Jacksonville Criminal Lawyer Blog

The U.S. Department of Justice recently announced criminal charges against 94 people relating to Medicare and Medicaid fraud which is reportedly the largest health care fraud sting in U.S. history, according to an article on SFgate.com. The officials said the investigation and charges span seven states and involve more than $251 million in false Medicare and Medicaid claims.

Medicare or Medicaid fraud typically involves a doctor or other health care provider seeking reimbursement through the government program for medical supplies or medical treatment that was either unnecessary or never provided to a patient. In these recent cases, the subjects of the investigation are suspected of submitting false claims for physical and occupational therapy, home health care and other treatments. The federal government has recently discussed an increased focus on these cases and created a task force to investigate Medicare/Medicaid fraud in various states. Florida is reported to be one of the prime focuses of the task force. The government claims that health care fraud costs the country billions of dollars each year.

A recent report by the U.S. Department of Justice, Bureau of Justice Statistics, shows that identity theft, also referred to as financial theft, crimes increased as of 2007 when the most recent statistics were compiled. According to the report, 7.9 million households, or 6.6%, report that at least one member was a victim of some type of identity theft in 2007. That was a major increase over the previous two years.

The Bureau defined identity theft as the unauthorized use or attempted unauthorized use of a credit card or other financial account or misuse of personal information. The most common type of identity theft is the unauthorized use or attempted unauthorized use of one's credit card. The average loss incurred by victims of identity theft was $1,830 in 2007 according to the report.

In a recent asset forfeiture case involving a client of the criminal defense and litigation law firm of Shorstein & Lasnetski, LLC, the state attorney's office in South Florida agreed to return approximately $2.5 million of forfeited funds to the client, which constitute approximately 90% of the funds originally seized by the state.

In this case, Shorstein & Lasnetski's client was a legitimate business in South Florida. The company was operating normally when the president learned that its main operating account had been frozen by law enforcement officials. The company was constantly ordering merchandise and paying vendors so that operating account was crucial for the normal operation of its business on a daily basis. However, with no notice of any kind, the state severely handicapped the business by seizing, and freezing, that account. The terms of the seizure allowed funds to be deposited into the bank account, but no money could be taken from that account. As a result, the company was at risk of bouncing checks to customers and vendors and was unable to make the regular payments required to make payroll and run the business.

After the initial sabotage of the company's bank account, we learned that the state was accusing the company and its president of money laundering and money structuring. Money laundering occurs when a person or company obtains money that comes from an illegitimate source (such as drug money) and runs that dirty money through a business and mixes it with the business's legitimate stream of income in a bank account in order to hide the source of the money, or clean it. Money structuring occurs when a person or company receives cash in excess of $10,000 and breaks that cash into lesser amounts to avoid the financial reporting requirement. When a business receives cash in an amount greater than $10,000, that business is required to prepare and file a form 8300 which provides identification information about the person providing the cash. The purpose of this requirement is to provide information to the government about people dealing in large amounts of cash so they can investigate the source of the cash. If a company receives $12,000 in cash from a customer and deposits $7,000 one day at one bank branch and $5,000 another day at a different branch, that is money structuring if it is done to avoid the financial reporting requirement.

In any case, the Shorstein & Lasnetski, LLC client was a business that sold its merchandise internationally. It sold tens of millions of dollars worth of products yearly to customers all over the world. The state was tipped off by the customer's bank that the client was receiving cash in varying amounts under $10,000 at bank branches in different locations. Based on this evidence, the state decided to seize the client's entire bank account without regard for how much money was in the account and what that might do to the business.

After a long course of litigation, it was determined that the state had very little to support the seizure and attempted forfeiture of the client's bank account. The state made blanket allegations of money laundering but could not provide any evidence that the seized funds came from any illegitimate or illegal source or that anyone in the company was aware of any drug or other illegal activity by any customers. This, however, is a requirement if the state seeks to prove that the company was laundering money. The state also made blanket allegations of money structuring based solely on the denominations of the money deposited in the company's bank account without any evidence of who deposited the money and whether the various deposits came from separate customers and transactions which would be a defense to structuring. Additionally, the state did not consider that the company had met the majority of its reporting requirements with regard to the seized funds.

For a majority of the $3 million dollars seized by the state, it was shown that the state could not prove it had any connection to drug money, money laundering or money structuring. For the small remainder of the funds seized, there was evidence of deposits into the company's bank account that were just under $10,000 but no evidence that the deposits were broken down from amounts greater than $10,000 with the intent to avoid the reporting requirements. It was clear that the state intended to strong-arm the company into a quick settlement by seizing and attempting to forfeit as much money as possible thereby crippling the company and scaring it into thinking the state had a valid money laundering and money structuring case. This appears to happen often in South Florida. However, fortunately, the company was run well enough that it was able to survive the temporary seizure of its operating account and the longer but still temporary seizure of the almost $3 million in that operating account. Once the company decided to put up a fight and shine a light on the state's (lack of) evidence, it was determined that the state had significant holes in its case and theory. The case was ultimately resolved favorably with the large majority of its money was returned.

However, at the end of the day, it was very troubling to see a state law enforcement agency go after a legitimate business in such a way with so little evidence of any wrongdoing. We imagine this probably happens often, and when it happens on a smaller scale with less money involved, the companies probably settle the forfeiture action quickly as it may be easier and more cost effective than fighting the forfeiture for a year or two. In other words, the government is probably often successful in squeezing money out of legitimate companies who settle on unfavorable terms because they are too worried about the potential consequences, need to settle to keep their business running or decide not to incur the expense of litigation for a year or two to fight the government.

The federal government recently announced the results of a concentrated effort to arrest, prosecute and seek financial penalties from people across the country for financial crimes, including a specific emphasis on mortgage fraud cases. As we have stated several times on our criminal defense lawyer blog, the federal government (and the local state attorney's office to a lesser extent) has significantly increased its focus on mortgage fraud and other financial crimes cases in light of the drastic decline in the value of real estate and the bailouts of financial companies. According to the government's press release, the government's Financial Fraud Enforcement Task Force (which is responsible for criminal investigations and civil enforcement of mortgage fraud and other financial crimes cases) has made 485 arrests over the last few months that relate to more than $2.85 billion in losses.

Based on comments by the Obama administration and the fact that mortgage fraud, real estate issues and bank problems continue to be hot topics in the news, we can expect the government to continue to focus its efforts and resources on mortgage fraud and other financial crime cases.

Several Employees of United Directories, a company located in Jacksonville Beach, Florida, were indicted in federal court for allegedly defrauding businesses out of more than $400 million by allegedly sending fraudulent bills for Yellow Pages advertisements. Federal law enforcement officials said United Directories and its employees sent the false Yellow Pages advertisement bills of several hundred dollars each to more than 100,000 companies across the country over a four year period.

Two of the charges include mail fraud and money laundering. The federal government will charge someone with mail fraud any time a person is alleged to have used the mail to commit or facilitate fraud. Using the mail as part of a scheme to defraud confers jurisdiction upon the federal government in a criminal case. Money laundering involves taking money that is known to come from illegal activity or an illegal source and mixing it with legitimate money in an attempt to conceal the source of the money, or clean it. When this kind of money is involved in an alleged fraudulent scheme, the potential penalties can be quite severe.

Recent statistics show that arrests and prosecutions for white collar crimes have markedly increased in the U.S. as of 2009. For instance, on a month to month basis, white collar crime prosecutions increased by an average of 8.8% in 2009 from the prior year and almost 20% from five years ago.

Two Florida districts were among the federal districts with the largest number of white collar cases per capita, but those were the Southern District and the Northern District. Jacksonville is in the Middle District of Florida. In Federal District Court cases, bank fraud was the most common lead charge. Wire fraud and mail fraud, which can consist of any number allegedly fraudulent activities, were the second and third most common lead charged.

Law enforcement authorities in Jacksonville and throughout Florida made several arrests of convenience store owners for alleged food stamp fraud according to an article on Jacksonville.com. The article indicates that at least four Jacksonville convenience store owners were arrested for food stamp fraud relating to the Ethio Shell station and the M&Y Food Store and at least 17 more people were arrested across the state. The arrests were apparently part of an ongoing undercover operation into alleged food stamp fraud with more arrests likely according to the article.

The food stamp system in states across the country, also called the Electronic Benefit Transfer system, authorizes people to purchase certain items from stores that are authorized to accept food stamps. In the past, the food stamps were actual paper coupons, but now the system has been modernized so that people in the food stamp program get a card that looks like a regular credit or debit card.

Traditional food stamp fraud involves people lying on their application for food stamps and receiving the benefits when they were not entitled to receive them. However, in this case it appears that the Florida Department of Law Enforcement (FDLE) was looking into a different kind of possible food stamp fraud. Because food stamps are only permitted to be used for certain merchandise, it is against program rules and the law for food stamp recipients to use, and store owners to accept, food stamps for unauthorized items such as liquor, cigarettes and prescription drugs.

In this case, the FDLE is apparently alleging that store owners accepted approximately $3.5 million in food stamp benefits payments last year for unauthorized items and also skimmed cash from those food stamp transactions. The FDLE apparently used undercover officers to go into the various convenience stores and use the food stamps card to buy the unauthorized items and look for improper skimming by convenience store owners.

Based on the tone and substance of a recent speech and press release from Eric Holder, the federal government plans to step up investigations and prosecutions of medical professionals for health care fraud. Mr. Holder made it clear that the government considers health care fraud one of the country's "most destructive" and "widespread" challenges. As a result, the federal government has created a couple of task forces specifically conceived to deal with health care fraud cases. Mr. Holder is also asking state and local law enforcement agencies to assist the federal government in making health care fraud cases and make their own cases.

Health care fraud, also referred to as Medicare or Medicaid fraud, can take several forms. Some of the more common accusations of health care fraud involve claims that doctors are charging the government for medical services or equipment that were not necessary or doctors are charging the government for medical services or equipment that were not provided. Investigators will look for what they consider to be excessive or unusual billing practices when investigating health care fraud cases.

According to the government, approximately $60 billion in public and private health care spending is lost each year to health care fraud. As a result, the government is increasing its budget to fight what they perceive to be health care fraud. In 2010, the federal government increased the health care fraud budget from $200 million to $300 million. As expected, health care fraud cases have increased. In the six months prior to the speech and press release, 60 health care fraud cases were filed and over 200 people were charged with health care fraud related crimes.

When the government focuses on a particular issue, they will pump more money into enforcement and increase arrests and prosecutions. Often times, the wide net cast by the government to make these cases crosses the line between illegal fraud and honest mistakes and aggressive but legal business practices.

A Jacksonville, Florida man was arrested for bank fraud, according to an article on News4Jax.com. The article indicates that the suspect was getting assistance from bank employees who provided the suspect with ATM and PIN information. The suspect then allegedly would deposit fraudulent checks through the bank ATM's and withdraw the cash before the bank realized the checks were not valid. Jacksonville police estimated that the suspect took more than $300,000 in the scheme.

We have seen several of these kinds of fraud cases along with similar cases involving fraudulent checks and ATM cards. While these types of schemes do exist, they are not always easy to prove. People on juries expect that ATM machines have surveillance cameras and checks have fingerprints. They expect to see concrete proof of who was involved. However, those important elements of proof are often missing from these investigations. Each case needs to be analyzed to see exactly what can be proven. It is one thing to prove that the bank suffered a loss but quite another to prove exactly how it happened and who was responsible. The money and customer information that are involved in these cases often pass through several hands. It is up to the police and the state to prove beyond a reasonable doubt which of those people are responsible for the crime.

Federal law enforcement officials arrested 26 doctors, nurses and other health care providers in Miami, New York and Detroit for Medicare fraud according to a recent article. We are also aware of similar arrests made recently in the Jacksonville, Florida area. According to the article, the alleged Medicare fraud was committed in several ways. Medicare fraud typically involves a doctor or other medical provider billing Medicare for services that were never performed or required, billing for unnecessary medical equipment or billing at an excessive rate.

In these cases, the suspects allegedly committed Medicare fraud by billing for expensive shoe inserts while providing a much cheaper version to the patients, billing for expensive treatments that were not medically necessary, submitting old ultrasound readings that were found at another doctor's office and billing for expensive home-care visits for homeless people or people who were paid to fake symptoms. The article indicates that the total amount of the Medicare fraud cost taxpayers approximately $16 million.

Several times, we have discussed the trend we have seen towards more federal investigations and arrests in mortgage fraud cases in Florida and Jacksonville. Federal authorities are responding to the tremendous meltdown in the housing markets and numerous mortgages that have gone unpaid. In many local U.S. Attorney offices in Florida, mortgage fraud cases used to occupy a relatively small percentage of the caseload. However, since the mortgage and housing crisis, some offices in Florida have so many mortgage fraud cases that all of the prosecutors have one or more of them.

The trends towards increased federal prosecution of mortgage fraud cases certainly includes the Jacksonville, Florida market. According to a recent article on News4Jax.com, there were twenty-four recent mortgage fraud related arrests in Jacksonville. There were over one hundred such arrests throughout Florida. Florida is obviously a major target for mortgage fraud related criminal cases due to the sheer volume of real estate and real estate transactions in the state. For some reason, many people consider Jacksonville the number one city in Florida for mortgage fraud.

However, the crime of mortgage fraud is often not black and white like some other crimes. What one prosecutor or FBI agent calls mortgage fraud, someone else may call good business or a misunderstanding on behalf of one of the parties to the mortgage transaction. Whether a transaction is a mortgage fraud crime or not may depend on what disclosures were made, whether verbal or in writing. There are often honest and legitimate differences of opinion between what one side considers a legitimate way of conducting business and the other side considers a serious felony crime. When law enforcement casts the net of arrests so wide so quickly, it is certainly likely that many of these cases fall on the legitimate business side of the line.

I read a good article on identify theft from the Miami paper. The article discusses how the crime of identity theft is not only becoming much more prevalent, but is also becoming harder to detect. This is the case in Florida and throughout the country.

The following are some of the more interesting points made in the article. Only 1 out of every 700 people who commit identity theft is ever arrested. When you consider that identity theft is often a difficult charge for prosecutors to prove, the percentage of people who are actually convicted of identity theft is quite a bit lower than the 1 in 700 figure. Additionally, the effects of identity theft can be extremely onerous on a person. However, those effects are not always immediately apparent like with other crimes. The article noted that on average, a person victimized by identity theft does not realize he/she is a victim of identity theft until a year after the actual theft. One of the best ways to stay diligent and reduce this lag time is to check your credit reports at the three major credit reporting agencies (Equifax, Experian and Transunion) at least once a quarter. Finally, the author of the article illustrates how easy it is for skilled hackers to gain access to other people's information. However, most people and businesses fail to appreciate the risk of a compromised network and do not take adequate security measures. This only exacerbates the problem of more identity thefts and fewer detections of identity thefts.

Federal agents raided dozens of doctors' offices and homes during investigations into alleged Medicare fraud. As part of the government's effort to reform health care and save money, the federal government is focusing on Medicare fraud and what they say are millions of dollars that are fraudulently taken from the government pursuant to the Medicare laws. The recent raids occurred in Houston, New York, Boston and Louisiana. In Houston alone, thirty-two indictments were recently unsealed charging $16 million in Medicare fraud claims.

Medicare fraud can be committed in various ways, but it often involves a doctor or someone in a doctor's office billing Medicare for supplies that were not medically necessary and/or never provided to the patient. Under the Medicare laws, when a doctor prescribes a medical product, such as a wheelchair, to a patient, the doctor has a right to reimbursement from the government. In this case and other cases of Medicare fraud, the government alleges that the medical supplies were unnecessary and/or the medical supplies were never given to the patient and the doctor pocketed the reimbursement money. In this case, wheelchairs, arthritis kits and tube feeding supplies were the most common supplies that were the subjects of the alleged Medicare fraud.

Due to its relatively large elderly population, Medicare fraud is a significant issue in Florida. With the publicity surrounding health care reform, wasted money in the health care industry and the enormous tax burden on the public, it is likely that the federal government and state law enforcement in Florida will continue to investigate doctors for Medicare fraud.

Not according to a recent survey. Those survey results indicated that women are more negatively affected by identity theft crimes than men. Affinion Security Center surveyed 808 households and found that women are 26% more likely to be victims of identity theft than men. Additionally, on average, women lose more money than men when they are victims of identity theft.

If you have been the victim of identity theft or suspect that your identity and/or financial information have been compromised, there are steps you can take to prevent the theft or limit the damage. Many people who have been victimized by identity theft will not know it until much later unless they actively check their credit status. You can learn more about the steps you can take to detect identity theft and limit your exposure here.

Under the Obama Administration, the Department of Justice has indicated an increased focus on mortgage fraud and other white collar crimes. We have discussed this marked increase in investigations and prosecutions of various white collar crimes in previous blogs here , here and here. However, a recent press release from the U.S. Department of Justice further emphasizes the point that mortgage fraud and other white collar crimes remain high on the government's list of priorities.

According to the press release, the government is currently investigating more than 2100 mortgage fraud cases, which is an increase of 400% from five years ago, and the government has doubled the number of agents investigating such crimes.

On the Shorstein & Lasnetski, LLC criminal law blog, we have discussed on several occasions the trends we have noticed with federal investigations and prosecutions of various crimes depending on what seems to be the prevailing issues of the day. One trend we have noticed recently is the increased focus by federal law enforcement officials on mortgage fraud crimes. This is obviously due to the massive collapse of the housing market and the number of foreclosures that resulted.

To further underscore this point, federal prosecutors in Florida have called Florida "ground zero" for mortgage fraud cases in the United States and are organizing their resources accordingly, according to a recent article on the Tampa, Florida news website. The Tampa, Florida article indicates that federal law enforcement officials in that area expect to have approximately 100 mortgage fraud cases charged or under investigation by the end of 2009. Because of the long time it takes to investigate and prosecute mortgage fraud cases in federal court, the U.S. Attorney for the Middle District of Florida said he expects each of his 105 assistant U.S. attorneys to handle the added workload.

We have seen similar articles and other evidence of an increase in mortgage fraud investigations and arrests in Jacksonville and other areas of Florida. We wonder if casting such a wide net for these cases and employing the efforts of law enforcement officials and prosecutors who may not have the experience handling mortgage fraud cases will result in a number of innocent people being caught up in this effort. We also wonder if the line between aggressive but legitimate business decision-making and criminal conduct will get blurred by such large scale investigative methods.

In any case, we will keep a close eye on the number, character and quality of mortgage fraud arrests and cases that are made out of Jacksonville, Florida and other areas of Florida and do our part to make sure those people who may have made an honest or legitimate business mistake are not categorized with anyone who can actually be proven beyond a reasonable doubt to have truly committed mortgage fraud.

The FBI is increasing its efforts to fight mortgage fraud, according to an article on Foxnews.com. The article indicates that the FBI is employing agents to work undercover and using wiretaps to investigate mortgage fraud activity.

In a prior blog post, I noted how federal law enforcement officials seem to shuffle their resources into different areas depending on the recent trends and media coverage. For instance, after 9/11 the FBI took a significant number of federal agents from various departments and redirected them to address immigration and terrorism related issues. More recently, after the economy began its downward spiral, the FBI has focused more on white collar crimes such as securities fraud and mortgage fraud. This article seems to confirm that the FBI remains focused on mortgage fraud activity, which is consistent with current events and news stories which are also focusing on the housing market, foreclosures and related financial crimes.

This article was posted at elamb.org to help expose a scam to get corporations to pay $150 for nothing. The scam involves a letter that is sent to corporations across the country that seems to indicate that corporations are required to file the minutes of their annual corporate meetings with the relevant state department, and the company sending the letter, Corporate Compliance, will file the minutes for the $150 fee. The letter makes it seem like a company is violating the law if they do not file their corporate minutes with the state.

In fact, in Florida, corporate minutes do not need to be filed with the state. The company maintains them. You can go to the Florida Department of State website to learn more about what companies are required to do and what documents are filed by Florida companies. So, in effect, this Corporate Compliance scam is asking for money for nothing with a letter that appears official. I would guess that a lot of people who would receive such a letter on behalf of companies throughout Florida are not clear as to the filing obligations of their company. As a result, they may assume this letter is legitimate or just request a check from their company to comply with the letter out of an abundance of caution.

However, if you receive such a letter, the better practice is to do some research to see if what they are asking is legitimate. Sometimes, it is just a matter of doing a google search for the company. In this case, this would reveal that Corporate Compliance is a shady company and that others have been the victim of this scam.

The Identity Theft Resource Center (ITRC) recently reported that data breaches increased by 47% from 2007 to 2008. Data breaches commonly involve unauthorized access to identification and/or financial information that is stored on a company's computer or network. It can result in severe financial penalties and irreparable damage to a company's reputation.

The ITRC has also put together a guide for small and mid-sized businesses that contains steps they can take to reduce their exposure to data breaches and identity theft. The guide can be found here. Some of the highlights include: determining the data the company needs and eliminating all other data from the company's files/network, storing paper files and disks with sensitive information in a locked room and limiting access to that room, implementing proper shredding procedures, minimizing the number of places or computers where financial information is stored, encrypting all sensitive information that is sent over the Internet, ensuring that employees use responsible computer passwords that are not easy to detect and limit access to those passwords, discontinuing the storage of sensitive information on laptops to the extent possible and establishing confidentiality and security procedures and training employees accordingly.

The Federal Trade Commission (FTC) keeps a database of the various business and fraud-related complaints made by people in the U.S. to various entities. In a recent report, the FTC indicated from where those complaints came and the nature of those complaints. There were over 1.2 million complaints documented by the FTC in 2008, and 52% of them were related to fraud. Of those fraud-related complaints, identity theft was clearly the most complained of activity. Specifically, credit card theft was at the top of the list for identity theft-related activity.

Florida ranks third in the U.S. among the states in per capita rate of identity theft complaints and ninth in total overall complaints. This comes as no surprise as Florida has a high population of senior citizens who are often targets of fraud. However, it was notable that email is now by far the preferred method of initial contact for those who are attempting to defraud someone. The fraud complaints revealed that the victims were initially contacted by email 52% of the time and by phone only 7% of the time.

Those of us who have been working in criminal law since the 1990's (or earlier), before the Internet was popular and widespread, recall boiler rooms and telemarketing schemes that were implemented to defraud the elderly and others. Now, it seems as if people have leveraged the relative ease of use and access and anonymity of email and the Internet to attempt schemes to defraud.