South Carolina Tax Preparer Fabricated Returns and Directed Refunds to Bank Accounts She Controlled

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Dorothy Lee Anderson of Hopkins, South Carolina was permanently barred by a federal district court judge in Columbia, South Carolina from preparing federal tax returns for others. The court found that Anderson, operating under the name “DL Anderson Tax Service,” fraudulently prepared and filed tax returns using individuals names and social security numbers without their assent, authorization, or knowledge. These fraudulent returns generated substantial tax refunds which Anderson deposited into bank accounts she controlled. The court found that Anderson deposited more than $290,000 in fraudulently obtained refunds and then absconded with over $220,000 of these funds for her personal use. After being tried, the court ordered Anderson to provide her customer lists to the government and mail copies of the court order to her former customers.

The Justice Departments Tax Division has obtained more than 465 injunctions over the past decade to stop tax fraud promoters and tax return preparers. Before hiring a professional to handle your financial records, be sure to inform yourself of their credentials.

If you have any questions or concerns as to the credentials of a financial professional, please contact Fuerst Ittleman, PL at contact@fidjlaw.com.

Compounding Pharmacist Gains Partial Judicial Relief; Still Guilty on Eight

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On April 30, 2010 Judge Marcia S. Krieger, United States District Judge,
District of Colorado dismissed 23 guilty counts against Thomas Bader, a
compounding pharmacist and owner of College Pharmacy in Denver Colorado,
while affirming eight counts and $4.8 million in forfeiture.

The case illustrates many of the nuanced risks involved with compounding
pharmacies, importing and exporting of active pharmaceutical ingredients
(API), compounding and selling high profile drugs such as human growth
hormone (HGH) and anabolic steroids, understanding the subtle distinction
between compounding and manufacturing, and the tenuous interplay between
state compounding laws and the Federal Food, Drug and Cosmetic Act (FDCA).

The case stems back to 2007 when Mr. Bader was charged with illegal
distribution, mail fraud, and conspiracy to facilitate the sale of smuggled
goods. Mr. Bader was importing HGH from China and compounding the API into
finished drug products. As Colorado’s compounding statute is very expansive,
he believed his practice to be protected under state law, and outside the
purview of FDCA.

The federal smuggling charges focused on the fact that imported HGH was from
a non-FDA registered facility and the compounded products thus involved new,
unapproved drugs requiring an NDA under FDCA. Mr. Bader was further charged
with illegal distribution of HGH and testosterone cypionate (a controlled
substance) as both products involved promotion for unapproved uses, illegal
under federal law.

On February 2, 2010 a federal jury found Mr. Bader guilty of 31 counts
including illegal distribution of HGH and controlled substances and unlawful
importation (i.e. smuggling) of HGH. Mr. Bader and counsel then moved to
acquit, or alternatively seek a new trial based on a number of legal
propositions including entrapment by estoppel, violation of due process
rights, erroneous juror instructions, failure to establish a criminal
purpose or intent, and insufficient evidence to support the findings.

Ultimately, on April 29, 2010 Judge Krieger dismissed 23 counts involving
illegal distribution of HGH. The Judge acknowledged a number of Mr. Bader’s
sales were for approved uses of HGH, including some even written for
children. Additionally, Mr. Bader had no way of knowing if the
prescriptions were for permissible uses and thus his actions were protected.

Still, the ruling upheld eight guilty counts. Two smuggling charges were
upheld, as importation of HGH from a non-FDA registered facility was seen as
“contrary to law,” and thus illegal. Simple repackaging or relabeling of a
product may be lawful under state compounding laws; however this
“compounding defense” could not shield Mr. Bader from further provisions of
the FDCA.

Five illegal distribution counts involving HGH were upheld as the use of HGH
as an anti-aging drug is unauthorized and illegal. The lone distribution
charge involving controlled-substances was also upheld, as selling and
promoting testosterone cypionate for muscle building and ant-aging is
illegal. Lastly, the judge affirmed $4.8 million forfeiture in assets based
on the nature of the guilty counts. Sentencing in this matter is scheduled
for June 10, 2010.

In sum, compounding pharmacies may be fully compliant with state law, but be
at great risk under federal law. Pharmacies and suppliers of API should
always consult an attorney and be aware of the risks involved. Fuerst
Ittleman, PL has experience with FDA import and export, pharmacy
compounding, and FDCA matters. Please feel free to contact us at
contact@fidjlaw.com to see how we can help you maintain complete
regulatory compliance with applicable state and federal law.

Spring Treasury Regulatory Agenda

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On April 26, 2010, the Treasury Department unveiled its regulatory agenda as part of the Unified Agenda of Regulatory and Deregulatory Actions covering IRS projects in the corporate tax, international tax, and exempt organizations area.

In the international tax arena, the agenda provides for projects that include guidance on the application of attribution rules to foreign trusts, clarification of the foreign base company sales income rules, and taxable years of foreign corporations. The agenda also includes international guidance projects dealing with US source income effectively connected with a US business and revisions relating to withholding reporting requirements for US source income paid to foreign persons. In the corporate arena, the agenda provides for projects dealing with reorganizations under IRC § 368(a)(1)(E) or (F), recharacterization of certain qualifying income of publically traded partnerships, and interest on deferred tax liability for contingent payment sales pursuant to IRC § 453A. Projects encompassing payments made pursuant to securities lending transactions or sale-repurchase transactions, deferred discharge of indebtedness income, and deferred original issue discount of corporation are also in the works. Finally, with regards to the exempt organizations arena, the IRS is working on guidance addressing charitable contributions of specific motor vehicles, lookback interest and tax-exempt entities, and qualified tax credit bonds.

From: BNA Spring Version of Treasury Regulatory Agenda Details Dozens of IRS Projects in Many Areas 29 TMWR 590

Regenerative Medicine to Grow to a $20 Billion Industry in 15 Years

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Regenerative medicine involves the use of tissues, cells (including stem cells), laboratory-made compounds, and artificial organs to treat injuries and diseases. This approach helps repair specific areas of the body, often without the need for traditional, invasive surgery. For example, research is being conducted to use stem cells to replace cardiac tissue in patients with congestive heart failure. Currently, bone morphogenetic proteins, or BMP, which are genetically modified human proteins that spur bone growth, are being used to help vertebrae fuse back together after certain spine surgeries.

The science and technology of regenerative medicine is expanding at a rapid pace. The current market for regenerative medicine technologies now stands at $1.6 billion, but experts predict that this market could swell to $15-20 billion by 2025. Regenerative medicine is growing so rapidly because it is more efficient and effective for both physicians and patients who will undergo fewer steps in surgery and other medical procedures. Regenerative medicine is growing around the world, with the top five producers of regenerative medicine research coming from the United States, Japan, Germany, United Kingdom, and China. China, specifically, has seen a jump in regenerative medicine from 50 publications in the year 2000 to over 1,000 in 2008.

Virtually every sector of the medical and biotechnology industries stand to expand alongside the worldwide market for regenerative medicine. For instance, the medical device industry will benefit from and aid in regenerative medicine with the development of “delivery systems” for these cellular and other therapies. The delivery systems, such as catheters and similar devices, would allow physicians to repair specific areas of the body with site specific implantation of tissues, cells, or other tissue or cellular-based products. In addition to the domestic demand for delivery systems, this worldwide growth provides a global market for domestic medical device manufactures who can export their devices to meet the needs of foreign regenerative medicine markets.

Fuerst Ittleman, PL has experience with stem cell and other regenerative therapies compliance. We also assist medical device and biotechnology companies with regulatory compliance and export requirements. Please feel free to contact us at contact@fidjlaw.com to see how we can help your company move forward with regenerative medicine therapies.

Hunton & Williams delays record disclosures in Stanford case

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By: Paul Brinkmann
October 19, 2009

Attorneys at one of Miami’s largest law offices are waiting for a Texas judge to rule on whether they should be forced to turn over records of their work for accused Ponzi schemer R. Allen Stanford.

Carlos Loumiet, Miami-based attorney for Hunton & Williams, helped Stanford set up a special trust office to move millions of dollars to Antigua before the SEC shut down Stanford International Bank earlier this year.

Hunton & Williams has agreed to turn over records related to Stanford’s U.S. operations and some limited files about representing Stanford personally, but it is fighting the request for records about Stanford operations based in Antigua.

Attorneys for Stanford receiver Ralph Janvey said Hunton & Williams’ refusal to turn over certain records has “jeopardized” the ability to recover and preserve assets for victims of the alleged scheme.

Kevin Sadler, of the Baker Botts law firm in Austin, Texas, represents the receiver.

In March, Hunton & Williams’ general counsel, Robert Rolfe, wrote to Sadler, saying that the law firm believes U.S. federal courts lack jurisdiction over the Antiguan companies, and that a receiver in Antigua may have jurisdiction.

Loumiet was in Greenberg Traurig’s Miami office when he began working for Stanford in the late 1990s.The Miami Herald reported Greenberg Traurig is being drawn into the investigation.

Loumiet, Greenberg Traurig and Hunton & Williams have not responded to the Business Journal’s request for interviews about the Stanford case.

In correspondence attached to court filings, Rolfe said Hunton & Williams maintains all the work it did for Stanford was “legal work.”

Janvey could be looking for law firm records for several reasons, said Andrew Ittleman, a partner with Fuerst Humphrey Ittleman in Miami who specializes in anti-money laundering law. The receiver probably just believes the records could help him investigate Stanford’s operations, he said, and is trying to determine if firms that advised a defunct company could be relief defendants.

“It’s more likely the firms are also victims of Stanford’s,” he added, noting lawyers should recognize illegal schemes if they work for one long enough.

To view original article, click here.

Miami Medicare Fraud Ring Linked to Check Cashing Stores

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Casual news-watchers may have missed the significance of the seemingly unrelated stories, but the legal and regulatory compliance professionals at FHI clearly saw the connection.As we reported previously, federal law enforcement agencies have increased their enforcement focus on Medicare fraud in the Miami area in a significant way. Under this program, on June 23, 2009, Federal officials in Miami announced that eight defendants were charged in an elaborate Medicare fraud that spanned five states, used 29 fake storefronts, and attempted to steal $100 million from Medicare and Medicare Advantage.

The indictments allege that Michel De Jesus Huarte and the defendants fronted their scam through more than a dozen phony medical clinics throughout the Southeast United States. In many cases, the storefronts were simply post office boxes.

They would submit fraudulent invoices to the government, then use check cashing stores to launder the reimbursements; money is harder to track through these stores than through conventional banks. The fraud group owned two check cashing stores in the Miami area and netted between $30,000 and $80,000 in cash several times a week.

According to government court filings, Huarte paid the fake store owners in cash “with the understanding that (they) would flee to Cuba to avoid law enforcement detection or capture.” Two of the defendants and approximately $30 million are still missing.

This fraud ring is similar to a scheme run through the La Bamba Check Cashing store. In that case, the Benitez brothers were accused of laundering $24 million in Medicare fraud money by using shell companies to cash checks at a local chain of stores. As we reported in our blog, Juan Rene Caro, owner of La Bamba, was recently sentenced in Federal court for using the check cashing store to launder funds from a construction fraud ring involving violations of the Bank Secrecy Act. You can read about the harsh sentence handed down to Mr. Caro here.

Viewed through a single lens, these indictments and convictions mean that the Federal government is not only going after those who perpetrate Medicare fraud, but those who move and launder the funds from these schemes as well. The implications are clear: if you are involved in Medicare fraud activities in any way, the government will be coming for you.

Let Fuerst Ittleman assist your health care company with its regulatory compliance to help protect you against fraud and other illegal activities. Please contact us at 305-350-5690 or contact@fidjlaw.com.

Harsh Sentence for Miami Check-Cashing Store Owner

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The owner of Miami, Florida’s La Bamba Check Cashing store, Juan Rene Caro was sentenced in Federal court on June 23, 2009 to serve 216 months in prison, pay a $250,000 penalty, and forfeit $11 million in assets for his conviction on conspiracy and fraud charges in violation of the Bank Secrecy Act.Caro’s now-defunct store offered illegal check-cashing services to construction companies and other business people seeking to mask the identity of the true recipients of the funds. A company would engage La Bamba to cash a check in the name of a shell corporation, but the real company’s owner would take cash. Most of these companies were local construction companies and subcontractors.

Under the Bank Secrecy Act, financial institutions – including check-cashing stores – are required to file currency transaction reports (CTRs), a notification to the U.S. Department of Treasury, disclosing the identity of parties to a transaction when amounts greater than $10,000 are involved. The financial institution must also verify and record the identity, social security number, or taxpayer ID number of the person benefiting from the transaction.

The companies using La Bamba’s services evaded taxation on an amalgamated total of $132 million. La Bamba profited from the filing of false CTRs by taking a fee of between 3% and 5% for performing such transactions.

U.S. Department of Justice enforcement of CTR requirements has ramped up recently with charges against small and big-time players alike. For example, Newport Beach, California, financier Danny Pang was accused this Spring of structuring transactions to avoid filing CTRs, as were the owners of a small machine shop in Rhode Island who similarly avoided CTRs in order to conceal business receipts and thereby evade taxation.

Although Caro’s attorney called the sentence unfair, comments from the Department of Justice and the Judge Joan Lenard’s hefty sentence indicate broad acceptance of a zero-tolerance attitude towards fraud and financial crimes that harm the American taxpayer. It should also be noted that the prosecution sought a longer prison term and more assets than those ordered to be forfeited by Judge Lenard.

Read the Department of Justice’s posting of the indictment against Mr. Caro for a detailed description of the mechanics of Caro’s crime as well as a list of the assets sought by the government.

For insight and strategies on maintaining compliance with state and federal regulation of financial services, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.

New Indictments, Arrests in Multi-State Health Care Fraud Scheme

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On June 24, 2009, Federal agents descended on Miami, Detroit and Denver, as well as other major cities, in a new round of arrests targeting Medicare fraud in those cities. Fifty-three Federal indictments were handed down early in the day by a grand jury in Detroit, and a wave of arrests soon followed. All tolled, the newly indicted suspects are charged with conspiring to defraud Medicare of over $56 million.

The indictments involve fake prescriptions, cash bribes, and stolen Medicare information, including physician identification numbers. As reported in our earlier blog posting, Federal and state government authorities under the Health Care Fraud Prevention & Enforcement Action Team (HEAT) taskforce have recognized the severity of healthcare fraud in South Florida and have been cracking down on these fraudulent schemes. Heightened enforcement in South Florida forced the group to extend their scheme to Detroit, which has become the latest site for Medicare fraud, and other cities to take advantage of Medicare funds.

According to the indictments, the defendants – including doctors, clinic owners, assistants, and patients – submitted millions of dollars in false claims to Medicare for infusion therapy, injection therapy, and other high-priced medical treatments that are designed to treat patients suffering from illnesses such as HIV, AIDS, and cancer.

“As demonstrated by today’s charges and arrests, we will strike back against those whose fraudulent schemes not only undermine a program upon which 45 million aged and disabled Americans depend, but which also contribute directly to rising healthcare costs that all Americans must bear,” U.S. Attorney General Eric Holder said at the press conference announcing the indictments and arrests.

The suspects identified in the Detroit indictments have clear connections to Miami, Florida. In 2008, it is estimated that that city’s prosecutions account for more than one-third of all Medicare fraud cases nationwide. “In fact, ten of the defendants named in the indictments unsealed today are alleged to have brought their fraud schemes from Miami to Detroit,” reported Holder. “Strike force operations in Miami have seen instances of fraud spread quickly through communities in that area. After we arrested and charged criminals in Miami, their cohorts simply moved their schemes to Detroit.”

All together, strikes forces in Miami, Los Angeles and Detroit have charged 249 defendants for Medicare fraud involving about $600 million in false claims for mostly HIV infusion services and medical equipment.

For the U.S. Attorney General’s press release on the indictments and arrests, click here.

For more information about how Fuerst Ittleman can assist your Medicare and health care regulatory compliance and protect against fraud, please contact us at 305-350-5690 or contact@fidjlaw.com.

Court Authorizes Refund of EU Retaliatory Duties

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On June 16, 2009, Gilda Industries, a small bakery and importer in Hialeah, Florida, struck a blow for importers everywhere when it prevailed in its case in the U.S. Court of International Trade.  The result of this case is that importers everywhere may qualify for a full refund of the 100% retaliatory duties paid to U.S. Customs and Border Protection (CBP) on certain products imported from the European Union on or after July 29, 2007.

The decision in Gilda Industries v. United States becomes the latest chapter in what is known as the “EC-Beef Hormones” dispute.  The dispute began in 1985 when the European Community (now the European Union) banned imports of beef and beef products from the United States that had been treated with hormones.  As a result, the U.S. imposed a 100% retaliatory tariff on a “retaliation list” of European Union products.

In theory, the retaliatory measures should have ended in mid-2007.  However, when CBP continued to collect the retaliatory tariffs after that date, Gilda took the matter to court.

The Court found that the 100% retaliatory tariffs did, in fact, terminate on July 29, 2007, and it ordered CBP to refund the retaliatory duties collected on Gilda’s imports after that date.  The Court’s opinion, however, opens the door for a full refund on all of the retaliatory duties paid to CBP after that date for all of the affected products

Importers who qualify for refunds should immediately file an action with the U.S. Court of International Trade to preserve the right to the refunds.  These actions must be filed before July 29, 2009.

The list of products subject to the 100% retaliatory duties – for which refund may be due -includes various meats, cheeses, vegetables and other food items.  For the complete list of products affected, click here.

For the decision of the Court in Gilda Industries v. United States, click here.

If you are importer who believes that you may be due refunds of duties from CBP under this decision, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.  You should not delay.

Healthcare Fraud Crackdown Expanded in Miami-Dade County

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Efforts to crack down on Medicare and Medicaid fraud has focused the radars of federal and state law enforcement onto the Miami-Dade county area. On June 19, 2009, state investigators from the Florida Agency for Health Care Administration (“AHCA”) revealed more Medicaid fraud in Miami-Dade: the state paid for unnecessary or unaccounted oxygen equipment.

Recent government studies have estimated Medicare and Medicaid fraud to be at least $60 billion a year nationwide. According to the FBI and the Department of Justice, Medicare and Medicaid fraud is big business in Miami Dade County reaching at least $2.5 billion a year.

Fraudulent billing for medical equipment is the latest scam plaguing Medicaid which, according to the AHCA, spent over $90 million on medical equipment last year alone. When over $1.4 million was spent on oxygen equipment in Miami-Dade County last year, this raised the suspicions of the AHCA.

Attempts to curb Medicaid and Medicare fraud in South Florida are nothing new. In March, Medicaid investigators commenced similar investigations of Miami-Dade’s home health industry. On June 15th, Governor Charlie Christ signed into law a bill that declared Miami-Dade a “crisis area for healthcare fraud” and tightened regulations on home health agencies, home medical equipment providers, and health care clinics.

These recent efforts by the state come on top of increased efforts by the federal government to stem the tide of fraud and wasteful government spending in Medicare and Medicaid. The first of these efforts, the Medicare Strike Force, was started in 2007. In two years, federal prosecutors have filed 87 indictments charging 159 defendants with fraud offenses. This past May, the federal government announced a new task force – the Health Care Fraud Prevention and Enforcement Team, or HEAT – which will increase healthcare fraud enforcement in Miami-Dade County.

With increased efforts of law enforcement cracking down on the industry, let FHI help your health care business with its regulatory compliance. Contact us at 305-350-5690 or contact@fidjlaw.com.