Headlines that Matter for Companies and Executives in Regulated Industries
Florida Man and Affiliated Companies Pay $20 Million for COVID-19 Fraud
Following a whistleblower complaint filed by Andrew Hersh in 2020, a Florida businessman, Patrick Walsh, and 10 companies he owned or operated entered into a civil settlement for over $20 million to resolve False Claims Act (FCA) allegations. Walsh admitted to submitting fraudulent COVID-relief Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) applications on behalf of his companies. The applications, submitted in the name of Walsh’s wife, contained false information about the companies’ rosters and payrolls. As a result, Walsh received approximately $7.8 million in fraudulent loans on behalf of his companies. Walsh used loan proceeds to purchase a private island, invest in Texas oil interests, and pay personal debts.
Earlier, in 2023, Walsh pleaded guilty to one count of wire fraud and one count of money laundering in connection with the fraudulent PPP and EIDL loans and was ordered to pay $7.8 million in restitution and forfeiture in the same amount. He is currently serving his 66-month prison sentence.
Read the US Department of Justice’s (DOJ) press release here.
Eight Transmigrante Forwarding Industry Guilty Pleas
As the new Administration focuses efforts on combatting transnational criminal organizations, the DOJ recently announced that eight defendants involved in a long-running conspiracy to monopolize the transmigrante forwarding agency industry in the Los Indios, Texas, border region have pleaded guilty. Transmigrantes worked together with forwarding agencies — who provided services to clients who exported vehicles in Mexico — to transport used vehicles and other goods from the United States through Mexico for resale in Central America.
According to filings, the defendants fixed prices for the transmigrante forwarding agency by creating a “pool” which they used to collect and divide revenue among conspirators. The defendants then conspired to force agencies to pay money to the pool and pay extortion fees or fines for market operations outside of pool rules. One defendant was individually responsible for over $9.5 million in extortion payments.
Several defendants pleaded guilty to conspiracy to fix prices, monopolize, and allocate the market for transmigrante forwarding agencies in violation of Sections 1 and 2 of the Sherman Act. Two defendants also pleaded guilty to charges related to a money laundering conspiracy — resulting from attempts to launder the extortion proceeds — and one defendant pleaded guilty to structuring a financial transaction to evade reporting requirements. Three individuals named in the superseding indictment remain at large.
Read the DOJ’s press release here.
Former NFL Player Sentenced for Ponzi Scheme
Former NFL player, John Leake, was recently sentenced to two and a half years in prison after pleading guilty to one count of wire fraud and one count of transactional money laundering associated with a Ponzi scheme, running from 2015 to 2020. According to prosecutors, Leake fraudulently received approximately $8.1 million from six victim investors who believed that Leake was involved in luxury real estate and land development in Costa Rica and other business ventures, causing a total loss of approximately $5.3 million. Leake falsely told investors that he had invested in these ventures, and investors believed that the real estate and land would return high rates. Leake offered the investors promissory notes to guarantee a return on their investment and used their money for his credit card bills, car payments, rent, gambling, and to pay back other investors.
While the government requested a 41-month sentence for Leake, Leake himself requested an 18-month sentence, admitting that the case caused him to seek treatment for gambling and substance addictions.
The case is United States v. Leake, case number 2:24-cr-00533, in the US District Court for the Central District of California.
Read the DOJ’s press release here.
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