Articles Posted in Fraud

The Department of Justice has announced charges against hundreds of individuals for COVID-19 relief fraud following an operation conducted by federal, state, and local law enforcement agencies. Many of those facing charges have ties to organized crime, according to the DOJ. In one case, authorities allege that the pandemic relief aid was used to pay for a murder. 

The DOJ has announced charges against over 300 defendants in these cases who allegedly stole more than $830 million from the federal government by making fraudulent claims. In this article, a Chicago criminal defense attorney will discuss pandemic relief fraud, how it works, and prosecutors’ efforts to hold those who stole money accountable for their actions. 

Understanding COVID-19 Relief Fraud

A Chicago chiropractor is facing federal fraud charges after billing a private insurer for nonexistent services. The defendant is alleged to have owned and operated Movement Health and Rehab, also known as Motu Chiropractic. According to federal authorities, he submitted false claims to Blue Cross Blue Shield of Illinois for health care services that the defendant knew he never rendered. In some cases, allegedly fraudulent claims were rendered on dates when the patient or their chiropractor was not in Illinois. Other claims involved chiropractic services that were provided to the defendant and his family members even when the defendant knew that those services were not provided. Blue Cross Blue Shield denies claims that are provided to family members. So, the defendant knew that the claim would be denied. 

When Blue Cross Blue Shield audited the defendant’s claims, he submitted false patient information to them. As a result of the fraudulent claims, the defendant made $430,000 in ill-gotten proceeds, according to the indictment. The defendant is now facing 14 counts of healthcare fraud. Each individual count is punishable by up to 10 years in federal prison. Below, we will discuss the crime of healthcare fraud.

Those Accused of Healthcare Fraud Often Face Federal Charges

A local Chicago rapper is going to plead guilty to using stolen credit cards to pay for private jet rides, luxury vehicles, and “designer” puppies. The charges were filed by the federal government in this case. The rapper is facing one count of conspiracy to commit wire fraud and two counts of aggravated identity theft, according to the court filing. Officials say he is one of six codefendants in the case. 

The rapper will plead guilty to one count of wire fraud and another count of making false statements. A wire fraud conviction carries a maximum sentence of 20 years in federal prison. Prosecutors have filed paperwork affirming the agreement, but the judge still needs to sign off on the plea deal. Two counts of aggravated identity theft were dropped in negotiating the plea agreement. 

Wire Fraud and Conspiracy to Commit Wire Fraud

A Chicago pharmacist has been convicted of stealing and then selling blank COVID-19 vaccination cards on eBay. The announcement came from the Justice Department, which claimed that the pharmacist stole CDC-issued vaccination cards and made them available to eBay users across the country. The Justice Department claims that over three weeks, the pharmacist listed over 650 vaccination cards on the online marketplace. They claim he sold the cards to over 200 individual buyers and pocketed more than $5,600 due to the illicit sales. 

The government was able to present evidence of the transactions and correspondence sent between the pharmacist and buyers. The pharmacist was convicted of 12 counts of theft of government property.

His attorney plans to appeal the verdict, claiming that the cards were not government property and that the government never exerted any control over them to make them their property. Instead, The government made the cards available to pharmacies like Walgreens, which distributed the cards after patients received COVID-19 vaccinations. In other words, the government exerted no supervision over the cards. They only printed them and then distributed them to pharmacies.

Bilking government agencies of publicly disbursed entitlements is now a national pastime, and when COVID struck, it only got worse. As Uncle Sam began rolling out one relief program after another, several bad actors moved into place to see how much of that money they could get without doing anything in return. These lawsuits are still being filed as the forensic number-crunchers at the IRS track down the information provided by individual applicants. In this case, briefly reviewing the records resulted in the numbers not adding up, and now one individual is facing charges for $83 million in losses.

The laboratory’s co-owner has been charged with 10 counts of wire fraud and one count of stealing government funds. 

How Did the Fraud Work?

A Chicago woman will spend the next five years in federal prison after authorities convicted her of using the identities of dead people to commit fraud against the federal government. According to the authorities, the woman used the identities to apply for benefits, some of which were disbursed during the coronavirus as pandemic aid packages. 

The woman acquired the identities of murder victims to pull off the scam. Authorities say it netted over $45,000 in profit. The information was used to file tax returns and pandemic-related entitlements. The woman would pose as relatives of the murder victims to collect payments on their behalf.

Prosecutors characterized the theft as “morally repugnant.” The woman had prior convictions for various forms of fraud. The court, in passing sentence, characterized her as a career criminal who had multiple opportunities to turn away from a life of crime but chose fraud anyway. 

The crypto winter reckoning is upon us, and individuals in thousand-dollar suits are now heading to Club Fed for an extended period after they were accused of fraud and making illegal donations to political campaigns. As of now, everyone around Sam Bankman-Fried, the former CEO of FTX, appears to be going down. The federal authorities have announced plea bargains in some deals, which will benefit the state’s prosecution. 

The U.S. government has a vested interest in seeing these individuals pay for rocking the U.S. financial markets when they were already under strain. Many Americans who were afraid of the collapse of the U.S. dollar invested in gold or Bitcoin. Those who used FTX’s brokerage platform had their accounts frozen and are unlikely to recover all of what they once had.

Meanwhile, the chain of bankruptcies caused the value of cryptocurrency to collapse across the board, depreciating investor assets in the process. 

Two FTX associates have pleaded guilty to charges including wire fraud, commodities fraud, and securities fraud amid the crypto collapse that temporarily destabilized the U.S. economy. Amid the allegations leveled at the company are accusations that they kept no discernable ledger for transactions, did most of their bookkeeping with QuickBooks, and cut themselves loans with their own names as both borrower and recipient.

The largest player, Sam Bankman-Fried, was still in the Bahamas as he was supposed to be testifying before Congress. He was flown back to the U.S. and is currently in FBI custody. A deal was reached with the two associates in exchange for testimony against Bankman-Fried. Bankman-Fried appears poised to be the fall guy for whom the FBI has been waiting. Collectively, the two associates faced 110 years in federal prison. However, their cooperation with law enforcement could help them secure much better deals moving forward.

Ultimately, the federal prosecutors want Sam Bankman-Fried. Bankman-Fried recently disbursed $100 million in FTX assets to Bahamian investors even as the crypto-exchange assets were frozen per the bankruptcy court. This amounts to bankruptcy fraud and is yet another charge that will be added to Bankman-Fried’s growing list of charges.

The U.S. Postal Service is facing backlash over the rise in check washing. Check washing is the sort of crime you saw in Catch Me if You Can, where an individual will steal a check from someone else, remove the name from the check, and put their own name on the check before cashing it. Obviously, that is a crime similar to forgery and fraud. However, these five suspects are accused of targeting the U.S. Postal service, which leaves them vulnerable to federal prosecution for specific crimes targeting interstate commerce. Authorities allege that the men had illegal access to stolen mailbox keys that they used to raid U.S. mailboxes. They targeted checks in the mail, washed them, and then cashed them under fraudulent names. 

Possession of the mailbox key alone is a crime punishable by up to ten years in prison. Three of the defendants are also facing charges related to the theft of mail. Often, these checks are sold on the internet.

Postal Service Apologies for Lack of Transparency

There are 47 defendants in a federal lawsuit filed against the perpetrators of a $250 million scheme to defraud a pandemic-related relief program that earmarked funds for starving children. The Department of Justice announced that it was the largest pandemic relief fraud to date. The defendants have been charged with wire fraud, conspiracy to commit wire fraud, money laundering, and bribery. Federal prosecutors will push hard for maximum sentences as the federal government tends to take it personally when you deprive needy children of necessary food. 

The fraud targeted the Federal Child Nutrition Program. The program sends federal funds to state governments to ensure that children in need are provided with daily meals. Each state has its own agency that oversees these federal funds. Reimbursements are conducted on a per-meal basis, and providers are allowed to keep 15% of the disbursed funds for administrative costs. Individual sponsors apply for applications through their state government and then coordinate meal plans with children in need. During the COVID pandemic, the federal government waived some of the requirements allowing for-profit businesses to partake in the program. It also allowed off-site food distribution for children. 

The scheme called for the opening of fake food distribution sites to secure federal money from state governments. The fraudsters are accused of opening fake food distribution sites and then lying about how many meals they serve. The defendants created shell companies to take the funds, and then more shell companies to launder the proceeds. They submitted falsified reports to the federal government and fake attendance rosters of children who were served meals. They then used the proceeds to buy luxury items. The defendants used a website that randomly generates fake names and an Excel formula to randomly generate ages between 7 and 17. 

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