Baylor Health Care System, Scott & White Healthcare Agree to Rescind Overly Broad, Unlawful Rules

Baylor Health Care System, Scott & White Healthcare Agree to Rescind Overly Broad, Unlawful Rules

$2.5 MILLION IN SACNCTIONS ORDRED AGAINST OWNERS AND THEIR PRECIOUS METALS TRADING COMPANIES

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 

February 5, 2015

CFTC Orders Florida Residents Isaiah Goldman and Brock Catronio and their Companies, Paramount Metals Exchange, LLC and Paramount Credit, LLC, to Pay More than $2.5 Million in Sanctions for Engaging in Illegal, Off-Exchange Precious Metals Transactions

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Isaiah Goldman and Brock Catronio, individually, and their companies, Paramount Metals Exchange, LLC and Paramount Credit, LLC (collectively Paramount), both of Delray Beach, Florida, for engaging in illegal, off-exchange precious metals transactions. Goldman resides in Boca Raton, Florida, and Catronio resides in Delray Beach.

The CFTC Order requires Goldman, Catronio, and Paramount jointly to pay restitution of $1,595,946 to their customers and jointly to pay a $1 million civil monetary penalty. In addition, the Order imposes permanent registration and trading bans on Goldman, Catronio, and Paramount.

The Order finds that, from December 2011 through February 2013, Goldman, Catronio, and Paramount solicited retail customers to engage in outright cash purchases of precious metals, falsely claiming to sell and transfer title of physical metals to customers and to arrange for the transfer and storage of the physical metals in independent depositories where such metal was purportedly held on the customers’ behalf.

The Order states that unknown to Paramount customers, Goldman, Catronio, and Paramount instead treated the customers’ transactions as financed purchases of metal in which the retail customer only paid a portion of the purchase price and took out a loan for the balance of the purchase price. According to the Order, Paramount’s customers paid a total of $3,306,032 and lost $1,595,946 of their funds to trading losses, commissions, interest charges, and other fees to Paramount and another company. Goldman, Catronio, and Paramount received $853,279 of those commissions and fees. Thus, the Order finds that, among other specific findings, Goldman, Catronio, and Paramount engaged in illegal, off-exchange transactions and committed fraud, violating provisions of the Commodity Exchange Act.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, financed transactions such as those conducted by Paramount, are illegal off-exchange transactions unless they result in actual delivery of metal within 28 days. According to the Order, Paramount’s retail financed precious metals transactions executed through Hunter Wise Commodities LLC did not result in actual delivery to the customer. In addition, as explained in the CFTC Order, financed transactions such as these must be executed on or subject to the rules of an exchange approved by the CFTC, which Paramount did not do.

The CFTC cautions that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets. The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

CFTC Division of Enforcement staff members responsible for this action are Susan B. Padove, Heather Johnson, Elizabeth M. Streit, Scott Williamson, and Rosemary Hollinger.

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CFTC’s Precious Metals Customer Fraud Advisory

CHARTER BUS COMPANY OWNERS SENT TO PRISON FOR TAX AND BANK FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, February 4, 2015

California Charter Bus Company Owners Sentenced to Prison for Tax Fraud and Bank Home Mortgage Fraud

Two San Jose, California, brothers were sentenced to prison for committing tax fraud and bank fraud,  Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Melinda Haag of the Northern District of California announced.

Fidencio Moreno, 52, was sentenced to serve 41 months in prison and three years of supervised release, and Arturo Moreno, 38, was sentenced to serve 28 months in prison and three years of supervised release.  The court also ordered Arturo Moreno to pay $422,962 in restitution and to forfeit $3,328,600 and his interest in two pieces of real property.  In January 2015, Elena Moreno, 40, the wife of Fidencio Moreno, was sentenced to serve 22 months in prison and three years of supervised release for her role in the conspiracies as a bookkeeper at the company.  Prior to pleading guilty in this case, the three co-defendants collectively paid more than $200,000 in restitution to the Internal Revenue Service (IRS) for losses associated with their conspiracy to defraud the United States by filing false and fraudulent tax returns.

According to court documents, beginning in 2005 and continuing through at least 2010, Arturo, Fidencio and Elena Moreno conspired to defraud the United States by failing to report substantial amounts of gross receipts from their charter bus company, Quality Assurance Travel (QAT), on the federal corporate tax returns for QAT and on their personal income tax returns that they filed with the IRS.  The total amount of unreported gross receipts of QAT during those years exceeded $966,908.  Arturo and Fidencio Moreno were each 50 percent owners of QAT.  The unreported income consisted primarily of cash receipts that were paid by passengers as they boarded the bus, but that were not deposited into the business bank accounts or disclosed to the Morenos’ tax return preparer.

According to court documents, between 2005 and July 2013, Arturo, Elena and Fidencio Moreno also conspired to commit bank fraud and wire fraud by submitting false and fraudulent home mortgage loan applications that overstated the applicants’ income and assets in order to acquire and refinance homes located in San Jose.  In total, the defendants fraudulently obtained more than $3.3 million in home loans.  After the defendants fell behind on the loan payments, they attempted to avoid foreclosure by submitting false and fraudulent applications to modify these loans.  Two of the financial institutions approved the fraudulent applications, reducing the principal due on these loans.  One of the four properties was ultimately sold via a short sale in 2013, while another was foreclosed upon in 2014.  The total losses to the financial institutions resulting from the foreclosure and short sale exceeded $325,000.

The case was investigated by special agents of IRS-Criminal Investigation.  Trial Attorney Todd P. Kostyshak of the Tax Division and Assistant U.S. Attorneys Thomas Moore and Katherine Wong prosecuted the case.

ALJ Grants Bargaining Order Against Novelis Corporation

ALJ Grants Bargaining Order Against Novelis Corporation

OCEAN SHIPPING EXEC. PLEADS GUILTY TO PRICE FIXING, RECEIVES 18 MONTH PRISON SENTENCE

FROM:  U.S. JUSTICE DEPARTMENT 

FRIDAY, JANUARY 30, 2015

OCEAN SHIPPING EXECUTIVE PLEADS GUILTY TO PRICE FIXING ON

OCEAN SHIPPING SERVICES FOR CARS AND TRUCKS

Executive Agrees to Serve 18 Months in U.S. Prison

WASHINGTON — An executive of Japan-based Kawasaki Kisen Kaisha Ltd. (K-Line) pleaded guilty today and was sentenced to 18 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.

According to the one-count felony charge filed today in U.S. District Court for the District of Maryland in Baltimore, Hiroshige Tanioka, who was at various times an assistant manager, team leader and general manager in K-Line’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. Tanioka participated in the conspiracy from at least as early as April 1998 until at least April 2012.

Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and off of an ocean-going vessel.  Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.

“For more than a decade this conspiracy has raised the cost of importing cars and trucks into the United States,” said Assistant Attorney General Bill Baer for the Department of Justice’s Antitrust Division.  “Today’s sentencing is a first step in our continuing efforts to ensure that the executives responsible for this misconduct are held accountable.”

Today’s sentence was the first to be imposed against an individual in the division’s ocean shipping investigation.  Previously, three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including Tanioka’s employer K-Line, which was sentenced to pay a criminal fine of $67.7 million in November 2014.

Pursuant to the plea agreement, which was accepted by the court today, Tanioka was sentenced to serve an 18-month prison term and pay a $20,000 criminal fine for his participation in the conspiracy.  In addition, Tanioka has agreed to assist the department in its ongoing investigation into the ocean shipping industry.

Tanioka was charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s plea agreement is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.

FTC CHAIRWOMAN RAMIREZ MAKES STATEMENT ON DECEPTIVE ADVERTISING CASE AGAINST POM WONDERFUL

FROM:  U.S. FEDERAL TRADE COMMISSION 

Statement by FTC Chairwoman Edith Ramirez on Appellate Ruling in the POM Wonderful Matter

Federal Trade Commission Chairwoman Edith Ramirez issued the following statement in response to a ruling today by the U.S. Court of Appeals for the District of Columbia Circuit regarding the FTC’s deceptive advertising case against POM Wonderful, its parent company, and its principals.

“Today’s decision by the D.C. Circuit is a victory for consumers.  It is in keeping with established law that advertisers who market products for serious health conditions must have rigorous science to back up those claims.  The court specifically recognized that this applies to food and dietary supplement marketers such as POM.  It also held that requiring a randomized, well-controlled human clinical study for future disease benefit claims is an appropriate remedy based on POM’s conduct.”

The D.C. Circuit affirmed a January 2014 FTC decision that the marketers of POM Wonderful 100% Pomegranate Juice and POMx supplements deceptively advertised that the products could treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction, and were clinically proven to have such benefits.  The court did not uphold the FTC order requirement for two randomized well controlled human clinical trials by POM. However, the court did affirm the FTC’s order requiring POM to have at least one such study before making disease prevention or treatment claims and held out the possibility that two might be warranted in other cases.

POM Wonderful filed an appeal with the court in March 2014, challenging the Commission’s January 2014 decision and order, which found that the POM marketers had made deceptive claims in 36 advertisements and promotional materials for the pomegranate juice and supplements.  The Commission issued a final order requiring POM’s future disease treatment and prevention claims to be supported by at least two randomized well-controlled human clinical trials, and other health benefit claims to be supported by competent and reliable scientific evidence.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

ANTITRUST AT DOJ ANNOUNCES $1.861 BILLION IN CRIMINAL FINES AND PENALTIES COLLECTED

FROM:  U.S. JUSTICE DEPARTMENT
ANTITRUST DIVISION ANNOUNCES FISCAL YEAR TOTAL IN CRIMINAL FINES COLLECTED

The Department of Justice collected $1.861 billion in criminal fines and penalties resulting from Antitrust Division prosecutions in the fiscal year that ended on Sept. 30, 2014. Contributing in part to one of the largest yearly collections for the division, five of the companies paid in full penalties that exceeded $100 million, including a $425 million criminal fine levied against Bridgestone Corp., the fourth-largest fine the Antitrust Division has ever obtained.  The second-largest fine collected was a $195 million criminal fine levied against Hitachi Automotive Systems Ltd.  The three additional companies that paid fines and penalties exceeding $100 million were Mitsubishi Electric Corp. with $190 million, Toyo Tire & Rubber Co. Ltd. with $120 million and JTEKT Corp. with $103.2 million. The collection total also includes penalties of more than $561 million received as a result of the division’s LIBOR investigation, which has been conducted in cooperation with the Justice Department’s Criminal Division. In addition, in the last fiscal year the division obtained jail terms for 21 individual defendants, with an average sentence of 26 months, the third-highest average ever.

“The size of these penalties is an unfortunate reminder of the powerful temptation to cheat the American consumer and profit from collusion,” said Assistant Attorney General Bill Baer for the Antitrust Division.  “We remain committed to ensuring that corporations and individuals who collude face serious consequences for their crimes.”