Category: Office of United States Attorneys

Source: Office of United States Attorneys

PORTLAND, Ore.—A local man is facing federal charges today after authorities intercepted an international parcel he had ordered containing MDMA and quantities of at least 16 different drugs and 42 firearms were found in and seized from his Gresham, Oregon home.

Riley James Hinds, 38, has been charged by criminal complaint with possessing with intent to distribute a controlled substance and possessing a firearm in furtherance of a drug trafficking crime.

According to court documents, on January 9, 2024, U.S. Customs and Border Protection (CBP) officers at Los Angeles International Airport seized an inbound package from the Netherlands containing approximately 2.5 pounds of MDMA. The package, addressed to “James Settler,” an alias used by Hinds to open a mailing box at a UPS Store in Gresham, was handed over to special agents from Homeland Security Investigations (HSI) in Portland for further investigation.

On January 26, 2024, investigators arrested Hinds and executed a federal search warrant on his residence. Investigators located and seized quantities of at least 16 different narcotics in Hinds’ residence including MDMA, Adderall, counterfeit Oxycodone, cocaine, ketamine, marijuana, psilocybin, ayahuasca, LSD, opium, morphine, DMT, mescaline, peyote, GHB, 5-MeO-DMT, and a mixture of unidentified pills. They also located and seized various drug processing tools and packaging materials, 42 firearms, four firearm suppressors, two unfinished ghost guns, and six sets of body armor.

Hinds made his first appearance in federal court today before a U.S. Magistrate Judge and was ordered detained pending further court proceedings.

This case was investigated by HSI, the U.S. Postal Inspection Service (USPIS), the Portland Police Bureau Narcotics and Organized Crime Unit (PPB-NOC), and the Oregon-Idaho High Intensity Drug Trafficking Area (HIDTA) Interdiction Task Force (HIT) with assistance from CBP. It is being prosecuted by Scott M. Kerin, Assistant U.S. Attorney for the District of Oregon.

A criminal complaint is only an accusation of a crime, and a defendant is presumed innocent unless and until proven guilty.

Source: Office of United States Attorneys

CHARLOTTE, N.C. – Glynn Paul Hubbard, Jr., 46, of Charlotte, pleaded guilty today to wire fraud and money laundering charges for obtaining more than $1.2 million in fraudulent COVID-19 relief funds for himself and his customers, announced Dena J. King, U.S. Attorney for the Western District of North Carolina.

Donald “Trey” Eakins, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI), Charlotte Field Office, joins U.S. Attorney King in making today’s announcement.

According to filed plea documents, from March 31, 2020, to August 1, 2020, Hubbard, Jr. submitted fraudulent Paycheck Protection Program (PPP) and Economic Injury Relief Disaster Loan (EIDL) Program loan applications to the U.S. Small Business Administration (SBA) and SBA-approved lenders, seeking to obtain relief funds for himself and for other businesses, which Hubbard, Jr. referred to as “customers.” To obtain the relief funds for himself and his customers, Hubbard, Jr. falsified the loan applications and supporting documentation by including false financial information, fake employment data, and fraudulent tax returns. Of the $1.2 million in relief funds disbursed as a result of the scheme, Hubbard, Jr. received more than $570,000 for himself, and over $660,000 was disbursed to his customers.

According to court records, Hubbard, Jr. promoted the fraudulent scheme through personal referrals and in social media posts where he advertised that he was a PPP loan/EIDL consultant. Hubbard, Jr. received improper loan preparer fees for his consulting services totaling more than $150,000. To avoid detection, Hubbard, Jr. required customers to pay his fees in cash, via cashier’s checks, or wire transfers.

Following the plea hearing, Hubbard, Jr. was released on bond. The wire fraud charge carries a maximum prison sentence of 20 years. The maximum statutory penalty for the money laundering offense is 10 years in prison. A sentencing date has not been set.

In making today’s announcement, U.S. Attorney King thanked IRS-CI for their investigative work in the case.

Assistant U.S. Attorneys Caryn Finley and Cassye Cole with the U.S. Attorney’s Office in Charlotte are in charge of the prosecution.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with U.S. Attorneys’ Offices and agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866‑720‑5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

 

Source: Office of United States Attorneys

SANTA ANA, California – A Riverside County man was sentenced today to 144 months in federal prison for the armed robbery of a convenience store in Orange County – his tenth such robbery committed during a two-day crime spree in late 2022.

George Arizon, 28, of Corona, was sentenced by United States District Judge Cormac J. Carney, who also ordered him to pay $3,658 in restitution.

Arizon pleaded guilty in August 2023 to one count of interference with commerce by robbery (Hobbs Act) and one count of brandishing a firearm in furtherance of a crime of violence.

On November 8, 2022, Arizon robbed a 7-Eleven store in Westminster. During the robbery, he brandished a semi-automatic handgun and used it to threaten a store employee. In fear for his safety, the employee handed Arizon $80 in cash and two packs of cigarettes. This was the tenth robbery Arizon committed during a two-day spree.

In his plea agreement, Arizon admitted to committing nine other armed robberies of businesses – eight restaurants and one hair salon – in Santa Ana, Garden Grove, and Westminster over a span of two days. In each of those robberies, Arizon brandished a firearm to threaten and intimidate the businesses’ employees.

Police officers responding to calls about the Westminster robberies later recovered and retained a black sweatshirt, black hat, and mask that Arizon wore during the crimes, according to court documents. Officers also recovered the black semi-automatic handgun, with a gold-colored barrel, which had been discarded nearby. Security camera footage showed Arizon wearing this apparel, court documents state.

Arizon stole a total of $3,658 during his crime spree.

“[Arizon] repeatedly pointed a ghost gun at victims to force them to hand over the stores’ money,” prosecutors argued in a sentencing memorandum. “When investigators arrested him and searched his house, they found another firearm, ammunition, high-capacity magazines, spent shell casings, and drugs.”

The Bureau of Alcohol, Tobacco, Firearms and Explosives’ Orange County Violent Crime Task Force investigated this matter, and received assistance from the Santa Ana Police Department, the Garden Grove Police Department, and the Westminster Police Department.

Assistant United States Attorney Jena A. MacCabe of the Violent and Organized Crime Section prosecuted this case.

Source: Office of United States Attorneys

            WASHINGTON – Roberto McBean, 30, a Maryland resident, has been arrested on felony charges after robbing the same business in Georgetown multiple times while using a firearm. McBean is charged in an indictment, filed in the District of Columbia, with four felony counts of violating the Hobbs Act, which prohibits individuals from actual or attempted robbery which affects interstate commerce.

            As detailed in the indictment, from November 23, 2023 to January 8, 2024, McBean robbed the Glover Park Market located at 2411 37^th Street NW. During this timeframe, McBean robbed the market of over $1000, often using a handgun and ordering the store employee to give him the money from the register.

            Agents with the FBI’s Washington Field Office arrested McBean on Friday, January 26, 2024, following his indictment. He made his initial appearance in the District of Columbia on Monday, January 29, 2024, before the Honorable Judge G. Michael Harvey. A detention hearing is currently set for Thursday, February 1, 2024.

            This case is being prosecuted by Special Assistant United States Attorney Ryan Lipes and Assistant United States Attorney Omeed A. Assefi of the U.S. Attorney’s Office for the District of Columbia. This case is being investigated by the Metropolitan Police Department and the FBI.

Source: Office of United States Attorneys

The Justice Department today announced charges against two individuals and the guilty plea of a third individual for orchestrating a $1.89 billion cryptocurrency fraud scheme.

Sam Lee, 35, an Australian citizen residing in Dubai, United Arab Emirates, was charged in an indictment unsealed today for allegedly co-founding HyperFund, also known as HyperTech, HyperCapital, HyperVerse, and HyperNation. Rodney Burton, 54, of Miami, and Brenda Chunga, 43, of Severna Park, Maryland, were promotors of HyperFund.

“The defendants are charged with defrauding investors to the tune of $1.89 billion. As alleged in court documents, the defendants falsely represented that investors would receive substantial returns paid from cryptocurrency mining operations, which did not in fact exist,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “With our partners in Homeland Security Investigations and IRS Criminal Investigation, we are committed to uncovering sophisticated frauds involving cryptocurrency and digital assets and bringing those who perpetrate them to justice.”

“The level of alleged fraud here is staggering,” said U.S. Attorney Erek L. Barron for the District of Maryland. “Whether it’s cryptocurrency fraud, or any other financial frauds, if it sounds too good to be true, it probably is. This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”

According to court documents, from June 2020 to November 2022, Lee and his co-conspirators allegedly offered and sold investment contracts to the public through HyperFund’s online investment platform. HyperFund’s promotional materials allegedly made various false claims, including that investors who purchased HyperFund “memberships” would receive between 0.5% to 1% daily in passive rewards until the company either doubled or tripled the investor’s initial investment. To convince investors that HyperFund could make such payments, HyperFund allegedly claimed that its payments would be disbursed in part from its revenues from large-scale crypto mining operations, when in truth, HyperFund did not have such operations. Beginning in at least July 2021, HyperFund allegedly began to block investor withdrawals.

“Today’s charges are a testament to the incredible work of HSI New York’s El Dorado Task Force,” said Acting Special Agent in Charge Erin Keegan of Homeland Security Investigations (HSI) New York. “I commend our law enforcement partners, including those at HSI Baltimore, for their outstanding collaboration. HSI will continue to protect American investors from financial predators.”

“The illegal activity alleged in this case is precisely the type of conduct IRS Criminal Investigation and our law enforcement partners are committed to deterring,” said Acting Special Agent in Charge David Meisenheimer of the IRS Criminal Investigation (IRS:CI) Washington, D.C. Field Office. “These charges send a clear message that we have the tools and internal fortitude to protect our financial systems by diligently investigating, prosecuting, and holding accountable those who seek to defraud the American public.”

Lee is charged with one count of conspiracy to commit securities fraud and wire fraud. If convicted, he faces a maximum penalty of five years in prison. Burton is charged by criminal complaint with one count of conspiracy to operate an unlicensed money transmitting business and one count of operating an unlicensed money transmitting business. He also faces a maximum penalty of five years in prison on each count. Chunga pleaded guilty today to one count of conspiracy to commit securities fraud and wire fraud. She faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

HSI New York’s El Dorado Task Force and IRS:CI are investigating the case.

Trial Attorney Tian Huang of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Aaron S.J. Zelinsky and Spencer Todd for the District of Maryland are prosecuting the case.  

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. To learn more about victims’ rights, please visit www.justice.gov/criminal/criminal-vns/victim-rights-derechos-de-las-v-ctimas.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: Office of United States Attorneys

Baltimore, Maryland – Three individuals are charged in U.S. District Court in Maryland for orchestrating a $1.89 billion cryptocurrency fraud scheme.

A federal grand jury has returned an indictment charging Sam Lee, age 35, an Australian citizen residing in the United Arab Emirates for allegedly co-founding HyperFund, also known as HyperTech, HyperCapital, HyperVerse, and HyperNation.  The indictment was returned on January 25, 2024, and unsealed today.  Co-conspirator Rodney Burton, a/k/a “Bitcoin Rodney,” 54, of Miami, Florida, is charged by criminal complaint for his role as an alleged promoter of HyperFund.  Co-conspirator Brenda Chunga, 43, of Severna Park, Maryland, pleaded guilty today to her role in the fraud scheme. 

The federal charges were announced by United States Attorney for the District of Maryland Erek L. Barron; Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; Acting Special Agent in Charge Erin Keegan of Homeland Security Investigations (“HSI”) New York; and Acting Special Agent in Charge David Meisenheimer of the Internal Revenue Service – Criminal Investigation (“IRS-CI”), Washington, D.C. Field Office.

“The level of alleged fraud here is staggering,” said U.S. Attorney Erek L. Barron. “Whether it’s cryptocurrency fraud, or any other financial frauds, if it sounds too good to be true, it probably is. This office and our law enforcement partners will hold perpetrators accountable for these and other fraud schemes.”

“The defendants are charged with defrauding investors to the tune of $1.89 billion. As alleged in court documents, the defendants falsely represented that investors would receive substantial returns paid from cryptocurrency mining operations, which did not in fact exist,” said Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division. “With our partners in Homeland Security Investigations and IRS Criminal Investigation, we are committed to uncovering sophisticated frauds involving cryptocurrency and digital assets and bringing those who perpetrate them to justice.”

“Today’s charges are a testament to the incredible work of HSI New York’s El Dorado Task Force,” said Acting Special Agent in Charge Erin Keegan of Homeland Security Investigations (HSI) New York. “I commend our law enforcement partners, including those at HSI Baltimore, for their outstanding collaboration.  HSI will continue to protect American investors from financial predators.”

“The illegal activity alleged in this case is precisely the type of conduct IRS Criminal Investigation and our law enforcement partners are committed to deterring,” said David Meisenheimer, Acting Special Agent in Charge of the Internal Revenue Service – Criminal Investigation Washington, D.C. Field Office. “These charges send a clear message that we have the tools and internal fortitude, to protect our financial systems by diligently investigating, prosecuting, and holding accountable, those who seek to defraud the American public.”

According to court documents, from June 2020 to November 2022, Lee and his co-conspirators allegedly offered and sold investment contracts to the public through HyperFund’s online investment platform.  HyperFund’s promotional materials allegedly made various false claims, including that investors who purchased HyperFund “memberships” would receive between 0.5% to 1% daily in passive rewards until the company either doubled or tripled the investor’s initial investment.  To convince investors that HyperFund could make such payments, HyperFund allegedly claimed that its payments would be disbursed in part from its revenues from large-scale crypto mining operations, when in truth, HyperFund did not have such operations.  Beginning in at least July 2021, HyperFund allegedly began to block investor withdrawals.

If convicted, Lee faces a maximum sentence of five years in federal prison for conspiracy to commit securities fraud and wire fraud.  Burton has been arrested on a criminal complaint charging him with one count of conspiracy to operate an unlicensed money transmitting business and one count of operating an unlicensed money transmitting business.  At a detention hearing today before U.S. Magistrate Judge Erin Aslan in U.S. District Court in Baltimore, Maryland, Burton was ordered to be detained.  If convicted, he also faces a maximum penalty of five years in prison on each of those counts. 

Brenda Chunga, a/k/a “Bitcoin Beautee,”pleaded guilty today to conspiracy to commit securities fraud and wire fraud, for her role as a promoter of HyperFund.  According to her plea agreement and other court documents, Chunga conducted online investor meetings, including in Maryland, to promote HyperFund’s investment programs and which detailed the purported returns that prospective investors could earn from investing in HyperFund.  Chunga admitted that she personally received at least $3 million in fraud proceeds from her participation in the conspiracy.  As detailed in her plea agreement, Chunga will be required to pay restitution in the full amount of the victims’ losses, which the parties agree is at least $3 million, but could be significantly higher.  Chunga faces a maximum penalty of five years in prison.  U.S. District Judge Richard D. Bennett has not yet scheduled a sentencing date.

Neither an indictment nor a criminal complaint is a finding of guilt.  An individual charged by indictment or criminal complaint is presumed innocent unless and until proven guilty at some later criminal proceedings. 

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov.  To learn more about victims’ rights, please visit www.justice.gov/criminal/criminal-vns/victim-rights-derechos-de-las-v-ctimas.

United States Attorney Erek L. Barron commended HSI New York’s El Dorado Task Force and IRS-CI for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorneys Aaron S.J. Zelinsky and Spencer Todd, and Trial Attorney Tian Huang of the Criminal Division’s Fraud Section who are prosecuting the case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

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Source: Office of United States Attorneys

LOS ANGELES – A Canadian man was sentenced today to 72 months in federal prison for distributing hundreds of pounds of cocaine out of stash houses in the San Gabriel Valley community of Alhambra.

Sam Nang Bou, 41, of Edmonton, Canada, was sentenced by United States District Judge Percy Anderson.

Bou pleaded guilty in December 2022 to one count of distribution of cocaine.

In June 2022, Bou operated two stash houses in Alhambra in which he used to store and prepare bulk quantities of narcotics for distribution and eventual importation into Canada. On June 28, 2022, Bou knowingly and intentionally transported approximately 104.6 kilograms (230.6 pounds) of cocaine from one of the Alhambra stash houses to a location in Hesperia.

While in Hesperia, Bou handed over four boxes containing the cocaine to a truck driver for exportation into Canada.

Bou engaged in eight other similar distributions of cocaine and methamphetamine from September 2021 to September 2022. In total, for these eight additional distributions, Bou distributed approximately 341 kilograms (752 pounds) of cocaine and approximately 729.7 kilograms (1,608.7 pounds) of methamphetamine.

In September 2022, Bou operated and controlled a Dodge Caravan with two hidden trap compartments that he used to store bulk quantities of drugs. He also controlled a storage unit in Alhambra, which he rented using an alias. On September 1, 2022, Bou drove the vehicle into the storage unit and locked the unit with the vehicle inside of it.

Inside of the Dodge Caravan’s two hidden trap compartments, Bou possessed approximately 47.3 kilograms (104.3 pounds) of cocaine and 325 grams of methamphetamine.

At one of the Alhambra stash houses, Bou possessed storage tubs, dozens of rolls of tape, numerous duffle bags and boxes, vacuum sealed bags, heat sealers, boxes of dryer sheets, scales, and a money counter. He also had industrial-size containers of various chemicals used to clean the drugs, coveralls, various sets of gloves, numerous bowls and containers, several masks, and a respirator.

The FBI and the Los Angeles HIDTA Task Force investigated this case. The Royal Canadian Mounted Police, the Los Angeles Violent Transnational Organized Crime Task Force, the Las Vegas Metropolitan Police Department, the California Highway Patrol, the Barstow Police Department, the Mohave Area General Narcotics Enforcement Team, and the Kern County Sheriff’s Office provided substantial assistance in this matter.

The case against Bou is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

Assistant United States Attorney Brittney M. Harris of the International Narcotics, Money Laundering, and Racketeering Section prosecuted this case.

Source: Office of United States Attorneys

BOSTON – A lifetime Level 2 sex offender, pleaded guilty today to possessing child sexual abuse material (CSAM).

Eric Robert Johnson, 50, of Billerica, pleaded guilty to one count of possession of child pornography. U.S. District Court Judge Denise J. Casper scheduled sentencing for May 2, 2024. Johnson was arrested and charged by criminal complaint in February 2022 and subsequently indicted by a federal grand jury in March 2022. He has remained in federal custody since his arrest. 

“Possession of child pornography is not a victimless crime because it further victimizes the innocent children who were abused to create these horrific images and drives demand for the creation of more abusive material,” said Acting United States Attorney Joshua S. Levy. “Mr. Johnson, a lifetime sex offender previously convicted of child rape, possessed over 5,000 files showing the sexual abuse of children, including infants. He is clearly a danger to our communities, and now faces significant time in federal prison. Our office will continue to relentlessly pursue individuals who harm children.”

“Images of children being sexually abused aren’t just documenting a moment in time. They’re a window into the horrific, ongoing reality for many of these kids. Sex offenders like Eric Robert Johnson who collect this material perpetuate the demand for it, which means more children will be exploited,” said Jodi Cohen Special Agent in Charge of the Federal Bureau of Investigation, Boston Division. “It’s imperative for the FBI and our law enforcement partners to intercept such predators when we find them, and we’re grateful Mr. Johnson accepted responsibility today for his criminal conduct.”

Searches of Johnson’s person and residence in February and March of 2022 resulted in the recovery of 25 electronic devices including a laptop, hard drives and other electronic devices. Multiple hard drives were found hidden next to Johnson’s bed as well as in Johnson’s basement ceiling, shelves, cabinets and in an ammunition can located in a crawl space at the residence. At the time of the search, the laptop was running a program to wipe, delete or remove files from an attached hard drive and was approximately 56% complete before being disabled by an on-scene forensic examiner. 

A subsequent forensic examination revealed over 5,000 files depicting CSAM on seven of the seized devices, including images and video files depicting the sexual abuse of minor victims as young as infants and toddlers. Further forensic examination determined that 15 of the seized devices were encrypted or had hardware and could not be searched.  

Additionally, during the search of Johnson’s residence, at least three mutilated dolls with the vaginal region sliced to make a hole were seized. Two children’s backpacks containing various children’s clothing including bathing suits and a nightgown, were found under his bed, along with a bag of children’s costumes. Additionally, children’s diapers were also observed throughout the residence.

Johnson was previously convicted in 1992 on state charges in New Hampshire of two counts of Aggravated Felonious Sexual Assault of a Child Under 13 Years of Age. At the time of the searches, Johnson was a Level 1 registered sex offender in the Commonwealth of Massachusetts. Per the Massachusetts Sex Offender Registry Board, Johnson is currently a Level 2 registered sex offender.

The charge of possession of child pornography after a prior conviction for a sex offense provides for a mandatory minimum sentence of 10 years and up to 20 years in prison, at least five years and up to a lifetime of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based on the United States Sentencing Guidelines and other statutory factors.

Acting U.S. Attorney Levy, FBI SAC Cohen and Billerica Police Chief Roy Frost made the announcement today. Assistant U.S. Attorneys Suzanne Sullivan Jacobus, Luke A. Goldworm and J. Mackenzie Duane of the Criminal Division are prosecuting the case. 

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and the DOJ’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.

Source: Office of United States Attorneys

Spokane, WA – Physician Daniel Case has agreed to pay $95,000 to resolve allegations that he participated in a kick-back scheme and ordered medically unnecessary durable medical equipment that Case caused to be billed to Medicare, Medicaid, and other federal health care programs, announced Vanessa R. Waldref, the United States Attorney for the Eastern District of Washington. 

Between October 2018 and April 2019, Case worked with RediDoc LLC (Redidoc).  RediDoc employed telemarketing companies to call federal health care program beneficiaries, including Medicare beneficiaries, and speak with them about obtaining durable medical equipment at no cost.  Portions of these calls were recorded and provided to physicians, like Dr. Case, along with pre-filled prescriptions for durable medical equipment.  The physicians would review the recordings and sign orders for durable medical equipment, which were then billed to federal health care programs, including Medicare.  The physicians, including Dr. Case, were paid for each order they signed prescribing durable medical equipment.

The owners of RediDoc were charged with various federal offenses in September 2020, including conspiracy to violate the federal anti-kickback statute, based upon the fact that the payments to physicians were remuneration intended to induce the physician to sign durable medical equipment orders, including orders that were not medically necessary. The owners of RediDoc both pled guilty to this conspiracy, admitting that RediDoc provided kickbacks to physicians, such as Dr. Case, to induce them to sign durable medical equipment orders.

While employed with RediDoc, Dr. Case expressed in a November 14, 2018, email his “concern” regarding the “legitimacy of what I am doing.” Nevertheless Dr. Case continued to work with RediDoc and signed durable medical equipment orders for patients until April 2019.  During his time working with RediDoc, Dr. Case signed numerous orders that were not medically necessary.  For example, Dr. Case signed an order on January 18, 2019, prescribing right and left knee braces to a woman who had and above-the-knee amputation of her right leg.  As another example, Dr. Case signed three durable medical equipment orders on January 9, 2019, for a patient who had died on January 7, 2019.  While working with RediDoc, Case signed orders that resulted in Medicare payments of $3,358,221.57.  During the same time, RediDoc paid Case approximately $66,727.00 for orders he signed. 

“Kickback schemes incentivize physicians to place financial gain over patient care,” said United States Attorney Waldref.  “RediDoc relied upon the willing participation of doctors around the country to sign orders prescribing equipment or medication for payment.  These schemes compromise the medical decision making of physicians, resulting in the payment of public money for services that are not medically necessary for the patients, such as the braces Dr. Case ordered for patients here.  This settlement is a signal to physicians that they will be held accountable for engaging in kickback schemes, and that they stand to lose more in the long run than will be gained in the short term by participating in an unlawful practice.”

“Doctors that participate in telemedicine kickback schemes for personal financial gain corrupt the provider-patient relationship and undermine the integrity of taxpayer-funded health care programs” said Special Agent in Charge Steven J. Ryan with the Department of Health and Human Services, Office of the Inspector General (HHS-OIG).  “This settlement demonstrates HHS-OIG’s ongoing commitment to protecting federal health care programs and ensuring that providers focus on providing medically necessary care.” 

The settlement can be found at the link below. 

The settlement was the result of a investigation conducted by the U.S. Attorney’s Office for the Eastern District of Washington and the U.S. Department of Health and Human Services, Office of Inspector General, Seattle Field Office.  Assistant United States Attorney Jeremy Kelley of the Eastern District of Washington handled this matter on behalf of the United States. 

Source: Office of United States Attorneys

A man who conspired to distribute methamphetamine pled guilty January 26, 2024, in federal court in Sioux City.

Kenneth Dawdy, 39, from Sioux City, was convicted of conspiracy to distribute methamphetamine.

At the plea hearing, Dawdy admitted his participation in a conspiracy from January 2021 through June 2023 that distributed at least 3500 grams of methamphetamine in the Sioux City area.  Dawdy also admitted to being a “middle-man,” assisting others in the conspiracy by acquiring and delivering money and methamphetamine to others.    

Sentencing before United States District Court Chief Judge Leonard T. Strand will be set after a presentence report is prepared.  Dawdy was taken into custody by the United States Marshal after the guilty plea and will remain in custody pending sentencing.  Dawdy faces a possible maximum sentence of 20 years’ imprisonment, a $1,000,000 fine, and at least three years of supervised release following any imprisonment.

The case is being prosecuted by Assistant United States Attorney Shawn S. Wehde and was investigated by the Tri-State Drug Task Force based in Sioux City, Iowa, that consists of law enforcement personnel from the Drug Enforcement Administration; Sioux City, Iowa, Police Department; Homeland Security Investigations; Woodbury County Sheriff’s Office; South Sioux City, Nebraska, Police Department; Nebraska State Patrol; Iowa National Guard; Iowa Division of Narcotics Enforcement; United States Marshals Service; South Dakota Division of Criminal Investigation; and Woodbury County Attorney’s Office.   

Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. 

The case file number is 23-4055. 

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