DOJ Continues To Prosecute PPP Fraud

DOJ Continues To Prosecute PPP Fraud

Earlier this week, Ana Soto of Newark, Delaware pled guilty to fraudulently obtaining and spending money received through Paycheck Protection Program (“PPP”) loans.  

Between March 30, 2020, and January 24, 2021, Soto allegedly submitted seventeen fraudulent loan applications on behalf of entities controlled by Soto or her close relations. The allegedly fraudulent applications falsely stated:  (i) the amount of gross revenues, (ii) the cost of goods sold, and (iii) the number of employees. Some of the applications also falsely claimed the businesses were in operation at the start of the coronavirus pandemic. Soto allegedly obtained approximately $246,000 in CARES Act loans due to the fraudulent applications.  

Soto pleaded guilty to one count of wire fraud and one count of money laundering. She faces a maximum penalty of 20 years in prison. This case signals a continued effort by DOJ to prosecute CARES Act fraud. We expect the DOJ to continue to investigate and prosecute allegations of attempted fraud involving PPP and CARES Act funding.  

The DOJ press release is here.

UnitedHealth Subsidiary Settles Health Care Claims for $5.8 Million

Optum Rx, a subsidiary of UnitedHealth Group, has agreed to pay $5.8 million to settle claims that it failed to comply with pricing procedures for prescriptions under Massachusetts’ workers’ compensation program. The Massachusetts Attorney General’s Office alleged that Optum Rx ignored various benchmarks when making its pricing determinations on injured worker prescriptions filled at certain Walgreens, CVS, and RiteAid locations, resulting in higher drug costs and overcharges to the program.

Optum Rx denied any wrongdoing, but as part of the settlement, it agreed to develop a compliance pricing protocol within 90 days to ensure that its procedures comply with state regulations. It is also required to provide the Massachusetts AG’s Office with data and documentation sufficient to verify the implementation of the new compliance pricing protocol. Notably, the settlement does not require Optum Rx to implement the same compliance practice outside of Massachusetts.

The AG’s press release is here.

BitMEX Founders Plead Guilty To Bank Secrecy Act Violations

Arthur Hayes and Benjamin Delo, two co-founders of the offshore cryptocurrency derivatives exchange BitMEX, pled guilty to violating the Bank Secrecy Act (“BSA”) by willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX.

The government alleged that between September 2015 and September 2020, Hayes and Delo willfully failed to implement an AML program, including a “know your customer” or “KYC” program, despite being notified of allegations that BitMEX was being used to launder the proceeds of a cryptocurrency hack. According to the government, neither Hayes, Delo, nor BitMEX filed a suspicious activity report in response to those notifications, or at all during the relevant time period. BitMEX was also accused of being a vehicle for sanctions violations, in part because Hayes and Delo both communicated directly with BitMEX customers who self-identified as being based in OFAC-sanctioned jurisdictions but still failed to implement an AML or KYC program.

Hayes and Delo each pled guilty to one count of violating the BSA. Under the plea deal, the parties agreed that the federal sentencing guidelines call for a sentence of six to 12 months each. The indictments and guilty pleas signal the continued scrutiny and commitment of prosecutors to the investigation and prosecution of money laundering in the cryptocurrency sector.  

The DOJ press release is here.

Former Founder of Medical Supply and Billing Company and Former CEO Charged in Kickback Conspiracy

Hunter Matthew Burroughs and Stephen Keith Andrews of Louisiana were charged for their alleged roles in three separate conspiracies to defraud the U.S. government and private workers’ compensation insurers. They have been each charged with one count of conspiracy to commit health care fraud, two counts of conspiracy to commit wire fraud, and eight counts of wire fraud. Burroughs is separately charged with an additional wire fraud count.

According to the indictment, the alleged health care fraud scheme involved Burroughs, Andrews, and others associated with Common Compounds Inc. (the medical supply and billing company Burroughs founded and for which Andrews served as CEO), recruited physicians to prescribe pain creams and patches to workers’ compensation patients in return for a split of the profits. After signing contracts with physicians, Common Compounds Inc. allegedly supplied the pain creams and patches to the physicians, and served as their billing agent, handling all of the paperwork and submitting fraudulent claims to federal workers’ compensation programs, as well as to private insurers. The indictment alleges that Common Compounds Inc. billed insurers at markups of anywhere from 15 to 20 times what the medications actually cost, and then paid the physicians unlawful kickbacks on amounts collected.

The DOJ press release is here.