Investment Fraud

There was some news from the FBI this week about Investment Fraud.

WASHINGTON—Attorney General Eric Holder announced today the results of Operation Broken Trust, a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud. To date, the operation has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes that harmed more than 120,000 victims throughout the country. The operation’s criminal cases involved more than $8.3 billion in estimated losses and the civil cases involved estimated losses of more than $2.1 billion. Operation Broken Trust is the first national operation of its kind to target a broad array of investment fraud schemes that directly prey upon the investing public.

In announcing the results of Operation Broken Trust, Attorney General Holder was joined by FBI Executive Assistant Director Shawn Henry, U.S. Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami, U.S. Postal Inspection Service (USPIS) Chief Postal Inspector Guy Cottrell, Deputy Chief Rick Raven of the Internal Revenue Service Criminal Investigation (IRS-CI), Acting Director of Enforcement Vince McGonagle of the U.S. Commodity Futures Trading Commission (CFTC), and other members of the Financial Fraud Enforcement Task Force.

The interagency Financial Fraud Enforcement Task Force was established by President Obama to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. Starting on Aug. 16, 2010, within a three-and-a-half month period, Operation Broken Trust involved 231 criminal cases and 60 civil enforcement actions. Eighty-seven defendants have been sentenced to prison, including several sentences of more than 20 years in prison.

“With this operation, the Financial Fraud Enforcement Task Force is sending a strong message,” said Attorney General Holder.  To the public: be alert for these frauds, take appropriate measures to protect yourself, and report such schemes to proper authorities when they occur. And to anyone operating or attempting to operate an investment scam: cheating investors out of their earnings and savings is no longer a safe business plan—we will use every tool at our disposal to find you, to stop you, and to bring you to justice.”

“This operation highlights the scope of this problem, and its impact on individuals from all walks of life,” said FBI Executive Assistant Director Henry. “This one sweep alone involves fraud schemes that harmed more than 120,000 victims. The schemes may change, but the underlying greed does not. Working with our partners, we in the FBI will use all the investigative techniques in our arsenal, including undercover operations, to bring those responsible to justice.”

“Fraud by well-known companies or high-profile executives gets the biggest headlines, but other scams are equally devastating to hard working families and retirees,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Victims want justice and don’t much care who the fraudster is or how unique the fraud.  Today’s actions underscore that law enforcement agrees and will pursue fraud in whatever form.”
Enforcement actions taken as a result of Operation Broken Trust involve a range of different investment fraud schemes, all of which prey directly on the investing public. The operators of these schemes often promise high returns to investors, but engage in little to no legitimate investment activity. Such schemes include Ponzi schemes, affinity fraud, prime bank/high-yield investment scams, foreign exchange (FOREX) frauds, business opportunity fraud, and other similar schemes. In some instances, operators of these schemes filed for bankruptcy in an attempt to avoid claims by victim-investors.

“The U.S. Postal Inspection Service has a long tradition of protecting postal customers from these types of investment and Ponzi scams and bringing those responsible to justice,” said USPIS Chief Postal Inspector Cottrell. “The Postal Inspection Service constantly strives to protect our customers and the general public from falling victim to these scams that claim millions of dollars every year.”

“The results announced today demonstrate the effectiveness of federal civil and criminal law enforcement in bringing to justice those who have engaged in financial fraud schemes,” said Acting Director McGonagle of the Division of Enforcement for CFTC. “The CFTC continues to devote substantial enforcement resources to combat financial fraud. We appreciate the partnership with the other members of the President’s Financial Fraud Enforcement Task Force to protect the public from financial fraudsters.”

“Securities and investment frauds are serious offenses which have brought financial ruin to many citizens. Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money,” said Rick Raven, Deputy Chief, IRS Criminal Investigation. “IRS Criminal Investigation is proud to bring our forensic accounting skills to this joint venture with our law enforcement partners to put a stop to this and other types of white collar fraud.”

Operation Broken Trust was conducted in conjunction with various Department of Justice components—including the U.S. Attorney Offices, the FBI, the Criminal and Civil Divisions and the U.S. Trustee Program—as well as the SEC, USPIS, the CFTC, IRS-CI, the Federal Trade Commission, the U.S. Secret Service, and the National Association of Attorneys General.

As a part of Operation Broken Trust, the task force is making the public aware of resources available to protect against these types of fraud and how to report fraud when it occurs. To learn more about investment scams, how to take steps to protect yourself from scams, or how to report investment fraud if you believe you have been victimized, go to StopFraud.gov. The website includes links to a wide array of task force member resources.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit StopFraud.gov.

Congratulations IC3!

On November 9th, 2010 the Internet Crime Complaint Center (IC3) logged it’s 2 millionth customer!  This is an amazing number, especially when you consider that not all scams and fraud are even reported.

This is a good thing, since it means that people are reporting the scams, which will give the FBI, National While Collar Crime Center and the Bureau of Justice Assistance (the agencies that partnered together to form the IC3) more information to try and go after these people and help warn people about these scams.

The IC3 receives, develops, and refers cyber crime complaints to local, state, federal, and international law enforcement agencies. The IC3 gives cyber crime victims a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations.

Since its inception, the IC3 has referred 757,016 criminal complaints to law enforcement around the globe. The majority of referrals involved fraud in which the complainant incurred a financial loss. The total reported loss from these referrals is approximately $1.7 billion, with a median reported loss of more than $500 per complaint.*

Medicare Fraud

It is always good to hear about a case where the “bad guys” are busted!

http://www.fbi.gov/pressrel/pressrel10/medicarefraud_071610.htm

WASHINGTON—Ninety-four people have been charged for their alleged participation in schemes to collectively submit more than $251 million in false claims to the Medicare program in the continuing operation of the Medicare Fraud Strike Force in Miami; Baton Rouge, Louisiana; Brooklyn, New York; Detroit; and Houston, announced Attorney General Eric Holder, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, FBI Director Robert Mueller, and Daniel R. Levinson, Inspector General of HHS. The operation announced today is the largest federal health care fraud takedown since Medicare Fraud Strike Force operations began in 2007.

The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. More than 360 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in today’s operation.

“Our continued Strike Force operations reflect the unprecedented commitment that inspired the creation of the Health Care Fraud Prevention and Enforcement Action Team in May 2009,” said Attorney General Holder. “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet. The federal government is working aggressively—and collaboratively—to pursue health care criminals around the country and to bring these offenders to justice.”

“Today’s arrests send a strong message that attempts to defraud Medicare will not be tolerated,” said Secretary Sebelius. “With the help of new tools in the Affordable Care Act, including stiffer penalties and better information sharing, we will continue to work with our federal, state, and local partners to stamp out Medicare fraud and protect beneficiaries and the American taxpayer.”

Charges were unsealed today against 94 individuals who are accused of various Medicare fraud-related offenses, including conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes, and durable medical equipment (DME) schemes. Thirty-six defendants charged in these schemes have been arrested in Miami, New York, Baton Rouge, and Detroit, and additional arrests are expected throughout the day.

According to the court documents, the defendants charged today participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes, never provided. In many cases, indictments and complaints allege that beneficiaries accepted cash kickbacks in return for allowing providers to submit forms saying they had received the treatments that, in reality, were unnecessary or never provided. Collectively, the doctors, health care company owners, executives and others charged in the indictments and complaints are accused of conspiring to submit more than $251 million in false claims to the Medicare program.

In Miami, 24 defendants were charged for allegedly participating in various fraud schemes that led to approximately $103 million in false billings. According to court documents, the fraud schemes involved fraudulent billing for HIV infusion services, home health care and physical therapy services, DME and pharmaceutical medications. The defendants include owners and operators of companies, doctors, nurses, and patient recruiters, as well as a medical biller who is alleged to have billed approximately $49 million for fraudulent services.

Thirty-one defendants were charged in Baton Rouge for various schemes allegedly involving fraudulent claims for DME totaling approximately $32 million. The defendants include the owners and operators of nine different purported medical services companies and four doctors, 14 patient recruiters, and other individuals who allegedly worked at the medical services companies.

Twenty-two defendants were charged in Brooklyn for their alleged participation in schemes to submit fraudulent claims totaling approximately $78 million. These fraud schemes involved false billing for physical and occupational therapy and DME. The defendants include the owners and operators, patient recruiters and employees at three different purported medical clinics and a medical equipment company, as well as three doctors. According to court documents, six of the defendants charged are serial Medicare beneficiaries, who purported to seek medical treatment from numerous providers, causing the submission of multiple claims to Medicare for purported medical treatments.

In Detroit, 11 defendants were charged for their alleged roles in schemes to submit fraudulent claims to Medicare for home health services, nerve conduction tests, and injection and infusion therapy sessions. The schemes involved a total alleged fraud of approximately $35 million and five different purported medical services companies.

Four defendants were also charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for DME.

In addition to making arrests around the country, law enforcement agents are executing search warrants in connection with ongoing health care fraud investigations.

“Today’s charges allege attempts by individuals to defraud the Medicare program of $251 million,” said FBI Director Robert S. Mueller, III. “Countless Americans rely on Medicare for their well-being, and the FBI, working in conjunction with our federal agency partners, is resolute in its commitment to stop those who would illegally manipulate the system.”

“Today’s arrests illustrate how health care fraud schemes can replicate virally and migrate rapidly across communities,” said Daniel R. Levinson, Inspector General of HHS. “To combat this fraud, the government’s response must also be swift, agile, and organized—a HEAT initiative goal which is well illustrated by today’s Strike Force actions.”

The Strike Force operations in Miami, Baton Rouge, Brooklyn, Detroit and Houston are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The HEAT task force, co-chaired by Acting Deputy Attorney General Gary G. Grindler and Deputy Secretary Bill Corr, is made up of top-level law enforcement agents, prosecutors and staff from both departments and their operating divisions. In the May 2009 announcement, Attorney General Holder and Secretary Sebelius announced the expansion of the Strike Force into Detroit and Houston to build upon existing partnerships between the agencies in a heightened effort to reduce fraud and recover taxpayer dollars. In December 2009, Strike Force operations were expanded to Brooklyn, Baton Rouge and Tampa.

Since its inception in March 2007 with Phase One in South Florida and continuing through its most recent expansion into Tampa, Fla., the Strike Force has obtained indictments of more than 810 individuals and organizations that collectively have billed the Medicare program for more than $1.85 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The cases announced today are being prosecuted and investigated by Strike Force teams comprised of attorneys from the Fraud Section in the Justice Department’s Criminal Division and from the U.S. Attorneys’ Offices for the Southern District of Florida, the Eastern District of New York, the Middle District of Louisiana, the Eastern District of Michigan and the Southern District of Texas; and agents from the FBI and HHS-OIG.

The Railroad Retirement Board Office of Inspector General and the Office of Personnel Management-Office of Inspector General also participated in today’s operation.

An indictment is merely an allegation, and defendants are presumed innocent until and unless proven guilty.

To learn more about the HEAT team, go to: www.stopmedicarefraud.gov.

Scams and a connection to terrorism

I have thought for a LONG time that there was a connection between scams and terrorists, but because I did not want to be seen as a conspiracy theory person I did not talk about it a lot. Well, now there is an FBI press release that supports that theory.

Al Qaeda Supporter Pleads Guilty to Supporting Terrorist Organization
Kansas City Man Also Admits to Bank Fraud, Overseas Money Laundering

KANSAS CITY, MO—Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., man pleaded guilty in federal court today to his role in a conspiracy to provide material support to the terrorist organization al Qaeda. He also pleaded guilty to bank fraud and money laundering.

“National security is the highest priority of the Department of Justice,” Phillips said. “I applaud the diligent work of our law enforcement partners from local, state and federal agencies that serve on the Heart of America Joint Terrorism Task Force. These agencies have made significant investments of manpower and resources to the task force, and I appreciate their commitment to defeating terrorism. Much of their work is done behind the scenes, investigating and gathering information, but they play a crucial role in preventing terrorist activities.”

Khalid Ouazzani, 32, of Kansas City, waived his right to a grand jury and pleaded guilty before U.S. District Judge Howard F. Sachs to a federal information that charges him with conspiracy to provide material support to a terrorist organization. Ouazzani also pleaded guilty to charges contained in an indictment that was returned under seal by a federal grand jury in Kansas City on Feb. 3, 2010.

Ouazzani, a native of Morocco and a naturalized citizen of the United States, swore an oath of allegiance to al Qaeda in June 2008. Ouazzani admitted that, from August 2007 to February 2010, he participated in a conspiracy to provide material support or resources to al Qaeda.

Ouazzani also admitted that he personally provided more than $23,000 to al Qaeda and performed other tasks at the request of and for the benefit of al Qaeda. Ouazzani had conversations with others about various ways to support al Qaeda, including plans for them to fight in Afghanistan, Iraq, or Somalia.

“Citizens here in the heartland should be alert to suspicious activity and never hesitate to report their concerns to law enforcement. This case serves as a reminder that terrorist-related activities can occur anywhere,” said Special Agent in Charge Brian A. Truchon of the Federal Bureau of Investigation’s Kansas City field office.

Ouazzani agreed to contribute $6,500 to al Qaeda in August 2007. A co-conspirator, who is not identified in court documents, made that payment on Ouazzani’s behalf. Ouazzani repaid the co-conspirator in November 2007 through a wire transfer to the co-conspirator’s bank account in the United Arab Emirates. Those funds came from Ouazzani’s sale of his business, Hafssa LLC, doing business as Truman Used Auto Parts, a retail operation that bought and sold used auto parts and used motor vehicles.

In June or July 2008, Ouazzani also agreed to pay al Qaeda $17,000, which represented his profit from the sale of an apartment in the United Arab Emirates that was owned by Ouazzani and a co-conspirator (who is not identified in court documents).

Bank Fraud Scheme

Ouazzani obtained a $175,000 line of credit commercial loan from Union Bank in April 2007 for Hafssa LLC (Truman Used Auto Parts). Under the terms of the loan, the funds were to be used as working capital for his business. Ouazzani admitted that he submitted false financial information about himself and the company to obtain the loan, and used substantial amounts of the loan proceeds for various personal purposes.

Ouazzani made only approximately $13,000 in payments on this loan. In September 2008 Union Bank wrote off the loan (then in the amount of $174,028) as uncollectible. On Feb. 11, 2009, Union Bank obtained a civil default judgment against Ouazzani and Hafssa LLC in the amount of $177,001.

Money Laundering

Ouazzani admitted that he used part of the proceeds of the Union Bank loan to purchase an apartment in the United Arab Emirates with a co-conspirator.

On May 23, 2007, Ouazzani caused a wire transfer of $112,830 to be sent to a bank account in the United Arab Emirates. The funds for this wire transfer included funds obtained from the $175,000 Union Bank loan and involved a series of transactions designed to make it more difficult to trace the funds.

Ouazzani used the wire-transferred funds to purchase an apartment in the United Arab Emirates, which he later sold for a profit of approximately $17,000. Ouazzani requested a co-conspirator to pay this $17,000 to al Qaeda.

“The criminal justice system is a valuable tool for disrupting terrorist plots and bringing terrorists to justice,” Phillips said. “We must use every means—criminal prosecutions as well as intelligence and military operations—to protect the American people. Federal prosecutions not only result in long prison sentences, but yield valuable intelligence that can be used in the fight against al Qaeda and other terrorist organizations.”

Under federal statutes, Ouazzani is subject to a sentence of up to 65 years in federal prison without parole, plus a fine up to $1 million and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys J. Daniel Stewart, David M. Ketchmark and Brian P. Casey and Special Assistant U.S. Attorney Alex Menzel of the U.S. Attorney’s Office for the Western District of Missouri, with assistance from attorneys at the Justice Department’s National Security Division, including the Counterterrorism Section. It was investigated by the Heart of America Joint Terrorism Task Force, led by the Federal Bureau of Investigation, with the assistance of the Missouri Department of Social Services – Division of Legal Services Investigation Section.

Heart of America Joint Terrorism Task Force
Federal Bureau of Investigation
Bureau of Alcohol, Tobacco, and Firearms
Defense Criminal Investigative Service
Federal Air Marshals Service
IRS-Criminal Investigation
Kansas City, Kan., Police Department
Kansas City, Mo., Police Department
Kansas Highway Patrol
Missouri State Highway Patrol
Overland Park, Kan., Police Department
U.S. Attorney’s Offices for the Western District of Missouri and the District of Kansas
U.S. Immigration and Customs Enforcement
U.S. Marshals Service
U.S. Postal Inspection Service
U.S. Secret Service

National Center for Disaster Fraud

It is a sad fact that natural disasters bring out the con-artists and scammers.  Why?  Because they prey on people’s feelings and wanting to help those in need.

The National Center for Disaster Fraud established a hotline in January where you can report suspected fraud.  The number is (866) 720-5721, or you can email them at disaster@leo.gov.

To read the FBI press release on the National Center for Disater Fraud go to http://www.fbi.gov/pressrel/pressrel10/fraud_031110.htm

Pop-Up Security Warnings Pose Threats

Pop-Up Security Warnings Pose Threats

The FBI warned consumers today about an ongoing threat involving pop-up security messages that appear while they are on the Internet. The messages may contain a virus that could harm your computer, cause costly repairs or, even worse, lead to identity theft. The messages contain scareware, fake or rogue anti-virus software that looks authentic.

The message may display what appears to be a real-time, anti-virus scan of your hard drive. The scareware will show a list of reputable software icons; however, you can’t click a link to go to the real site to review or see recommendations. Cyber criminals use botnets—collections of compromised computers—to push the software, and advertisements on websites deliver it. This is known as malicious advertising or “malvertising.”

Once the pop-up warning appears, it can’t be easily closed by clicking the “close” or “X” buttons. If you click the pop-up to purchase the software, a form to collect payment information for the bogus product launches. In some instances, the scareware can install malicious code onto your computer, whether you click the warning or not. This is more likely to happen if your computer has an account that has rights to install software.

Downloading the software could result in viruses, malicious software called Trojans, and/or keyloggers—hardware that records passwords and sensitive data—being installed on your computer. Malicious software can cause costly damages for individual users and financial institutions. The FBI estimates scareware has cost victims more than $150 million.

Cyber criminals use easy-to-remember names and associate them with known applications. Beware of pop-up warnings that are a variation of recognized security software. You should research the exact name of the software being offered. Take precautions to ensure operating systems are updated and security software is current. If you receive these anti-virus pop-ups, close the browser or shut down your computer system. You should run a full anti-virus scan whenever the computer is turned back on.

If you have experienced the anti-virus pop-ups or a similar scam, notify the Internet Crime Complaint Center (IC3) by filing a complaint at http://www.ic3.gov.

Rothstein Investment

This press release can be found at http://miami.fbi.gov/pressrel/2009/mm111209.htm

FBI and IRS Seeking to Identify Victims and Individuals with Information in Rothstein Investigation

The Miami Division of the Federal Bureau of Investigation (FBI) and the Miami Field Office of the Internal Revenue Service (IRS) are seeking information from individuals who have invested in the Rothstein Structured Settlement Investment (RSSI) or from individuals who have information that would be helpful to the investigation. To facilitate information gathering, the FBI has established a dedicated e-mail address and an informational telephone line 1-800-CALL-FBI, “Rothstein Option.”

Details of the investigation cannot be discussed at this time, as the investigation is ongoing. However, the FBI and IRS are seeking to identify victims and to obtain any information to determine the extent of any potential fraud.

In an effort to determine the scope of the matter and the amount of losses that may be involved, investigators are requesting that individuals provide:

Basic contact information (name, address, telephone numbers, e-mail address.)

Amount of investments/losses with the Rothstein Structured Settlement Investment.

Whether you can verify your investments by providing the most recent statements.

Any additional information that may be helpful.

Information may be provided via dedicated e-mail address Rothstein.Investment@ic.fbi.gov

 or to informational telephone line 1-800-CALL-FBI, “Rothstein Option” (1-800-225-5324.)

 If you have investigative information that may aid the criminal investigation, you may also submit it via email or telephone. For those who would like to return funds received from Rothstein please call the 1-800 number and someone will get back with you with specific instructions on how to return the funds.

 Hard copy documentation may be mailed to:

FBI Victim Assistance Program

Rothstein Investment

16320 NW 2nd Avenue

Miami, Florida 33169

If it is determined that you are a victim, the FBI will be in touch with you. Please note that due to the expected number of responses, it may be several days before you are contacted.

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