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The U.S. Attorney’s Office for the Middle District of Pennsylvania announced yesterday that Michael J. Jackson of Hershey, Pa., was indicted on Feb. 15 by a federal grand jury on wire fraud, bankruptcy fraud, false bankruptcy oaths and claims, and aggravated identity theft charges, according to a press release. The indictment was unsealed yesterday following Jackson’s initial appearance before United States Magistrate Judge Susan E. Schwab. Jackson was ordered detained pending his detention hearing scheduled for today. According to U.S. Attorney Bruce D. Brandler, the indictment alleges that Jackson perpetrated a scheme to defraud his creditors, the Bankruptcy Court for the Middle District of Pennsylvania, and his wife between 2009 and 2017, by filing seven chapter 13 and 11 bankruptcy petitions, five of which were filed under Jackson’s name and two of which were filed under his wife’s name without her knowledge, information or consent.

A group of South Dakota doctors has filed suit against four hospital administrators, claiming that they were defrauded out of millions of dollars in an investment that went belly up, the Argus Leader reported yesterday. The 12 doctors were investors in Progressive Acute Care, a company that in 2009 owned three rural hospitals in central Louisiana. The doctors were primarily orthopedic surgeons and neurosurgeons practicing at CNOS in Dakota Dunes. According to their complaint, the doctors owned about 40 percent of the preferred equity in Progressive Acute Care (PAC). Mike Hurlburt, a former CEO at CNOS and the chief operating officer for PAC, had introduced the doctors to the company. In 2012, Hurlburt and three others with PAC came up with a plan to buy a fourth hospital, also located in Louisiana. Hurlburt, the lawsuit says, “told the physicians that a return of three-to-four times their investment was assured, and that he was expecting a return of ten times their investment.” Based upon those assurances, the doctors invested an additional $3 million to purchase the fourth hospital and approved more than $10 million in additional debt for PAC to make the purchase. But the doctors claim in their lawsuit that the revenue numbers of the fourth hospital — called Dauterive Hospital — were falsified by the defendants. The lawsuit claims that in 2016, after PAC declared bankruptcy, a memo surfaced that showed PAC had deliberately falsified the profitability of the fourth hospital. The losses sustained by PAC after the purchase of the fourth hospital plunged the company into bankruptcy in 2016. Read more.

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

Maurice R. Greenberg, the former chief executive of American International Group, reached an unexpected settlement ending a tumultuous, decade-long battle over civil accounting fraud charges first brought in 2005 by New York Attorney General Eliot Spitzer, the New York Times DealBook blog reported on Friday. Greenberg, 91, and his co-defendant, Howard Smith, AIG’s former chief financial officer, reached the agreement with the current New York attorney general, Eric T. Schneiderman, who announced it on Friday. In the settlement, the two men acknowledged that they had participated in and approved two transactions that inaccurately portrayed AIG’s financial results over four years. They agreed to give up more than $9.9 million that they received as performance bonuses from 2001 through 2004, with Greenberg paying most of that amount. But it is a fraction of the more than $50 million the state had sought.

Bernard Madoff's victims will soon recoup another $252 million from the trustee unwinding the swindler's firm, boosting their total recovery to $9.72 billion, Reuters reported. The latest payout by trustee Irving Picard was made possible by settlements in the second half of 2016 with people accused either of facilitating Madoff's fraud or withdrawing more money from his firm than they deserved. This included money from a settlement with the family of Stanley Chais, who prior to his 2010 death managed money for Hollywood clients like director Steven Spielberg, and was accused by Picard of excess withdrawals. Picard's eighth distribution started yesterday and will go to customers who once had 953 accounts at Bernard L. Madoff Investment Securities LLC. Checks will range from $271.80 to about $42.3 million.

Hundreds of Michigan residents may have been forced into bankruptcy by false fraud allegations leveled by Michigan’s Unemployment Insurance Agency, irreversibly damaging their ability to obtain credit or buy a home, the Detroit Free Press reported yesterday. The state has conceded its Michigan Integrated Data Automated System (MiDAS), which began making fraud determinations in October 2013, had a 93 percent error rate. Since that system went online, there’s been an explosion in the number of cases the Attorney General’s Office has brought in federal bankruptcy court to recover alleged overpayment of unemployment insurance benefits. Now, attorneys are asking whether claimants who felt forced into settlements of unemployment insurance debt they may not have owed can have their bankruptcy cases reopened. The massive error rate is compounded by the state’s highest-in-the-nation 400 percent penalties, and huge problems Michigan Auditor General Doug Ringler has identified with a lack of adequate notice sent to claimants about the alleged overpayments, including notices sent to the wrong addresses or through online unemployment insurance accounts that former claimants had no reason to log on to and check. Since the law allows for debts owed to the state Unemployment Insurance Agency to live on after a bankruptcy in which most other debts are erased, those caught up in a bankruptcy have a strong incentive to pay up to settle the state’s claims and end their wage garnishments, even when they don’t believe they have done anything wrong.

The dismantled remains of one of Richmond’s most charitable companies has started demanding the return of some of its gifts, the Richmond (Va.) Times-Dispatch reported on Sunday. While the now-bankrupt blood-testing firm Health Diagnostic Laboratory enjoyed years from 2008-15 as one of Richmond’s fastest-growing companies, it simultaneously earned a reputation for philanthropy, but HDL’s swift downfall and 2015 bankruptcy on the heels of a federal investigation into whether it paid doctors illegal kickbacks for using its service has left many of those gifts in jeopardy as the company’s bankruptcy trustee attempts to recoup more than $600 million for its creditors. Co-founder and former CEO Tonya Mallory was well-known for her charitable tendencies. In 2011, HDL gave $2.35 million to the Science Museum of Virginia, at the time the largest corporate gift the museum had received. In addition to the large gifts, HDL gave smaller contributions throughout the community — from sponsoring a viewing of a health-focused documentary to donating to area private schools. In a complaint that Richard Arrowsmith, HDL’s liquidating trustee, filed in September against Mallory and dozens of other former HDL executives and employees, he claims that HDL “squandered millions of dollars through inappropriate corporate sponsorship and large charitable gifts.” The trustee’s legal counsel has sent demand letters to various area organizations in which it calls the donations “fraudulent transfers.”