Texas Man Sentenced for $19 Million Fraud Scheme
Conspirators Impersonated Cerner Corporation
KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a Texas man was sentenced in federal court today for his role in an elaborate, multi-million-dollar fraud scheme in which conspirators impersonated North Kansas City-based Cerner Corporation in business and legal activities.
Albert Davis, 56, of Richardson, Texas, was sentenced by U.S. Chief District Judge Greg Kays to 12 years in federal prison without parole. The court also ordered Davis to pay $19,151,555 in restitution to the victims of his fraud scheme.
On Oct. 3, 2016, Davis pleaded guilty to participating in a conspiracy to commit wire fraud. Davis admitted that he was the leader of a conspiracy to commit wire fraud in which more than 10 victims suffered millions in losses from Aug. 25, 2008, to Feb. 19, 2015. Conspirators engaged in a scheme to use Cerner Corporation’s reputation and standing in the medical field to manipulate business transactions and court proceedings in their favor.
The decade-long criminal conduct, including relevant conduct from several other jurisdictions, involved perjured testimony, doctored trial exhibits, a manipulated multi-million dollar civil verdict, a fake bankruptcy filing, the use of fake people with fake email accounts, impersonated companies and a phalanx of over 70 entities to conceal it.
Four additional co-conspirators (in separate but related cases) also have pleaded guilty. David Hernon, 56, of Fishers, Ind. (formerly of Richardson, Texas), David Tayce, 67, of Lucas, Texas, and Richard Bryant, 41, and his wife, Christina Bryant, 41, both of Sachse, Texas, are scheduled to be sentenced on Tuesday, April 25, 2017.
In order to impersonate Cerner Corporation, Davis and his co-conspirators created a fake Cerner business entity for a similarly-named company, Cerner, LLC. Conspirators opened a fake Cerner bank account, registered a fake Cerner Internet domain and leased virtual office space for a fake Cerner address in Kansas City, Mo. They created fictitious employees from Cerner Corporation – including both fictitious identities and impersonating actual employees – to communicate with others. Conspirators fabricated documents, price quotes, agreements and invoices, which were all made to appear to be authentic Cerner Corporation documents, when they were not.
For example, conspirators sent e-mails to doctors at Summit Medical Center in Oklahoma, which falsely represented Cerner Corporation in negotiations by containing a quote for the sale of a MRI to Summit Medical Center.
Conspirators also created fraudulent invoices for the sale of an MRI to Dallas Medical Center (DMC), which paid over $1 million to what they believed was Cerner Corporation, but which turned out to be nothing more than one of Davis’ shell companies.
When DMC was not acting quickly enough on the deal, Davis created fake e-mail accounts for prominent cardiologists in Dallas. Davis then used these fake email accounts to draft e-mails to himself, which stated that these cardiologists could not wait to get Davis’ MRI system at DMC. Davis then forwarded these e-mails to DMC, which created the impression of demand for his system at DMC. Smith also provided “references” for DMC to check on him. These “references” turned out to be more fake doctors and co-conspirators playing the role of satisfied business partners of Davis on the phone.
Davis also admitted that conspirators provided false and misleading information and testimony during the litigation of several lawsuits. The false and misleading testimony was regarding business deals where the conspirators had impersonated Cerner Corporation.
For example, when Dallas Medical Center learned of the fraud, Davis sued them (iHeart Care DMC Holdings, LLC. v. Dallas Medical Center, LLC., et al., Cause No. 13-09460, in Dallas County, Texas). Davis, Tayce, and others then provided false testimony in depositions in the resulting lawsuit.
According to court documents, the Dallas Medical Center scheme was just a sliver of the fraud Davis and his co-conspirators committed.
In another example, Davis brought a lawsuit against Korean company ISOL Technology. After testifying falsely about business dealings with Cerner Corporation and offering fake exhibits to support his claim of damages, Davis received a jury award of $24 million in the 2014 trial in LBDS Holding Company, LLC v. ISOL Technology, Inc., et al., Case No. 6:11-CV-428-LED, in the Eastern District of Texas. When the fraud was discovered, attorneys for ISOL Technology filed an emergency motion for sanctions against LBDS (Davis’ company).
In addition to impersonating Cerner Corporation, Davis admitted, conspirators used additional e-mail accounts to impersonate business entities and physicians in order to send communications designed to manipulate others in business transactions.
For example, conspirators forged signatures and misled doctors into guaranteeing over $8 million in loans from Community Trust Bank in Texas. Davis admitted that he and his co-conspirators fraudulently obtained five individual loans from Community Trust Bank.
Conspirators also impersonated bondholders in order to file an involuntary bankruptcy petition against their own company, CMI Holding Company, Inc., in Case no. 10-38011-SGJ-7, in the Northern District of Texas. Conspirators continued to impersonate those bondholders throughout the litigation in phone calls and email communications, and by signing as the bondholders in a settlement agreement. Davis and his co-conspirators concealed their ownership of Eureka Group, LLC and used that entity to receive and disburse the monies received from the $1.8 million settlement of the involuntary bankruptcy. Conspirators impersonated yet another company to buy back their newly re-organized company through the bankruptcy, and collect additional funds and manipulate the price through other fake liabilities and creditors.
Additionally, Davis admitted, conspirators solicited investments using fabricated communications and documents from entities they created, including the entity created to impersonate Cerner Corporation. Those misrepresentations included false financial documents, altered MRI images and false claims that used MRI systems were newly developed technology. Davis collected large amounts of investments through this process.
This case is being prosecuted by Assistant U.S. Attorney Matthew P. Wolesky, in cooperation with Assistant U.S. Attorney Nathaniel Kummerfeld of the Eastern District of Texas and Assistant U.S. Attorney Kimberly Davis of the Western District of Arkansas. It was investigated by the FBI.