21 Airlines Fined for Price-Fixing

March 10th, 2011

AOL News

By: Alicia A. Caldwell

When the airline industry took a nose dive a decade ago, executives at global carriers scrambled to find a quick fix to avoid financial ruin.

What they came up with, according to federal prosecutors, was a massive price-fixing scheme among airlines that artificially inflated passenger and cargo fuel surcharges between 2000 and 2006 to make up for lost profits.

The airlines’ crimes cost U.S. consumers and businesses – mostly international passengers and cargo shippers – hundreds of millions of dollars, prosecutors say.

But the airlines caught by the Justice Department have paid a hefty price in the five years since the government’s widespread investigation became public.

To date, 19 executives have been charged with wrongdoing – four have gone to prison – and 21 airlines have coughed up more than $1.7 billion in fines in one of the largest criminal antitrust investigations in U.S. history.

The court cases reveal a complex web of schemes between mostly international carriers willing to fix fees in lockstep with competitors for flights to and from the United States.

Convicted airlines include British Airways, Korean Air, and Air France-KLM. No major U.S. carriers have been charged.

The price-fixing unraveled largely because two airlines decided to come clean and turn in their co-conspirators.

In late 2005, officials with German-based Lufthansa notified the Justice Department that the airline had been conspiring to set cargo surcharges. By Valentine’s Day 2006, FBI agents and their counterparts in Europe made the investigation public by raiding airline offices. After those raids, British-based Virgin Atlantic came forward about its role in a similar scheme to set fuel surcharges for passengers.

Investigators eventually found a detailed paper trail laying out agreements, stretching back to 2000, to set passenger and cargo fuel surcharges The probe expanded to airlines doing business between the U.S. and Europe, Asia, South America, and Australia.

The Lufthansa and Virgin Atlantic mea culpas allowed them to take advantage of a Justice Department leniency program because they helped crack the conspiracies.

Former Associate Attorney General Kevin J. O’Connor, who oversaw Justice’s antitrust division in the late 2000s, said he doesn’t know why they confessed, but the result “demonstrates the effectiveness of that amnesty program.”

Now in private practice, O’Connor said companies that confess for amnesty may be wisely trying to limit liabilities from illegal conduct.

“Generally speaking, if they have an inkling they might get caught, they come in,” O’Connor said. “The theory might be that eventually these things will be exposed and why risk continuing.”

Federal prosecutors and investigators declined to discuss details of the cases because they are still investigating.

“Lufthansa Cargo fully cooperated with the investigation launched by DOJ,” Martin Riecken, Lufthansa’s director of corporate communications for the Americas said. Virgin Atlantic referred all questions to the Justice Department.

Airlines and executives who didn’t come forward were charged with violating the Sherman Antitrust Act.

Two former airline executives were sentenced to six months in prison; two others were ordered to prison for eight months. Charges are pending against 15 executives, nine of whom are considered fugitives.

Bruce McCaffrey, one-time vice president of freight for the Americas at the Australian carrier Qantas, pleaded guilty to conspiracy to restrain trade. He was sentenced to six months in prison in 2008. He admitted working with other airlines to fix cargo fuel surcharges between 2000 and 2006.

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32 Charged with Medicare Fraud

December 16, 2009

CNN

By Allan Chernoff

Federal agents Tuesday announced they have broken up five separate rings that allegedly filed $61 million in false claims with Medicare, and charged 32 people in Miami, Florida; Detroit, Michigan; and Brooklyn, New York, with a variety of schemes to defraud the health care system for the elderly and disabled.

Thirty of those charged had been arrested as of Tuesday afternoon, federal authorities said.

The largest case, in Miami, involved a doctor and nurses who allegedly ordered home health care services that were not medically necessary.

“When someone sends fraudulent bills to Medicare, they are stealing American taxpayer dollars that are intended for those most in need,” said Assistant Attorney General Lanny Breuer.

In Brooklyn, two people were charged with billing Medicare for expensive, custom-made orthotics for diabetic patients, when in fact they were merely providing inexpensive off-the-shelf footwear inserts, in some cases when they were not even medically necessary, said federal authorities.

The departments of Justice and Health and Human Services also announced plans to expand their joint Health Care Fraud Prevention & Enforcement Action Team to Brooklyn, Baton Rouge, Louisiana, and Tampa, Florida, to complement strike force operations already in place in Miami, Los Angeles, California; Houston, Texas; and Detroit.

Those cities are targeted because a Health and Human Services inspector general analysis of claim forms has found fraud is widespread in those seven locations.

“There are people masquerading as health care providers, who have no business claiming to be health care providers and that also constitutes a significant part of the fraudulent action we’re uncovering,” said Daniel Levinson, inspector general of the Department of Health & Human Services.

Federal Investigators consider Miami to be ground zero for health care fraud. The inspector general found that 52 percent of all Medicare home health care expenses above $100,000 were in Miami-Dade County, while only 2 percent of Medicare home health care beneficiaries actually live in that county.

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