Bashian & Papantoniou, P.C.

Plea of guilty entered in $135 Million Medical Equipment Fraud Scheme

Bruce Donner, owner of Donner Medical Marketing, Inc., recently pled guilty to his role in a $135 million phony lease scheme.  The case, U.S. v. Bruce Donner, was heard in U.S. District Court in New Jersey before Judge Susan Wigenton.

According to prosecutors, Donner provided false medical equipment invoices to Charles Schwartz, the owner of Allied Health Care Services, Inc.  The invoices stated that Donner was providing various medical equipment to Allied when, in reality, no such equipment existed.  Schwartz then used the fake invoices to convince banks to enter into leasing agreements in which the banks would buy the equipment and then lease it to Schwartz. The bank payments were sent to Donner, who forwarded most of the money to a dummy corporation set up by Schwartz.  Donner kept a portion of the money, over $4.1 million, for himself as “commissions”. 

Overall, over fifty banks were defrauded, causing losses of more than $80 million. By pleading guilty to mail fraud, Donner faces up to 20 years in prison, as well as a fine of $250,000 or double the gross loss resulting from his offense.

The entire text of the article can be found here.

New Voting Laws Could Leave More than 5 Million Americans Away from the Polls Next Year

Republican state legislators and governors in a number of states have passed various laws this year that stand to have a large impact on voters in 2012. According to a study released this past Sunday by the Brennan Center for Justice at New York University, some of these recently passed laws will make it overwhelmingly difficult for voters, mostly Democrat ones, to cast ballots come election time in 2012.

Some of the new laws passed will: require photo identification for voting, eliminate same day voter registration in several states, require proof of citizenship to register to vote, change the requirements for voter registration drives and reduce early voting days. The report notes that these laws “could make it significantly harder for more than five million eligible voters to cast ballots in 2012.”

While Republicans claim the new laws are intended to prevent voter fraud, most Democrats aren’t buying it. They say it is a tool to dissuade the younger generations, minorities and low-income voters who vote in large part for the Democratic Party.  The Brennan Center’s report highlights the fact that minority groups in the U.S. will for the most part be negatively impacted. For example, according to the Brennan Center, African-Americans and Hispanics are the most likely to register to vote during voter registration drives in Florida. Those that have now been outlawed in that state the Sunday before Election Day (a well known day on which numerous African-American churches plan organized drives for the members of their congregation). Likewise, the new laws passed in Maine will no longer allow people to register to vote on Election Day, a practice that in 2008 was credited with enrolling nearly 60,000 new voters. In Texas, student identification cards will not be an acceptable form of photo identification now required. According to calculations performed by the Brennan Center, 11 percent of potential voters currently do not possess state-issued photo identification. Thus, this new relevant law alone would affect 3.2 million voters in those states where the change is scheduled to take effect before the 2012 elections.

Unpaid Interns Fight Back

Two interns are seeking a class action lawsuit against their former “employer” Fox Searchlight Pictures for violating federal labor laws. The interns, Eric Glatt, 42 and Alexander Footman, 24, claim that they worked full time, up to 50 hours per week, unpaid, performing menial tasks that did not further their education whatsoever. The two men worked on the hit movie “Black Swan,” one as a production intern and the other, an intern in the accounting department. Both state that they and hundreds like them at Fox Searchlight were given basic tedious tasks that should have been performed by paid employees. The labor laws contain certain requisite requirements in order to allow an entity to be exempt from paying their interns, requirements the plaintiffs say, that were not met.

The Federal labor department provides for criteria that must be met in order for a company to employ unpaid interns legally. Some of the requirements are: that the intern benefit in some way from their position at the firm, that the training received be similar to what would be given in an educational institution, that the intern not displace regular employees and that the employer derive no immediate advantage from the intern’s activities. Footman notes the lack of educational benefit derived from his daily tasks of fetching employees coffee, taking out the trash, taking and distributing lunch orders for the production staff and cleaning offices.

Black Swan, released in late 2010, grossed more than $300 million worldwide, although the cost of production was calculated to be $13 million. With a profit of $287 million, Glatt and Footman say, they could have afforded to pay their interns at least minimum wage. Thus, the former interns demand that they be paid their wages due as well as an injunction on Fox Searchlight restricting them from using unpaid interns on all future film productions.

General Patent Corporation Sues Wi-Lan in the Wake of a Failed Acquisition

New York patent firm General Patent Corporation (“GPC”) is suing the Canadian Ottawa-based patent and licensing company Wi-Lan for fraud and misappropriation of confidential information. The claims allege that Wi-Lan faked an interest in acquiring GPC in order to gain access to its private trade secrets. It is further alleged that at the time a term sheet was signed in April 2011, Wi-Lan deliberately concealed facts that it knew or should have known would make a completion of the transaction impossible. Thus, after signing the term sheet, Wi-Lan became privy to a number of confidential documents for the sole purpose of finalizing an acquisition it allegedly knew would never happen. 

Furthermore, GPC highlights that Wi-Lan hired Paul Lerner, its general counsel of General Patent who had allegedly told GPC that he was leaving the company due to his desire for retirement. However, Lerner is allegedly currently setting up shop in Stamford Connecticut at Wi-Lan’s new office where he holds the title of senior general counsel. GPC notes that accepting this job with one of their competitors is a breach of Lerner’s non-compete agreement, which should have prevented him from working for any competing entity for one year following the termination of his employment. Ironically, Wi-Lan announced the appointment of Lerner at their new office to promote the growth of the company’s partnership-licensing business.

The suit is scheduled to be heard on October 11 this year. A U.S. District Court Judge will rule on whether or not Wi-Lan will be able to use or disclose any of the confidential information it has discovered as well as Mr. Lerner’s fate at his new place of employment.

Possible SAT scam on Long Island

Sam Eshaghoff, a nineteen year-old sophomore at Emory University, was arrested along with six others, for his part in an SAT cheating ring. Eshaghoff was allegedly paid up to $2,500 from Great Neck North High School students to write their exams for them. Whiz kid Eshaghoff consistently scored between 2140 and 2220 out of a total available 2400 points for his “clients.” 

The six students discovered in the alleged scheme all signed up to take the test off school grounds. Eshaghoff would allegedly  manufacture phony driver’s licenses with the student’s name and his own picture in order to slip by monitors at the test-taking sites. School Administrators began hearing rumors of the alleged scheme and upon investigation, found six students whose SAT scores when compared to grade point averages respectively, exposed large discrepancies between the two. After a thorough handwriting analysis, Eshaghoff was thought to be the test-taker of all six exams. Eshaghoff now faces charges of scheming to defraud, criminal impersonation and falsifying business records. If convicted, he could face up to four years in prison for his actions. The six others in question face misdemeanor charges.  Prosecutors are handling the cases with priority, noting that it is no small indiscretion that these teens’ role in the scheme has left hard-working, honest students out of the running for competitive slots in good colleges. 

With rumors still popping up about Eshaghoff’s possible fraudulence with other students, the investigation continues. The prosecution has extended their inquiries into other school districts on Long Island that may have been a part of this SAT scam.

The Mets Battlefield in Court Continues

Brothers-in-law Fred Wilpon and Saul Katz, co-owners of the New York Mets, were given some relief in what had the potential to be a $1 billion lawsuit. Currently, nine of the eleven counts in the complaint of Irving Picard, the court-appointed trustee of assets seized from Bernie Madoff, have been dismissed. The two men, along with several others connected to the team’s ownership group, Sterling Equities, were brought before the court on allegations of fraudulently earning money via involvement in a Ponzi scheme with the notorious Madoff.

All counts relating to constructive fraud have been dismissed, however, Picard still stands to gain up to $383 million. A paramount allegation that still remains to be litigated is whether or not Wilpon and Katz earned nearly $300 million in fictitious profits by investing in a Ponzi scheme that they knew to be fraudulent.  According to U.S. District Judge Jed Rakoff, Picard can recover up to $83 million in fictitious profits and $300 in principal. The two require separate standards of proof. To recover fictitious profits, Picard will only need to show that defendants Wilpon and Katz did not provide any sort of value for the monies they received. This should not prove to be a difficult feat seeing as the defendants, if portrayed as intelligible investors, would have known their profits to be entirely unrealistic given their investments. Somewhat more of a challenge however, will be obtaining the proof necessary to succeed in recovering the principal. Rakoff noted that Picard must prove that defendants were “intentionally blind” to Madoff’s fraudulent and illegal actions. Thus, Picard will need to establish that Wilpon and Katz had substantial and informed suspicions of Madoff’s fraudulence and evidence of their states of mind.

With the New York Mets losing tens of millions of dollars each year, this lawsuit does not bold well for Wilpon and Katz’s hold on their ownership of the team.

Cyberbullying Law Reform

New York State Senator Jeffrey Klein aims to modernize the state’s laws with respect to ‘cyberbullying.’ The relatively new term is defined as “causing fear of harm or emotional distress using electronic communications to a person under 21.”

The legislation seeks to include its definition of cyberbullying in the state’s category of third-degree stalking. Furthermore, ‘bullycide’ defined as, “when a person engages in cyberbullying and intentionally causes the victim of such offense to commit suicide,” would be categorized as second-degree manslaughter. Such a conviction could hold up to a 15-year prison sentence, and many would say, rightly so. This piece of legislation reform was presented in a news conference earlier this week, sadly it finds itself on the heels of tragic suicide by Jamey Rodemeyer, a 14-year old boy from Buffalo who took his life due to years of emotional suffering caused by cyberbullying.

Law reform is a necessity in our growing and evolving society. Bullying has taken on some ugly forms where perpetrators hide themselves behind the safety of a computer, utilizing new popular Internet forums such as Facebook, and Twitter. According to CNN Politics, Klein emphasized this during Monday’s news conference noting that, “no longer is bullying only confined to the schoolyard, it is now piped in an instant through victim’s computers and onto the devices they carry in their pockets. This legislation will help provide protections to those who need it, as well as send a strong message about the seriousness of this destructive behavior.”

At least 30 states already have laws set in place to deal with online harassment and 5 have reformed their laws to explicitly include cyberbullying. Although cyberbullying was addressed at the federal level in 2008, it has been left up to the individual states to address the problem. This bill seeks to elevate New York to the level of modernization so many others have already reached.