Post on 14-Jul-2020
transcript
Early Warning Signs… And Resources
ORRICK, HERRINGTON & SUTCLIFFE
213/612-2204
www.orrick.com
BACKGROUND INTELLIGENCE, INC.
213/243-0707
www.backgroundintelligence.com
INITIAL BRIEFING
Start-up Surgery Center (not in operation) Two primary Partners (70% and 10%) Five other investors The consultant “Bob”
Pattern of financial funny business
Unsigned Agreement with Surgery Center
Marketing and management Develop new physician contacts Develop contracts with healthcare providers
Actual role (without Partner oversight) Managed all aspects of Surgery Center start-up Assisted in real estate lease negotiation Oversaw space build-out/construction Leased or purchased medical equipment/furnishings Hired staff Managed all financial and billing activity
OPEN HOUSE…celebrating grand opening of Surgery Center
01/17/14 Bob fired
Bob emptied out Surgery Center office, leaving “trash”
01/20/14 BRIEFING FROM PARTNERS
01/14/14
OPEN HOUSE…celebrating grand opening of Surgery Center
01/17/14 Consultant fired
Emptied out Surgery Center office, leaving “trash”
01/20/14 BRIEFING FROM PARTNERS
Chaos Computers, financial records and vendor information taken by consultant Muddled records Everyone under suspicion (including bank) Secure office (restrict access, change locks) Partners tapped out
Refinanced homes Loans (SBA loan)
Corporate attorney involvement Limited funds to pay investigators
Current assets Identify business entities Liens, judgments, or factors that may affect collections Identify the parties: complicit relationships and
business interrelationships Document others scammed by consultant Facts: benefit negotiations or influence collections
Proprietary databases Public records
Court search in each jurisdiction Recorder’s office
Social networking sites Title searches Telephone interviews
B (Bob’s dead dad)
SLF (Bob’s former
wife)
RM
JN
Nurse LB
AC
JG
R F. N
T J. T
LV
KL (aliases; Bob’s
fiancée)
MR
EKP
“BOB”
CFN (aliases; Bob’s wife)
VP (multiple aliases)
JO
GS
AAG
AAA, PC
MCA, LLC
SCSM, LLC
SCL, LLC
GA
GFA A, LLC
NHM S
SCPA
AAG AAA, PC MCA, LLC SCL, LLC NHM S SCPA EP AH CCAM SCSC
ARB SSI SSM SSI KRN SCSM, LLC SCS, LLC SCMSC SCS TLM GA GFA SM A, LLC LBn, LLC
SSI, LLC
Bob’s Companies Tied to Surgery Center
Bob’s Other Companies
LBn, LLC
EP
AH CCAM
SCSC
BOB
TLM
SCMSC
SCS
SM
SCS, LLC
ARB
SSI
KRN
SSM
CASE TYPE COMMENTS
8:04-MJ-005-UA-1 • Conspiracy • Illegal Kickback for Patient
Referral
GUILTY Letters of Support
6:11-bk-194-MJ Bankruptcy (Chapter 7) Discharged 08/29/2012
6:12-ap-011-MJ and 30-2011-004393-CU-BC-CJC
Breach of Contract (Related to Bankruptcy)
(Dr. S: Other Surgery Center) Bob and VP Dismissed: Closed
6:11-ap-020-MJ and 30-2009-003280-CU-BC-CJC
Breach of Contract (Related to Bankruptcy)
(M: Billing Service) Dismissed: Closed
30-2012-006215 Fraud (Dr. T: Other Surgery Center) Dismissed-with Prejudice
30-2010-003765-CU-CL-CJC Civil (Bank)
30-2010-003761-CU-CO-CJC Contract R Capital LLC
30-2010-003655-CU-BU-CJC Breach of Contract (Dr. CC: Other Surgery Center)
30-2010-003650-CU-BU-CJC Breach of Contract (Dr. DM): Other Surgery Center)
30-2010-003383-CL-UD-HNB Unlawful Detainer Bob and Nurse LB
LIENS
CREDITOR AMOUNT
Franchise Tax $29,878
Franchise Tax $1,310
Federal Tax Lien $7,000
Federal Tax Lien $9,449
JUDGMENTS
CREDITOR AMOUNT
$7,500
Dr. CC Other Surgery Center
$56,000
Dr. DM Other Surgery Center
$365,598
Dr. DM Other Surgery Center
$283,000
Using Dead Dad’s address
$2,500
01/20/14 INVESTIGATION BEGINS
01/21/14 Initial Investigative Findings…complex criminal case
01/22/14 Introduced Forensic Accountant
Bob’s accomplice still working in Surgery Center billing
01/24/14 Forensic Accountant hired: • Provide management accounting (new investors/bank) • Forensic accounting…criminal case
Introduced Computer Forensics Expert
Investigative Briefing: Partners, Corporate Attorney, Forensic Accountant, Computer Forensics Expert
01/26/14 Vetted prospective consultant…Bob’s replacement
Registered DBAs using names similar to
legitimate businesses (including the Surgery Center)
Opened checking accounts for fake companies
Got vendors to send payment to these
accounts…funds were deposited to Bob Dummied invoices and proposals
Some Surgery Center invoices paid twice
SBA loan payments wired to Bob Purchased or leased “shoddy” refurbished
medical equipment (no replacement parts)
Two unemployment insurance claims for
accomplices using fake company Exceeded budgeted $360,000 Tenant
Improvement Allowance with the building owner. Now Partners owe well over $1 million.
Bob asks doctors for money and doesn’t pay it back
“shuffling funds between accounts” pays with checks that bounce
Often claims to be putting together an independent surgery
center or group Doctors introduce Bob to other physician friends and
colleagues “He’d tell people not to tell others that he was paying them” “Odd” behavior
“Many doctors get conned by Bob”. “…lost hundreds of thousands…he lost his pension” “I’ve been screwed too” “It was like a Ponzi scheme” “It is obvious that we are dealing with a sophisticated
con man who knows how to read and use people and how to manipulate the system while staying one step ahead of the law”.
CCAM SM SCS SSI ARB SM, LLC
Dr. T Nurse LB MR VP Dr. S CFN Dr. CC Dr. VV Dr. DM
People Connected to Surgery Centers
Surgery Centers That Have Sued Bob for Breach of Contract/Fraud
Dr. S
Dr. T
Nurse LB
MR
VP
CCAM
CFN
SM
SCS
Dr. DM
Dr. CC
Dr. VV
ARB SM, LLC
Bob’s Other Surgery Center Scams
SSI
BOB
Complex money flow Needs fresh sources of incoming funds
Investors New surgery centers (victims) Bank accounts New vendors Medical equipment
Finds willing accomplices
Possible options available to the Surgery
Center What the Partners did
The Surgery Center… Bob’s company (entity in unsigned
agreement) is still operating Bob has opened a new surgical facilities
company Bob’s Facebook page
No panacea for dealing with fraud Lengthy, dedicated, persistent effort Leadership and coordination required