Co-Founder and Accountant of Leading Special Needs Trusts Charged in $100 Million Alleged Fraud Scheme

Co-Founder and Accountant of Leading Special Needs Trusts Charged in $100 Million Alleged Fraud Scheme

Earlier this week, the government unsealed an indictment against Leo Joseph Govoni, the co-founder of the nonprofit Center for Special Needs Trust Administration (CSNT), and John Leo Witeck, an accountant for CSNT, charging the two men with an alleged scheme to misappropriate over $100 million in client-beneficiary funds. CSNT is one of the nation’s largest administrators of special needs trusts, which managed money for people with disabilities and other special needs, including those who received court awards, settlements, and other payments.

According to the government, between June 2009 and May 2025, Govoni and Witeck used client-beneficiary funds to enrich themselves and others, concealing their misconduct through complex financial transactions and deceit, such as by sending fraudulent account statements with false balances to victims. Govoni and Witeck were both charged with conspiracy to commit wire and mail fraud, wire fraud, mail fraud, and money laundering conspiracy.

Govoni was also charged with making false bankruptcy declarations in connection with CSNT’s 2024 bankruptcy proceeding, during which it disclosed that more than $100 million in client-beneficiary funds were missing from its trust accounts, as well as with bank fraud relating to an alleged mortgage loan refinance and money laundering relating to the proceeds to pay off a home equity line of credit.

The US Department of Justice’s (DOJ) press release about the indictment is here.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Court Holds CVS Pharmacy Benefits Manager Liable for $95 Million in False Claims, Treble Damages Possible

On June 25, Chief US District Judge Mitchell S. Goldberg for the Eastern District of Pennsylvania ruled that CVS Caremark Corporation, a pharmacy benefits manager for CVS, overbilled Medicare Part D-sponsored drugs by $95 million in violation of the False Claims Act (FCA), leaving open the possibility of trebling those damages and imposing statutory penalties after the parties have an opportunity to brief those issues.

Caremark is alleged to have contracted with pharmacies to pay a fixed average price for prescription drugs but caused health insurers to misrepresent to the government that higher prices were paid. Following an eight-day bench trial, the court found that Caremark knowingly submitted false claims by failing to accurately report the prices it “actually paid” for Medicare Part D drugs, and inflating these prices through a sophisticated scheme involving Generic Effective Rate (GER) guarantees with the pharmacies. According to the decision, these GER guarantees allowed Caremark to report inflated drug prices by offsetting overpayments on Medicare Part D drugs with underpayments on commercial drugs, effectively creating hidden “spread” or profit.

As a result, the court found pre-trebling and pre-penalty damages of $95 million.

The case is US ex rel. Sarah Behnke v. CVS Caremark Corp. et al., No. 2:14-cv-00824 (E.D.P.A.).

Former Executive Acquitted by Jury in $53 Million Medicare Fraud Trial

Last week, a Florida jury found Kenia Valle Boza, former director of Medicare Risk Adjustment Analytics for HealthSun Health Plans, Inc., not guilty of all remaining charges arising out of an alleged $53 million Medicare fraud scheme that her former employer had voluntarily self-disclosed to the DOJ in 2023. HealthSun offers privately managed but publicly funded Medicare Advantage plans.

The DOJ had alleged that between 2015 and 2020, Valle Boza orchestrated a scheme to use computer code to alter beneficiaries’ medical information, thereby creating more than $12 million in fraudulent diagnoses, which increased the plan’s profits and Boza’s own compensation.

Following a nine-day trial, and after just four hours of deliberating, the jury acquitted Valle Boza of one count of conspiracy to commit health care fraud and wire fraud, as well as three counts of major fraud against the United States. The court dismissed two counts of wire fraud as a matter of law, before those charges went to the jury. In 2023, the DOJ declined to prosecute HealthSun for the alleged conduct at issue pursuant to the Criminal Division’s Voluntary Self-Disclosure and Corporate Enforcement Policy.

The case is US v. Valle Boza, No. 1:23-cr-20417 (S.D.F.L). The DOJ’s announcement of HealthSun’s non-prosecution is here. 

Circuit Court Upholds $26 Million FCA Penalty Against Importer for False Statements on Customs Forms to Avoid Tariffs

On June 23, the Ninth Circuit Court of Appeals upheld a $26 million judgment against Sigma Corporation, a metal pipe importer, following a jury trial at which Sigma was found to have knowingly made false statements on customs forms to avoid paying tariffs on imports from China.

Sigma was alleged to have worked with Chinese manufacturers to evade antidumping duties by declaring that the imported products were not subject to antidumping duties, and describing those products as steel couplings despite marketing them to customers as welded outlets. As a result, Sigma was allegedly able to avoid the 182.9% levy on the imports.

A jury found that Sigma violated the FCA and awarded the US government $8 million. The district court subsequently trebled the jury award, ordering Sigma to pay approximately $24.2 million in damages, plus $1.8 million in civil penalties.

On appeal, Sigma argued that section 1592 of the Tariff Act, which provides a specific mechanism for the government to recover fraudulently avoided customs duties, displaces the FCA and precludes the claims brought against it. The Ninth Circuit rejected this argument, reasoning that while § 1592 undoubtedly overlaps with the FCA, there is no irreconcilable conflict and the FCA extends to antidumping duties that an importer, such as Sigma, has fraudulently evaded paying.

Sigma also contended that even if § 1592 does not displace the FCA, Sigma could not be liable because it had no “obligation” under the FCA to pay antidumping duties. The Ninth Circuit rejected this argument as well, determining that Sigma became liable for antidumping duties when its imported products arrived from China, even if the amount due was not yet fixed.

The appellate court also rejected Sigma’s arguments on scienter, determining that there was sufficient evidence for the jury to conclude that Sigma acted with either deliberate ignorance or reckless disregard for the truth when it declared on customs forms that it did not owe antidumping duties on its welded outlets. 

The case is Island Industries Inc. et al. v. Sigma Corp. et al., No. 22-55063 (9th Cir.).