Fraud » Fraud Fraud Laws- Click Fraud, Statute of Frauds, Credit Card Fraud, Fraud Alert, Medicare Fraud Thu, 29 Sep 2016 15:43:46 +0000 en-US hourly 1 NY Attorney General Announces Price Gouging Investigation Sat, 04 Apr 2015 13:50:32 +0000   On November 15, 2012, Attorney General Eric T Schneiderman announced an investigation into 13 gas stations that are suspected of violating the New York State Price Gouging statute.  The investigation began as the Attorney General’s Office received hundreds of consumer complaints about price gouging in the wake of Hurricane Sandy. General Business Law § 396-r strictly prohibits merchants from overcharging consumers for goods or services during an “abnormal disruption of the market.”  The New York State’s price gouging law applies to all vendors, retailers, and suppliers.  Common businesses subject to the law include supermarkets, hardware stores, gas stations, taxi services, delis, and more. The 13 gas stations involved in the investigation include the following: Nassau County ·   Shell Gas Station on 408 Rockaway Turnpike in Cedarhurst for charging $5.00+ Suffolk County ·   Babylon Gas Station/Express Mart on 1000 Route 109 in Lindenhurst for charging $4.99 ·   USA Petroleum in East Islip for charging $5.50+ ·   USA Petroleum on 2664 Route 112 in Medford for charging $5.50+ Westchester County ·   Shell Gas Station on 3709 Crompond Road in Cortlandt Manor for charging $5.00 ·   Mobil Gas Station on Hutchinson River Parkway in White Plains for charging $5.03 ·   Mobil Gas Station on 174 Westchester Avenue in White Plains for charging $5.05 Brooklyn ·   Sonomax on 278 Greenpoint Ave for charging $4.74 Queens ·  Mobil Gas Station on 40-40 Crescent St in Long Island City for charging $4.89 ·  Shell Gas Station on 71-08 Northern Blvd in Jackson Heights for charging $5.50 ·  Delta on 1309 14th Ave in College Point for charging $5.00 Bronx ·  Getty on 600 Pelham Parkway for charging $5.39 ·   Mobil Gas Station on 688 E. Gun Hill Road for charging $4.89 New York’s price gouging law specifically restricts price gouging in the event of a natural disaster.  A disruption in the market is specifically defined as “weather events, power failures, strikes, civil disorder, war, military action, national or local emergency, or other causes.”  Consumer goods are defined as “those used, bought or rendered primarily for personal, family or household purposes.”  Thus, gasoline or alternative fuels are protected by the statute because these fuels add to the safety of the public during a natural disaster such as Hurricane Sandy. What is considered excessive? Authorities will review prices for fuel before and after the wake of Hurricane Sandy.  Price gouging can occur before a natural disaster occurs if there is warning of impending circumstances, and the gouging can also occur if there is a need for shared sacrifice during or after the disaster and the prices remain high. Attorney General Schneiderman provided the Mobil Gas Station on 40-40 Crescent Street as an example of how price gouging occurs.  The consumer complained that the price posted along the road was $3.89, and the line for gas was three blocks long.  When consumers finally reached the pump, the cash price was $4.89 and the credit card price was $4.99. Attorney General Schneiderman stated, “These thirteen retailers stand out from others in the high prices they have charged and in the size of their price increases.” Source: New York State Office of the Attorney General
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Prom Dress Retailer Ordered To Pay Restitution Sat, 04 Apr 2015 13:50:32 +0000

A dress shop in New Jersey that closed down weeks before prom season has been ordered by a judge to pay thousands of dollars in restitution to girls who paid deposits amounting to as much as 100 percent of the purchase price of their dresses.

According to New Jersey Attorney General Jeffery S. Chiesa, Red Carpet, a dress shop in Wayne, N.J., closed its doors and abruptly stopped operations after having gathered thousands of dollars in dress deposits.  The owner of Red Carpet, Patricia Dowling, is also accused of having made a false report of burglary when the business was failing.

In total, Patricia Dowling and her husband Michael have been ordered to pay restitution in the amount of $2,900, as well as $110,000 in civil penalties and nearly $50,000 in attorney costs.  In the terms of the settlement with the Dowlings, the judge has also ordered that Patricia Dowling be forbidden from managing or owning any other business in New Jersey.  Dowling is also forbidden from running any type of business or advertising sales of formal wear, prom dresses, or pageant dresses—the types of clothing sold at Red Carpet before its doors were closed.

Soon after the dress shop closed its doors, angry consumers who had been left in the lurch without their paid-for prom dresses contacted the New Jersey Department of Consumer Affairs.  A day after the Department of Consumer Affairs filed a lawsuit in state court, the state of New Jersey entered Red Carpet and seized its property for auction.

The liquidation of the property still in Red Carpet was sufficient to provide refunds to the ten consumers who had not yet had their dresses refunded by the shop's owners.  According to the state of New Jersey, Red Carpet deliberately closed its doors knowing that many consumers had deposits that would need to be refunded and did not work with consumers to provide a refund.  

Dowling also claimed that $600 and 40 of the store's dresses had been stolen by a burglar but was unable to provide sufficient documentation to prove that the theft had actually occurred.  Because of the number of outstanding claims against Dowling and her stores, police believe that the burglary was actually just a way for Dowling to avoid having to provide dresses that had already been paid for, at least in part, by customers.


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Dentist Gets 18 Months for Medicare Fraud Sat, 04 Apr 2015 13:50:31 +0000

On November 15, 2012, the US Attorney’s Office for the Western District of Oklahoma announced that Robin R Lockwood was sentenced to 18 months in federal prison for health care fraud.  Lockwood is a dentist in Oklahoma City.  On top of her prison sentence, Lockwood is also ordered to pay $375,672.27 in restitution.

Lockwood is licensed to practice in the state of Oklahoma, and she was employed by Ocean Dental at 1610 Southwest 74th Avenue.  The dentists employed at Ocean Dental provided care to children who qualified for Medicaid.  The Medicaid program provides care to people with low income through federal and state funding.  Medicaid is provided in the name of “SoonerCare” in Oklahoma by the Oklahoma Health Care Authority (OHCA).  

Normally, Ocean Dental would submit claims to OHCA in order to receive reimbursement for the dentists’ services.  If Lockwood provided the services personally, Ocean Dental would provide her with a percentage of the funds reimbursed by OHCA.  

According to court documents, Lockward attempted to defraud Medicaid from July 1, 2007 to December 31, 2010 by submitting claims for dental services that were never provided.  In most cases, she would provide information on treatment notes that she made dental restorations to certain teeth when no such treatments to the teeth were performed.  In other cases, Lockwood recorded that she used certain treatments on teeth when she actually used treatments that were not reimbursed through Medicaid.  

Lockwood admitted that she used the fraudulent funds for personal purchases.  She pled guilty on July 11, 2012 and was sentenced today.  

The investigation was led by the FBI, the Department of Health and Human Services Office of Inspector General, and the Medicaid Fraud Control Unit under the State of Oklahoma’s Attorney General’s Office.  

Source: Federal Bureau of Investigation

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Owner of Health Care Clinics Fraudulently Billed $3M Sat, 04 Apr 2015 13:50:31 +0000

On November 15, 2012, the US Attorney’s Office for the Northern District of Texas announced that Ovsanna Agopian pleaded guilty to one count of conspiring to commit health care fraud.  Vagharshak Smbatyan, Ovsanna’s husband, was charged in the same case and pled guilty to making false statements to a government agency.  

Agopian and Smbatyan each face a maximum penalty of 10 years in prison and a fine up to $250,000.  Restitution is also possible, but prosecutors have not clarified if they will ask for restitution.  Agopian and Smbatyan are both on bail, and they live in Houston, Texas and Grenada Hills, California.  

Court documents indicate that Agopian operated a business called Euless Healthcare Corporation (EHC) that is located on West Bedford Euless Road in Hurst, Texas.  She also operated Medic Healthcare Incorporated (Medic) on Bonhomme Road in Houston.  EHC was in business from March 2010 to May 2011, and Medic conducted business from October 2009 to May 2011.  

During her plea hearing, Agopian admitted that she conspired with co-defendants to submit false billing to Medicare for diagnostic testing.  The co-defendants were able to falsely claim that the testing was performed by EHC or Medic, when no such tests were performed in the first place.  

The co-defendants are Tolulope Labeodan, Godwin Umotong, Leslie Omagbemi, Munda Massaquoi, and Comfort Gates.  

The investigation was part of the Medicare Fraud Strike Force and the Health Care Fraud Prevention and Enforcement Action Team (HEAT).  The joint initiative was formed in 2009 by the Department of Justice and the Department of Health and Human Services to prevent fraud and prosecute those who commit health care fraud.  

The investigation was led by the HHS-Office of Inspector General, FBI, and the Medicaid Fraud Control Unit under the Office of the Texas Attorney General.  

Source: Federal Bureau of Investigation

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Scam Targeting Women on Dating Websites Sat, 04 Apr 2015 13:50:31 +0000


Women who have been trying to find someone special online already have plenty to watch for, but a new FBI warning now says they should also keep an eye out for blackmailers.  A new extortion scam has begun to target people who are using some of the web's most popular dating websites, and according to the FBI, most of the victims so far have been women over the age of 40.

The FBI says that dozens of people have already fallen for the scam, and more complaints are coming in regularly.  The scam starts when contact is initiated between the woman looking on the matchmaking website and the scammer. 

They begin an online conversation, which may start innocently enough.  However, soon the conversation will take a turn for the sexual once the scammer gains the trust of the victim.  If the woman doesn't initiate the sexual part of the conversation, the scammer will make an attempt to steer the conversation toward sexual topics.  Then, the scammer goes for more information.  They usually attempt to obtain not only photographs (naked or otherwise compromising ones if possible), but also the real name and home phone number for the woman about to be scammed.

At this point, it's very likely that the victim thinks she's about to end up getting a date.  What she gets instead is a link.  That link will take her to a page that shows her photographs (including any intimate or personal photographs that she had given to the scammer), her full real name, her phone number, and text indicating that she is a “cheater.”

The extortion begins after the victim has seen the website link.  In order to have the page taken down, the victim is told, they need to pay $99 to the scammer.  However, in situations where the victims have paid the money, they were told to use difficult to trace services like Western Union—and when they paid, the page stayed up.

The FBI has so far been unable to track down who is creating these extortion scams, but the extensive use of Western Union and MoneyGram services is a pattern that has also been observed with scammers using the “419” or “Nigerian prince” scam.  Because these services are often difficult to trace, the FBI advises that people not use these services to send money to any person that you do not know personally.

This isn't the first time that online scams have targeted dating site users.  In fact, some of these scams can be much worse for their victims than the $99 cheater site scam.  In some cases, online scammers have set up fake dating profiles that allowed them to con people out of thousands of dollars for plane tickets, jewelry, clothing, and more.

According to the FBI, the best way to avoid dating scams online is to be careful about who you're talking to and who you're meeting.  Meet in a public place, and keep in mind that anything you share with somebody online can be shared with anyone else with an internet connection.


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Former Comptroller Stole $53M from City of Dixon Sat, 04 Apr 2015 13:50:30 +0000

On November 14, 2012, the US Attorney’s Office for the Northern District of Illinois announced the Rita A Crundwell pleaded guilty to stealing over $53 million from Dixon, Illinois since 1990.  She admitted that she used the proceeds to fund her quarter horse farming business and buy other personal items.

Crundwell pled guilty to wire fraud and money laundering.  She faces a maximum sentence of 20 years in prison and a fine of $250,000 or twice the gain or loss from the crime.  Prosecution believes she will receive between 15 years and eight months and 19 years and seven months in prison, but the defense estimates lower.  

She has agreed to pay $53,740,394 in restitution to the city of Dixon.  She also agreed to liquidate her assets, and the U.S. Marshals Service has received $7.4 million from auctions of about 400 quarter horses, trailers, vehicles, and a motor home so far.  

According to court documents, Crundwell opened a bank account in the name of Dixon and RSCDA.  She then used her position to transfer funds from the city’s Money Market account to its Capital Development Fund account and other city accounts.  She proceeded to transfer city funds to the RSCDA account and used the funds to pay for private expenses from 1990 to 2012.  

Crundwell was able to hide the nature of the transfers by creating fake invoices to show auditors that the funds were used legitimately.  She informed city officials that budgetary shortfalls occurred because the state was late on tax revenue payments to the city.  

She was eventually caught when a replacement was put into her position when she was on vacation.  The replacement asked for all of the city’s bank statements, and the individual eventually informed the Mayor of Crundwell’s activity.  

Source: Federal Bureau of Investigation

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MoneyGram International Inc Forfeits $100M for Fraud Sat, 04 Apr 2015 13:50:30 +0000

On November 9, 2012, the Department of Justice announced that MoneyGram International Inc agreed to forfeit $100 million after it was accused of wire fraud and failing to maintain an anti-money laundering program.  The company is headquartered in Dallas and provides international money services.  

The Justice Department states that MoneyGram engaged in “mass marketing and consumer fraud phishing schemes.”  Because of the company’s failure to maintain the anti-money laundering program required by the Bank Secrecy Act, they have agreed to forfeit the money and the Justice Department will begin to return the funds to victims through the Victim Asset Recovery Program.  

MoneyGram participated in the scheme from 2004 to 2009 that mostly targeted elderly and other vulnerable consumers.  The scammers posed as relatives of the victims and asked for money.  The scammers falsely promised expensive items and discounted items after the funds were sent through the MoneyGram’s system.  

MoneyGram received thousands of complaints, but they still failed to fire agents that were responsible for the scams.  There were a total of 19,614 complaint reports by 2008.  Because of the company’s failure to maintain its Anti-Money Laundering Program, customers faced fraud totaling about $100 million.  

In April of 2007, the company’s fraud department asked MoneyGram executives to terminate and punish 32 Canadian agents for their fraud.  The sales department disagreed, and the 32 agents continued to receive complaints about fraud.  

Assistant Attorney General Lanny A. Breuer stated: “MoneyGram knowingly turned a blind eye to scam artists and money launderers who used the company to perpetuate fraudulent schemes targeting the elderly and other vulnerable victims.  In addition to forfeiting $100 million, which will be used to compensate victims, MoneyGram must for the next five years retain a corporate monitor who will report regularly to the Justice Department.”

Source: U.S. Department of Justice

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Gold Coin Dealer Committed $4 Million Fraud Scheme Sat, 04 Apr 2015 13:50:30 +0000

At the end of October, 2012, the US Attorney’s Office for the District of Oregon announced that Lawrence H Heim was sentenced to 51 months in prison for defrauding a total of 48 victims out of over $4 million with a gold investment scheme.  

Heim was sentenced by Honorable Marco A. Hernandez, and Judge Hernandez ordered Heim to pay $4,057,003.87 in restitution as well.  

Lawrence Heim was the president of a gold and silver business in Portland Oregon called U.S. Gold & Silver Investments Inc (USGSI) before he was arrested by authorities.  He hosted several forms of media to discuss gold and silver prices as well.  He hosted a radio program in the Portland area, and he also operated a website (called where he provided a so-called “calculation” for gold prices.  

During the scheme, Heim told USGSI customers that he would sell them gold or silver if they mailed or wired investment funds to the company.  Many of the victims were elderly people who wanted to invest in gold and silver with their retirement savings.  

Heim started to fall behind on his coin purchases in 2009 while the value of gold and silver was increasing largely.  It is during this time that he began to operate a Ponzi scheme and use funds from new investors to buy gold and silver coins for current customers.  The scheme failed in 2011 when he could no longer make coin purchases for new customers.  

Greg Fowler, the Special Agent in Charge of the FBI for Oregon, stated: “Ponzi schemes come in all shapes, sizes, and colors—including gold and silver.  Many people have simply trusted that the precious metals market was a safe bet in a down economy.  This case demonstrates that you must always be cautious about how and with whom you invest your money.”

Source: Federal Bureau of Investigation

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Russian Twins Indicted for $7.2M Commodities Fraud Scheme Sat, 04 Apr 2015 13:50:29 +0000

On October 19, 2012, the US Attorney’s Office for the Northern District of Illinois announced that Marat Yunusov and Ayrat Yunusox of Kazan, Russia were charged with eight counts of wire fraud and two counts of commodities fraud.  The two men managed to profit $7.2 million by engaging in manipulative trading with the CME Group’s trading program.  

The indictment indicates that the brothers used the CME Globex electronic trading platform to collect about $7.2 million of profits from the futures commission merchant Velocity LLC.  However, the brothers failed to pay a $7.8 million loss to a separate merchant called Open E Cry LLC.  

The brothers attempted to match their accounts at Open E Cry and Velocity by issuing either a buy or a sell order for one account and then enter an equal by opposite amount of a buy or sell for the other account within seconds.  The brothers purposely initiated the orders towards the back of the month because trading volume was low and they were more likely to match the trade orders.  

They tested the commodities scheme in April of 2010 and managed to match a large amount of trades overnight on June 4, 2010.  They ultimately made it appear that profits covered the losses from another trade.  

Each of the men faces up to 25 years for each count of commodities fraud.  They also face a maximum of 20 years in prison for each count of wire fraud.  There is a maximum fine of $250,000 associated with each count, and restitution is mandatory.  The court may also decide to issue a fine that is twice the loss to a victim or twice the gains for the defendant.  

The sentencing has not yet been scheduled.  The United States is being represented by Assistant U.S. Attorney Sunil Harjani.  

Source: Federal Bureau of Investigation

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Woman Defrauded Nazi Persecution Reparation Program Sat, 04 Apr 2015 13:50:29 +0000

On October 19, 2012, the US Attorney’s Office for the Southern District of New York made clear that Polina Breyter would spend the next 58 months in prison for defrauding the Conference of Jewish Material Claims Against Germany, Inc out of $57.3 million.  

According to court documents, the Claims Conference is a not-for-profit organization that seeks to provide assistance for surviving Nazi persecution victims.  Funds are distributed to “the Hardship Fund” and “the Article 2 Fund,” by Germany, and the Claims Office processes the applications for the disbursements.  

The Hardship Fund provides refugee victims with a payment of $3,500 one time, but Breyter and co-conspirators placed fraudulent applications for many people that were born after World War II and not Jewish.  According to the FBI, Breyter and co-conspirators submitted about 3,839 fraudulent applications.  

The Article 2 Fund provides monthly payments around $400 to victims that now make under $16,000.  Qualified applicants also lived in hiding or used a false identity for at least 18 months, were forced to live in a Jewish ghetto for 18 months, or were placed in a concentration camp for at least 6 months.  The fraud was more complex with the Article 2 Fund because co-conspirators had to create false documents that prove the victim’s prosecution by Nazi Germany.  About 1,112 Article 2 Fund applicants were discovered as fraudulent so far.  

Breyter agreed to file the falsified applications and received payments from other co-conspirators.  For her actions, he was sentenced to prison and ordered to pay restitution of $461,875.65 and forfeit $22,000.  31 people have been charged in the scheme so far.  

Manhattan U.S. Attorney Preet Bharara noted, “Polina Breyter played a central role in a multi-million-dollar fraud scheme perpetrated against an organization whole sole mission is to provide relief to victims of Nazi atrocities.”  

Source: Federal Bureau of Investigation

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