U.S. Attorney's Office Recovers More Than $366 Million On Behalf Of U.S. Taxpayers In FY 2013

Tampa, FL – Acting U.S. Attorney A. Lee Bentley, III announced today that the Middle District of Florida (MDFL) collected over $366 million in Fiscal Year (FY) 2013 in criminal, civil, and forfeiture actions. Almost $30 million was recovered in criminal actions, most of which will be distributed to crime victims. Approximately $290 million was collected in civil actions, including in excess of $96 million as a result of approximately nine major civil fraud settlements arising from cases filed in the MDFL. The amounts recovered in civil lawsuits over and above $96 million resulted from recoveries in cases involving other judicial districts, most notably a major nationwide discriminatory lending case brought by the Department of Justice Civil Rights Division.

Additionally, the office collected $46.2 million in criminal and civil forfeitures Forfeited assets are deposited into the Departments of Justice and Treasury Assets Forfeiture Funds and are used to restore funds to crime victims and for a variety of law enforcement purposes. For instance, approximately $3.1 million in forfeited funds was used to compensate crime victims and more than $20 million is in the process of being returned to victims this year. In addition, approximately $3.5 million in forfeited funds was shared with state and local law enforcement agencies, and property valued at more than $55,000 was retained by federal law enforcement agencies for official use.

“Recovering monies from convicted criminals and others defrauding the government is critical to our mission,” said Acting U.S. Attorney A. Lee Bentley, III. “Working alongside our law enforcement partners and other federal, state, and local agencies, our efforts ensure not only that criminals and others committing fraud are held fully accountable for their offenses, but also that we help victims recover from their losses to the extent possible. In addition, a huge portion of the recovered funds is used to replenish public resources.”

Attorney General Eric Holder announced on Thursday that the Justice Department collected $8.1 billion in civil and criminal actions in the fiscal year ending September 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”    The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

The Middle District of Florida has historically had one of the busiest whistleblower case dockets in the country, and in FY2013 placed third among the 94 judicial districts in qui tam cases filed under the False Claims Act. The significant FY 2013 recoveries in the Civil Division's affirmative enforcement program were driven in large measure by a national discriminatory lending case and settlements in cases filed by private whistleblowers involving fraud against federal healthcare programs (see case highlights for details).

For further information, view the United States Attorneys' Annual Statistical Reports on the internet at http://www.justice.gov/usao/resources/annual-statistical-reports. See highlighted cases below from the U.S. Attorney's Office for the Middle District of Florida.

Middle District of Florida Affirmative Case Highlights

Wells Fargo lending settlement

In the past fiscal year, the MDFL partnered with the Department of Justice Civil Rights Division in a major national discriminatory lending case against a large institutional lender, Wells Fargo Bank. The investigation, spearheaded by the Civil Rights Division, found that Wells Fargo discriminated against African American and Hispanic borrowers by charging higher fees and interest rates than non-Hispanic white borrowers, in the wholesale and retail markets. These practices were without regard to the credit applicants’ creditworthiness or objective criteria related to risk. Wells Fargo was found to have discriminated against 30,000 borrowers from 2004 and 2009, eventually settling the claims against it, in return for $175 million.

United States ex rel Freedman v. SuarezHoyos, et al.

The MDFL intervened in this civil qui tam case, in which a physician whistleblower alleged that a local pathology lab and a dermatologist violated the federal anti-kickback statutes through an arrangement in which the pathologist agreed to provide the dermatologist with an opportunity to bill Medicare and other federal health programs for work that the dermatologist did not perform. This arrangement was designed to induce referrals of Medicare business from the dermatologist to the pathology lab. In investigating this claim, the MDFL uncovered other significant schemes by the dermatologist, including upcoded claims for dermatology services and billing Medicare for expensive surgical services that he did not perform. In an earlier settlement, the pathologist defendant agreed to settle the civil kickback claims against him, in return for $1 million. In FY2013, the MDFL settled all of its claims against the dermatologist for an additional $26.2 million. It is believed to be the largest settlement with an individual physician in the history of the False Claims Act.

United States ex rel. Myers v. Shands Healthcare, et al.

The MDFL intervened, in part, in this civil qui tam case filed by an officer of a health care consulting firm against the Shands hospital chain in North Florida.  The whistleblower alleged that from 2003 through 2008, six of the system’s hospitals submitted claims for reimbursement of inpatient hospital services, when those claims should have been for outpatient services.  In August, 2013, we announced a settlement that paid $26 million to resolve these civil claims. Of this amount, $25,170,440 was paid to Medicare and other federal payors, while $829,600 went to the Florida Medicaid program. At the time that it was announced, the Shands settlement was the largest on record to address allegations of this kind.

United States ex rel. Ferrare v. Morton Plant Mease Healthcare, et al.

The qui tam case was filed by a former director of case management for Morton Plant Hospital. She alleged that the Morton Plant chain of hospitals used a written billing protocol to require its hospitals to bill certain interventional cardiology procedures on an inpatient basis, regardless of whether the patients’ condition justified those claims. In November 2012, the MDFL settled the civil claims in the case against the chain of hospitals for $10.1 million.

United States ex rel. Ferner v. Stallings, et al.

This was a procurement fraud case filed by a whistleblower who alleged that a government contractor, SAIC, used fraud to deceive the General Services Administration to steer federal consulting services contracts to it. The whistleblower – a former military officer – alleged that a private individual had misrepresented himself to be a senior government executive with the Department of Defense, in order to bypass competitive bidding and win government contracts for SAIC. The MDFL intervened in the case and settled all claims for $5.75 million.

United States ex rel. Numbers et al. v. Hernando Pasco Hospice Inc., et al.

This qui tam case was filed by two former employees of a non-profit hospice company based in Hernando County. They alleged that the hospice provider had submitted false claims to Medicare and Medicaid for reimbursement of hospice services to patients who did not qualify for the services. After a lengthy investigation, the MDFL intervened and settled the claims based upon the provider’s ability to pay, for $1,000,000, payable in installments over time plus interest.

Mortgage Investors Corp. consent decree

The MDFL assisted the Federal Trade Commission in its effort to confront violations by a St. Petersburg based residential lending firm of federal Do Not Call statutes. The FTC found that the firm had targeted veterans with a campaign of home mortgage telemarketing calls, contacting 5.4 million homes in violation of federal law. The FTC imposed a record civil penalty of $7.5 million under the Do Not Call statute.  

Middle District of Florida Asset Forfeiture Case Highlights

United States v. $20,000,000 (Jacksonville Division)

As part of the Non-Prosecution Agreement (NPA) entered into between the United States and Lender Processing Services (LPS), the United States completed a civil forfeiture of $20 million, which it alleged was derived from the mail fraud and wire fraud scheme perpetrated through DocX involving the preparation and filing of an estimated one million mortgage documents with false and misleading signatures and notarizations. DocX was at relevant times, a wholly-owned subsidiary of LPS. LPS, without admitting or denying the allegations regarding DocX’s proceeds, consented to the civil forfeiture of the $20 million.  

United States v. Louis Fernandez, III, et al. (Tampa Division)

Defendants Louis Fernandez, III, Louis Fernandez, Jr., Marco Beltran, Kimberly Curtis, and Christopher Switlyk pleaded guilty to conspiracy to illegally distribute and dispense controlled substances. The defendants, operated pain clinics and pharmacies, for the purpose of unlawfully distributing and dispensing controlled substances, primarily Oxycodone, a prescription painkiller sold generically or under a variety of brand names, including Roxicodone, Roxicet, Oxycontin, Percocet, and Endocet. Defendants Beltran and Switlyk also pleaded guilty to engaging in unlawful monetary transactions. As part of their plea agreements, the defendants consented to the forfeiture of more than $2.5 million in drug proceeds seized from them as well as a Rolex watch, car, and real property that had been purchased with drug proceeds.  Additionally, in fiscal year 2011, the government forfeited more than $3.6 million in drug proceeds that had been seized from the defendants during execution of search warrants.

United States v. Dennis Devlin (Orlando Division)

In July 2011, Dennis Brian Devlin, of Daytona Beach, was sentenced to 15 years in federal prison for sexually exploiting a minor. As part of Devlin’s sentence, the court ordered Devlin to forfeit his interest in the Desert Inn because it was used to facilitate the crimes for which he was convicted. The titled owner of the Desert Inn, Deslin Hotels, Inc., filed a claim to contest the forfeiture of the hotel because it alleged that Devlin did not have an interest in the hotel. In September 2013, after months of litigation, a settlement was reached wherein Deslin Hotels, Inc. agreed to the forfeiture of $1,552,588.62, representing Devlin’s interest in the proceeds obtained from the recent sale of the Desert Inn.

United States v. $1,820,008.93 (Ft. Myers Division)

The United States civilly forfeited approximately $1.8 million in proceeds of online gambling, which is illegal in the state of Florida, for violations of wire fraud. The funds were seized as they were being wire transferred through Deutsche Bank Trust Company Americas. Deutsche Bank’s policy was not to accept wire transfers that were related to online gambling of any sort whether legal or illegal. Indeed, the bank had created a filter for key words in wire transfers in order to identify and prevent the receipt and/or transmission of wires related to online gambling.  As alleged in the amended complaint, Chargestream, a company wiring gambling winnings to gamblers in the United States, created a series of letter and number identifiers in their wires in order to disguise the nature of the wires and to evade bank filters.