The DOJ is increasingly using a “data focused approach” to identify economic crime and corporate misconduct, according to a DOJ official.  In remarks to the 6th Annual Government Enforcement Institute, Deputy Assistant Attorney General Matthew S. Miner recently shared that using data analytics to identify fraud improves efficiency, expedites case development, and makes program enforcement “more targeted.”

While Miner indicated that data analytics are being utilized across the DOJ’s white collar enforcement efforts, he pointed to the healthcare industry and financial sector as two such targets of the DOJ’s data-driven enforcement approach.  The DOJ has already successfully used Medicare claims data to identify fraud.  That success is attributed, in part, to the DOJ’s healthcare data analytics team which analyzes the Centers for Medicare and Medicaid Services’ payment database for health care fraud activity and trends.  The financial sector—specifically the commodities and securities arena—represents an expanding “area of focus” for the DOJ’s data-driven enforcement.  Miner indicated that the DOJ uses trading data to identify indicators or anomalies that are suggestive of market manipulation and other fraudulent activity.
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On Wednesday, March 30, 2016, the U.S. Supreme Court ruled in Luis v. United States, No. 14-419, slip op., that the pretrial restraint of legitimate, untainted assets needed to retain counsel of choice violates the Sixth Amendment. Accordingly, the Court overturned an Eleventh Circuit ruling permitting the government to prevent a criminal defendant from using funds earned outside the scope of alleged crimes to hire private defense counsel.
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DOJ has announced that it will increase efforts to investigate and prosecute criminal actions under the False Claims Act.  In a recent address to the False Claims Act plaintiffs’ bar, Leslie R. Caldwell, Assistant Attorney General for the Criminal Division, described the Criminal Division’s recent successes in prosecuting healthcare and government procurement fraud and its

The owner and operator of a Miami home health care company recently was sentenced for her part in a $6.5 million Medicare fraud scheme, after falling into the cross-hairs of the federal government’s Health Care Fraud Prevention and Enforcement Action Team (“HEAT”). Cruz Sonia Collado owned a home health care company, Nestor Home Health, in Miami. According to the DOJ, Collado paid kickbacks and bribes to patient recruiters for referrals to Nestor Home Health for home health and therapy services that were medically unnecessary or were never provided. Over a nearly 4 year period, between March 2009 and January 2014, Medicare paid more than $6.1 million—of the $6.5 million claims submitted—to Nestor Home Health for home health services. Collado was sentenced to 75 months in prison, followed by three years of supervised release. She also was ordered to pay over $6.5 million in restitution. The Department of Justice (“DOJ”) and Department of Health and Human Services (“HHS”) formed HEAT in an effort to help prevent waste and crack down on abuse of Medicare and Medicaid programs. And the group of has been active.
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A federal grand jury in San Francisco indicted FedEx Corporation, FedEx Express, and FedEx Corporate Services, Inc. (collectively, “FedEx”) for its role in distributing controlled substances and prescription drugs for illegal internet pharmacies.  The 18-count superseding indictment charges FedEx with conspiring with two internet pharmaceutical rings (internet pharmacies, fulfillment centers, doctors) to distribute controlled substances such as Ambien and Diazepam on invalid prescriptions, or based only on the customers’ completion of an online questionnaire, without examination by a physician.  The Government alleges that FedEx knew that it was delivering drugs to dealers and addicts, some of whom overdosed and died, and some of whom were underage. If convicted, FedEx could pay a fine of up to twice the gross gains derived from the offenses, alleged to be approximately $820 million.  The criminal proceedings will help answer when, if ever, the Government can deputize shipping companies to police illegal activity in internet commerce.
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Enforcement officials from the U.S. SEC’s Chicago Regional Office and the U.S. Attorney’s Office for the Northern District of Illinois gathered to discuss their enforcement initiatives at the “SEC & DOJ Hot Topics 2014” program on February 11, 2014.  Local regulators reinforced the theme that in 2014, the SEC will continue to adopt enforcement tools that historically have been used by their counterparts in criminal law enforcement.

The program was among the first public speaking engagements by David Glockner in his new role as director of the SEC’s Chicago Regional Office.  Mr. Glockner was appointed as the Chicago Regional director in November 2013, following an impressive, decades-long career in the Chicago U.S. Attorney’s Office, including 11 years as the criminal division chief.  Joining Mr. Glockner on the panel were regulators Thomas Dunn, a Financial Economist in the SEC’s Division of Economic and Risk Analysis, and Julie Porter, Chief of the Financial Crimes Division at the Chicago U.S. Attorney’s Office.

In discussing the SEC’s 2014 enforcement priorities, Mr. Glockner noted that the economy seems to be “between major financial crises” at the moment, which presents an opportunity for the SEC to set its own agenda – rather than reacting to various market failures.  In setting this agenda, Mr. Glockner warned that companies should expect the SEC to be present in as many of its different areas of regulatory responsibility as possible.  He noted that even activities that have not garnered much attention from the SEC in the recent past may now fall under scrutiny, especially if there is a high potential for misconduct in a previously overlooked area.  He specified that current areas of interest include: (1) accuracy of books and records, earnings reports and investor communications; (2) municipal securities / public pensions; and (3) utilizing staff exams to conduct targeted reviews of risk-based areas.
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