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

Ambulance company employeeAharon Aron Krkasharyan, 54, of Los Angeles, California, was sentenced by U.S. District Judge George H. Wu of the Central District of California, who also ordered Krkasharyan to pay $484,556 in restitution to Medicare, jointly and severally with his co-conspirators, who await sentencing.  On Nov. 27, 2017, Krkasharyan pleaded guilty to one count of conspiracy to commit health care fraud. According to court documents, during the course of the conspiracy, Mauran submitted over $28 million in claims to Medicare.  Krkasharyan’s co-defendants admitted that at least $6.6 million of those claims were false and fraudulent claims for medically unnecessary transportation services.  Medicare paid at least $3.1 million on those false and fraudulent claims.

Krkasharyan was employed as the Quality Improvement Coordinator for Mauran Ambulance Inc. (Mauran) of San Fernando, California, an ambulance transportation company operating in the greater Los Angeles area that provided non-emergency services to Medicare beneficiaries, many of whom were dialysis patients.  As part of his plea, Krkasharyan admitted that between June 2011 and April 2012, he conspired with other Mauran employees to submit claims to Medicare for ambulance transportation services for individuals who did not need such services.  Krkasharyan also admitted that he and his co-conspirators instructed Mauran emergency medical technicians to conceal the patients’ true medical conditions by altering paperwork and creating fraudulent reasons to justify the ambulance services.

Krkasharyan was charged along with Toros Onik Yeranosian, 55, the former owner of Mauran; Oxana Loutseiko, 57, the former general manager of Mauran; and Maria Espinoza, 47, a former employee of a Los Angeles dialysis treatment center.  Yeranosian, Loutseiko and Espinoza each pleaded guilty and are pending sentencing.  The former dispatch supervisor at Mauran, Christian Hernandez, 37, who was previously charged in the case, has also pleaded guilty and awaits sentencing.

Many online retailers have a strong advantage over local stores they may not have to pay a 6 plus percent sales tax which the local stores must pay. That means billions of dollars in uncollected revenue for the states and what is being argued as an unfair advantage in a major case being argued before the United States Supreme Court tomorrow. If S.C. decides in favor of the states, it could also affect whistleblowers who reveal the companies who try to evade state sales taxes which they owe.  The states, led by South Dakota, are seeking to overturn a 26-year old ruling that exempts many internet companies from collecting billions of dollars in sales taxes. The decision rendered in 1992 says that retailers can be forced to collect the taxes only if they have a physical presence in a state such as a store or a warehouse. The decision could affect Amazon.

Retailers who are battling the states say they would be hit by heavy costs in complying with the rules for thousands of products in thousands of cities. The case before the court involves Wayfair, Overstock and Newegg, three retailers who were sued by South Dakota for not charging sales taxes to customers there, even though they do not have a presence there. South Dakota requires retailers with more than $100,000 in annual sales in the state to pay 4.5% taxes on the purchases.  A lot of people are watching this case–from states to online retailers.

The United States, which filed a brief in the action and has asked to argue, says that the states have ample authority to require the online retailers to collect state sales taxes owed by their customers. This is because, says the U.S., the internet retailers have a pervasive and continuous virtual presence in the states where their websites are available. Imposing a sales tax collection on out of state sellers will provide significant benefits to the states, it is argued. The U.S. Census Bureau estimated that in 2017 the retail e-commerce sales totaled more than $452 billion.

The Securities and Exchange Commission today announced a whistleblower award of more than $2.1 million to a former company insider whose information led to multiple successful enforcement actions.  The whistleblower’s information strongly supported the findings in the underlying actions and the whistleblower provided ongoing assistance to the staff during the investigation. “The SEC has issued nearly $90 million in whistleblower awards in the past month alone,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “As these awards demonstrate, we continue to receive high-quality information from whistleblowers, which we use to detect and prosecute securities violations and safeguard investors.”

Since issuing its first award in 2012, the SEC has awarded more than $266 million to 55 individuals under the whistleblower program.  In that time, almost $1.5 billion in monetary sanctions have been ordered against wrongdoers based on actionable information received from whistleblowers, including more than $740 million in disgorgement of ill-gotten gains and interest, the majority of which has been or is scheduled to be returned to harmed investors.

All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.  No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.

Banner Health has agreed to pay the United States over $18 million to settle allegations that 12 of its hospitals in Arizona and Colorado knowingly submitted false claims to Medicare by admitting patients who could have been treated on a less costly outpatient basis, the Justice Department announced today.  Headquartered in Arizona, Banner Health owns and operates 28 acute-care hospitals in multiple states. The settlement resolves allegations that 12 Banner Health hospitals knowingly overcharged Medicare patients unnecessarily.  In particular, the United States alleged that from Nov. 1, 2007 through Dec. 31, 2016, Banner Health billed Medicare for short-stay, inpatient procedures provided at the 12 hospitals that should have been billed on a less costly outpatient basis.  The settlement also resolves allegations that Banner Health inflated in reports to Medicare the number of hours for which patients received outpatient observation care during this time period.

Banner Health also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years.  Under the agreement, Banner Health is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to federal health care program beneficiaries. This settlement resolves a lawsuit filed in the U.S. District Court for the District of Arizona by Cecilia Guardiola, a former employee of Banner Health, under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.  Guardiola will receive roughly $3.3 million.  The case is captioned United States ex rel. Guardiola v. Banner Health and NCMC, Inc. No. 2:13-cv-02443.

Jeffrey Newman represents whistleblowers

Michael Brian Anderson, a shrimper and fisherman, was convicted by a federal jury on three counts of false statements, four counts of mail fraud, and two counts of money laundering.

According evidence presented at trial, Anderson submitted multiple false claims to Customs & Border Protection (CBP) seeking millions of dollars in subsidies under the Continued Dumping and Subsidy Offset Act of 2000 (CDSOA). The CDSOA protected American shrimp producers by imposing anti-dumping taxes on foreign producers and permitting domestic shrimpers to apply for the money they would have made but for unfair foreign competition.

Anderson, an eligible domestic shrimper, mailed multiple false certifications to CBP, stating that his shrimping business expenses for the years 2005 to 2007 were more than $24 million.Anderson claimed he spent almost all of this money on the purchase of 3.9 million pounds of raw shrimp from R&R Seafood, a small seafood store on Tybee Island.

Massachusetts Whistleblower Law

Massachusetts Medicaid fraud hit a new record, rising to  $17 million, says the state auditor. Suzanne Bump. Bump released an annual report Monday outlining a nine percent year-over-year increase in public assistance benefit fraud in fiscal year 2017. She noted that the fraud “represents a small percentage of overall spending, but has a disproportionate impact in weakening public trust in these programs.” The average amount of fraud found after investigations are complete comes to $14,678.

The Massachusetts state budget is about $40 billion a year.

PNC Investments LLC, Securities America Advisors Inc., and Geneos Wealth Management Inc. failed to disclose conflicts of interest and violated their duty to seek best execution by investing advisory clients in higher-cost mutual fund shares when lower-cost shares of the same funds were available. The SEC also charged Geneos for failing to identify its revised mutual fund selection disclosures as a “material change” in its 2017 disclosure brochure.  Collectively, the firms will pay almost $15 million, with more than $12 million going to harmed clients. The Share Class Selection Disclosure Initiative gives eligible advisers until June 12, 2018, to self-report similar misconduct and take advantage of the Enforcement Division’s willingness to recommend more favorable settlement terms, including no civil penalties against the adviser.

The SEC’s orders also found that PNCI and Geneos failed to disclose the conflict of interest associated with compensation they received from third parties for investing clients in particular mutual funds, and that PNCI improperly charged advisory fees to client accounts for periods when there was no assigned investment advisory representative.The SEC’s orders find that PNCI, SAA, and Geneos each violated provisions of the Investment Advisers Act of 1940, including an antifraud provision.  Without admitting or denying the findings, the advisers each consented to a cease-and-desist order and a censure.  The orders require PNCI to pay $6,407,770 in disgorgement and prejudgment interest along with a $900,000 penalty. SAA must pay $5,053,448 in disgorgement and prejudgment interest along with a $775,000 penalty. Geneos must pay $1,558,121 in disgorgement and prejudgment interest along with a $250,000 penalty.

“These disclosure failures cause real harm to clients,” said C. Dabney O’Riordan, Co-Chief of the Asset Management Unit.  “We strongly encourage eligible firms to participate in the recently announced Share Class Selection Disclosure Initiative as part of an effort to stop these violations and return money to harmed investors as quickly as possible.”

The Securities and Exchange Commission has obtained a court order freezing more than $27 million in trading proceeds from allegedly illegal distributions and sales of restricted shares of Longfin Corp. stock involving the company, its CEO, and three other affiliated individuals. According to the SEC’s complaint, Longfin’s founding CEO and controlling shareholder, Venkata Meenavalli, caused the company to issue more than two million unregistered, restricted shares to Altahawi, who was the corporate secretary and a director of Longfin, and tens of thousands of restricted shares to two other affiliated individuals, Penumarthi and Tammineedi, who were allegedly acting as nominees for Meenavalli. The subsequent sales of those restricted shares violated federal securities laws that restrict trading in unregistered shares distributed to company affiliates.

The Complaint alleges that shortly after Longfin began trading on NASDAQ and announced the acquisition of a purported cryptocurrency business, its stock price rose dramatically and its market capitalization exceeded $3 billion. The SEC alleges that Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi then illegally sold large blocks of their restricted Longfin shares to the public while the stock price was highly elevated. Through their sales, Altahawi, Penumarthi, and Tammineedi collectively reaped more than $27 million in profits.

“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” said Robert Cohen, Chief of the SEC Enforcement Division’s Cyber Unit.  “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.” The SEC’s complaint, which was filed under seal on April 4, charges Longfin, Meenavalli, Altahawi, Penumarthi, and Tammineedi with violating Section 5 of the Securities Act of 1933. The complaint seeks injunctive relief, disgorgement of ill-gotten gains, and penalties, among other relief.

A Chinese scientist was sentenced to 121 months in a federal prison for conspiring to steal samples of a variety of rice seeds from a Kansas biopharmaceutical research facility. Weiqiang Zhang, 51, a Chinese national, and U.S. legal permanent resident residing in Manhattan, Kansas, was sentenced by U.S. District Court Judge Carlos Murguia in the District of Kansas. Zhang was convicted onone count of conspiracy to steal trade secrets, one count of conspiracy to commit interstate transportation of stolen property and one count of interstate transportation of stolen property.

Evidence at trial established that Zhang worked as a rice breeder for Ventria Bioscience in Junction City, Kansas.  Ventria develops genetically programmed rice to express recombinant human proteins, which are then extracted for use in the therapeutic and medical fields.  Zhang has a master’s degree in agriculture from Shengyang Agricultural University in China and a doctorate from Louisiana State University.

According to trial evidence, Zhang acquired without authorization hundreds of rice seeds produced by Ventria and stored them at his residence in Manhattan.  The rice seeds have a wide variety of health research applications and were developed to produce either human serum albumin, contained in blood, or lactoferrin, an iron-binding protein found, for example, in human milk.  Ventria spent millions of dollars and years of research developing its seeds and cost-effective methods to extract the proteins, which are used to develop life-saving products for global markets. Ventria used locked doors with magnetic card readers to restrict access to the temperature-controlled environment where the seeds were stored and processed.

A mixed group of orthopedic and anesthesia providers including Georgia Bone & Joint (GBJ), Southern Bone & Joint a/k/a Summit Orthopedic Surgery Center (Summit Surgery Center), Southern Crescent Anesthesiology, PC (SCA), Sentry Anesthesia Management, LLC (Sentry), and registered anesthesia nurse David LaGuardia (LaGuardia) have agreed to pay $3.2 million to settle a whistleblower case involving Medicare fraud in the sale of prescription drugs outside the USA that are not FDA approved. The allegation was based upon LaGuardia, Sentry, and SCA providing a free medical director to Summit in order to encourage preference to the surgery center in lieu of the GBJ office, as well as GBJ and LaGuardia submitting false claims to Medicare in order to purchase prescription drugs outside of the U.S. that are not FDA approved.

All health providers agreed to pay a sum of $3.2 million to settle these allegations. This also infers there will be no actual determined liability and in so fully resolving the lawsuit filed by Sharon Kopko, former Practice Admin for SBJ to the U.S. District Court for the Northern District of Georgia under the whistleblower provisions of the False Claims Act. This also allows Ms. Kopko to receive a share of the settlement, officially concluding Sharon Kopko v. Georgia Bone and Joint.

Many were passionate about the case such as U.S. Attorney Byung J. “BJay” Pak. who remarked “Kickbacks should never play a role in medical decision-making. It is critical to our health care system that patients seeking health care know that their providers’ recommendations are based on what is in the patient’s best interests and not influenced by illegal kickbacks or arrangements.”