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Category Archives: 43A Fraudulent Schemes Pre-Charge Victories

State v. Mr. K (DMC N. 11324) – Insurance and Medical Billing Fraud – Vacated Suspension of Physical Therapy License at Board Hearing – Arizona Board of Physical Therapy (Complaint No. 12-41):  Mr. K worked as a physical therapist and had submitted various medical bills to assisted healthcare services.  It was alleged that he billed for some services that he did not actually perform.  Once we were involved in the case, we were able to show that his billing practices may have fallen below the standard of ethics, but they were not criminal in nature.  This was true, even though they were claiming he had falsified his records.

We were able to get the case dismissed with an agreement to probation.  As a condition of probation, Mr. K was required to do classes in continuing education, along with monitoring of his billing submissions.  After one year, the probation was lifted and his license was unencumbered.  He was allowed to maintain his livelihood throughout the entire course of his probation.

State v. Mr. M (DMC No. 11444) – Felony Fraudulent Schemes (Counterfeiting $20 Bills), Felony Counterfeiting, Felony Theft & (2 counts) Felony Forgery – Not Charged – Maricopa County Sheriff’s Office investigated (DR#20XXX-XXXXX7).

Maricopa County Sheriff’s Office was called to a CVS Pharmacy located in Queen Creek. When they arrived, they spoke with a manager who sated that Mr. M. had come into the store and utilized a counterfeit $20 bill to purchase a $1 item and then he received $19 in change. They stated that this had occurred to them in the past also. The manager had taken down the license plate number from the video in the parking lot before Mr. M. left. The Officers ran the license plate and then showed up at Mr. M’s residence. Mr. M lived with his parents, and only the father was home when the Police arrived. The father allowed them to search Mr. M’s room, and it was discovered there was a computer, a scanner and a shedder inside the room. Contained in the shredder were several pieces of shredded counterfeit money.

When contact was made with Mr. M, he invoked his right to remain silent. We then became involved in the case and we had Mr. M. sign an Affidavit that he was invoking his right to remain silent if he were to be contacted by Detectives in the future. We also spoke with Detectives about the fact that the computer in the household was a “community computer”, and it was not password protected. Lastly, we pointed out that they had no video evidence of the alleged prior incidents occurring at that CVS and other stores in the surrounding neighborhoods. Eyewitnesses could not pick Mr. M out of any photo line-ups, and he had made no admissions to knowledge of the counterfeit money. Ultimately, the Sheriff’s Detective routed the case to the Maricopa County Attorney’s Office seeking a charge of Fraud Schemes, Theft, and two counts of Forgery. It was also possible that a charge of Counterfeiting could have been tacked on. However, the Maricopa County Attorney’s Office made the decision to “turn down” the case. Mr. M has no criminal record.

State v. Mr. A (DMC No. 9146) – Felony Embezzlement/RICO ($88,000 Misappropriated from Law Firm), Felony Fraudulent Schemes & Felony Theft – Not Charged – Resolved with Civil Settlement – Scottsdale Police Department Investigated (DR#20XX-XXXX2); Maricopa County Superior Court, Civil Division (Case No. CV2008-015240).

Mr. A. owned a collection service business. He contracted with a local Phoenix law firm to conduct their collections regarding overextended accounts receivables. Things were not going well at first, and Mr. A. convinced the law firm to let him take over all of the bookkeeper’s duties. This gave him access to all of the law firm’s bank accounts and he was authorized to sign checks into a bank (cost account) only. Over the course of a two month span, he began transferring all of the law firm’s money into various accounts. He would then use electronic transfers, write checks or use “check by phone” transfers to transfer money to himself. These were monies that he was not entitled to.

In addition, Mr. A. began charging the law firm for overhead incurred while working on the law firm’s accounts. The law firm received no benefit for this and they had no idea that this was going on. In essence, Mr. A. was “padding” the bills. The total amount of loss for the two months totaled $88,000. Once this was discovered, Mr. A. secured our services.

We began negotiating with the lawyer who was working on behalf of the law firm. As we were in Settlement negotiations, they filed a Civil Lawsuit against Mr. A., which included accusations of, among other things; RICO, Theft, Breach of Contract and Breach of Fiduciary Duty. We were eventually able to work out a Settlement with the law firm and they agreed that this appeared to be a situation of a miscommunication and bad bookkeeping practices. They decided that they were not going to seek any criminal charges against Mr. A. Initially, he could have been facing mandatory prison time, however, he has no criminal charges on his record.

State v. Mr. B (DMC No. 12267) – Felony Mortgage Fraud ($140,000), Felony Fraudulent Schemes & Felony Vulnerable Adult Abuse – Not Charged – California Law Firm Investigated.

Mr. B owned a company that would buy houses, remodel them, and then “flip” them. He did this with the help of a partner. He became involved with an insurance agent that sold annuities to her clients. She would convince her clients to break their annuities in order to buy properties that Mr. B. would then sell. Unbeknownst to the clients, and unbeknownst to Mr. B., a $100,000 annuity that would be broken early by a client would have a $25,000 surrender fee to be paid to the insurance agent. When the insurance agent would refer over clients to buy houses from Mr. B., she would include her fee in the price (even though she wasn’t on the real estate documents) and he would send her the money for the property closed.

The alleged victim in this case was an 82 year old gentleman who claimed he did not know about the surrender fee on his annuities, and that he was basically taken advantage of by the insurance agent due to his age. He bought two houses from Mr. B. that were in Arizona while the alleged victim lived in California. One of the houses was being routinely vandalized and having copper and appliances stolen from it, so Mr. B. had one of his workers live in the house for six months (rent free) in order to protect it. The alleged victim was claiming that it was Mr. B. who was having the copper and appliances sold on the side in order to defraud additional funds out of the victim.

When Mr. B. received a threatening inquiry from a law firm in California regarding Mortgage Fraud, Fraud Schemes and Vulnerable Adult Abuse, he contacted us. After reviewing all documents involved in the sale, we then had Mr. B take a polygraph with the following two questions: “Did you work with [insurance agent] to encourage her clients to cash out stocks, annuity, etc. in order to purchase properties owned by your company?” and “Did [construction worker] pay you rent in order to stay in the property that was regularly vandalized?” He answered “No” to both questions, which was “truthful”. In addition, we obtained Affidavits from his business partner and the construction worker who lived in the house. All of this was assembled and sent to the Attorney in California. Working with the Attorney in California, he agreed that this was a civil matter and not a criminal matter. Mr. B. settled for a very small amount of money and was never charged with any crimes.

State v. Mr. W (DMC No. 13130) – Federal Bank and Wire Fraud ($1,000,000), Felony Fraud Schemes ($450,000 Misappropriated from Wire Amount), Felony Money Laundering, Felony Sale of an Unlicensed Security and Felony RICO – Not Charged – FBI Investigated.

Mr. W had two co-defendants that were in the process of trying to raise money for a new energy company venture. They had a primary investor out of China who was to wire $1 million to a bank in Singapore to begin the investment. The idea was that Mr. W and the two co-defendants were to purchase AAA rated “paper,” which they would buy at ¢.85 and sell at ¢.92. By doing these securities transaction sales, they were attempting to raise $5 billion for the energy startup company. These types of transactions are illegal in the United States.

After the initial $1 million wire was sent out, $100,000 was immediately misappropriated by one of the co-defendants. The other co-defendant took $450,000, and the remaining $450,000 was split between all three co-defendants in order to cover past expenses.

The FBI became involved on behalf of the alleged victim, and they issued a subpoena for Mr. W to testify in a Grand Jury proceeding in the New Jersey District Court. We then became involved and began talking to the FBI agent and the Assistant U.S. Attorney General involved in the case. We were able to work with them in order to show that one of the other co-defendants should be the actual target of the investigation. We ended up providing the documents that they were seeking, and we also made Mr. W available for interviews. Mr. W was never charged with any crimes, and he has no criminal record.

State v. Mr. G (DMC No. 11956) – Felony Securities Fraud ($1,747,000), Felony Bank and Wire Fraud, Felony Fraudulent Schemes and Felony Money Laundering – Not Charged – Private Law Firm Investigated and Resolved with Civil Settlement.

Mr. G was the manager of an LLC that bought foreclosure homes and flipped them for profit. The agreement was the LLC was to pay him 10% of the net profits. He had been paid approximately $180,000 – $200,000 from the LLC over time (roughly $2,000 per house sale). In addition, he had borrowed $30,000 to $35,000 from the LLC without their permission and had used landscapers and other contractors to perform work on his personal house without permission.

The LLC had secured a $400,000 and a $600,000 loan/investment from two individuals. These people were promised a 50/50 split of all of the profits of the sales. Ultimately, these people were never paid their money and they secured a private law firm to attempt to recover their money prior to filing a civil suit or contacting the authorities. The allegations were that the LLC engaged in a Sale of Unlicensed Securities, pursuant to A.R.S. 44-1801 (26). Also, Securities Fraud was alleged under the Arizona Securities Act, per Arizona Revised Statute 33-1991. That related to the $1 million Sale of Securities (i.e., the loan/investment) that was never paid back. In addition, the victims were entitled to a recovery which included interest, cost and attorney’s fees under Arizona Revised Statute 44-2001. This brought the total amount of loss to $1,747,017.

We became involved and we began working with the civil law firm, and the attorneys who represented the two principals of the LLC. Ultimately, the case was resolved with a civil settlement in which Mr. G paid the lowest amount of the three potential co-defendants. Because Mr. G had a prior felony conviction, it was very important to keep him from being charged. If he were to have been charged and found guilty of these crimes, the mandatory minimum would have been well over 10 years in prison due to the amount of loss and his previous felony convictions.

State v. Mr. K. (DMC No. 13080 and DMC No. 11324) – Felony Medicare Insurance/Benefits Fraud ($1,500 Misappropriated from Medicare), Felony Fraudulent Schemes and Felony Forgery – Not Charged and Physical Therapy License Not Revoked at Professional Hearing – Arizona Board of Physical Therapy Investigated.

Mr. K worked as an independent homecare contractor regarding services for physical therapy. Mr. K allegedly billed Medicare for 15 home visits on a client in which he only did 7 visits. He was accused of signing the patient’s name on the visit confirmation slips for all 15 visits. He was eventually contacted by the Arizona Board of Physical Therapy regarding allegations of Medicare Insurance Fraud, Fraud Schemes, and Forgery.

We became involved when we represented Mr. K in front of the Arizona Board of Physical Therapy. Discrepancies in the record were clarified and Medicare was made whole. In the end, Mr. K was not charged with any criminal charges and he was allowed to keep his physical therapy license.

State v. Mr. B (DMC No. 13979) – Felony Embezzlement ($1,855 Misappropriated from Educational Association), Felony Fraudulent Schemes and Artifices and Felony Theft – Not Charged –Bisbee Police Department Investigated (DR No. B20XX-XXX2).

Mr. B worked for four years in the Cochise County School Superintendent’s Offices as a grants administrator and educational services agency employee. While he was there, he formed a separate Educational Association in which received dues from other County Superintendent Offices. He originally opened an account at Bank of America in order to deposit monies into that account. He collected approximately $1,855 to start this Association.

He then dissolved the Association with the Corporation Commission fairly quickly, He then transferred the remaining money to a different bank’s account and he rolled it into a new private Educational Foundation. He then closed the original B of A account. He was subsequently contacted by the Bisbee Police Department to discuss possible Embezzlement/Fraud Schemes and Thefts allegations.

Mr. B then contacted our office and we immediately made contact with the Cochise County School Superintendent’s Office. We were able to demonstrate that the one Foundation was properly dissolved and that the monies were then rolled into a separate/new Educational Foundation. There was some debate about whether this could legally be done, and we ultimately agreed that Mr. B make the full restitution in exchange to resolve this matter civilly. The County Superintendent’s Office agreed, along with the Bisbee Police Department, and restitution was made in full. No charges were ever brought against Mr. B and he has no criminal record.

State v. Mr. T (DMC No. 13272) – Felony Benefits Fraud ($2,000 Misappropriated from AHCCCS and SNAP) and Felony Fraudulent Schemes – Not Charged – Arizona Attorney General’s Office and Department of Economic Security Investigated (Case No. 20XX-XXXXX3).

Mr. T had been unemployed for 16 months due to a degenerative disc disease and he had been receiving medication and treatment. He sold his home in Colorado and moved to Arizona. When he arrived, he applied for benefits under AHCCCS (Arizona Health Care Cost Containment System) and for food stamps under SNAP (Supplemental Nutrition Assistance Program). When he applied, he failed to disclose that he had one bank account with $3,000, a second one with $17,000, and a third one with $88,000 (which was the result of the sale of his home in Colorado). He also applied for Social Security Disability benefits and was denied.

An Investigator with the Department of Economic Security contacted him about these other accounts and an investigation was opened. Mr. T hired our firm and we then became involved and we pulled all the documentation he had filled out when he originally applied for benefits. We were able to show by way of a neuropsychological evaluation that Mr. T had dyslexia, a somewhat lower I.Q. and did not fully understand the forms he was filling out. Ultimately, DES also got the Attorney General’s Office involved, however, we were able to convince both of them not to file any charges against Mr. T. Originally, he was facing a very serious felony, but he now has no charges on his record.

State v. Ms. G (DMC No. 13474) – Felony Benefits Fraud ($13,700 Misappropriated from AHCCCS) and Felony Fraudulent Schemes – Not Charged – Department of Economic Security and Family Assistance Division Investigated.

Ms. G only had a high school education and was working part-time at a Subway sandwich shop as a sandwich maker. She had multiple health issues which included Type I diabetes, cystic fibrosis, depression, asthma, PTSD, etc. Many of these ailments rendered her partially disabled and she needed assistance from AHCCCS (Arizona Health Care Cost Containment System) in order to received medical care and medication.

While applying for AHCCCS benefits, she did not list all of her income. She omitted the fact that she had a $28,000 annuity/life insurance policy that was left to her by her grandfather. For several years while she was on AHCCCS, she made several withdrawals totaling $13,700, which was a violation of AHCCCS rules and the statute under A.R.S. 23-785. Ms. G suddenly received a letter from DES and the Family Assistance Division asking for an interview as they were conducting an investigation triggered by that annuity.

Once we became involved, we contacted the Investigator for DES and began revealing her total income. We also showed that these draws (spread out over several years) would not have affected her eligibility to receive AHCCCS benefits. Ultimately, AHCCCS agreed to allow her to reapply for benefits with the full disclosure of the balance of the annuity being revealed. Originally, she could have been charged with a very serious felony and lost her medical benefits. However, she was never charged and was able to continue getting her medical treatment and her medications.

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