U.S. Attorney Collects more than $44 Million in Civil and Criminal Penalties
ALBANY, NEW YORK – Albany, NY - U.S. Attorney Richard S. Hartunian announced today that the U.S. Attorney’s Office for the Northern District of New York collected more than $44 million in civil and criminal penalties this past fiscal year. Of this amount, $17,655,763 was collected from criminal prosecutions and $2,319,703 was collected in civil cases in Fiscal Year 20141. Additionally, the U.S. Attorney’s Office, working in conjunction with other U.S. Attorney’s Offices and agencies in the Department of Justice, collected an additional $2,050,000 in civil cases.
On top of this amount, the U.S. Attorney’s Office worked with partner agencies to make substantial recoveries of money and forfeited assets. These typically represent proceeds of criminal conduct which can be forfeited under federal law. $22,034,435 was collected and deposited into the Department of Justice Assets Forfeiture Fund. These moneys are used to make restitution to crime victims and for a variety of other law enforcement purposes.
Nationally, Attorney General Eric Holder announced this morning that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And this result shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”
“This year’s collections far exceed last year’s amounts for our office,” said U.S. Attorney Richard S. Hartunian. “We have doubled our criminal, civil and administrative forfeitures over the past year. Additionally, approximately $15 million more was collected this year in criminal cases. These are ill-gotten funds and profits from criminal activities. We take great satisfaction in knowing we’ve taken them back from the hands of lawbreakers.”
Some notable cases in which funds were recovered by the U.S. Attorney’s Office during fiscal year 2014 include the following:
Forfeited bank accounts in illegal gambling business:
Forfeiture of nearly $10 million was ordered for the government in an illegal gambling business, run by multiple co-defendants2, which used internet websites that allowed bettors to place thousands of wagers from the Capital District, Florida, Indiana, California, Texas, and Nevada. The wager money was transferred to offshore accounts in Panama, Andorra, and the Cayman Islands, all of which were forfeited.
Forfeited property in bath salts case:
In February of this year, an RV and cash, together worth nearly $300,000, were among assets forfeited in the U.S. v John Tebbetts case which focused on the illegal distribution of bath salts.
Small Business Administration loan recovery:
A civil complaint was filed against Clifton Park LLC, and 3 individuals (Chetan Patel, Magan Patel, and Dalpat Patel) who were guarantors on an SBA loan for $ 1,367,000. The purpose of the loan was the purchase/rehab of a Comfort Inn in Clifton Park, NY. The complaint was settled for a total amount of $ 609,208.00 spread out over 8 months. To date, $442,104.00 has been collected.
Forfeited and returned artifacts:
Two Italian artifacts, the Attic Red-Figure Skyphos, valued at $35,000, and the Apulian Red-Figure Bell Krater, valued at $20,000, were subject to forfeiture pursuant to federal law which pertains to stolen, smuggled, and clandestinely imported or introduced merchandise. The two artifacts smuggled into the U.S. were forfeited and will be returned to the Italian Ministry of Cultural Heritage and Tourism.
Marketing of prescription drugs for unapproved uses:
The U.S. Attorney’s Office for the Northern District of New York, in conjunction with its colleagues in the Eastern District of Pennsylvania and at the Department of Justice, resolved criminal and civil investigations arising from Endo Pharmaceuticals’ marketing of the prescription drug Lidoderm for uses not approved as safe and effective by the Food and Drug Administration, including payment by Endo of $192.7 million. In a deferred prosecution agreement to resolve the criminal Information filed in the Northern District of New York, Endo admitted that it intended that Lidoderm be used for unapproved indications and that it promoted Lidoderm to health care providers for those unapproved indications, agreed to pay a total of $20.8 million in monetary penalties and forfeiture, and agreed to implement enhanced compliance measures. Endo also agreed to civil false claims settlements with the United States and the states totaling $171.9 million. This settlement emphasized that public health is protected by compliance with FDA’s drug approval process and requirement that product labeling be based on performance, rather than profitability.
Restitution secured through pension benefit:
On May 16, 2001, Paul Ryan was sentenced by U.S. District Judge Lawrence E. Kahn to pay restitution in the amount of $2,881,662.90 to Albany Savings Bank in connection with his securities fraud conviction covering the period of 1993-1998. During the course of the investigation it was discovered that the defendant was entitled to a 401(k) pension benefit distribution from Integra Networks, Inc. in the amount of $65,000. A Writ of Execution was issued on Integra Networks, Inc. on October 29, 2013. As a result, a check in the amount of $54,473.34 was issued to the United States District Court Clerk on November 5, 2013, which was applied to the court-ordered restitution. Efforts to enforce the remaining restitution continue.
Violations of the Recovery Act’s “Buy American” requirement:
The U.S. Attorney’s Office recently resolved, for $500,000, a case involving allegations that Jett Industries, a Colliersville-based general contractor, had falsely certified compliance with the American Recovery and Reinvestment Act’s “Buy American” provision. Jett purchased key project components in France, and then created and submitted paperwork in an effort to mislead the government into believing that the cheaper, French-made products were produced in the United States.
City acknowledges that it mismanaged federal funds:
Another recent case that involved a seven-figure monetary recovery, an admission of wrongdoing, and other forward-looking (non-monetary) components was a settlement reached last month with the City of New York. This settlement resolved allegations, brought to our attention by a whistleblower, that the New York City Human Resources Administration (HRA) violated the False Claims Act by causing various managed care organizations to provide health care coverage to individuals that HRA knew, or should have known, were ineligible to receive benefits through New York State’s Medicaid program. As part of the settlement, HRA accepted responsibility for failing to timely review and close Medicaid cases after being provided information that the beneficiaries moved outside of New York City, and it admitted that its inaction caused one or more MCOs to receive payments to insure individuals who were ineligible for benefits through New York State’s Medicaid program. HRA also agreed as part of the settlement to establish a process to investigate and close Medicaid cases whenever it learns that a beneficiary no longer resides within its coverage area.
Unlawful physician compensation arrangements:
A settlement was reached in August 2014 with the New York Heart Center. In that case, a group of upstate New York cardiologists agreed to pay $1.34 million to resolve allegations that its physicians’ compensation was determined using a formula that took into account the volume or value of each physician’s ordering of designated health services from other physicians in the practice, in violation of the Stark Law.
Attached is a chart showing how the Northern District of New York’s FY2014 $44,064,710 collections were distributed to the victims, government agencies serving the public and state and local law enforcement agencies.
All 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.
1 The federal fiscal year runs from October 1st to September 30th.
2 U.S. v. Any and All Funds on Deposit in Bank of America, N.A. in the name of Jay Goldman, et al case 1:13-CV-765, U.S. v. $65,000.00 in U.S. Currency case 1:13-CV-776, and U.S. v. Michelle Lasso case 1:13-CR-413