A former investment manager was charged in an indictment unsealed today for his alleged participation in a scheme to defraud a North Carolina-based life insurance company out of over $34 million.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Matthew G.T. Martin of the Middle District of North Carolina, and Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group made the announcement.
Bradley Reifler, 61, of Milbrook, New York, was charged with four counts of wire fraud and one count of perjury in the U.S. District Court for the Middle District of North Carolina. The defendant was arrested this morning and will appear today before U.S. Magistrate Judge Katherine H. Parker in the Southern District of New York.
The indictment alleges that the defendant, CEO and founder of Forefront Capital Holdings, engaged in a scheme to enrich himself and his business entities by defrauding a life insurance company out of assets held in trust for the potential payment of life insurance claims.
As alleged in the indictment, the defendant served as an investment advisor for over $34 million in assets belonging to the life insurance company. Rather than investing the $34 million in permissible investments, the defendant invested funds in high-risk, “junk”, or self-dealing investments and otherwise diverted funds for his personal and business use. The indictment further alleges that after a 2016 audit of the trust assets raised concerns about investments made by the defendant, the defendant concealed the fraud by falsifying and causing others to falsify supporting documentation, including valuations, promissory notes, and agreements, purporting to underly investments made with the trust assets.
The indictment also alleges that the defendant submitted a false declaration in connection with a civil suit brought by the life insurance company, falsely swearing, under penalty of perjury, that all investments had been approved and that all of the funds had been invested in debt instruments. As a result of the defendant’s scheme, the life insurance company was only able to recoup a portion of the approximately $34 million that it entrusted to the defendant, was unable to pay out on claims by its beneficiaries, and was placed in rehabilitation.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by USPIS. Trial Attorneys Michelle Pascucci, Drew Bradylyons, and Jessee Alexander-Hoeppner of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Meredith Ruggles of the Middle District of North Carolina are prosecuting the case.
The Criminal Division’s Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
- Defense Logistics: Preliminary Observations on Equipment Reset Challenges and Issues for the Army and Marine CorpsBy Sam NewsAugust 25, 2021The United States is engaged in an unconventional war, not a war against military forces of one country, but an irregular war against terrorist cells with global networks. Operations Iraqi Freedom and Enduring Freedom are sustained military operations, which are taking a toll on the condition and readiness of military equipment that, in some cases, is more than 20 years old. The Army and Marine Corps will likely incur large expenditures in the future to reset (repair or replace) a significant amount of equipment when hostilities cease. The Army has requested about $13 billion in its fiscal year 2006 supplemental budget request for equipment reset. Today's testimony addresses (1) the environment, pace of operations, and operational requirements in Southwest Asia, and their affects on the Army's and Marine Corps's equipping and maintenance strategies; (2) equipment maintenance consequences created by these equipping and maintenance strategies; and (3) challenges affecting the timing and cost of Army and Marine Corps equipment reset. GAO's observations are based on equipment-related GAO reports issued in fiscal years 2004 through 2006, as well as ongoing related work.In response to the harsh operating environments in Iraq and Afghanistan, and the unanticipated and prolonged length and pace of sustained operations, the Army and Marine Corps have developed and implemented several initiatives to equip its forces and maintain the extensive amounts of equipment in theater. Environmental factors such as heat, sand, and dust have taken their toll on sensitive components. In addition, operating equipment at a pace well in excess of peacetime operations is generating a large operational maintenance and replacement requirement that must be addressed when units return to their home stations. To meet ongoing operational requirements, the Army and Marine Corps have developed pools of equipment in theater to expedite the replacement of equipment damaged during operations and directed that equipment necessary for OIF and OEF operations remain in theater. In response, the Army and Marine Corps have developed several initiatives to increase the maintenance capacity in theater to be able to provide near-depot level repair capabilities. Although the Army and Marine Corps are reporting high rates of equipment readiness and have developed and implemented plans to increase the maintenance capabilities in theater, these actions have a wide range of consequences. Many of the equipment items used in Southwest Asia are not receiving depot-level repair because equipment items are being retained in theater or at home units and the Army has scaled back on the scope of work performed at the depots. As a result, the condition of equipment items in theater will likely continue to worsen and the equipment items will likely require more extensive repair or replacement when they eventually return to home stations. The Army and Marine Corps will face a number of ongoing and long-term challenges that will affect the timing and cost of equipment reset, such as Army and Marine Corps transformation initiatives, reset of prepositioned equipment, efforts to replace equipment left overseas from the active, National Guard, and Reserve units, as well as the potential transfer of U.S. military equipment and the potential for continuing logistical support to Iraqi Security Forces. Also, both the Marine Corps and Army will have to better align their funding requests with the related program strategies to sustain, modernize, or replace existing legacy equipment systems. Finally, both services will have to make difficult choices and trade-offs when it comes to their many competing equipment programs. While the services are working to refine overall requirements, the total requirements and costs are unclear and raise a number of questions as to how the services will afford them. Until the services are able to firm up these requirements and cost estimates, neither the Secretary of Defense nor the Congress will be in a sound position to weigh the trade offs and risks.[Read More…]
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- Nuclear Weapons: NNSA Should Further Develop Cost, Schedule, and Risk Information for the W87-1 Warhead ProgramBy Sam NewsSeptember 23, 2020The National Nuclear Security Administration (NNSA) did not consider cost estimates in early major design decisions for the W87-1 warhead because it was not required to do so, but NNSA has since changed its guidance to require that cost be considered, according to a May 2019 NNSA review of program documentation. The design decisions that remain for features that would achieve either minimum or enhanced requirements for the W87-1 could affect cost, according to NNSA officials (see table). We found, however, that NNSA did not yet have study plans for assessing the costs and benefits of the remaining decisions consistent with best practices as detailed in NNSA's analysis of alternatives business procedure. NNSA does not require and only recommends that programs such as the W87-1 follow these best practices. By directing the W87-1 program and future weapons programs to follow best practices for design studies, or to justify and document deviations, NNSA would have better assurance that design studies apply consistent, reliable, and objective approaches. NNSA Cost Estimates for W87-1 Warhead Design Variations That Meet Minimum and Enhanced Requirements, as of December 2018 (Dollars in billions) W87-1 design variations Cost estimate rangea Design includes features that meet minimum safety and security requirements 7.7 - 13.3 Design includes enhanced safety and security features 8.6 - 14.8 Difference between the above estimate ranges 0.9 - 1.5 Source: National Nuclear Security Administration (NNSA) documentation | GAO-20-703 aThe cost ranges reflect low and high estimates for a single design variation. The ranges represent technical and production risk and uncertainty. It is not clear that NNSA will be able to produce sufficient numbers of pits—the fissile cores of the primary—to meet the W87-1 warhead's planned production schedule. Recent NNSA and independent studies have cast doubt on NNSA's ability to ready its two planned pit production facilities in time. If one facility is not ready to produce pits in the early 2030s, for example, NNSA would likely produce fewer weapons than planned, according to GAO's analysis of NNSA plans. We were unable to fully assess the extent to which the two pit production facilities will be ready to produce pits for the W87-1 because NNSA's plutonium program—which is managing the facility readiness efforts—has not yet completed an integrated schedule for the overall pit production effort. An integrated schedule is important, according to best practices, because it integrates the planned work, resources, and budget. An NNSA official stated that the program was building a schedule, but could not provide documentation that it would meet best practices. A schedule consistent with best practices would provide NNSA with better assurance that it will have adequate pits to meet planned W87-1 production. This is a public version of a classified report that GAO issued in February 2020. Information that NNSA or DOD deemed classified or sensitive has been omitted. The Department of Defense (DOD) and NNSA restarted a program in fiscal year 2019 to replace the capabilities of the aging W78 nuclear warhead with the W87-1. NNSA made key design decisions for this weapon from 2010 until the program was paused in 2014. NNSA estimated in December 2018 that the W87-1 would cost $8.6 billion to $14.8 billion, which could make it the most expensive warhead modernization program to date. NNSA plans to newly manufacture the entire warhead, including the two major nuclear components, called the primary and secondary, using facilities it is modernizing or repurposing. You asked us to examine plans for the W87-1 warhead. This report examines, among other things, the extent to which NNSA (1) considered cost estimates in prior design decisions for the W87-1 and the potential effects of remaining design decisions on program cost, and (2) will be able to produce sufficient numbers of key nuclear components to meet W87-1 production needs. GAO reviewed NNSA documentation on prior and remaining design decisions and preliminary cost estimates, reviewed warhead and component production schedules, and interviewed NNSA and DOD officials. GAO is making four recommendations, including that NNSA require programs such as the W87-1 to follow analysis of alternatives best practices when studying design options and that the plutonium program build an integrated schedule consistent with schedule best practices. NNSA generally agreed with the recommendations. For more information, contact Allison B. Bawden at (202) 512-3841 or email@example.com.[Read More…]
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- Steel and Aluminum Tariffs: Commerce Should Improve Its Exclusion Request Process and Economic Impact ReviewsBy Sam NewsSeptember 15, 2020The Department of Commerce (Commerce) has a four-phase process to review companies' requests to be excluded from having to pay Section 232 steel and aluminum tariffs. Commerce ensures an exclusion request is complete, accepts public input, evaluates materials submitted, and issues a final decision. Between March 2018 and November 2019, Commerce received over 106,000 requests; it rejected over 19,000 of them prior to decision due to incorrect or incomplete information. Although rejections may delay relief for requesters and can increase work for Commerce, the agency has not identified, analyzed, or taken steps to fully address the causes of these submission errors. In deciding exclusion requests, Commerce examines objections from steel and aluminum producers to find whether the requested products are reasonably available domestically in a sufficient amount. Commerce may also decide exclusion requests based on national security issues, but has not done so. While Commerce approved two-thirds of exclusion requests, it most often denied requests that had technical errors or where a domestic producer had objected. Commerce did not decide about three quarters of requests within its established timeliness guidelines, as shown in the figure, taking more than a year to decide 841 requests. Commerce took steps to improve timeliness, such as streamlining the review process for some requests and creating a new submission website, but continues not to meet guidelines and had a backlog of 28,000 requests as of November 2019. Until Commerce takes additional steps, companies will continue to encounter delays in obtaining relief. Most Steel and Aluminum Exclusion Decisions Did Not Meet the Department of Commerce's Established Timeliness Guidelines from March 2018 to November 2019 Commerce has not documented the results from any reviews of the tariffs' impacts or assigned responsibility for conducting regular reviews. GAO found evidence of changes in U.S. steel and aluminum imports and markets. For example, imports covered by the tariffs declined after an initial surge and prices dropped after significant increases in earlier years. Evaluating whether the tariffs have achieved the intended goals and how they affect downstream sectors requires more in-depth economic analysis. Without assigning responsibility for conducting regular reviews and documenting the results, Commerce may be unable to consistently assess if adjustments to the tariffs are needed. Citing national security concerns over excess global supply of steel and aluminum, in March 2018 the President placed tariffs on the import of some products using Section 232 of the Trade Expansion Act of 1962. At the President's direction, Commerce established a process to provide relief, or exclusion, from the tariffs. GAO was asked to review Commerce's Section 232 tariff exclusion process. This report assesses (1) the process Commerce uses to decide exclusion requests and to what degree it has accepted submitted requests; (2) what criteria and factors affected Commerce's decisions; (3) how often Commerce met established guidelines for the timely resolution of requests; and (4) the extent to which Commerce reviewed the impacts of the tariffs on steel and aluminum imports, as directed. GAO analyzed Commerce's Bureau of Industry and Security and International Trade Administration records from March 2018 to November 2019, as well as data from the U.S. Census Bureau and the Department of Homeland Security, and spoke with agency officials. GAO recommends that Commerce (1) identify, analyze, and respond to factors in the process that may cause submission errors; (2) take steps to improve timeliness of exclusion request decisions and address the backlog; and (3) assign responsibility for reviewing the tariffs' impact and document the results. Commerce concurred with all three recommendations. For more information, contact Kimberly Gianopoulos at (202) 512-8612 or GianopoulosK@gao.gov .[Read More…]
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- Eight Individuals Charged With Conspiring to Act as Illegal Agents of the People’s Republic of ChinaBy Sam NewsOctober 28, 2020A complaint and arrest warrants were unsealed today in federal court in Brooklyn charging eight defendants with conspiring to act in the United States as illegal agents of the People’s Republic of China (PRC). Six defendants also face related charges of conspiring to commit interstate and international stalking. The defendants, allegedly acting at the direction and under the control of PRC government officials, conducted surveillance of and engaged in a campaign to harass, stalk, and coerce certain residents of the United States to return to the PRC as part of a global, concerted, and extralegal repatriation effort known as “Operation Fox Hunt.”[Read More…]
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- Federal Employees’ Compensation Act: Comparisons of Benefits in Retirement and Actions Needed to Help Injured Workers Choose Best OptionBy Sam NewsAugust 21, 2020Factors such as the timing of an injury in a career affect how Federal Employees' Compensation Act (FECA) total disability benefits compare to income security from typical federal retirement. The FECA program compensates federal employees for lost wages from work-related injuries, among other benefits. FECA recipients can receive this compensation for as long as their disability continues. At retirement age, they can remain on FECA or, instead, choose to receive their benefits from the Federal Employees Retirement System (FERS). Thus, FECA benefits represent a significant portion of retirement income for some injured federal employees. Through simulations, GAO found that factors such as the length of retirees' careers absent injury affected how similar their hypothetical FECA benefits packages were to their FERS packages in 2018. FERS benefits increase substantially the longer a federal employee works. As a result, median current and reduced FECA packages were greater than the FERS median for retirees with shorter careers absent injury. However, median FECA packages were similar to or less than FERS for retirees with longer careers (see figure). Median FECA Benefits as a Percentage of FERS Benefits by Career Length Absent an Injury For FECA recipients who choose to compare their FECA and FERS benefit options at retirement, estimates for most components of those benefits packages are available. However, the Department of Labor (DOL) does not routinely remind recipients to compare benefits, so they may be unaware of their options or how to consider them. In addition, DOL and the Social Security Administration (SSA) use a manual and highly complex process to calculate one key component of a FECA recipient's compensation in retirement related to Social Security benefits. As a result, estimates of FECA benefits in retirement that include this component are not readily available prior to retirement. These challenges hinder recipients' ability to accurately compare their options and may result in some recipients not choosing their best option at retirement. The President's budgets for fiscal years 2019-2021 have proposed several FECA reforms, including reducing disability compensation at retirement age. In a series of reports published in 2012, GAO analyzed the effects of similar proposed revisions to FECA compensation. GAO was asked to update its FECA and FERS benefit comparisons. This report examines (1) how FERS and total disability FECA benefits at retirement age compare under current and previously proposed reduced FECA compensation rates, and (2) the extent to which FECA recipients have access to information to compare their FECA and FERS benefits options. GAO compared the FERS benefits selected retirees received in 2018 with the hypothetical total disability FECA benefits they would have received from simulated injuries. GAO reviewed agency documents and interviewed officials from DOL, SSA, and other federal agencies. GAO is recommending that DOL remind FECA recipients as they approach retirement to obtain FERS benefit estimates for comparisons with FECA, and that DOL and SSA take steps to modernize and improve their process for calculating and providing information on certain FECA benefits in retirement that would enable recipients to make complete comparisons of retirement options. DOL and SSA concurred with all three recommendations. For more information, contact Cindy Brown Barnes at (202) 512-7215 or firstname.lastname@example.org.[Read More…]
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- Substance Use Disorder: Reliable Data Needed for Substance Abuse Prevention and Treatment Block Grant ProgramBy Sam NewsDecember 14, 2020According to Substance Abuse and Mental Health Services Administration (SAMHSA) data, the number of substance use disorder (SUD) treatment facilities and services increased since 2009. However, potential gaps in treatment capacity remain. For example, SAMHSA data show that, as of May 2020, most counties did not have all levels of SUD treatment available, including outpatient, residential, and hospital inpatient services; nearly one-third of counties had no levels of treatment available. Stakeholders GAO interviewed said it is important to have access to each level for treating individuals with varying SUD severity. Availability of Substance Use Disorder Treatment Levels, by County, as of May 2020 SAMHSA primarily relies on the number of individuals served to assess the effect of three of its largest grant programs on access to SUD treatment and recovery support services. However, GAO found the agency lacks two elements of reliable data—that they be consistent and relevant—for the number of individuals served under the Substance Abuse Prevention and Treatment Block Grant (SABG) program. For example, grantee reporting includes individuals served outside of the program, which limits this measure's relevance for program assessment of access. SAMHSA plans to implement data quality improvements for the SABG program starting in fiscal year 2021. However, the agency has not identified specific changes needed to improve the information it collects on individuals served. As SAMHSA moves forward with its plans, it will be important for it to identify and implement such changes. Doing so will allow SAMHSA to better assess whether the SABG program is achieving a key goal of improving access to SUD treatment and recovery services or whether changes may be needed. Treatment for SUD—the recurrent use of substances, such as illicit drugs, causing significant impairment—can help individuals reduce or stop substance use and improve their quality of life. SUDs, and in particular drug misuse, have been a persistent and long-standing public health issue in the United States. Senate Report 115-289 contains a provision for GAO to review SUD treatment capacity. This report, among other things, describes what is known about SUD treatment facilities, services, and overall capacity; and examines the information SAMHSA uses to assess the effect of three grant programs on access to SUD treatment. GAO analyzed national SAMHSA data on SUD treatment facilities and providers, and reviewed studies that assessed treatment capacity. GAO also reviewed documentation for three of SAMHSA's largest grant programs available to states, and compared the agency's grant data quality to federal internal control standards. Finally, GAO interviewed SAMHSA officials and stakeholders, including provider groups. GAO is recommending that SAMHSA identify and implement changes to the SABG program's data collection efforts to improve two elements of reliability—the consistency and relevance—of data collected on individuals served. SAMHSA concurred with this recommendation. For more information, contact Alyssa M. Hundrup at (202) 512-7114 or HundrupA@gao.gov.[Read More…]