U.s. Attorney's Office Collects $29.3 Million In Civil & Criminal Actions And Forfeitures In Fy 2013

(Albany, New York) - United States Attorney Richard S. Hartunian has announced that the Northern District of New York collected $4,006,217.22 in criminal and civil actions in Fiscal Year 2013. Of this amount, $2,642,890.05 was collected in criminal actions and $1,363,327.17 was collected in civil actions. The U.S. Attorney’s Office also worked with other components of the Department of Justice to collect an additional $14,313,192.93 in cases pursued jointly. Of this amount, $2,601,102.21 was collected in criminal actions and $11,712,090.72 was collected in civil actions.

Additionally, the U.S. Attorney’s Office, working with partner agencies and divisions, collected $11,051,256 in criminal, civil and administrative forfeitures in 2013. Forfeited assets are deposited into the Department of Justice Asset Forfeiture Fund and are used to restore funds to crime victims and for a variety of law enforcement purposes.

Attorney General Eric Holder announced in January that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 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.”

“As we go forward in these challenging economic times, collections continue to be a critically important part of our services to the citizens in our district," said U.S. Attorney Richard S. Hartunian. "The U.S. Attorney's Office is dedicated to protecting the public and recovering ill-gotten gains for the federal treasury and for victims of federal crime. Once again this year, the amount collected significantly exceeds the annual cost of our entire office operations."

Some notable cases in which funds were recovered by the U.S. Attorney’s Office during fiscal year 2013 include the following:

A. Forfeiture Cases

On December 19, 2012, defendant John Tebbetts, Syracuse area owner of the head shop chain known as “Tebb’s Head Shops,” was charged with and pled to possession with the intent to distribute, Schedule I controlled substances in violation of 21 U.S.C. § 841, possession with the intent to distribute a controlled substance analogue, as defined in 21 U.S.C. § 802(32), with the intent that it be used for human consumption, as provided for in 21 U.S.C. § 813, and one count in violation of 18 U.S.C. § 1957, engaging in a monetary transaction in property derived from a specified unlawful activity, for the purchase of a 2012 Forest River Berkshire Motor Home for $157,440 in U.S. Currency in the case of U.S. v. John Tebbetts. On April 22, 2013 the court signed a Preliminary Order of Forfeiture ordering the forfeiture of the 2012 Forest River Berkshire Motor Home, $286,376.37 in U.S. Currency, one 2004 Toyota Scion XB, one 2009 Cadillac CTS 4, and one 2005 GMC Savana G3500, as the proceeds of, and property facilitating the aforementioned violations.

In 2013, the U.S. Attorney’s Office forfeited $5,359,983.91 in real property, vehicles, bank accounts and currency in the case of U.S. v. Lonzinski, et al. This office is seeking to have the moneys collected thus far used to pay the restitution ordered in the amount of $14,108,623. This case involved the criminal prosecution of a mother and son, Laura Conarton and Scott Lonzinski, from the Binghamton area, who engaged in a loan fraud scheme which ultimately bankrupted the Broome County Teachers Federal Credit Union. Among the millions of dollars already seized, $162,347 has been credited to the National Credit Union Administration (NCUA) through administrative action undertaken by the U.S. Attorney’s Office. Upon the sale of forfeited real property, the remaining forfeited proceeds will be eligible for transfer to the NCUA.

B. Civil Actions

In September 2013, the Northern District of New York recovered $3.57 million as part of the settlement in the United States of America ex rel. Lynch v. Imagimed LLC, et al., a civil case filed under the False Claims Act’s qui tam provision. Imagimed LLC is a company that operated 14 different MRI sites in the Northeast, including sites in Elmira, DeWitt, Utica and Amsterdam. The settlement resolved allegations that Imagimed LLC, the company’s former owners, William B. Wolf III and Dr. Timothy J. Greenan, and the company’s former chief radiologist, Dr. Steven Winter submitted to federal healthcare programs false claims for magnetic resonance imaging (MRI) services. Imagimed owns and operates MRI facilities, located primarily in New York State, under the name “Open MRI.” More specifically, it was alleged that, from July 1, 2001, through April 23, 2008, Imagimed, Greenan, Wolf and Winter submitted claims to Medicare, Medicaid and TRICARE for MRI scans performed with a contrast dye without the direct supervision of a qualified physician. Since a potential adverse side effect of contrast dye is anaphylactic shock, federal regulations require that a physician supervise the administration of contrast dye when it is used for an MRI. It was also alleged that from July 1, 2005, to April 23, 2008, Imagimed, Greenan, Wolf and Winter submitted claims for services referred to Imagimed by physicians with whom Imagimed had improper financial relationships, in that, in exchange for these referrals, Imagimed entered into sham on-call arrangements, provided pre-authorization services without charge and provided various gifts to certain referring physicians, in violation of the Stark Law and the Anti-Kickback Statute.

In March 2013, $8,065,411 was recovered as part of a $20.3 million dollar settlement in the United States of America, The State of New York and The St. Regis Mohawk Tribe v. Aluminum Company of America and Reynolds Metals Co. civil case. The settlement resolved allegations that, for decades, Alcoa Inc. (Alcoa West), Reynolds Metals Company (now Alcoa East) and the former GM Central Foundry plant, located in Massena, New York adjacent to the St. Regis Mohawk Tribe lands, had released hazardous substances into the St. Lawrence River environment. These substances, including polychlorinated biphenyls (PCBs), adversely impacted natural resources within the surrounding environment and contaminated the Mohawk community of Akwesasne by degrading natural resources used for traditional cultural practices. Most of this settlement, $18.5 million, will be combined with $1.8 million in restoration funds from a 2011 General Motors (GM) bankruptcy settlement, and used for restoration of the St. Lawrence River area. The settlement funds include the following components:

• Approximately $8.4 million of the settlement will go to the Mohawk Tribe to support traditional cultural practices, including an apprenticeship program to promote Mohawk language and traditional teachings. A portion of those funds will also support cultural institutions, including youth outdoor education programs and horticultural programs for medicine, healing and nutrition.
• More than $10 million from the GM and Alcoa/Reynolds settlements will be spent on a variety of ecological restoration projects, including restoration and/or enhancement of wetlands, stream banks, native grasslands, bird nesting and roosting habitat, fisheries and fish habitat, and acquisition of unique habitat under threat of development. These projects may also benefit cultural practices that depend on these restored natural resources.
• Nearly $2 million will be spent by Alcoa/Reynolds to develop and upgrade two boat launches on the Raquette River and construct three new launches on the Grasse River to improve fishing and boating access to rivers in the Massena area.

The litigation of this case was handled primarily by the Department of Justice’s Environment and Natural Resources Division, along with the National Oceanic and Atmospheric Administration, the U.S. Department of the Interior, the New York State Attorney General’s Office and the St. Regis Mohawk Tribe.

C. Criminal Actions

On March 4, 2011, defendant Lal B. Singh, as part of his sentence, was ordered by the Court to pay restitution in the amount of $3,610,538 to the Bank of New York in connection with his scheme to defraud committed while he was employed by the Bank in Manhattan. From 1993 through 2007, Singh served as a Section Manager in the Securities Redemption Department of the Bank. If customers did not redeem bonds that had been purchased upon the maturity date, the additional interest payments on the bonds would be transferred into a pooled account for unclaimed funds. If these funds are not claimed within three years, the bank was required to transfer these monies to the New York State Comptroller’s Office, Department of Unclaimed Funds. Through his job position, Singh had access to a data base that allowed him to view the unclaimed funds and to determine which funds were soon to be transferred to the state. Beginning in 1996, Singh created funds transfer requests to have funds transferred from the Unclaimed Funds accounts to one of several other accounts that belonged to individuals in the Schenectady area who agreed to assist Singh in the fraudulent funds transfer. Singh was able to make wire transfers totaling more than $3.6 million dollars. During the course of the investigation, it was discovered that Singh was entitled to a lump-sum benefit distribution from the Bank of New York Pension Plan in the amount of $281,350. After a Writ of Garnishment was issued to the Bank of New York, a check was issued by the Bank to the United States on November 21, 2012 in the amount of $229,278.59, which was then applied to the court-ordered restitution.

On January 31, 2013, defendant Joseph Dellerba was sentenced by Senior U.S. District Judge Norman A. Mordue. As part of his sentence, he was ordered to pay restitution in the amount of $1,429,458 to various insurance companies in connection with his conspiracy to defraud conviction involving a staged motor vehicle accident in Utica, New York. After a pre-trial financial investigation, Dellerba turned over $102,111, which represents a portion of the proceeds fraud. This amount was then applied toward the restitution he was ordered by the court to pay.

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 United States 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.

Attached is a chart showing how the FY2013 $29,370,665 collections were distributed to the victims, government agencies serving the public and state and local law enforcement agencies.