHS-OIG and IRS-CI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  This case is being prosecuted by Trial Attorneys Niall M. O’Donnell and James P. McDonald of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

TEXAS BUSINESS OWNER INDICTED FOR FAILING TO REPORT OVR $1.6 MILLION IN CASH TRANSACTIONS

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, October 20, 2014

Owner of Texas Perfume Business Indicted for Violating Cash Reporting Requirements Involving More Than $1.6 million

The owner and president of a wholesale and retail perfume store in Laredo, Texas, was indicted by a federal grand jury today on 44 counts of causing his business to fail to report cash transactions of more than $10,000.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

The indictment alleges that Virender Sharma, 59, of Laredo, Texas, was the owner and president of T.M. Perfumes, and was responsible for complying with the cash reporting requirements for the company.  Despite knowing of his filing obligations since 2006, Sharma allegedly caused the business to fail to report at least 44 cash transactions exceeding $10,000 between June 2009 and July 2010, which totaled more than $1.6 million.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

The case was investigated by the Internal Revenue Service – Criminal Investigation and the Drug Enforcement Administration.  The case is being prosecuted by Trial Attorney Keith Liddle of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Ted Imperato of the Southern District of Texas.

Labor Department News Releases Update

Labor Department News Releases Update

CFTC SETTLES ACTION AGAINST FUTURES COMMISSION MERCHANT

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

CFTC Settles Action against Friedberg Mercantile Group, Inc., a Registered Futures Commission Merchant, for Secured Amount Deficiency, Commingling of Customer Funds and Failure to Timely Report Secured Amount Deficiency

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced that it entered an order requiring Friedberg Mercantile Group, Inc. (Friedberg), a registered Futures Commission Merchant (FCM) in Toronto, Canada, to pay a $70,000 civil monetary penalty for a secured amount deficiency of approximately $240,000 on February 5, 2013, commingling of customer funds with its proprietary funds on February 6, 2013, and failure to timely notify the CFTC of the February 5, 2013 secured amount deficiency as required.

Friedberg is a subsidiary of Canadian broker-dealer Friedberg Mercantile Group, Ltd., also in Toronto. The company maintains a futures business to accommodate its securities customers who wish to trade futures and is one of the smallest FCMs as measured by customer assets required in segregation.

The CFTC Order finds that Friedberg’s handling of a customer request to transfer $300,000 of segregated funds to secured funds caused Friedberg to be under its secured amount requirement by approximately $240,000 on February 5, 2013, and its subsequent movement of funds to its secured account in connection with the same customer request resulted in Friedberg improperly commingling customer funds with its proprietary funds on February 6, 2013.

According to the CFTC Order, Friedberg failed to timely notify the CFTC of the February 5, 2013 secured amount deficiency as required.

The CFTC’s Order requires Friedberg to cease and desist from further violations of the CFTC Regulations charged in the Order, and imposes a $70,000 civil monetary penalty.

The CFTC staff members responsible for this matter are Division of Enforcement staff Susan Gradman, Allison Passman, Joseph Patrick, Scott Williamson, Rosemary Hollinger, and Richard Wagner, and Division of Swap Dealer and Intermediary Oversight staff Nicholas Chiacchere, Robert Loeber, Gerald Nudge and Kevin Piccoli.

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