Pharmaceutical Company Ultragenyx Agrees to Pay $6 Million for Allegedly Paying Kickbacks to Induce Claims for Its Drug Crysvita

 

Pharmaceutical company Ultragenyx Pharmaceutical Inc. (Ultragenyx) has agreed to pay $6 million to resolve allegations that it caused the submission of false claims to Medicare and Medicaid, in violation of the False Claims Act, by paying for free genetic tests, plus a separate fee to receive test result information for marketing purposes, to collectively induce prescriptions of its drug Crysvita and referrals of health care providers (HCPs) to Ultragenyx for the furnishing or arranging for the furnishing of Crysvita.

Ultragenyx is a pharmaceutical manufacturer with a principal place of business in California that manufactures Crysvita. Crysvita is an FDA-approved drug to treat X-linked hypophosphatemia (XLH) in adult and pediatric patients six months of age and older. XLH is a rare inherited disorder characterized by low levels of phosphate in the blood, which can lead to weak bones and, in many instances, may require a genetic test to definitively diagnose.

Ultragenyx understood that, in some cases, a positive genetic test for a genetic mutation consistent with XLH would be required for an insurer (including Medicare or Medicaid) to pay for a patient’s prescription for Crysvita, or for a healthcare provider (HCP) to make a definitive diagnosis of XLH and prescribe Crysvita. Thus, Ultragenyx entered into an arrangement with a genetic testing laboratory (Laboratory), whereby Ultragenyx paid the Laboratory to conduct genetic tests — at no cost to HCPs or patients — and provide the results to the HCP. Ultragenyx referred to this program as its “sponsored” XLH testing program and Ultragenyx sales personnel discussed the XLH testing program with HCPs and delivered order forms for the tests to HCP offices.

Ultragenyx separately paid the Laboratory to provide the test results to Ultragenyx, including the name of the HCP who ordered the test, a de-identified patient ID number, the date the test was ordered and — once ready — the test result itself (collectively, Results Reports). Ultragenyx used the Results Reports, in part, for marketing purposes to find potential Crysvita patients and their HCPs. Until April 2022, Ultragenyx received Results Reports and disseminated this information to its sales force with instructions to make sales calls for Crysvita to HCPs who ordered a test or, in particular, who had a patient with a positive test result. Ultragenyx’s sales force followed up with HCPs regarding test results. The United States contends that, as a result of these actions, Ultragenyx caused the submission of false claims to Medicare and Medicaid by paying kickbacks 1) to beneficiaries in the form of free genetic tests to induce their purchase of Medicare or Medicaid-reimbursed Crysvita and 2) to the Laboratory for the Results Reports to induce the referral to Ultragenyx of HCPs to whom Ultragenyx could market Crysvita.

As part of the settlement, Ultragenyx admitted and accepted responsibility for certain facts providing the basis of the settlement.

“The department is committed to protecting the integrity of federal health care programs and the medical care received by their beneficiaries,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. “A primary focus of this effort is the pursuit of kickback schemes that can allow third parties, such as pharmaceutical manufactures, to insert themselves into the doctor-patient relationship and potentially undermine the objectivity of treatment decisions by physicians and patients.

“Kickbacks, in whatever form, have no business in our federal healthcare system” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “We are always on the lookout for financial kickbacks that can improperly influence medical decisions, undermine patient care and cause waste to federal healthcare programs. As medical practices evolve, our office is committed to ferreting out improper financial kickbacks of any permutation.”

“Kickback arrangements designed to improperly influence medical decisions will always be an investigative priority for our agency,” said Special Agent in Charge Roberto Coviello of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “The goals of our continued enforcement in this area are to protect the integrity of taxpayer-funded health care programs such as Medicare and Medicaid, and to curb schemes that can inappropriately manipulate the health care choices of patients and their doctors.”

“The FBI and its partners will not stand by when a pharmaceutical company illegally takes advantage of our health care system,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response and Services Branch. “Those who engage in activity that violates the False Claims Act must face the consequences of their actions. As we strive to protect the American people, we will not stop working to combat healthcare fraud.”

The allegations resolved by the settlement agreement were, in part, originally brought in a case filed under the whistleblower, or qui tam, provision of the False Claims Act. The case is captioned United States ex rel. Ruggiero v. Ultragenyx Pharmaceutical, Inc. (D. Mass.) (No. 1:21-cv-11176-ADB). The False Claims Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The act also permits the government to intervene in such actions, as the government did, in part, in this case. Of the total $6 million recovery, approximately $5.8 million constitutes a recovery for Medicare and the federal share of Medicaid and approximately $200,000 constitutes a recovery for State Medicaid programs. The whistleblower will receive approximately $1.07 million from the federal portion of the recovery.

The government’s pursuit of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800‑HHS‑TIPS (800-447-8477).

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the District of Massachusetts, with investigative support from HHS-OIG and the FBI’s Boston Field Office.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Former Swiss Executive Pleads Guilty To Tax Fraud Conspiracy

 

Damian Williams, the United States Attorney for the Southern District of New York, and Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, announced that ROLF SCHNELLMANN, a Swiss former executive, pled guilty to conspiring to defraud the United States in connection with a scheme to help high-value U.S. taxpayer-clients conceal more than $60 million in income and assets held in undeclared, offshore bank accounts and to evade U.S. income taxes.  SCHNELLMANN pled guilty before U.S. District Judge Gregory H. Woods. 

According to the allegations in the Indictment, court filings, and statements made in Court:

SCHNELLMANN was the former head of Allied Finance Trust AG, a Zurich-based financial services company that was a subsidiary of the Allied Finance Group in Liechtenstein.  From in or about 2008 to in or about 2014, SCHNELLMANN and his co-conspirators defrauded the IRS by concealing income and assets of high-value U.S. taxpayer-clients with undeclared bank accounts at Privatbank IHAG Zurich AG (“IHAG”), a Swiss private bank.  In order to assist the U.S. taxpayer-clients, SCHNELLMANN and his co-conspirators devised and implemented a scheme dubbed the “Singapore Solution” to fraudulently conceal the bank accounts of the U.S. taxpayer-clients, their assets, and their income from U.S. authorities.  In furtherance of the fraudulent scheme, SCHNELLMANN and his co-conspirators conspired to transfer more than $60 million from undeclared IHAG bank accounts of the U.S. taxpayer-clients through a series of nominee bank accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG in the name of a Singapore-based asset-management firm that a co-conspirator helped establish.  The U.S. taxpayer-clients paid large fees to IHAG and others to help them conceal their funds and assets and evade taxes. 

SCHNELLMANN was arrested in August 2023 in Italy and extradited to the United States.

SCHNELLMANN, 61, of Switzerland, pled guilty to one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison.  SCHNELLMANN is scheduled to be sentenced by Judge Woods on July 19, 2024, at 10:00 a.m.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as SCHNELLMANN’s sentence will be determined by the judge.

Mr. Williams praised the outstanding work of the Internal Revenue Service, Criminal Investigation.  Mr. Williams also thanked the Department of Justice’s Office of International Affairs, Interpol, Italian law enforcement authorities, the Prosecutor General’s Office of Trieste, and the Italian Ministry of Justice for their assistance in the extradition of the defendant.  Mr. Williams thanked the Department of Justice’s Tax Division for their partnership on this case. 

Attorney General James Releases Footage from Investigation into the Death of Mamady Cisse

 

New York Attorney General Letitia James today released police body-worn camera footage from a member of the New York Police Department (NYPD) that her office obtained as part of its ongoing investigation into the death of Mamady Cisse, who died on September 9, 2023 following an encounter with law enforcement in the Bronx. 

The Office of Special Investigation (OSI) of the Attorney General’s Office released a video from a body-worn camera that a responding NYPD officer was equipped with during the incident. The release of this video follows Attorney General James’ directive that camera footage obtained by her office during an OSI investigation be released to the public in order to increase transparency and strengthen public trust in these matters. 

Pursuant to New York State Executive Law Section 70-b, OSI assesses every incident reported to it where a police officer or a peace officer, including a corrections officer, may have caused the death of a person by an act or omission. Under the law, the officer may be on-duty or off-duty, and the decedent may be armed or unarmed. Also, the decedent may or may not be in custody or incarcerated. If OSI’s assessment indicates an officer may have caused the death, OSI proceeds to conduct a full investigation of the incident.

The release of this footage is not an expression of any opinion as to the guilt or innocence of any party in a criminal matter or any opinion as to how or whether any individual may be charged with a crime. 

Warning: This video contains imagery that viewers may find disturbing.

New York City Comptroller’s Office Releases Fiscal Year 2023 Popular Annual Financial Report

 

The Office of New York City Comptroller Brad Lander released the Popular Annual Financial Report (PAFR) for fiscal year ended June 30, 2023. The PAFR is a comprehensive summary of the previously released Annual Comprehensive Financial Release (ACFR) containing the City’s audited financial statements and detailed data on the City’s finances.

“New York’s recovery is steadily surpassing expectations and maintaining this will require thoughtful and sustainable budgeting decisions,” said New York City Comptroller Brad Lander. “This year’s PAFR once again provides a clear accounting of how the City is spending tax dollars and how the economic rebound is shaping up in a comprehensive format easily accessible for all New Yorkers. I am thankful to our Bureau of Accountancy for their efforts on this award-winning report that sets a standard for transparency among municipal finance professionals and governments across the country.”

The PAFR serves as an illustrative guide to the ACFR for residents and explains New York City government and finances in a concise and easy-to-understand manner. The PAFR is also enhanced with several explanatory visuals for readers.

For the 43rd consecutive year, the City of New York was awarded the prestigious Certificate of Achievement for Excellence in Financial Reporting by the Government Finance Officers Association (GFOA). This report will be submitted specifically for consideration of GFOA’s Award for Outstanding Achievement in Popular Annual Financial Reporting which the City of New York has received for the last eight fiscal years.

This year’s PAFR highlights:

New York City’s Economy

In Fiscal Year 2023, the city’s economy continued to recover from the pandemic-induced recession.  By June 2023, private-sector employment was close to the record high set in February 2020, the proportion of New York City adult residents with jobs reached an all-time high, and wage and salary income also surpassed its pre-pandemic high, even after adjusting for inflation. Other economic metrics—ranging from residential real estate values to hotel revenues—had just about fully recovered. The commercial real estate sector continued to face headwinds.

Employment Across New York City

• The city recovered almost all of the roughly 950,000 jobs lost at the start of the pandemic by the end of Fiscal Year 2023.
• As of June 2023, private-sector employment was just 8,900 (0.2%) below its pre-pandemic peak.
• During Fiscal Year 2023, health care and social assistance saw the strongest job gains.
• The information sector saw a notable decline of 15,000—reflecting a combination of the writers’ strike, the impending actors’ strike and technology layoffs.

Housing and the Cost of Rent

• After rising sharply over the course of Fiscal Year 2022, the median citywide rent resumed a more modest pace of increase in Fiscal Year 2023, as the inventory of available units trended up gradually. Still, the median rent reached a record high of $3,750 in June 2023.

The City of New York’s Finances

Program and General Revenues

• In Fiscal Year 2023, program and general revenues were approximately $110.3 billion, an increase of $2.7 billion from Fiscal Year 2022.
  • Real estate taxes had the most revenues, totaling $31.5 billion, followed by operating grants and contributions at $27.9 billion.
  • The increase in real estate taxes resulted from growth in billable assessed value during the fiscal year.
• The City budgeted less Coronavirus State and Local Fiscal Recovery Funds and FEMA Public Assistance COVID-19 Emergency Protective Measures in FY 2023 due to lower pandemic response needs.

Expenses

• Fiscal Year 2023 expenses were approximately $106.8 billion, an increase of close to $9.4 billion from Fiscal Year 2022.
  • Social Services expenses increased due to an increase in Department of Homeless Services expenses related to the asylum seeker response.
  • Transit expenses increased due to increased spending related to Taxi and Limousine Commission relief efforts.
  • Health expenses decreased due to a decrease in Department of Health and Mental Hygiene and Health and Hospitals expenditures on initiatives to respond to COVID-19.
• Education, public safety and judicial, and social services were the largest shares of expenses respectively.

The full Popular Annual Financial Report for 2023 is available here.

Operating Engineers Recruit Apprentices

 

The Joint Apprenticeship and Training Committee for Operating Engineers, Local Union #30, will conduct a recruitment from January 22, 2024 through February 2, 2024 for 25 Stationary Engineer apprentices, the New York State Department of Labor announced today.

Applications can be obtained at Operating Engineers, Local Union #30, 16-16 Whitestone Expressway, Whitestone, NY 11357 between the hours of 9:00 a.m. and 2:00 p.m., Monday through Friday, excluding legal holidays, during the recruitment period. Applications must be returned via U.S. Postal Service certified mail and postmarked no later than March 1, 2024.

Candidates will be scheduled to take a Comprehensive Math exam and must score at least 85% out of 100% on the exam. The Math exam will be given approximately six weeks after the application return cut-off date.

The Committee requires that applicants:

• Must be at least 18 years old.
• Must have a high school diploma or a high school equivalency diploma (such as TASC or GED). Proof will be required after selection and prior to enrollment in apprenticeship.
• Must be legally able to work in the United States.
• Must sign a statement indicating that they are physically able to perform the work of a Stationary Engineer. This trade often includes work environments that are dangerous. The work itself may require a Stationary Engineer to be able to perform work under physically challenging and difficult conditions. Duties include but are not limited to:
• Willing to work rotating shifts including weekends and holidays.
• Climbing stairs, ladders and other means to access boiler room equipment, entering confined spaces.
• Standing upright for extended periods of time.
• Using vision to read small numbers and/or markings on gauges and equipment.
• Using vision and hearing to avoid injury from overhead piping and rotating machinery.
• Communicating orally in noisy working conditions.
• Working in areas containing gases from the combustion process and strong odors from grease, lubricants or solvents.
• Lifting heavy metal object up to 60 pounds.
• Working with alkaline and acidic chemicals used in boiler water treatment and handling chemicals.
• Walking over wet and slippery surfaces.
• Working around noisy environments, hazardous materials, such as asbestos and infectious waste.
• Working in areas with extreme heat, wet and slippery floors.
• Wearing personal protective equipment including but not limited to respirators, face shield and hearing protection.
• Working in confined spaces in a boiler room (for example, steam drums and fire boxes) or heating and ventilating rooms (for example, air handlers and plenums) which maybe dusty and dark with varying degrees of extreme temperatures.
• Must provide DD-214, Certificate of Release or Discharge from Active Duty, if applicable, after selection and prior to enrollment.
• Must have a valid driver’s license to operate company vehicles.
• Must have reliable means of transportation to and from various job sites and required classes at the approved school.

For further information, applicants should contact Local Union 30 at (718) 847-8484 Ext. 213. Additional job search assistance can be obtained at your local New York State Department of Labor Career Center (see: dol.ny.gov/career-centers).

Apprentice programs registered with the Department of Labor must meet standards established by the Commissioner. Under state law, sponsors of programs cannot discriminate against applicants because of race, creed, color, national origin, age, sex, disability, or marital status. Women and minorities are encouraged to submit applications for apprenticeship programs. Sponsors of programs are required to adopt affirmative action plans for the recruitment of women and minorities.

Governor Hochul Signs Legislation to Protect Wildlife

 

Legislation S.4099/A.2917 Updates Hunting Competition Laws to End Certain Contests, Competitions, Tournaments and Derbies with No Conservation Purpose

Governor Kathy Hochul today signed legislation to protect wildlife in New York State. Legislation S.4099/A.2917 amends the environmental conservation law to make certain hunting contests, competitions, tournaments, and derbies that allow for the take of large numbers of wildlife unlawful. The legislation does not ban hunting or fishing but does protect New York's rich biodiversity by prohibiting the wasteful taking of certain wildlife.

“Protecting wildlife is critical to fostering the integrity and resilience of our environment and our outdoor recreation economy,” Governor Hochul said. “This legislation establishes strong safeguards for our state’s precious wildlife species and protects our important fishing and hunting traditions.”

The new law makes it unlawful for an individual to organize, sponsor, conduct, promote or participate in any contest, competition, tournament or derby with the objective of taking or hunting wildlife for prizes, inducement or entertainment. Any wildlife killed during these activities become the property of the New York State Department of Environmental Conservation.

The law specifically helps prevent the taking of significant numbers of animals, often coyotes, crows, squirrels and rabbits, in contests held for prizes and entertainment rather than the targeted management of wildlife populations. The legislation excludes contests for hunting white-tailed deer, turkeys and bears, as well as fishing contests, which are carefully regulated by the state. By enacting this legislation, New York joins a national trend of states banning such contests.

MAYOR ADAMS TAKES DOWN CITY’S LONGEST-STANDING SIDEWALK SHED, SCAFFOLDING

 

409 Edgecombe Avenue, City Landmark, Had Eyesore Shed in Place for 21 Years

 

Removal Follows City Lawsuit Against Property Managers for Failure to Repair Building

 

Since Launching ‘Get Sheds Down’ Plan in July, Adams Administration Has Removed More Than 500 Sheds — Covering 11 Miles of Sidewalk Space

New York City Mayor Eric Adams and New York City Department of Buildings (DOB) Commissioner Jimmy Oddo today took down New York City’s longest-standing sidewalk shed at 409 Edgecombe Avenue, a city landmark, which had been up for 21 years. The safe removal of this shed comes after the city filed a criminal court case against the building’s property managers for their repeated failure to repair the building. Through the “Get Sheds Down” plan, the Adams administration has expediated the removal of sidewalk construction sheds and scaffolding while reimagining the future of pedestrian protection in New York City.

 

“For 21 years, residents of Harlem sacrificed public space and the beauty of a historical landmark because property managers repeatedly failed to do their job,” said Mayor Adams. “Today, we deliver 409 Edgecombe Avenue back into the hands of the Sugar Hill community and remain focused on continuing to safely remove the eyesores that are ugly sidewalk sheds and scaffolding across the five boroughs. With our ‘Get Sheds Down’ plan, we’re cutting red tape to help city government move faster and give our neighborhoods back to New Yorkers.”

 

“The pandemic proved how much our public spaces mean to our wellbeing — not just our legacy parks, but the public spaces right outside our front doors,” said Deputy Mayor for Operations Meera Joshi. “Sidewalk sheds are necessary to keep people safe during active work, but they are also an eyesore — and they certainly shouldn't be old enough to go to a bar. We're thrilled to be able to return this space to Sugar Hill and we look forward to continuing the work across the city.”

 

“After a long wait, the residents of 409 Edgecombe Avenue are finally seeing a dual benefit to their homes: a safer entryway, and a view of their building’s façade,” said Deputy Mayor for Housing, Economic Development, and Workforce Maria Torres-Springer. “Property owners must assume responsibility for making repairs that protect residents and neighbors, and the city will continue our work on safe housing across the five boroughs.”

 

“The removal of this sidewalk shed was a long time coming, and I am proud of the work this department has done to doggedly pursue this case until the property owners were finally compelled to do the right thing,” said DOB Commissioner Oddo. “Sidewalk sheds serve a legitimate public safety role in our city, but not all sheds are the same. A shed installed as part of new construction is a sign of economic activity. A shed erected as part of necessary maintenance is an indication of compliance and responsible ownership. A shed kept up for years while delaying needed building repairs is selfish and unacceptable, and we will continue to do all we can to address these situations. As part of the administration’s ‘Get Sheds Down’ plan, we are working closely with our partners in the New York City Council on new legislation to refine our enforcement tools, so we can see more of these long-standing sheds taken off the street.”

 

“Sidewalks are critical public spaces, and, finally, the residents of 409 Edgecombe Avenue will regain full access to the public realm outside their front door,” said Chief Public Realm Officer Ya-Ting Liu. “No sidewalk shed should be up for 21 years, and the Adams administration and DOB are working to ensure that building owners start paying the public cost of having sidewalk sheds up for too long and remove them in a timely manner.”

 

“Get Sheds Down.” Credit: New York City Mayor’s Office

 

Since Mayor Adams launched the “Get Sheds Down” plan in July 2023, there are over 500 fewer actively permitted sidewalk sheds in New York City – sheds that had covered nearly 11 miles of New York City sidewalks. Additionally, since the plan was announced, the city has removed 75 long-standing sheds (sheds that have been up for over five years) from the streets. For decades, the rules governing construction sheds have incentivized property owners to leave them up for long periods of time instead of completing the critical façade work that is often the reason that the shed is required.

 

The administration has already advanced multiple efforts as part of “Get Sheds Down.” Earlier this year, DOB released technical guidance to help the industry understand revised rules and processes. DOB also issued a Request for Proposal to design firms looking for less obtrusive pedestrian protection, and is currently reviewing proposals received. Additionally, new rules went into effect allowing for art on sidewalk sheds and other temporary construction equipment.

 

The Adams administration is currently working with the New York City Council on legislation to allow for a wider variety of colors, improve oversight over shed construction and maintenance, and enhance enforcement strategies. In the coming months, the city plans to file more criminal court cases against property owners who have failed to make repairs to their buildings and kept sidewalk sheds in place for years.

 

In the 20^th century, 409 Edgecombe Avenue was an important site for Black political organizing, serving as a home to the NAACP and its executive secretaries, Walter White and Roy Wilkins, as well as W.E.B. DuBois and Thurgood Marshall. The shed at 409 Edgecombe Avenue was first erected in 2002 because of a local law requiring regular façade inspections for buildings over six stories. An engineer hired at the time by the owners found unsafe conditions around the brick and terra-cotta stone façade. For approximately 20 years, the property owner failed to make repairs, instead allowing the sidewalk shed to remain in place without work on the building progressing. In 2019, the city filed criminal charges against the building’s management company to compel them to move forward with the long-delayed repairs. The repair work began in earnest after charges were filed and were recently completed.

Founder Of Cryptocurrency Ponzi Scheme “IcomTech” Pleads Guilty

 

Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of DAVID CARMONA for his role in founding and promoting a large-scale cryptocurrency Ponzi scheme known as IcomTech.  CARMONA pled guilty today before U.S. District Judge Jennifer L. Rochon to one count of conspiracy to commit wire fraud. 

U.S. Attorney Damian Williams said: “IcomTech was a large-scale cryptocurrency scam founded by David Carmona that defrauded numerous investors.  Carmona and his co-defendants founded IcomTech on lies, and siphoned money away from victims at every opportunity.  Today’s guilty plea should send a clear message to those who engage in Ponzi schemes — whether in the cryptocurrency markets or elsewhere — that this Office is committed to rooting out fraud in all its forms and holding those responsible to full account.” 

According to the allegations in the Indictment and statements made in public court proceedings:

CARMONA started IcomTech in 2018, and MARCO RUIZ OCHOA — who pled guilty in September 2023 — was represented to be IcomTech’s CEO until 2019, when a new CEO replaced him.  IcomTech was a purported cryptocurrency mining and trading company that promised to earn its victim-investors (“Victims”) profits in exchange for their purchase of purported cryptocurrency-related investment products.  CARMONA and the other promoters of IcomTech, including his co-defendants OCHOA, JUAN ARELLANO, MOSES VALDEZ, and DAVID BREND, falsely promised their respective Victims, among other things, that profits from the companies’ cryptocurrency trading and mining would result in guaranteed daily returns on Victims’ investments.  In reality, IcomTech did not engage in cryptocurrency trading or mining for its Investors, and CARMONA and Icomtech’s other promoters used Victim funds to pay other Victims, to further promote the schemes, and to enrich themselves.

Icomtech promoters, including CARMONA, traveled throughout the United States and internationally where they hosted lavish expos and small community presentations aimed at luring Victims to invest in the schemes, including in the Southern District of New York.  During larger-scale events, IcomTech promoters presented on purported investment products and the compensation plan, encouraged Victims to invest as a means of achieving financial freedom, and boasted about the amount of money they were earning.  IcomTech promoters often showed up at larger-scale events in expensive cars and wearing luxury clothing as a way of exhibiting their purportedly legitimate success from IcomTech.  The atmosphere of these events was festive and designed to generate excitement about the schemes.

Victims invested in IcomTech by purchasing investment products from promoters using cash, checks, wire transfers, and actual cryptocurrency.  Following a Victim’s investment, a Victim would be provided with access to an online portal where the Victim could monitor the purported returns.  While Victims saw “profits” accumulate on the online portal, most Victims were unable to withdraw any of these so-called profits and ultimately lost their entire investments.  By contrast, IcomTech’s promoters, including CARMONA, siphoned off, in some cases, hundreds of thousands of dollars in Victim funds, which they withdrew as cash, spent on IcomTech promotional expenses, and used for personal expenditures such as luxury goods and real estate.

CARMONA worked with his co-defendant, GUSTAVO RODRIGUEZ, to build IcomTech’s website and online portal, where Victims were provided with personal accounts.  CARMONA and RODRIGUEZ discussed how to structure IcomTech’s compensation plan and investment products.  For example, RODRIGUEZ advised CARMONA on where CARMONA should set the purported daily returns on Victims’ investment packages and on the size of the investment packages that CARMONA should offer for sale.

In or about September 2018, CARMONA and OCHOA entered into a contract on behalf of IcomTech to purchase cryptocurrency mining equipment from a legitimate supplier and then began touting that investment as a means of generating interest among Victims to invest.  However, IcomTech did not meet its payment obligations to the supplier and never received any hardware.  Indeed, in or about July and August 2018, CARMONA admitted that his negotiations with the supplier were just for appearances and that he was just “using them.”  Even though RODRIGUEZ warned CARMONA that this would only work for a limited time before the supplier found out, CARMONA and OCHOA continued to promote IcomTech’s purported investment with the supplier.

At least as early as August 2018, Victims who attempted to withdraw money from their online portal accounts had difficulty doing so, and when they complained to promoters, they were met with excuses, delays, and hidden fees, if they were able to make any withdrawals at all.  Despite these complaints, IcomTech promoters, including CARMONA, continued to promote IcomTech and accept Victims’ investments.  As complaints mounted, IcomTech began offering a proprietary crypto-token for sale as a means of injecting liquidity into IcomTech.  Promoters of the schemes claimed that these tokens, known as “Icoms,” would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services.  This was false.  In reality, “Icoms” were essentially worthless and resulted in further financial loss to Victims.  By in or about the end of 2019, IcomTech stopped making payments to Victims and IcomTech collapsed.

CARMONA, 40, of Queens, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as the sentencing of the defendant will be determined by the judge.  

Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force.  Mr. Williams also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance.

If you believe you are a victim of the IcomTech fraud, updated information regarding the case and victims’ rights, as well as contact information for the victim witness coordinator is available here.