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Press Release
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 $32 million in civil and criminal penalties in fiscal year 20151. Of this amount, $4,792,446 was collected from criminal prosecutions; $8,057,372 was collected via the forfeiture of money and other assets that represented the proceeds of criminal conduct or property used to commit such conduct; $19,210,739 was collected in civil cases; and an additional $508,916 was collected in civil cases worked in conjunction with other U.S. Attorney’s Offices and agencies in the Department of Justice.
1 The federal fiscal year runs from October 1st to September 30th.
Nationally, U.S. Attorney General Loretta E. Lynch announced that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015 – more than seven and a half times the appropriated $2.93 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
"The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse," said Attorney General Loretta Lynch. "The collections we are announcing . . . demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work."
United States Attorney Richard S. Hartunian said, "Recovering ill-gotten gains from wrongdoers is an important part of our work to protect the public and secure justice for all. Such recoveries remove the incentive for improper conduct and fund restitution for victims and other important programs. These collections results demonstrate the value of using all available remedies to address violations of law fairly."
Notable cases in which funds were recovered by the U.S. Attorney’s Office during fiscal year 2015 include the following:
Allegations of fraud perpetrated against Disadvantaged Business Enterprise program:
HD Supply Waterworks, the Nation’s largest supplier of water, sewer, fire protection and storm drain products, paid the United States $4,945,000 under the False Claims Act to resolve allegations that it participated in a scheme designed to take advantage of the Disadvantaged Business Enterprise (DBE) program in order to obtain subcontracts on federally-funded projects. The DBE program provides opportunities for businesses owned by socially and economically disadvantaged individuals to perform work on projects financed, at least in part, by the federal government. The settlement resolved allegations that Waterworks enabled various prime contractors to represent falsely that a now-defunct DBE, American Indian Builders & Suppliers, had performed commercially useful functions on federally-funded projects when, in reality, the prime contractors worked directly with Waterworks and used the DBE as a pass through.
Hospital and physician combine to pay to resolve billing improprieties self-disclosed by the hospital:
Oswego Hospital, a 164-bed acute care community hospital located in Oswego, New York, agreed to pay $1,456,457.33 to resolve False Claims Act liability stemming from healthcare billing improprieties that the hospital self-disclosed to the federal government. Dr. Vilas Patil, a physician formerly working as an independent contractor with Oswego Hospital, agreed to pay $204,365.97 to resolve False Claims Act liability in connection with a related investigation. The combined recovery to the state and federal governments was $1,660,823.30. The improprieties centered on billings that were unsupported by valid medical records and "repeat notes." These were instances where a patient’s chart would cover multiple days of inpatient services but the same treatment note was used for each day. The medical records therefore failed to support that any distinct services were rendered (making it improper to bill) and were of little to no use to the patients or subsequent providers trying to learn the patient’s mental health history.
Securities fraud conviction nets large restitution recovery:
On May 16, 2001, Paul Ryan was sentenced to be imprisoned for 37 months and to pay restitution in the amount of $2,881,662.90 to Albany Savings Bank (known as First Albany) in connection with his securities fraud conviction. After his release from prison, Ryan became employed by Integra Networks, Inc., and arranged for compensation in the form of company stock transferred to a Trust he established. Upon learning of the stock, the United States initiated an investigation into whether the transfers were improper. Prior to instituting an action, the United States was informed that Mr. Ryan wished to avoid further litigation and was willing to arrange the transfer of Integra stock to First Albany in order to satisfy the remaining balance of his restitution obligation. After successfully negotiating an in-kind stock transfer to the victim, stock valued at $2,634,035.71 was issued to First Albany, resulting in full satisfaction of the court-ordered restitution.
Government Forfeitures involving synthetic marijuana distributors:
The United States forfeited $1,707,988.11 from synthetic marijuana distributors, Eagle Eye Products, Inc., & Canyon Novelty Sales, Inc. et al., based in California but having shipped synthetic marijuana to the Northern District of New York for distribution and sale at various head shops throughout Central New York. An additional $39,652.39 was seized and forfeited from the owner of Zonen LTD, a head shop based in the Northern District of New York which purchased and sold synthetic marijuana products, such as "bizarro" and "spice." The United States also forfeited $103,253.22 in U.S. Currency and a 2010 Chevrolet Express Cargo Van from members of the Mansour synthetic marijuana distribution conspiracy, involving the sale of packets of synthetic marijuana at various locations throughout the City of Syracuse, including corner shops.
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, the U.S. Department of Health and Human Services, the Internal Revenue Service, the Small Business Administration, and the U.S. Department of Education.