State Comptroller Thomas P. DiNapoli's Weekly News - Growth Opportunities and Challenges for New York Farms

 

Growth Opportunities and Challenges for New York Farms

New York is fortunate to have access to diverse, locally produced food in local stores and farm markets. New York farms contribute to our quality of life and billions of dollars to the economy. Yet, challenges have forced nearly 5,000 farms out of business over the past decade. State Comptroller DiNapoli's new agriculture report examines the health of the industry and what the State can do to strengthen our food supply to benefit all New Yorkers. 

For more regional information: 

• Finger Lakes
• Long Island
• Hudson Valley
• North Country 

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DiNapoli Report Looks at New York's Social Insurance Programs for Unemployed and Injured Workers

The benefits from four major social insurance programs provide crucial financial support during difficult times for hundreds of thousands New Yorkers each year, according to a new report by State Comptroller DiNapoli that reviews the benefit amounts, limits, and wage replacement rate of these programs and how they compare with peer states.

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State Paid $14.5 Billion for Medicaid Home Care Services That Lacked Verification

Billions of dollars have been spent on Medicaid home care services for New Yorkers without the required verification that the services took place, according to a new audit from State Comptroller DiNapoli.

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Fulton County Snowmobile President Arrested for Stealing Over $8,000 From Nonprofit

State Comptroller DiNapoli and Fulton County District Attorney Mike Poulin announced the arrest of the president of a nonprofit that maintains snowmobile trails in the Adirondacks, the Snowdrifters of Stratford, for allegedly stealing over $8,000 from the nonprofit, and for falsifying business records to fraudulently secure $40,000 in State grant money for the organization.

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ALSO IN THE NEWS THIS WEEK

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• Editorial: Transparency amid emergency 
  

• Police: Stratford snowmobile association official stole from group

• Albany woman pleads guilty to stealing over $230k from elderly person

• State comptroller report outlines threats to New York's farms

• NY State Paid $14.5 Billion for Unverified Home Health Services

Post of the Week
Thomas P. DiNapoli

Pharmaceutical Company QOL Medical and CEO Agree to Pay $47M for Allegedly Paying Kickbacks to Induce Claims for QOL’s Drug Sucraid

 

Pharmaceutical company QOL Medical LLC (QOL) and its co-owner and CEO, Frederick E. Cooper, have agreed to pay $47 million to resolve allegations that they caused the submission of false claims to federal health care programs, in violation of the False Claims Act and similar state statutes, by offering kickbacks in the form of free Carbon-13 breath testing services to induce claims for QOL’s drug Sucraid.

Sucraid is an FDA-approved therapy for the rare genetic condition Congenital Sucrase-Isomaltase Deficiency (CSID). CSID patients have difficulty digesting sucrose (table sugar) and suffer from gastrointestinal symptoms such as diarrhea, abdominal pain, bloating and gas.  

Beginning in 2018, QOL, with Cooper’s approval, distributed free Carbon-13 breath test kits to health care providers and asked providers to give the kits to patients with common gastrointestinal symptoms. QOL claimed that the test could “rule in or rule out” CSID. In fact, the test does not specifically diagnose CSID. Conditions other than CSID can cause a patient to test “positive” for low sucrase activity on a Carbon-13 breath test. Approximately 30% of the Carbon-13 breath tests from QOL were positive for low sucrase activity.  

QOL paid a laboratory to analyze the breath tests, report the results to health care providers and also provide the results to QOL. The results provided to QOL did not contain patient names, but did contain the name of the health care provider who ordered the test, along with the patient’s age, gender, symptoms and test result. Between 2018 and 2022, QOL disseminated this information to its sales force with instructions to make sales calls for Sucraid to health care providers whose patients had positive Carbon-13 breath test results. QOL tracked whether sales representatives converted “positive” Carbon-13 breath tests into Sucraid prescriptions. As QOL’s CEO, Cooper was aware of and approved the implementation and continuation of this marketing program.

Some QOL sales representatives also made claims to health care providers regarding the Carbon-13 test’s ability to definitively diagnose CSID that were not supported by published scientific literature. For example, in slides at a 2019 national sales training, which Cooper reviewed, QOL suggested that sales representatives tell health care providers, “If you have a positive breath test, the patient will not improve unless you treat with Sucraid.”  

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

“Participants in the federal healthcare system, including pharmaceutical manufacturers, may not offer improper inducements to generate business,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to protecting the integrity of federal health care programs, upholding the objectivity of treatment decisions by physicians and patients and preventing overutilization and waste in government health care programs.”

“QOL provided free goods to doctors and patients in order to induce prescriptions for the very expensive drug QOL manufactured,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “Not all kickbacks come in the form of cash going into a doctor’s or a patient’s pocket. Here, the defendants relied on free breath tests and misleading sales tactics to drive patients to their product. This conduct unnecessarily drained money from the federal health care programs and improperly influenced treatment decisions by physicians and their patients.”

“Kickback arrangements can compromise medical decisions and threaten the integrity of the Medicare program,” said Special Agent in Charge Roberto Coviello of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “We are committed to protecting taxpayer-funded health care programs and the patients served by those programs, and we will thoroughly pursue allegations of False Claims Act violations.”

“Kickbacks have no place in our healthcare system,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “This settlement should send a message that the FBI is committed to finding fraudsters and investigating all those who try to exploit the healthcare system at the expense of patients.”

“The Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Department of Defense Office of Inspector General, has placed a high priority on pursuing companies that engage in fraudulent activity at the expense of the U.S. military,” said Special Agent in Charge Patrick J. Hegarty of the DCIS Northeast Field Office. “This settlement demonstrates our commitment to protecting the TRICARE program, and we will continue to work with our partners to ensure critical healthcare funds are utilized in the appropriate manner.”

The allegations resolved by the settlement agreement were, in part, originally brought in a case filed under the qui tam or whistleblower provisions of the False Claims Act by Elizabeth Allen, Lauren Canlas, Donald Johnson and Stacey Adams, who are former QOL Medical employees. The case is captioned United States ex rel. John Doe 1 et al. v. QOL Medical LLC, et al., No. 1:20-cv-11243 (DMA). 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 $47 million recovery, approximately $43.6 million constitutes the federal portion of the recovery and approximately $3.4 million constitutes a recovery for State Medicaid programs. The whistleblowers will receive approximately $8 million from the federal portion of the recovery.

The government’s pursuit of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the FCA. 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 Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Massachusetts, with investigative support from HHS-OIG, the FBI Boston Field Office, DCIS and Department of Veterans Affairs’ Office of the Inspector General.

Trial Attorneys Emily Bussigel and Paige Ammons of the Justice Department’s Civil Division and Assistant U.S. Attorneys Brian LaMacchia and Lindsey Ross for the District of Massachusetts handled the matter.

With the exception of the facts admitted by QOL and Cooper, the claims resolved by the settlement are allegations only. There has been no determination of liability.

BRONX MAN AND TEEN INDICTED FOR MURDER OF MAN DURING ROBBERY

 

15-Year-Old Boy Allegedly Shot the Victim

Bronx District Attorney Darcel D. Clark today announced that a Bronx man and a 15- year-old boy have been indicted for second-degree Murder and additional charges in a robbery that took a man’s life. 

District Attorney Clark said “The defendants allegedly robbed a man inside an apartment building, and during it he was shot, allegedly by the teenage boy. We cannot become inured to the tragedy of children committing gun violence in our community.” 

District Attorney Clark said Francisco Deleon, 25, of Westchester Avenue, and the 15- year-old defendant were indicted on two counts of second-degree Murder, first-degree Manslaughter, two counts of first-degree Robbery, two counts of second-degree Robbery, and two counts of second-degree Criminal Possession of a Weapon. Deleon was arraigned on Thursday, November 14, 2024, before Bronx Supreme Court Justice Brenda Rivera and remanded. The teen defendant was arraigned by Bronx Supreme Court Justice Gayle Roberts in the Youth Part on November 7, 2024, and remanded. They are due back in court on February 6, 2025.

According to the investigation, on October 16, 2024, at approximately 8:30 p.m., inside of 671 Westchester Avenue, in the Woodstock section of the Bronx, the defendants acted in concert with each other and others in luring Ali Flores, 26, to the location where they robbed him of marijuana and cash and during the struggle involved in that robbery, the 15-year-old allegedly shot Flores once in the torso, causing his death. The assailants fled with victim’s property to an apartment in the same building. Police arrested the defendants inside the apartment after they obtained a search warrant where they also found the victim’s property. The incident was also captured on video.

District Attorney Clark thanked NYPD Detective Patrick Flatley of the Bronx Homicide Squad, Detective Stephen Barry of the 40th Precinct Detective Squad and members of the Police Service Area 7 Field Intelligence Office for their work in the investigation. 

An indictment is an accusatory instrument and not proof of a defendant’s guilt. 

MAYOR ADAMS CELEBRATES BACK-TO-BACK RECORD-BREAKING YEARS FOR SUPPORTING MINORITY-AND-WOMEN-OWNED BUSINESSES

City Awarded $6.4 Billion in Total M/WBE Contracts During Fiscal Year 2024 

  

City Agencies Utilized M/WBEs at Highest Rate Ever Recorded in Fiscal Year 2024 

  

Highest Total Contract Amount Awarded to M/WBEs in Program’s History  

  

Adams Administration Announces M/WBE Advisory Council of Prominent Business, Civic, and

Advocate Leaders to Continue Historic Progress with M/WBEs 

  

Milestones Mark Progress Towards Administration’s 

Moonshot Goal of Awarding $25 Billion by Fiscal Year 2026  

New York City Mayor Eric Adams, Chief Business Diversity Officer Michael J. Garner, Mayor’s Office of Contract Services (MOCS) Director Lisa Flores, and the New York City Department of Small Business Services (SBS) Commissioner Dynishal Gross celebrated a multi-agency effort to deliver back-to-back record-breaking years for spending on, and supporting, minority-and-women owned business enterprises (M/WBE). In Fiscal Year 2024 (FY24), the city awarded $6.4 billion in M/WBE contracts and continued to make meaningful progress towards Mayor Adams’ OneNYC goal of awarding $25 billion in M/WBE city contracts by FY26. Under Local Law 1 (LL1), which governs the city’s M/WBE program, the utilization rate was 31.2 percent — the highest ever in the program’s history. The city also set a record-high in total contract value awarded to M/WBEs under LL1 at $1.59 billion, a 15 percent increase since FY22, the first fiscal year of the Adams administration. Further, in FY24, more M/WBEs than ever were awarded contracts under the city’s M/WBE Small Purchase method, a streamlined process to engage directly with certified M/WBEs, representing an increase of 41 percent in contract value from the previous fiscal year. 

  

Finally, Mayor Adams announced the M/WBE Advisory Council to advance the administration’s historic progress on supporting M/WBEs. Chaired by Chief Business Diversity Officer Michael Garner, the council will be co-chaired by former New York City Comptroller William Thompson and New York Building Congress Chairperson Emeritus Elizabeth Velez. The full list of members can be found online. 

  

“When we came into office two and a half years ago, we had a mission: make this a safer, more affordable city for working-class New Yorkers, and we continue to deliver on that vision by putting money back into communities that have been denied a fair shot for far too long,” said Mayor Adams. “Today, we are proud to announce another record-breaking year for minority-and-women owned business enterprises in New York City with the city awarding $6.4 billion in M/WBE contracts for Fiscal Year 2024, and the creation of the M/WBE Advisory Council to help advance the administration’s historic support of M/WBEs. This council will help us build on the progress we have already made and reach our moonshot goal of awarding $60 billion by Fiscal Year 2030 to ensure M/WBEs finally are able to open their small businesses, support their families, and truly get ahead.” 

  

“Since the beginning of this administration, we have used every tool at our disposal to ensure M/WBEs are getting their fair share of city dollars,” said First Deputy Mayor Maria Torres-Springer. “We are proud to announce our Fiscal Year 2024 results: $6.4 billion in total M/WBE contracts and a record-breaking 31.2 percent M/WBE utilization rate, milestone achievements that mark our progress towards awarding $25 billion in contracts to M/WBEs by Fiscal Year 2026. Our new M/WBE Advisory Council, capturing diverse industries and a wealth of experience, will work hand-in-hand with us to ensure our continued progress towards these ambitious goals.”  

  

“Under the effective leadership of Mayor Adams and his ‘Get Stuff Done’ approach to addressing historic disparities in city contracting, the M/WBE program has made great strides in Fiscal Year 2024 despite challenging fiscal times,” said Chief Business Diversity Officer Garner. “Through collective and focused efforts, which include key legislative victories, we’ve been able to put M/WBEs in the critical path of the city’s procurement processes. The outcome is a record fiscal year for M/WBEs on multiple levels, including records set in the M/WBE utilization rate — 31.2 percent — and agency use of their discretionary authority via the M/WBE Small Purchase Method tool to award over $250 million in contracts to M/WBEs. I also recognize that these achievements would not have been possible without the tireless work and committed leadership of our citywide agencies’ procurement staff and our excellent oversight partners, SBS and MOCS. With the announcement of our new M/WBE Advisory Council — a collection of accomplished public and private sector leaders, civil rights organizations, and business industry experts — I have no doubt that we will indeed meet the mayor’s aggressive OneNYC goal of awarding $25 billion in M/WBE contracts by FY26. This achievement will lead to increased employment and homeownership opportunities for many New Yorkers.” 

  

“Today, we are excited to highlight the outcomes of this administration's investment in our minority and women-owned business community,” said City Chief Procurement Officer and MOCS Director Flores. “Fiscal Year 2024 demonstrated that our steadfast commitment to enhancing New York City’s M/WBE program has resulted in unprecedented success, including an M/WBE utilization rate exceeding 31 percent. This groundbreaking achievement was made possible through tireless advocacy for establishing fair procurement practices by agency leaders and professionals from across our city. Collaboration is essential and it is how progress happens. The M/WBE community has voiced its needs, and today, we are proud to share our plans to continue addressing those needs. The newly formed M/WBE Advisory Council has significant work ahead, and I am honored to partner with the council, Chief Business Diversity Officer Garner, and Small Business Services Commissioner Gross to create the equitable procurement system New York City deserves.” 

  

“SBS is proud of the contributions we've made to achieving the milestone of record M/WBE contributions to New York City's critical work,” said SBS Commissioner Gross. “Through rigorous implementation of M/WBE certification and targeted programs ranging from the Contract Financing Loan Fund to M/WBE business education and technical assistance, SBS unlocks economic opportunity for M/WBEs that help our city ‘Get Stuff Done.’ I thank Mayor Adams, First Deputy Mayor Torres-Springer, and Chief Business Diversity Officer Garner for their devotion to making New York City's M/WBE program the gold standard in the fight against economic inequity and inequality.” 

  

“We are thrilled that Mayor Adams and our partner agencies are well on their way to achieving the OneNYC goal of awarding $25 billion in M/WBE city contracts by FY26,” said New York City Economic Development Corporation (NYCEDC) President and CEO Andrew Kimball. “Supporting diverse entrepreneurs is a pillar of NYCEDC’s work to create a more vibrant and equitable economy and we are thrilled to support Mayor Adams’ leadership in uplifting M/WBE’s across the five boroughs.” 

 

Today’s announcement follows last year’s record-breaking numbers for MWBEs. In FY23, the first full fiscal year of the Adams administration, the city set a new record for spending on city-certified M/WBEs by awarding over $1.4 billion in contracts to M/WBEs under the Local Law 1 program, awarded contracts to a record-setting 1,903 unique certified vendor firms, set a record in agency discretionary use of the Small Purchase Method, and tied a then-city record 28 percent M/WBE utilization rate. 

  

The Adams administration has a proven track record on investing in the success and growth of M/WBEs. Mayor Adams appointed Michael Garner as the city's first-ever chief business diversity officer to address historic disparities in city contracting and provide minority and women entrepreneurs increased opportunities to do business with New York City. Additionally, Mayor Adams signed Executive Order 34, ensuring that each city agency has a senior staff member empowered to prioritize M/WBE programming; standardize data collection from city-affiliated entities that will help facilitate the city’s full, real-time M/WBE performance outcome tracking; create more contracting opportunities for M/WBEs wherever practicable; and prioritize M/WBE vendor firms for the city’s emergency contract procurements. 

The Adams administration successfully advocated for the enhancement of a state law, sponsored by New York State Senator James Sanders and New York State Assemblymember Rodneyse Bichotte Hermelyn, and signed into law by New York Governor Kathy Hochul, to authorize agencies to award up to $1.5 million through the city’s M/WBE Small Purchase method, tripling the previous discretionary limit of $500,000 inherited by the Adams administration. This enhancement has paved the way for M/WBEs to better compete for small purchase contracts, with more than 60 percent of the total contract value awarded to Asian women-owned or Black- and Hispanic-owned businesses, which have historically been the most underutilized categories of M/WBEs. 

  

To provide equitable employment and business opportunities for marginalized communities, Mayor Adams announced the city’s first-ever community hiring effort, which will leverage more than $1.2 billion in city contracts to create job opportunities for underserved New Yorkers. Community hiring allows the city to use its purchasing power, set hiring goals across city procurement contracts, and build on the success of existing project labor agreements and agency-specific hiring programs.  

Under Mayor Adams’ leadership, the unemployment rate for Black and Latino New Yorkers has decreased by roughly 20 percent since the start of the administration. Between January 1, 2022, and July 1, 2024, the Black and Latino unemployment rate decreased in the five boroughs.  

NYC Comptroller Lander Files Brief in Support of FTC’s Ban on Non-Compete Agreements Amid Legal Challenges

 

New York City Comptroller Brad Lander, in partnership with The Interfaith Center on Corporate Responsibility and Zevin Asset Management, submitted an amici curiae brief in support of the Federal Trade Commission (FTC) and its defense of its recently issued non-compete rule, which banned the use of non-compete agreements for nearly all workers.

“Non-compete agreements lock workers into low-paying jobs, limit career advancement, and disproportionately affect women and workers of color,” said New York City Comptroller Brad Lander. “The businesses fighting against this rule are clearly trying to cling to outdated practices that harm workers and the economy for the sake of their profits. The FTC’s ban must be implemented on a national level in order to protect all workers equally and create a fairer, more competitive economy.”

The FTC’s rule has faced legal challenges from businesses, including a real estate company in Florida. A judge in the Middle District of Florida temporarily blocked the rule, claiming it may exceed the FTC’s authority to create such regulations. Despite recognizing that the FTC has the power to address unfair competition, the judge ruled that banning non-competes across the board raised broader legal questions.

Back in April 2023, Comptroller Lander penned a joint comment letter with Council Members Keith Powers and Tiffany Cabán to the FTC, urging strong action to curb these restrictive agreements that limit job mobility and suppress wages across the workforce. The letter emphasized how non-compete agreements disproportionately harm marginalized workers and called on the FTC to strengthen the proposed rule by including functional equivalents of non-compete agreements, such as non-solicitation and non-poaching clauses, which also restrict workers’ ability to switch jobs and seek better opportunities.

In response, Comptroller Lander joined other amici to support the FTC rule, arguing that a national, uniform rule is essential and that leaving the issue to be handled on a case-by-case basis would fail to address the widespread harm caused by non-compete agreements.

“We strongly support the FTC’s ban on non-compete agreements, which particularly impact low-wage workers by limiting job mobility and suppressing wages. As long-term investors, we believe that companies that invest in their workforce for long-term retention and growth, without using the artificial barrier of noncompete agreements, will be better positioned to respond to labor shortages and economic downturns,” said Josh Zinner, Chief Executive Officer at The Interfaith Center on Corporate Responsibility.

“We believe a resilient labor market is integral to corporate long-term value. Restricting mobility and wages with noncompetes limits the talent pool for companies to recruit from, hindering corporate and economic growth,” said Marcela Pinilla of Zevin Asset Management. “Additionally, eliminating noncompetes protects the individual worker’s freedom to pursue their employment of choice.”

Computer Programmer Convicted for Helping Run One of the Biggest Illegal Television Show Streaming Services in the United States

 

After a two-week trial, a federal jury in Las Vegas convicted a Cuban citizen and U.S. permanent resident for helping operate an illegal streaming service with one of the largest quantities of infringing works. The defendant, who was convicted of one count of conspiracy to commit criminal copyright infringement, is the eighth and final defendant to be convicted in the case.

According to court documents and evidence presented at trial, Yoany Vaillant, 43, worked as a computer programmer for Jetflicks, an online, subscription-based service headquartered in Las Vegas that permitted users to stream and, at times, download copyrighted television episodes without the permission of relevant copyright owners. At one point, Jetflicks claimed to have 183,285 different television episodes, far more than Netflix, Hulu, Vudu, Amazon Prime, Disney+, or any other licensed streaming service. At Jetflicks, Vaillant worked directly with Kristopher Dallmann and Jared Jaurequi, who were convicted of criminal copyright offenses by a different jury earlier this year.

According to his resume, Vaillant had 15 years of computer programming experience when he started at Jetflicks and knew 27 computer languages. During the four-and-a-half months that Vaillant worked at Jetflicks he made significant contributions to the operation of the service, including fixing issues affecting the automated downloading, processing, syncing, uploading, and streaming of Jetflicks’ inventory of infringing television episodes.

Evidence at trial showed that Vaillant and his co-conspirators scoured the internet to find infringing television programs from pirate sites around the world — including some of the biggest sites specializing in infringing content such as The Pirate Bay, RARBG, altHUB, and Nzbplanet — using automated software and computer scripts that ran nonstop. Vaillant and his co-conspirators reproduced hundreds of thousands of copyrighted television episodes without authorization and streamed the infringing programs to tens of thousands of paid subscribers located throughout the United States, often providing episodes to subscribers the day after the shows originally aired on television. The vast scale of Jetflicks’ piracy affected every significant copyright owner of a television program in the United States and resulted in millions of dollars of losses to the U.S. television show and streaming industries.

Vaillant was one of eight defendants indicted in the Eastern District of Virginia in 2019 for running Jetflicks. In that case, Vaillant’s co-defendant Darryl Polo, a computer programmer, pleaded guilty to four criminal copyright counts and one money laundering count, which related to Jetflicks as well as another illegal streaming site he operated. Co-defendant Luis Villarino, also a computer programmer, pleaded guilty to conspiracy to commit criminal copyright infringement at Jetflicks. The court sentenced Polo to four years and nine months in prison and Villarino to one year and one day in prison.

In February 2022, the court transferred the case to the District of Nevada for trial. The court in the District of Nevada subsequently severed Vaillant’s case from the other remaining five defendants — Dallmann, Jaurequi, Douglas Courson, Felipe Garcia, and Peter Huber — and those defendants were tried in Las Vegas last June. Dallmann ran the Jetflicks operation with assistance from Jaurequi and Courson; Garcia was in charge of customer support and helped obtain television show content; and Huber provided computer programming services. A jury found all five defendants guilty of conspiracy to commit criminal copyright infringement, and Dallmann was also found guilty of three additional counts of criminal copyright infringement and two counts of money laundering by concealment. This was the largest internet piracy case by volume of infringed works — and first illegal streaming case — ever to go to trial.

The court will sentence Dallmann, Courson, Garcia, Jaurequi, Huber, and Vaillant on Feb. 3 and 4, 2025. The court will determine any sentences after considering the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Jason M. Frierson for the District of Nevada; and Assistant Director in Charge David Sundberg of the FBI Washington Field Office made the announcement.

The FBI Washington Field Office investigated the case, with assistance from the FBI Las Vegas Field Office.