Nine More Sentenced in Telemarketing Fraud Case, Bringing Restitution Ordered to More than $190 Million
On October 27 and 28, 2008, nine additional defendants were sentenced for crimes related to the international telemarketing fraud scheme OIG has been investigating for the past 5 years. Sentences ranged from 18 months to approximately 9 years, and each defendant ordered to pay either $5 million or $10 million in restitution, for a combined total of $70 million.
These latest sentencings bring total restitution order thus far to more than $190 million. They follow a string of recent court actions in the sweepstakes telemarketing fraud case:
- On September 24, three defendants were sentenced. One of the three received 50 years in prison and was ordered to pay $4 million in restitution. The other two were sentenced to a combined total of 6 years in prison and $15 million in restitution.
- On September 18 a defendant received a special jury verdict of $17 million for his participation, as well as $31,633 for his convictions on 21 counts of wire fraud. The defendant was arrested at his call center in Costa Rica on May 16, 2006, and extradited to the United States in March 2008.
- On September 15 one of two masterminds behind the scheme entered a guilty plea to one count of conspiracy to commit wire fraud and one count of wire fraud.
- On August 18, nine other defendants were sentenced to a total of 36 years in prison, 27 years' supervised release, more than $55 million in fines and restitution.
These cases are part of an intense OIG investigation that over the past 5 years has netted nearly 40 arrests and 36 convictions of Americans and Canadians involved in plots to defraud U.S. citizens. In one scheme, fraudulent telemarketers based in Costa Rica and other foreign countries claimed to be from Commerce's Bureau of Industry and Security or another federal agency. They asked "winners" to pay insurance and customs fees and to wire funds to guarantee prize delivery. 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.
This is a joint investigation with Immigration and Customs Enforcement and the Postal Inspection Service.
Jail Time, Restitution Ordered for Former Research Scientist Convicted of Federal Grant Fraud
On October 21, 2008, a former research recipient convicted of intentionally misapplying federal grant funds was sentenced to a combined 15 months' in prison and home detention and ordered to pay $120,000 in restitution.
Daniel B. Karron, president and chief technical officer of Computer-Aided Surgery, Inc., (CASI) had 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 mismatching versions of his actual grant 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.
In delivering the sentence, U.S. District Judge Robert Patterson stated it is crucial that grant recipients face serious criminal consequences for committing fraud. This case was OIG's first conviction at trial for 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.