Ericsson Agrees To Pay More Than $1 Billion To Resolve Foreign Corrupt Practices Act Case

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), Brian A. Benczkowski, the Assistant Attorney General for the Criminal Division of the Department of Justice (“DOJ”), and Don Fort, Chief of the Criminal Investigation Division, Internal Revenue Service (“IRS-CI”), announced today the filing of criminal charges against TELEFONAKTIEBOLAGET LM ERICSSON (“ERICSSON”), a multinational telecommunications company headquartered in Sweden, and its subsidiary ERICSSON EGYPT LTD. (“ERICSSON EGYPT”) for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) by bribing government officials, falsifying books and records, and failing to implement reasonable internal accounting controls.  The resolutions cover criminal conduct in Djibouti, China, Vietnam, Indonesia, and Kuwait. 

Mr. Berman also announced that in connection with the filed charges, ERICSSON EGYPT pled guilty today before United States District Judge Alison J. Nathan, and SDNY and DOJ entered into a deferred prosecution agreement (“DPA”) with ERICSSON.  Pursuant to the DPA, ERICSSON admitted to participating in the charged conspiracy.  ERICSSON will pay a total criminal penalty of $520,650,432 to the United States, which includes a $9,520,000 criminal fine that ERICSSON agreed to pay on behalf of ERICSSON EGYPT.  ERICSSON also agreed to implement rigorous internal controls, retain an independent compliance monitor for a term of three years, and cooperate fully with the Government in any ongoing investigations.

In related proceedings, ERICSSON reached a settlement with the U.S. Securities and Exchange Commission (“SEC”).  Under the terms of its civil resolution with the SEC, ERICSSON agreed to pay $539,920,000 in disgorgement of profits and prejudgment interest, which, together with the criminal penalty paid to the United States, yields total criminal and regulatory penalties to be paid by ERICSSON of $1,060,570,432.

U.S. Attorney Geoffrey S. Berman said:  “Today Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business.  Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’  Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

Assistant Attorney General Brian A. Benczkowski said:  “Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits.  Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.”

IRS Criminal Investigation Chief Don Fort said:  “Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity.  Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records.  We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

According to the allegations contained in the criminal Informations, which were filed today in Manhattan federal court, the statement of facts set forth in the DPA, and other publicly available information:

From approximately 2000 to 2016, ERICSSON and ERICSSON EGYPT, through various executives, employees, and affiliated entities, used third-party agents and consultants to bribe foreign government officials and/or manage off-the-books slush funds in countries where it pursued contracts to conduct telecommunications business.  The agents were often engaged through sham contracts and paid pursuant to false invoices, with those payments accounted for improperly in ERICSSON’s books and records.

In Djibouti, from approximately 2010 to 2014, ERICSSON, via subsidiaries, paid approximately $2.1 million in bribes to high-ranking government officials in order to obtain a contract valued at approximately €20.3 million.  To conceal the bribe payments, an ERICSSON subsidiary entered into a sham contract with a consulting company and approved fake invoices to conceal the bribe payments, and ERICSSON employees completed a draft due diligence report that failed to disclose that the owner of the consulting company was married to a high-ranking official in Djibouti’s government.

In China, from approximately 2000 to 2016, ERICSSON, via subsidiaries, paid various agents, consultants, and service providers tens of millions of dollars, a portion of which was used to fund an expense account that covered gifts, travel, and entertainment for foreign officials.  ERICSSON used the expense account to win business with Chinese state-owned customers.  In addition, from approximately 2013 to 2016, ERICSSON subsidiaries paid third-party service providers approximately $31.5 million pursuant to sham contracts for services that were never performed.  The payments were intended to allow ERICSSON’s subsidiaries to continue to use and pay third-party agents in China in contravention of ERICSSON’s policies and procedures.  ERICSSON knowingly mischaracterized the payments and improperly recorded them in its books and records.

In Vietnam, from approximately 2012 to 2015, ERICSSON, via subsidiaries, paid a consulting company approximately $4.8 million in order to create off-the-books slush funds.  The slush funds were then used to make payments to third parties who would not be able to pass ERICSSON’s due diligence processes.  ERICSSON knowingly mischaracterized these payments, which were made pursuant to sham contracts for services that were never performed, and improperly recorded them in ERICSSON’s books and records. 

In Indonesia, from approximately 2012 to 2015, ERICSON, via a subsidiary, paid a consulting company approximately $45 million in order to create off-the-books slush funds.  ERICSSON took active steps to conceal the payments, which were made pursuant to sham contracts for services that were never performed.

In Kuwait, from approximately 2011 to 2013, ERICSSON, via a subsidiary, paid a consulting company approximately $450,000 at the request of a sales agent who had given ERICSSON inside information about the bidding process for a lucrative contract with a state-owned telecommunications company.  ERICSSON made the payment after one of its subsidiaries was awarded the contract, which was valued at approximately $182 million.  The payment was made pursuant to a sham contract for services that were never performed.

ERICSSON EGYPT was charged with, and pled guilty to, one count of conspiring to violate the anti-bribery provisions of the FCPA.  ERICSSON was charged in a two-count Information with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal-controls and books-and-records provisions of the FCPA.

Mr. Berman thanked the Fraud Section of the DOJ’s Criminal Division for its collaboration, and praised the investigative efforts of IRS-CI and law enforcement authorities in Sweden.  He also thanked the SEC’s Division of Enforcement for its significant assistance and cooperation in the investigation.

NYPD Commissioner Shea Announces New Executive Designations and Appointments

  NYPD Commissioner Shea Announces New Executive Designations and Appointments NYPD Police Commissioner Dermot Shea today announced changes at the executive staff level, following the appointments of Chief of Detectives Rodney Harrison and Chief of Patrol Fausto Pichardo, as part of the department's commitment to furthering crime-reduction through Neighborhood Policing and precision-policing efforts.

"When you look at the totality of what we're trying to accomplish across the NYPD and all five boroughs – taking Neighborhood Policing to the next level and enhancing our precision-policing efforts – it is critical to fine-tune the executive team that will lead this vital work" said Police Commissioner Dermot Shea

Deputy Commissioner Vincent Grippo was appointed to Chief of Staff to the Police Commissioner.

Assistant Chief Martin Morales will be promoted to Chief of Personnel where he will be responsible for the recruitment and selection of personnel. This includes the seeking, selecting, and appointing the most qualified candidates that are reflective of the City's diverse population, to support the department's ever-increasing challenges and complex mission.

Assistant Chief Michael Lipetri will be promoted to Chief of Crime Control Strategies. He has ead the Department's CeaseFire efforts and played a central role in the CompStat process.

Deputy Chief Martine Materasso was promoted to the rank of Assistant Chief of Counterterrorism. As head of the Counterterrorism Bureau, she will lead the City's efforts against the threat of international and domestic terrorism and play an integral role in the FBI's Joint Terrorism Task Force. She is the first female to hold this appointment.

Chief Lori Pollock was appointed Chief of Collaborative Policing, where she will foster shared responsibility for public safety through productive partnerships with individuals, government agencies, and community-based organizations. In this position, she will play an important role in the Department's new youth strategies efforts.

Chief William T. Morris was appointed Chief of Transportation who will continue the critical work of ensuring the safety and security of motorists, passengers, pedestrians, and cyclists on the streets and highways throughout New York City and manages traffic control.

Chief Thomas Chan was appointed to Chief of Office of Management Analysis and Planning, the Department's central body for research, analysis, and policy development.

Chief Raymond Spinella was appointed to Chief of Support Services which oversees the Fleet Services Division, Property Clerk Division, Central Records Division, and the Printing Section.

Deputy Chief Galen Frierson will be promoted to Assistant Chief and appointed Commanding Officer of Patrol Borough Queens North.

Inspector Brian McGee will be promoted to Deputy Chief and appointed Commanding Officer Detective Borough Manhattan North

Deputy Chief Eddie Lott was appointed as Commanding Officer of Equity and Inclusion.

Deputy Inspector Julie Morrill will be promoted to Deputy Chief and appointed Commanding Officer Detective Borough Queens North.

Bronx Democratic Party - UGLY SWEATER HOLIDAY PARTY & TOY DRIVE

Happy Monday, Tomorrow's the day! The uglier the sweater, the better. Our annual UGLY SWEATER HOLIDAY PARTY and TOY DRIVE starts 6:30PM. Bronx Dems Headquarters 1534 Boone Avenue The Bronx, NY 10460 Sincerely, The Bronx Democratic Party

Alexandria Ocasio-Cortez - On the Doors

This movement was born on the doorsteps. We built it by people knocking on thousands of doors, talking to our neighbors, and spreading a simple message to all: we can build an economy and democracy that works for all of us together.

In 2020, we’re headed back to the doors. Right now, we’re planning an organizing campaign to bring even more voters off the sidelines.

Our strength is in our community, and our work in bringing people together to fight for change. We’re up against some big challenges — a slate of Republicans, a few conservative Democrats, and some corporate PACs all trying to take us out.

But we have something they don’t: heart. We’re not working to divide people — we’re bringing them together to fight for Medicare for All, a Green New Deal, a Just Society and so much more. That’s how we win again.

In solidarity,

Team AOC 

Leaders Of Latin Kings Set Charged In Manhattan Federal Court With Racketeering, Narcotics, And Firearms Offenses

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Dermot F. Shea, the Commissioner of the New York City Police Department (“NYPD”), John B. Devito, Special Agent-in-Charge of the New York Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), and Geraldine Hart, the Commissioner of the Suffolk County Police Department (“SCPD”), announced the unsealing of an Indictment charging 17 defendants with committing various racketeering, narcotics, and firearms offenses in Manhattan and the Bronx.  Ten of the defendants were arrested today and presented before U.S. Magistrate Judge Barbara Moses in Manhattan federal court.  Three of the defendants are already in state custody and will be presented at a later date.  Four defendants remain at large.  The case has been assigned to U.S. District Judge Valerie E. Caproni.

U.S. Attorney Geoffrey S. Berman said:   “As alleged in the indictment, the defendants in this case include high-ranking members of a violent set of the Latin Kings gang.  They are alleged to have engaged in acts of violence, robberies, narcotics trafficking, and the use of firearms.  Thanks to the efforts of our partners at the FBI, NYPD, ATF, and SCPD, the defendants now face federal charges for these very serious crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “Rounding up these alleged gang members is more than just removing violent criminals from the streets they believe they control.  They’re pushing and selling drugs that are killing thousands of people each year in our country, adding to the epidemic tearing apart families and communities.  Our work today, and the work we will continue to do tomorrow on our FBI Metro Safe Streets Gang Task Force, is vital to combating the spread of these drugs, and crucial to saving people’s lives.”

ATF Special Agent in Charge John B. Devito said:  “The defendants are alleged to have conspired on, threatened and committed numerous acts of violence to influence and control their members and enforce the territorial boundaries of their illegal narcotics operations.  Thankfully through the diligent efforts of our law enforcement partners this operation has been disrupted and dismantled.  We will stand with all of our local, state and federal partners to see that these violent gangs are eradicated from our communities.  I would like to thank the United States Attorney’s Office for prosecuting this case.”

SCPD Commissioner Geraldine Hart said:  “More than a dozen alleged violent gang members are now off the streets thanks to the collaborative efforts with our law enforcement partners.  As alleged, these criminals have zero consideration for the well-being of anyone, inside or outside their gang, distributing narcotics and possessing firearms in an attempt to instill fear in our communities.  We will continue to work together with our partner agencies to rid our communities of violent street gangs.”

NYPD Commissioner Dermot F. Shea said: "Targeting and dismantling gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be among the highest priorities for the NYPD. We continue to relentlessly with our law enforcement partners to identify, arrest, and build the strongest possible cases to hold to account anyone who involves themselves in such behavior."

As alleged in the Indictment unsealed today in Manhattan federal court and statements made in court[1]:

CARMELO VELEZ, a/k/a “Jugg,” CHRISTOPHER RODRIGUEZ, a/k/a “Taz,” LUIS SEPULVEDA, a/k/a “Red,” ANGEL LOPEZ, a/k/a “SB,” CHRISTOPHER LUM, a/k/a “Un,” EMMANUEL BONAFE, a/k/a “Eazy,” CHRISTOPHER NELSON, a/k/a “Hype,” JOSIAH VELAZQUEZ, a/k/a “Siah,” ALBERTO BORGES, a/k/a “AB,” JUAN HERNANDEZ, a/k/a “Goldo,” HEINNER SOLIS, a/k/a “Juelz,” EZEQUIEL OSPINA, a/k/a “Izzy,” RAIMUNDO NIEVES, a/k/a “Dobule-R,” DEESHUNTEE STEVENS, a/k/a “Kay,” HECTOR BONAPARTE, a/k/a “June,” and MICHAEL GONZALEZ, a/k/a “Wisdom,” are members and associates of a racketeering enterprise known as the “Black Mob,” which operates in the Bronx, Manhattan, Queens, Brooklyn, and Long Island.  The Black Mob is a set, or “tribe,” of the nationwide Latin Kings gang.  In order to enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of the Black Mob committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including heroin, fentanyl, and crack; committed robberies; and obtained, possessed, and used firearms.

VELEZ, 30, RODRIGUEZ, 34, SEPULVEDA, 27, LOPEZ, 34, LUM, 28, BONAFE, 27, NELSON, 28. VELAZQUEZ, 22, BORGES, 29, JUAN HERNANDEZ, 31, JESUS HERNANDEZ, 26, SOLIS, 25, and OSPINA, 23, are each charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison. 

Those 13 defendants, as well as NIEVES, 46, STEVENS, 46, BONAPARTE, 37, and GONZALEZ, 33, are each charged with one count of conspiracy to distribute and possess with intent to distribute: (i) one kilogram and more of mixtures and substances containing a detectable amount of heroin, (ii) 400 grams and more of mixtures and substances containing a detectable amount of fentanyl, (iii) 280 grams and more of mixtures and substances containing a detectable amount of crack cocaine, (iv) five kilograms and more of mixtures and substances containing a detectable amount of cocaine, (v) oxycodone, (vi) alprazolam, and (vii) marijuana, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of 10 years in prison. 

All of the defendants except GONZALEZ are also each charged with possessing, carrying, and using firearms in relation to, and in furtherance of, the narcotics conspiracy, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI, NYPD, ATF, and SCPD.  Mr. Berman also thanked the New York State Department of Corrections and Community Supervision for its assistance in the case.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.       

 [1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes only allegations, and every fact described herein should be treated as an allegation.

Bronx Man Sentenced In Manhattan Federal Court To 22 Years In Prison For Attempting To Provide Material Support To ISIS

Sajmir Alimehmeti Amassed Combat Knives and ISIS Propaganda in His Apartment, Facilitated Equipment Purchases by an Individual He Believed Was Traveling to Syria to Fight with ISIS, and Conspired with Chelsea Bomber Ahmad Khan Rahimi to Distribute Terrori

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot F. Shea, Commissioner of the New York City Police Department (“NYPD”), announced today that SAJMIR ALIMEHMETI, a/k/a “Abdul Qawii,” was sentenced to 22 years in prison based on convictions for attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”), and for attempting to fraudulently procure a U.S. passport to facilitate an act of international terrorism.  ALIMEHMETI pled guilty on February 21, 2018, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Bronx resident Sajmir Alimehmeti took the position of an adversary to the United States and its values.  Alimehmeti’s contempt for the U.S. led him to travel overseas to support ISIS’s terror campaign, eventually purchasing military-type weapons and assisting another to get travel documents, equipment, and encryption technology to fight with ISIS in Syria.  Even after his incarceration, Alimemehti continued his supportive conduct for ISIS by working with convicted Chelsea bomber Ahmad Khan Rahimi, to distribute ISIS propaganda in prison.  I sincerely commend our law enforcement partners for their commitment to detecting and apprehending those who support the disruption of American life through brazen acts of terrorism.” 

Assistant Attorney General John C. Demers said:  “Alimehmeti was determined to support ISIS.  He attempted to travel overseas to support the terrorist group, he assisted another person he believed to be a fellow ISIS supporter to prepare to purportedly travel to join ISIS, he lied on his passport application so he could get a clean passport to ease his efforts to travel overseas to join ISIS, and while in pretrial detention, he conspired with another terrorist to spread ISIS propaganda.  With today’s sentence, he is being held accountable for his crimes.  The National Security Division will continue to work with our partners to identify, disrupt and hold accountable those who seek to provide material support to designated foreign terrorist organizations.  I want to thank the agents, analysts, and prosecutors who are responsible for this case.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Sajmir Alimehmeti was so committed to supporting and furthering the ISIS agenda, that when his multiple attempts to travel overseas raised enough red flags to deny him entry, he turned to assisting someone he thought shared his same objective.  Unbeknownst to him, however, that someone was an undercover employee.  Today’s sentencing is a welcome end to this case, and another successful outcome for the many agents, detectives, and analysts on FBI’s JTTF in New York.  Their work and our extensive partnerships are essential to keeping New York City and the nation safe.”

NYPD Commissioner Dermot F. Shea said:  “Sajmir Alimehmeti betrayed the country he called home by trying to travel overseas to join ISIS, a brutal terrorist group at war with the United States.  When that failed, Alimehmeti deliberately assisted another individual he believed was traveling to join ISIS.  At the same time, the investigation revealed he was acquiring tactical knives, handcuffs and equipment indicative of efforts to prepare for an attack here in New York City.  This case is another example of the relentless efforts of the Joint Terrorism Task Force and the NYPD’s Intelligence Bureau to prevent terrorism before it occurs.”

As reflected in the criminal Complaint, Superseding Indictment, court filings, and statements during court proceedings:

In October 2014, ALIMEHMETI attempted to enter the United Kingdom but was denied entry after U.K. authorities found camouflage clothing and nunchucks in his luggage.  Approximately two months later, in December 2014, ALIMEHMETI was again denied entry into the United Kingdom, this time after U.K. authorities found that his cellphone contained images of ISIS flags.  Further forensic examination of the contents of the cellphone and ALIMEHMETI’s laptop computer showed numerous indicia of ALIMEHMETI’s support for ISIS, including a photograph of ALIMEHMETI with an ISIS flag in the background, images of ISIS fighters in the Middle East, a photograph of ALIMEHMETI making a gesture of support for ISIS, various files relating to jihad and martyrdom, and an online messaging exchange in which ALIMEHMETI attempted to assist another ISIS supporter to travel to Syria to join ISIS by providing contact information for an ISIS affiliate who could facilitate the travel.

After returning to the United States, ALIMEHMETI continued to support ISIS.  Among other things, ALIMEHMETI displayed an ISIS flag in his apartment in the Bronx and, in the course of recorded meetings with undercover law enforcement employees, ALIMEHMETI played multiple pro-ISIS propaganda videos on his computer and his cellphone, including videos of ISIS fighters decapitating prisoners, and ALIMEHMETI also indicated that he was interested in radicalizing other individuals in the Bronx area.  ALIMEHMETI also made repeated purchases of combat knives and other military-type equipment, including masks, handcuffs, a pocket chainsaw, a wire pocket saw, and a rucksack designed for tactical combat.  ALIMEHMETI stockpiled such equipment at his apartment in the Bronx.

In October 2015, ALIMEHMETI applied for a U.S. passport, falsely claiming in the application that his previous passport had been lost.  ALIMEHMETI later told an undercover law enforcement employee that his prior passport had not been lost and, instead, that he was applying for a new passport because he believed the rejection stamps in his existing passport resulting from his attempted entries into the United Kingdom would make it difficult to travel to ISIS territory. 

In May 2016, ALIMEHMETI attempted to assist an individual who was purportedly traveling from New York to Syria to train and fight with ISIS but who was actually an undercover law enforcement employee (the “UC”).  On May 17, 2016, ALIMEHMETI met with the UC in Manhattan.  ALIMEHMETI helped the UC locate stores so the UC could purchase supplies to use while traveling to, and fighting with, ISIS, including a cellphone, boots, a compass, a bag, and a flashlight, among other items.  ALIMEHMETI then brought the UC to a hotel in Queens so the UC could purportedly meet with an individual who was preparing travel documents that the UC would use to travel to Syria to join ISIS.  ALIMEHMETI gave the UC a piece of paper with his name and contact information, and asked the UC to provide that information to the purported document facilitator.  ALIMEHETI explained that he wanted to travel to Syria and join ISIS, stating “I’m ready to . . . go with you man . . . you know I would.  I’m done with this place.”  After leaving the hotel in Queens, ALIMEHETI brought the UC to JFK Airport, via public transportation, so the UC could begin the purported journey to ISIS.

Following ALIMEHMETI’s arrest on the charges in this case in May 2016, the FBI executed a search of ALIMEHMETI’s Bronx apartment pursuant to a judicially authorized search warrant.  The FBI found in the apartment, among other things, an ISIS flag that was displayed on a wall in the apartment.

In 2017, while ALIMEHMETI was incarcerated and awaiting trial, law enforcement learned that ALIMEHMETI had worked with Ahmad Khan Rahimi inside the prison to aggregate and distribute terrorist propaganda that was part of the evidence in their respective cases and produced to them during discovery.  Rahimi was sentenced to life in prison, in February 2018, for planting a series of bombs in New York and New Jersey in September 2016.  Law enforcement also intercepted a letter that ALIMHEMETI sent to Rahimi, after their propaganda-distribution scheme inside the jail was thwarted, in which ALIMEHMETI referred to himself as the “ISIS balla,” indicated that he had destroyed evidence of their propaganda distribution efforts, and expressed hope that both convicted terrorists would ultimately achieve so-called martyrdom through another act of terrorism.

In addition to the prison term, ALIMEHMETI, 26, of the Bronx, was also sentenced to five years of supervised release. 

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state and local agencies; the NYPD’s Intelligence Division; the Department of Justice’s Office of International Affairs; the Albania State Police; and the Metropolitan Police Service’s Counter Terrorism Command of London, United Kingdom.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division.

Manhattan Doctor Convicted In Manhattan Federal Court Of Accepting Bribes And Kickbacks From A Pharmaceutical Company In Exchange For Prescribing Fentanyl Drug

  Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of GORDON FREEDMAN for participating in a scheme to receive bribes and kickbacks in the form of fees for sham educational programs (“Speaker Programs”) from Insys Therapeutics, Inc. (“Insys”) in exchange for prescribing millions of dollars’ worth of Subsys, a potent fentanyl-based spray manufactured by Insys, among other offenses.  The jury convicted FREEDMAN today on three counts, following a three-week trial before the U.S. District Judge Kimba M. Wood.

U.S. Attorney Geoffrey S. Berman stated:  “Today’s conviction, in addition to the prior guilty pleas in this case of four other prominent Manhattan doctors, underscores that this Office will hold any physician accountable when that physician’s medical judgment is compromised by the corrupting influence of money.  As a jury of his peers has now found, Dr. Gordon Freedman sold out his patients by prescribing a powerful and dangerous fentanyl opioid in exchange for bribes from the pharmaceutical company that manufactured that drug.”

As reflected in the Indictment, documents previously filed in the case, and evidence introduced at trial:

Insys manufactured Subsys, a powerful painkiller approximately 50 to 100 times more potent than morphine.  The FDA approved Subsys only for the management of breakthrough pain in cancer patients.  Prescriptions of Subsys typically cost thousands of dollars each month, and Medicare and Medicaid, as well as commercial insurers, reimbursed prescriptions written by FREEDMAN.

In or about August 2012, Insys launched a “Speakers Bureau,” purportedly aimed at educating practitioners about Subsys.  In reality, however, Insys used its Speakers Bureau to induce doctors to prescribe large volumes of Subsys by paying them Speaker Program fees.  At each Speaker Program, speakers were supposed to conduct a slide presentation for other health care practitioners regarding Subsys.  However, many of the Speaker Programs led by the speakers paid by Insys were predominantly social affairs where no educational presentation about Subsys occurred.  Attendance sign-in sheets for the Speaker Programs were frequently forged by adding the names and signatures of health care practitioners who had not actually been present.

FREEDMAN was a doctor certified in pain management and anesthesiology who owned a private pain management office on Manhattan’s Upper East Side.  FREEDMAN, who was also an Associate Clinical Professor at a large hospital in Manhattan (“Hospital-1”), received approximately $308,600 in Speaker Program fees from Insys in exchange for prescribing large volumes of Subsys. 

In March 2013, a Regional Sales Manager for Insys sent an email to FREEDMAN informing him that he would receive more Speaker Programs in the coming months because Insys wanted prescriptions of Subsys to increase, and urging FREEDMAN to put more patients on Subsys.  FREEDMAN responded, in part, “Got it,” and significantly increased his Subsys prescriptions in the following months, during which he received approximately $33,600 in Speaker Program fees. 

In 2014, FREEDMAN’s prescriptions of Subsys rose even further, and he was the fourth-highest prescriber of Subsys nationally in the final quarter of 2014, accounting for approximately $1,132,287 in overall net sales of Subsys in that quarter alone.  During 2014, FREEDMAN was the highest-paid Insys Speaker in the nation, receiving approximately $143,000. 

FREEDMAN, 59, who resides in Mount Kisco, New York, was found guilty of one count of conspiracy to violate the Anti-Kickback Statute, which carries a maximum term of five years in prison, one count of violating the Anti-Kickback Statute, which carries a maximum term of 10 years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum term of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  FREEDMAN is scheduled to appear for sentencing before Judge Wood on March 19, 2020.

Mr. Berman praised the investigative work of the FBI, and thanked HHS OIG and the New York City Police Department for their participation in the investigation. 

Attorney General James Wins State Vaccination Lawsuit

 New York Attorney General Letitia James today released the following statement after a lawsuit against the state’s vaccination laws was dismissed in the case of F.F. on behalf of her minor children, et al. v State of New York, et al.:

“Vaccines ensure the health and safety of our children, our families, and our communities. This law will help protect New Yorkers from experiencing any additional public health crises, which is why we vigorously defended it. We are pleased with the decision by the court.”

In June, the New York State legislature passed and Governor Andrew M. Cuomo signed into law a bill that would end religious exemptions for immunizations, citing a growing measles outbreak in Rockland County and the growing threat of a public health emergency.