Investigations Newsletter: Contractor to Pay Over $4 Million to Settle FCA Violations

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CEO of Defunct Medical Testing Lab to Pay $1.1 Million to Settle FCA and AKS Case

Jae Lee, the former CEO of defunct Northwest Physicians Laboratory (NWPL), agreed to pay $1.1 million to resolve allegations that he participated in a wide-ranging kickback scheme. NWPL allegedly accepted kickbacks from testing labs MTL and Sterling Healthcare Opco, LLC d/b/a Cordant Health Solutions for the referral of Medicare and TRICARE business. According to DOJ’s press release, the entities described the fees as marketing services, which never actually occurred, in order to conceal the payment of the kickbacks.

In December 2018, MTL agreed to pay $1,777,738 to resolve False Claims Act allegations for its role in the scheme, and in July 2020, Cordant Health Solutions agreed to a $12 million settlement for its role. In May 2021, NWPL, as a corporate entity, was sentenced and ordered to pay over $8 million in restitution jointly and severally with the other defendants. Mr. Lee and MTL’s Vice-President (who also pled guilty) are scheduled for sentencing in March 2022.

Read the DOJ’s press release here

Contractor to Pay Over $4 Million to Settle FCA Violations

Strock Contracting, Inc. agreed to pay $4,752,000 to resolve allegations that it profited from fraudulently obtaining federal contracts intended to benefit service-disabled veterans in violation of the False Claims Act.

According to DOJ’s press release, Strock Contracting recruited a service-disabled veteran to create a pass-through company controlled by Stock Contracting and then directed that pass-through company to submit false certifications of eligibility for contracts reserved for service-disabled-veteran-owned small businesses. This allowed Strock Contracting to profit from federal contracts that should have been awarded to eligible businesses that were service-disabled-veteran-owned.

Read the DOJ’s press release here.

COVID-19 Relief Fraud Updates

  • Steven Jalloul of Dallas, Texas pled guilty this week to one count of engaging in monetary transactions using property derived from unlawful activity for orchestrating a fraud scheme to obtain more than $23 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the CARES Act. Mr. Jalloul, a tax consultant, admitted to submitting 170 falsified PPP loan applications to lenders on behalf of over 160 clients from his tax preparation business, and usually charged his clients a 2-20% commission on any PPP loans the clients received. In order to increase the amount of PPP funds for which his clients’ businesses would be eligible, Mr. Jalloul inflated employee rosters and monthly payroll expenses. Of the 170 PPP loan applications submitted, 97 loan applications were approved, and Mr. Jalloul’s clients were awarded more than $12 million, earning him at least $972,114 in fees. Read the DOJ’s press release here.
  • Sinoj Joseph of Texas was charged with seven counts of wire fraud and three counts of making false statements to a bank for his alleged submission of fraudulent applications for over $3 million in forgivable PPP loans. These applications allegedly contained fabricated payroll records and other fraudulent documentation. Read the DOJ’s press release here.
  • Clark Grant of Massachusetts was charged with one count of wire fraud and one count of false statements on a loan and credit application for allegedly obtaining more than $67,000 in pandemic unemployment benefits while working and collecting a full-time salary as well as for making false statements to a mortgage lender in order to fraudulently obtain a residential mortgage for approximately $410,000. Read the DOJ’s press release here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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