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An experienced whistleblower attorney, successful trial attorney, former criminal prosecutor, and former reporter Representing whistleblowers reporting fraud on the Federal State Governments

A researcher at the University of Kansas (KU) has been indicted on federal charges of hiding the fact he was working full time for a Chinese university while doing research at KU funded by the U.S. government. Feng “Franklin” Tao, 47, of Lawrence, Kansas, an associate professor at KU’s Center for Environmentally Beneficial Catalysis (CEBC), is charged with one count of wire fraud and three counts of program fraud.  He was employed since August 2014 by the CEBC, whose mission is to conduct research on sustainable technology to conserve natural resources and energy. His bio and academic papers are listed here: Miller Associate Professor Tao ; All Publications Tao

The indictment alleges that in May 2018 Tao signed a five-year contract with Fuzhou University in China that designated him as a Changjiang Scholar Distinguished Professor.  The contract required him to be a full time employee of the Chinese university.  While Tao was under contract with Fuzhou University, he was conducting research at KU that was funded through two U.S. Department of Energy contracts and four National Science Foundation contracts.

Kansas Board of Regents’ policy requires staff to file an annual conflict of interest report.  In Tao’s reports to KU, he falsely claimed to have no conflicts of interest.  The indictment alleges that he fraudulently received more than $37,000 in salary paid for by the Department of Energy and the National Science Foundation.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC)has fined a U.S. truck maker PACCAR $1.7 million for 63 alleged violations of the Iranian Transactions and Sanctions Regulations. The settlement resolves potential civil liability for actions taken by a wholly-owned subsidiary of the company that allegedly sold or supplied trucks with a total transactional value of over $5.4 million to European customers, but knew or had reason to know the trucks were ultimately intended for buyers in Iran.

In arriving at the settlement amount, various mitigating factors were considered, including that (i) neither the company nor the subsidiary have received a penalty or finding of a violation in the five years prior to the transactions at issue; (ii) the subsidiary had in place at the time of the alleged violations a trade sanctions compliance program with contractual prohibitions on dealers and service partners that were re-selling products in violation of U.S. trade sanctions; and (iii) the company and subsidiary voluntarily self-disclosed the issue to OFAC, cooperated with OFAC during the investigation, and undertook remedial efforts to minimize the risk of similar violations from occurring in the future.

The Treasury also considered various aggravating factors, including that the subsidiary failed to exercise caution when alerted to warning signs regarding the potential sales, and that in each instance, a subsidiary employee was aware of the conduct leading to the alleged violations.

Defense contractor Vista Machining Co. has been charged with making false claims about the aluminum he provided for U.S. military aircraft landing gears. Ross Hyde,  owner of the company faces up to five years in prison, if convicted. But inspectors said many of his products were cheap replacements, some illegally obtained from China, which he tried to hide from the government. Substituting such knockoffs can cause serious safety problems for members of the military if the parts are used in critical systems.

But Vista has earned more than $20 million from government contracts, according to a government database. The case highlights the government’s questionable oversight of its defense contractors, who are able to keep selling Uncle Sam goods despite being repeat offenders.

A former Walt Disney Co. accountant says she has filed a series of whistleblower tips with the Securities and Exchange Commission alleging the company has materially overstated revenue for years. Sandra Kuba,  a senior financial accountant analyst in Disney’s evenue-operations department who worked for the company for 18 years and says employees working in the parks-and-resorts business segment systematically overstated revenue by billions of dollars by exploiting weaknesses in the company’s accounting software. Ms Kuba says she has met with officials from the SEC on several occasions to discuss the allegations.

The whistleblower filings were reviewed by MarketWatch which reported that they state several ways employees allegedly boosted revenue, including recording fictitious revenue for complimentary golf rounds or for free guest promotions. Another alleged action Kuba described in her SEC filing involved recording revenue for $500 gift cards at their face value even when guests paid a discounted rate of $395.

The Securities and Exchange Commission charged TherapeuticsMD Inc., a pharmaceutical company, with violations for sharing of material, nonpublic information with sell-side research analysts without also disclosing the same information to the public. The SEC’s order says that on two separate occasions in 2017, TherapeuticsMD selectively shared material information with analysts about the company’s interactions with the U.S. Food and Drug Administration (FDA).  As detailed in the SEC’s order, on June 15, 2017, one day after a publicly-announced meeting with the FDA about a new drug approval, TherapeuticsMD sent private messages to sell-side analysts describing the meeting as “very positive and productive.”  TherapeuticsMD’s stock price closed up 19.4 percent on heavy trading volume the next day.  At that time, the company had not issued a press release or made any other market-wide disclosure about the meeting. The whistleblower is represented by Edward Scarvalone of Willens & Scarvalone in New York.

According to the SEC’s order, early in the morning of July 17, 2017, TherapeuticsMD issued a press release announcing that it had submitted additional information to the FDA, but did not yet have a clear path forward regarding its New Drug Application.  TherapeuticsMD’s stock price declined approximately 16 percent in pre-market trading following the issuance of the press release.  The SEC’s order finds that in a call and email to sell-side analysts after the press release was issued but before the market opened, the company selectively shared previously undisclosed details about the June FDA meeting and the information it had subsequently submitted to the FDA.  According to the SEC’s order, all of the analysts published research notes containing these details, and the stock rebounded to close down only 6.6 percent for the day.  The SEC’s order found that at the time of these selective disclosures, TherapeuticsMD did not have policies or procedures regarding compliance with Regulation FD.

“Information about a pharmaceutical company’s interactions with the FDA can be critical to investors.  It is essential that when companies disseminate material, nonpublic information, they do so fairly and appropriately to all investors and not just a select few analysts,” said Carolyn M. Welshhans, Associate Director of the SEC’s Division of Enforcement.

IMG_0429-300x200Terry Anderson and his son, Rocky Anderson, were found guilty of multiple counts of health care fraud and aggravated identity theft following a 10-day trial in 2018. On Thursday, August 5th, 2019, it was announced that the duo would serve eight and seven years in prison, respectively. In total, Terry Anderson and Rocky Anderson were found to have submitted more than $27 million in fraudulent hearing aid claims to Blue Cross and Blue Shield of Texas.

According to the Department of Justice, the Andersons ran a business called Anderson Optical & Hearing Aids Center, which had multiple locations in Texas. This business was used to submit the defendants’ fraudulent claims to Blue Cross and Blue Shield, although many of the patients did not require hearing aids or never received them.

In an effort to gain additional patients for more claims, the defendants performed multiple marketing tactics, including the promise of free high-end sunglasses, gift cards, or prescription eyeglasses for participating in a complimentary hearing test. Upon completing the hearing test, many patients were told that they suffered from mild hearing loss and required the use of hearing aids. Patients were then asked to sign a consent form for the ordering of the hearing aids, which would also be provided at no cost. The Anderson pair also told patients that copayments and deductibles would be waived.

The Securities and Exchange Commission today announced that broker Cantor Fitzgerald & Co. will pay more than $647,000 and broker BMO Capital Markets Corporation will pay over $3.9 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs). With today’s actions, the SEC has charged 13 financial institutions in its ongoing investigation into abusive ADR pre-release practices, which, thus far, has included monetary settlements exceeding $427 million.

ADRs – U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank. The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided brokers receiving the ADRs have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADRs represent.

According to the SEC’s orders, both Cantor Fitzgerald and BMO Capital obtained pre-released ADRs when they should have known that the pre-release transactions were not backed by foreign shares. The SEC orders find that both brokers improperly obtained pre-released ADRs indirectly from other broker-dealers, and the order as to Cantor Fitzgerald finds that the firm also improperly obtained pre-released ADRs directly from depositary banks.

Minnesota health officials identified four cases of persons suffering severe lung injuries believed to be connected with their vaping, similar to more cases in nearby Wisconsin and Illinois. While officials said they don’t yet know the exact products used, both nicotine and marijuana products have been reported. “There are still many unanswered questions, but the health harms emerging from the current epidemic of youth vaping in Minnesota continue to increase,” the department’s medical director and state epidemiologist, Dr. Ruth Lynfield, said in a statement Tuesday. “We are encouraging providers and parents to be on the look-out for vaping as a cause for unexplained breathing problems and lung injury and disease.”

The announcement said some were hospitalized for “multiple weeks, with some patients being admitted to the intensive care unit.” They came in with symptoms including shortness of breath, fever, cough, vomiting, diarrhea, headache, dizziness and chest pain. Dr. Emily Chapman, chief medical officer at Children’s Minnesota, which reported the four cases, said in a statement that such cases are tricky to diagnose because they can start off looking like a common infection before leading to more serious complications.

Lincare, Inc., has paid $5.25 million to resolve allegations that it violated the federal False Claims Act and the Anti-Kickback Statute by offering illegal price reductions to Medicare beneficiaries, U.S. Attorney Steven D. Weinhoeft announced today. Headquartered in Clearwater, Florida, Lincare is one of the nation’s largest providers of oxygen and other respiratory therapy services to patients in the home, with approximately 1,000 locations across the United States.

The government alleged that, from 2011 to 2017, Lincare attempted to gain a competitive advantage in the marketplace by unlawfully waiving or reducing co-insurance, co-payments, and deductibles for beneficiaries who participated in a Medicare Advantage Plan operated through a private insurer. Lincare’s practices violated the Anti-Kickback Statute, and further caused the submission of false claims for payments to Medicare.

“Medicare is a promise to protect the elderly and disabled by providing health insurance to those who need it most. This office will aggressively defend Medicare to ensure that entities participating in government sponsored healthcare programs do so lawfully,” said U.S. Attorney Weinhoeft. “This settlement reflects our commitment to maintain the integrity of the Medicare program.”

 The Securities and Exchange Commission settled charges against a Brighton Massachusetts based blockchain company SimplyVital Health, Inc. for offering and selling approximately $6.3 million of securities to the public in unregistered transactions.

According to the SEC Cease and Desist Order Simply Vital in late 2017, SimplyVital Health, Inc. publicly announced its plan to conduct a token sale-an “Initial Coin Offering” or “ICO”-to raise money to further its development of Health Nexus, a “healthcare-related blockchain ecosystem.” SimplyVital offered a new token called Health Cash, or HLTH, which, it stated, would be used as currency in the Health Nexus. SimplyVital concurrently announced that it would conduct a “pre-sale” of its HLTH tokens, in which it offered investors Simple Agreements for Future Tokens, or SAFTs, under which it sold HLTH tokens that would not be delivered to investors unless and until created by SimplyVital. The order finds that SimplyVital did not file a registration statement with the Commission or qualify for an exemption from registration before offering and selling HLTH to the public through the SAFTs.

According to the SEC’s order, SimplyVital raised approximately $6.3 million from its unregistered sale of securities in between September 2017 and April 2018. After concluding its pre-sale in April 2018, SimplyVital ultimately decided not to offer and sell HLTH during its scheduled ICO. In 2019, SimplyVital voluntarily returned to investors substantially all of the funds raised during its pre-sale. Simply Vital is a new kind of healthcare company which seeks to enhance patient well being through better communication of patient information. Its platform is a bit complicated, so for more information read the following White Paper: Health-Nexus-White-Paper-232x300