_________::::___#500 - November 2, 2007________________
FRAUDBARON.com
The Anti-Fraud Professionals'
Source for Fraud News
#500 Updated: 11/2/07 1:01 p.m.

Gov't Recovered $2B in 2007 Fraud Cases
Houston Chronicle | 11/1/07 | Associated Press
WASHINGTON — The Justice Department said Thursday that it obtained $2 billion in
settlements in fraud cases during fiscal year 2007, with most of the recoveries resulting
from whistleblower lawsuits. Under the False Claims Act, whistleblowers can sue companies
or individuals that they believe have filed fraudulent claims with the federal government. If
successful, they can receive from 15 percent to 30 percent of the proceeds, the department
said. Approximately $1.45 billion of the settlements resulted from whistleblower lawsuits in
fiscal year 2007, which ended Sept. 30, the department said. The individuals who filed suit
were awarded $177 million. Health care fraud accounted for the bulk of the settlements,
with $1.54 billion stemming from cases involving programs such as Medicare and Medicaid.
The department said it is cracking down on various practices by pharmaceutical companies,
such as inflating the price of drugs that are reimbursed by federal programs, paying
kickbacks to physicians and pharmacists to induce drug purchases and promoting drugs for
uses that have not been approved by the Food and Drug Administration, also known as "off-
label" marketing. In one of the largest settlements, Bristol-Myers Squibb Co. and one of its
former subsidiaries agreed in late September to pay $515 million to settle federal and state
allegations that it illegally promoted its anti-psychotic drug Abilify for several off-label uses.
In other settlements, oil and gas company ConocoPhillips' Burlington Resources subsidiary
paid the U.S. government $105.3 million in August to settle claims that it failed to pay
sufficient natural gas royalties, the department said. ConocoPhillips bought Burlington
Resources last year. Software company Oracle Corp., meanwhile, paid $98.5 million early in
fiscal 2007 to resolve allegations that PeopleSoft Inc., which it acquired in 2005, had
overcharged the government on numerous contracts.

Staffer at disabled-aiding company charged with $200K embezzlement
Arizona Daily Star | 11/1/07 | Enric Volante
A woman who kept the financial books at a Tucson firm that assists the disabled siphoned
off more than $200,000, prosecutors charged.  Authorities arrested Cheryl W. Crabtree, 62,
of Phoenix Tuesday. An indictment announced Wednesday by Attorney General Terry
Goddard's office alleges that Crabtree embezzled the money over 13 years, ending in
2005.  She was a bookkeeper and then chief financial officer for Tucson-based Dorothy Kret
& Associates. The  company contracts with federal, state and local governments to provide
services to people with physical or mental disabilities in Tucson and Phoenix.  Crabtree had
been a "trusted, valuable employee," said Dot Kret, the company president.  "When I found
out about this in December 2005 I was devastated personally," Kret said the theft did not
affect services to disabled clients, who number about 400, she said.  Kret would not say
how the theft was discovered but said she immediately fired Crabtree and reported the
theft to authorities. An investigation by the attorney general's Special Investigation Section
led to an indictment on one count of fraud involving more than $100,000 and one count of
theft over $100,000.  Authorities allege she embezzled the money between January 1992
and December 2005. Crabtree was in the Pima County jail Wednesday in lieu of a $300,000
bond. She is to appear Tuesday before Judge Hector Campoy of Pima County Superior
Court.

Ex-PTA head arrested for embezzlement
Desert Trail | 10/31/07 | Staff Writer
TWENTYNINE PALMS — Kerry Jimenez, 41, of Twentynine Palms, who served as president of
the Palm Vista Parent Teacher Association from June 2005 through May 2007, was arrested
Monday, Oct. 29 on suspicion of embezzling $15,000 from the PTA’s fundraising account.
Jimenez was arrested at her home after deputies served a search warrant in connection
with an investigation into the alleged theft initiated on Thursday, Oct. 11.  A complete audit
of the account showed a documented loss of $15,000 from the account, according to a
sheriff’s department press release. Interviews of people handling fundraiser money and
paperwork led investigators to Jimenez. After her arrest, Jimenez was booked into the
Morongo Basin Jail and released on $15,000 bail. A criminal case is pending with the San
Bernardino County District Attorney’s office. “I was aware there was an arrest,” Palm Vista
Principal Joe Crites said Wednesday morning. “I feel pretty lousy about it. It’s something
that has to be followed through to the end.” He noted that the PTA is bonded, meaning
that whatever money is proven to have been taken will be replaced by the bonding
company minus a $500 deductible.  He added that the PTA has a new board and is
receiving assistance from district officials to keep “on the straight and  narrow.”  Officials
will be “making sure this won’t happen again in the foreseeable future,” Crites said.  He
noted that Jimenez served as PTA president at Palm Vista for two years and appeared to
have worked hard in  support of the elementary school.  “Kerry has been in the community
for a long time,” he said. “She graduated high school with some of our teachers.”  He
added that she has children who attend Palm Vista.  “We are terribly disappointed in the
direction this seems to be leading us,” he said.  “We wish that it isn’t so but we think very
probably that it is.”

Barstow Truck Parts embezzlement trial starts
Desert Dispatch | 11/1/07 | Aaron Aupperlee
BARSTOW — The trial of a couple accused of embezzling approximately $500,000 six years
ago from a Barstow business began in a Barstow courtroom on Thursday. Wesley and Joyce
Jaska, of Apple Valley, are accused of multiple counts of grand theft, perjury and tax
evasion dating back to 2001, according to court documents. The prosecution claims the
couple stole money from Barstow Truck Parts, where Joyce was a full-time employee and
Wesley a part-time employee. They were arrested for suspicion of the charges in 2002,
pleaded not guilty in 2005 and have been in and out of court for pre-trial arguments
since. District Attorney Richard Golden said the trial started with even more pre-trial motions
brought by the defense to dismiss the case and change its location. Judge John Gibson
decided to wait for trial testimony to decide if the case should be dismissed on violations of
due process and the defendants’ right to a speedy trial. Gibson denied a motion to change
the venue and tossed out two of the charges against the defendants because they were
filed after the six-year statute of limitations expired.  Jury selection in the case will begin on
Nov. 13, Golden said. However, he does not expect to present opening statements or call
witnesses until January because of court scheduling.  Golden hopes to finish with his case
by the end of January. He said Gibson intends to instruct  the jury that case could last until
March. The case has taken a long time to go to trial because of its complexity. The District
Attorneys office originally filed 32 charges against Joyce and six against Wesley. Golden
said he has whittled the charges down to only five counts of grand theft and perjury and
tax evasion charges against Joyce and only perjury and tax evasion against Wesley. Golden
has also sifted through mountains of paperwork, presenting more than 6,000 pages to the
defense.  “There was an awful amount of documents,” he said. “We had thousands of
pages, maybe 10,000 pages, of documents to go through.” The documents will form the
backbone of the prosecution’s case, Golden said. He also intends to call witnesses from the
franchise tax board and solicit evidence from other witnesses about the Jaskas’ financial
transactions. In July 2002, Barstow police officers searched the Jaskas’ Apple Valley home
after receiving search warrants based on accusations of embezzlement by Barstow Truck
Parts.

Ex-con stockbroker tells story
WCF Courier | 11/1/7 | Drew Andersen
CEDAR FALLS --- University of Northern Iowa students packed the Curris Business Building's
John Deere Auditorium Wednesday afternoon for a presentation by "Iowa's Fugitive"
Patrick Kuhse. The capacity crowd of about 200 were on hand to hear Kuhse tell his story,
from growing up in Grundy Center to a being a white-collar criminal to the four years he
spent in a federal penitentiary. Kuhse regularly presents his riveting story to universities
and businesses across the country, and Wednesday was the second time in two years that
he presented his story to UNI students. The Iowa native's tale touched on subjects as
diverse as relationship advice, graduate school admittance and balancing family life with
work. But Kuhse concentrated on the critical thinking errors that he said underpin all
unethical behavior. Kuhse presented eight errors: entitlement, super optimism,
rationalization, situational ethics, seemingly unimportant decisions, victimitis, affection
disconnection and laziness. Compromising his integrity to these errors, Kuhse said, was the
source of his downfall, and he preached to students about how to avoid the same pitfalls
that lead to it.  "I had my greed goggles on," said Kuhse, who was indicted on 32 federal
offenses for defrauding the state of Oklahoma.  Kuhse also spent four years on the lam. He
avoided international bounty hunters and Interpol while hiding in Central and South
America. "My parents didn't know for years if I was alive or dead," said Kuhse. Finally Kuhse
gave himself up and spent nearly four years in prison where he earned a college degree
from Western Illinois University. After his release, Kuhse had no possessions, owed $4
million to the government and had been banned from his profession. He also owed
hundreds of hours of community service, which is how he came to find his calling as a
public speaker. "Along the way I realized that my passion is doing what I am doing here
today," said Kuhse. Kuhse still has $3.29 million left on his restitution, but says he is going
to make a movie to pay it off. He also praised UNI's department of business, especially Dr.
Donna J. Wood, the David W. Wilson Chair of Business Ethics. Kuhse said he wished
someone had warned him of the perils of unethical decision making, and that delivering his
message to people in his home state of Iowa is important to him.

Former IRS agent convicted of failing to pay taxes
Atlanta Journal Constitution | 10/30/07 | Bill Rankin
Sherry Peel Jackson, a former IRS revenue agent and certified public accountant, told a
federal jury Tuesday she was sure she did not have to file income tax returns.  But after
less than 30 minutes of deliberations, the jury convicted Jackson of failing to file income tax
returns for four years, despite an income of more than $400,000 during that time, according
to prosecutors.  The Stone Mountain woman faces a maximum of four years in prison. She
will be sentenced early next year. Jackson, 45, did not fit the typical profile of a criminal
defendant. She worked as a revenue agent from 1988 to 1995 and then as an accountant.
But in July 2000, Jackson testified, she began to question whether she had to pay income
taxes. By the following year, she decided she was not going to file a tax return.  Sitting at
the witness stand, with large books of federal regulations and the tax code in front of her,
Jackson said she could not find any section of the tax code that held her liable for income
taxes.  "I'd done a lot of research and I was just about sure," she testified. "I did not have
to file an income tax return."  During cross-examination, assistant U.S. Attorney Richard
Langway read Section 1 of the tax code to Jackson, who is married. A tax is imposed on
"every married individual," Langway read, asking Jackson how she could not be an
individual.  "I couldn't find the definition of 'individual,' " Jackson replied.  Lowell H. Becraft
Jr., one of Jackson's attorneys, told jurors they should not convict her of willfully disobeying
the law because Jackson had a "good faith" reason to believe she did not have to file
taxes. He reminded the jury Jackson attended Tuskegee University in Alabama and the
University of Georgia, raised a family and lived the life of an ordinary American.  "You may
have never heard of this before," Becraft said. "To you, it may sound wild. It may sound
crazy. ... But she believes she's not required to file tax returns." Langway called Jackson's
reasoning "cockamamie" and "absurd." "She's an 'individual' and she knows that," Langway
said. "You should disbelieve everything she said."  Jackson was once entrusted with
protecting IRS laws when she served as a revenue agent, Rodney Clarke, IRS criminal
investigation special agent in charge, said in a statement.  The verdict, he said, "indicates
that she knew exactly what she was doing when she stopped filing her own individual tax
returns. While taxpayers such as Ms. Jackson have the right to contest their tax liabilities in
the courts, taxpayers do not have the right to violate and disobey tax laws. The law
establishing the requirement to file tax returns is crystal clear."

Woman sentenced in embezzlement from wrestling club
The Flint Journal | 10/31/07 | Paul Janczewski
A Clio woman convicted of stealing cash from a Mt. Morris youth wrestling program
was placed on probation but paid $12,000 in restitution.  Katherine S. Orr, 37, looked
toward several members of the Mt. Morris  Mountaineers Wrestling Club who were at her
sentencing Tuesday and apologized.   "I loved the club. I loved the kids," Orr said. "I made
some bad decisions."  Genesee Circuit Judge Joseph J. Farah sentenced Orr to 18 months
probation and ordered her to pay fines and costs, along with the restitution. He said he will
consider shortening the probationary period if recommended by the adult probation
department.  But he also said she would need approval from her probation agent if she
seeks employment in which she has access to other people's money. Orr originally was
charged with embezzlement over $1,000 but less than $20,000, a 5-year felony, but
pleaded guilty to attempted embezzlement, a 2-1/2-year felony.  Earlier, she told Farah she
used the stolen cash for her own use.  An official with the wrestling club said earlier that
Orr was the treasurer but left the unpaid position.  Officials for the club said the non-profit
organization has about 30 youth wrestlers between the ages of 5 and 14. It has been
operating for more than 15 years and competes in events sponsored by the Mid-Michigan
Wrestling Association.  Orr was elected treasurer in September 2006, and officials said the
thefts began in December and continued through March.  Officials said the club has changed
its policy on handling cash, now requiring two signatures on checks and using an updated
accounting procedure that provides better information.

Former Westby banker charged in federal court
LaCrosse Tribune | 11/1/07 | Dan Springer
Federal bank embezzlement charges were filed Wednesday against a former Westby,
Wis., banker accused of stealing more than $350,000 from the bank. Dale M. Pedretti, 45, of
Westby is accused in U.S. District Court in Madison with stealing the money while working
at Fortress Bank in Westby. According to an internal investigation, Pedretti diverted some
bank loan fees for his own use and operated outside prescribed bank lending policies, bank
officials said in April 2006. Pedretti was Fortress senior vice president and chief lending
officer until mid-February 2006.  If convicted, Pedretti faces a maximum penalty of 30 years
in prison, a $1 million fine and could be forced to repay the total $351,899.75 he is accused
of stealing.  The case stems from an investigation by the FBI’s La Crosse Resident Agency
and is being prosecuted by Assistant U.S. Attorney Grant Johnson. A plea date for Pedretti
is expected to be set in coming days, a court official said.  

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