The Government’s New Strategy to Crack Down on ‘Spoofing’

The Justice Department has tried to crack down on traders who try to move markets by entering and quickly canceling orders, conduct that goes by the catchy moniker “spoofing.”

But the government’s early prosecution of the crime has faced a big setback. In just the second trial for spoofing, which the Dodd-Frank Act outlawed, a Connecticut jury acquitted a former trader at UBS of spoofing this spring. That raised questions about whether prosecutors can pursue these cases.

Late July the Justice Department took a new tack. Rather than use the spoofing law, prosecutors charged two former Deutsche Bank traders, James Vorley and Cedric Chanu, with wire fraud. The government claims the pair placed and quickly canceled orders for precious metals futures contracts to create the impression that there was greater supply or demand.

That sounds like spoofing, which is defined as “bidding or offering with the intent to cancel the bid or offer before execution,” and a criminal complaint filed in January accused the two men of that very offense. But when the current indictment hit, it only accused them of wire fraud and conspiracy.

One advantage of the wire fraud statute is that it gives prosecutors 10 years to pursue their case when a bank is involved, rather than the usual five-year limitations period. That may explain, in part, why prosecutors are pursuing this approach, but the change may well reflect lessons learned from the Connecticut acquittal. read more »

Houston Psychiatrist Sentenced to More Than 12 Years in Prison for Role in $155 Million Medicare Fraud Scheme

A Houston psychiatrist was sentenced today to 150 months in prison for his role in a $155 million Medicare fraud scheme involving false and fraudulent claims for psychiatric services.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge C.J. Porter of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Dallas Region, Special Agent in Charge D. Richard Goss of IRS Criminal Investigation’s (IRS-CI) Houston Field Office, Special Agent in Charge Kristin Osswald of the Railroad Retirement Board Office of Inspector General’s (RRB-OIG) Chicago Regional Office, and Unit Division Chief Stormy Kelly of the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) made the announcement.

Riyaz Mazcuri, 67, a former attending psychiatrist at Riverside General Hospital (Riverside) of Houston, was sentenced by U.S. District Judge Vanessa D. Gilmore of the Southern District of Texas.  Judge Gilmore also ordered Mazcuri to pay $20,607,410.22 in restitution to Medicare and $2,250,789.69 in restitution to Medicaid.

On May 23, 2017, following a five-day trial, a jury convicted Mazcuri of one count of conspiracy to commit health care fraud, and five counts of health care fraud.

According to the evidence at trial, from 2006 until February 2012, Mazcuri and others engaged in a scheme to defraud Medicare by submitting to Medicare, through Riverside, approximately $155 million in false and fraudulent claims for partial hospitalization program (PHP) services.  A PHP is a form of intensive outpatient treatment for patients with severe mental illness. read more »

McKinsey accused of complicity in SA cement industry cartel

McKinsey & Co has been cast into the center of the probe into cartel conduct in the cement industry, with evidence emerging that the global consultancy advised cement producers to undermine competitors by secretly conspiring.

The startling admissions by a former MD of cement producer AfriSam at the Competition Tribunal’s hearings into alleged cartel conduct are the latest allegations about McKinsey’s questionable conduct.

The firm is already under fire for allegedly facilitating corrupt deals between the Gupta family and state-owned entities.

McKinsey denied that it had advised its clients to collude.

The Competition Commission’s submission in the long-running cement industry case included a witness statement by former AfriSam MD Mike Doyle. In his statement, submitted to the Competition Tribunal last Monday, Doyle alleged that in 1998 McKinsey told AfriSam that it needed "to cartelise the industry by adopting a strategy which was known as co-opetition" — an act of co-operation between competing companies.

Doyle has since passed away.

The referral to the tribunal followed the commission’s investigation between 2008 and 2012 of collusive conduct in the cement industry against the four main producers, Natal Portland Cement Cimpor (NPC), Pretoria Portland Cement (PPC), Lafarge and AfriSam. read more »