Nine Defendants in Telemarketing Fraud Scheme Face Jail Time, $55 Million in Fines and Restitution
On August 18, 2008, nine defendants in an ongoing OIG investigation of a major international telemarketing fraud scheme were sentenced to a total of 36 years in prison, 27 years' supervised release, and more than $55 million in fines and restitution.
The nine were part of a scam in which callers posing as representatives of a bogus U.S. lottery purportedly sanctioned by the Department of Commerce, told victims they had won multimillion dollar cash prizes. To claim the winnings, victims were instructed to wire money to various locations in Costa Rica, supposedly for insurance and fees. Investigators have so far identified transfers of more than $30 million from U.S. citizens to Costa Rica, but the worldwide total could top $1 billion.
Over the past 5 years, the investigation has netted 38 arrests, 32 convictions, and more than $62 million in restitution and fines. Twelve additional defendants face sentencing later this month. The trial of one of the scam's masterminds begins on September 15.
This is a joint investigation with Immigration and Customs Enforcement and the Postal Inspection Service.
OIG Investigation Leads to Conviction of Former Research Scientist for Federal Grant Fraud
On June 11, 2008, a former research grant recipient was convicted in federal court after an OIG investigation revealed he had misused grant funds.
Daniel B. Karron, president and chief technical officer of Computer-Aided Surgery, Inc., (CASI) was found guilty by a jury of intentionally misapplying federal grant funds after an 8-day trial in U.S. District Court for the Southern District of New York. Karron faces up to 10 years in prison and a maximum fine of $250,000 or twice the pecuniary loss or gain derived from the offense. He is scheduled to be sentenced on September 11, 2008.
Karron, a research scientist, received a $2 million Advanced Technology Program (ATP) grant from the National Institute of Standards and Technology (NIST) in October 2001. The grant was payable over 3 years in increments of approximately $800,000 per year for specific use in designated research.
In 2003, NIST requested an audit by OIG because Karron had submitted several inconsistent versions of claimed project costs in required reports. The OIG Office of Audits examined Karron's use of the grant funds from 2001 to 2003, found he had not been spending the money properly, and NIST suspended the grant. OIG's Office of Investigations later determined that Karron, 52, had spent approximately $500,000 of the ATP grant funds to pay for numerous personal expenses, including rent, home renovations, cleaning services for his condominium, restaurant meals, and miscellaneous household items.
This is the first conviction at trial for Commerce OIG in a fraud case involving research grants made by NIST's Advanced Technology Program.
Former Commerce Intern Convicted of Credit Card Fraud
A former Department of Commerce intern has been convicted of felony credit card fraud in Fairfax County (Virginia) Circuit Court. A joint OIG/Fairfax County Police investigation revealed he had fraudulently used the government travel card account numbers of several senior Commerce employees and other personal credit card numbers to purchase thousands of dollars worth of international plane tickets and hotel accommodations through an Internet travel site.
NOAA Employee Sentenced on Purchase Card Fraud
A NOAA employee convicted of theft of government property was sentenced in November in U.S. District Court for the Southern District of Mississippi to 2 years' probation and ordered to pay $3,938.80 in restitution. An OIG investigation found he had used his government purchase card to charge nearly $4,000 worth of personal items including cigarettes, beer, gift cards, CDs, video games, and a television.
OIG Forensic Analysis Contributes to Successful State Murder Prosecution
A former Census employee convicted of murdering a man who was dating the employee's former girlfriend has been sentenced to 35 years' imprisonment. The man was tried in Fairfax County (Virginia) Circuit Court in March 2008 and found guilty of first degree murder. OIG's Computer Crimes Unit had initially been asked to join the investigation to seize government computer equipment assigned to the defendant and examine it for evidence linking the employee to the crime. But while working with local police, OIG investigators subsequently seized a number of home computers at the defendant's residence. OIG conducted a forensic analysis of 13 computers and hundreds of removable disks, which revealed, among other things, that the defendant had been accessing the woman's personal e-mail account for months and reading personal messages from the victim.
OIG Aids Money Laundering Prosecution of Census Contractor
On December 11, 2007, a former Census Bureau contractor was tried in U.S. District Court for the District of Columbia and found guilty of one count of conspiracy to launder monetary instruments. OIG provided assistance to Immigration and Customs Enforcement (ICE) with the investigation of suspected of laundering the proceeds of illegal drug deals. ICE is also working with the General Services Administration to debar the defendant and his CPA firm from obtaining future government contracts.