Articles Posted in Whistleblower Cases

A whistleblower has filed a False Claims Act in Federal Court alleging that the sound-dampening coating was improperly affixed  causing the coating to “de-bond” and slip off the submarines while underway. According to the complaint, “since the inception of the program, Virginia-class submarines have been plagued with problems with their exterior hull coating system,” including an incident in 2007 on the USS Virginia, the first submarine of its class.
The complaint asserts that the failure of the Special Hull Treatment on Virginia-class submarines squarely on Huntington Ingalls’ Newport News Shipbuilding facility: “The failure of the sound-absorbing material is a direct result of NNS’ failure to adhere to proper Navy contract specifications and a direct effort to conceal that lack of qualifications and certifications required by the Navy.”

The Securities and Exchange Commission ordered blockchain technology company Block.one to pay $24 million to settle charges it conducted an unregistered initial coin offering of digital tokens (ICO) raising the equivalent of several billion dollars over approximately one year.  The company agreed to pay.

According to the SEC’s order, Block.one, which has operations in Virginia and Hong Kong, conducted an ICO between June 2017 and June 2018.  The order finds that Block.one stated it would use the capital raised in the ICO for general expenses, and also to develop software and promote blockchains based on that software.  Block.one’s offer and sale of 900 million tokens began shortly before the SEC released the DAO Report of Investigation and continued for nearly a year after the report’s publication, eventually raising several billion dollars worth of digital assets globally, including a portion from US investors.  Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements.

“A number of US investors participated in Block.one’s ICO,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.  “Companies that offer or sell securities to US investors must comply with the securities laws, irrespective of the industry they operate in or the labels they place on the investment products they offer.”

The Securities and Exchange Commission today announced that two BMO advisers have agreed to pay over $37 million to settle charges regarding their failure to tell clients about certain aspects of how the advisers selected investments in their retail investment advisory program, known as the Managed Asset Allocation Program (MAAP), which included the selection of more expensive investments from which BMO advisers profited.

According to the SEC’s order, when selecting investments for clients, BMO Harris Financial Advisors Inc. (BMO Harris) and BMO Asset Management Corp. (BMO Asset Mgmt) preferred mutual funds managed by BMO Asset Mgmt (proprietary funds) and invested approximately 50% of MAAP client assets in proprietary funds. This practice resulted in payment of additional management fees to BMO Asset Mgmt, however, the SEC’s order found that neither BMO adviser disclosed this practice or the associated conflict of interest to clients. Moreover, the SEC’s order found that, when considering mutual funds for MAAP, BMO Asset Mgmt evaluated the lower-cost institutional share class for both proprietary and non-proprietary funds, but the higher-cost, non-institutional share class for proprietary mutual funds always was selected for MAAP.

In addition, the SEC found that BMO Harris failed to disclose its conflicts of interest arising from investing MAAP client assets in higher-cost share classes of certain mutual funds, including funds managed by BMO Asset Mgmt, when lower-cost share classes were available. By selecting the higher-cost share classes, BMO Harris received revenue sharing payments and avoided paying certain transaction costs, while clients received lower returns on these investments.

 

Ericsson, the Swedish multinational networking and telecommunications company has reserved $1.23 billion to cover fines associated with foreign bribes made by the company in China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam, based on an investigation. Ericson has a 35% share in the 2-5G mobile market network and is the major competitor to Huaweri, the Chinese telecom company. The $1.23 billion reserve provision covers $1 billion in estimated combined penalties from forthcoming settlements with the Justice Department and SEC. The remainder accounts for costs related to other investigation. Ericsson Chief Legal Officer Xavier Dedullen said the company had so far disciplined 65 employees in relation to the FCPA violations, 49 of whom were no longer with the company.  Ericsson’s settlements could include the imposition of an independent monitor to oversee the company’s compliance reforms.

If you are aware of any foreign bribes by companies traded on the US stock exchanges, you may be able to become a whistleblower under the False Claims Act (FCA) and recover up to 30% of what the Government recovers in any investigation of such bribes. US laws prevent making bribes to foreign officials or their families in order to get business in other countries. Jeffrey Newman represents whistleblowers. His email is  Jeffrey.Newman1@gmail.com

 

 

 

 

 

 

 

 

Accounting firm PricewaterhouseCoopers LLP was charged by the Securities & Exchange Commission with improper professional conduct in connection with 19 engagements on behalf of 15 SEC-registered issuers and violating auditor independence rules in connection with engagements for one issuer where the firm performed prohibited non-audit services. The SEC also charged PwC partner Brandon Sprankle with causing the firm’s independence violations. Both respondents have agreed to settle the charges and PwC will pay over $7.9 million in monetary relief.

The SEC’s order finds that PwC violated the SEC’s auditor independence rules by performing prohibited non-audit services during an audit engagement, including exercising decision-making authority in the design and implementation of software relating to an audit client’s financial reporting, and engaging in management functions. In connection with performing non-audit services for 15 SEC-registered audit clients, the order states that PwC violated Public Company Accounting Oversight Board (PCAOB) Rule 3525, which requires an auditor to describe in writing to the audit committee the scope of work, discuss with the audit committee the potential effects of the work on independence, and document the substance of the independence discussion. According to the order, PwC’s actions deprived numerous issuers’ audit committees of information necessary to assess PwC’s independence. As further detailed in the order, the violations occurred due to breakdowns in PwC’s independence-related quality controls, which resulted in the firm’s failure to properly review and monitor whether non-audit services for audit clients were permissible and approved by clients’ audit committees.

“Auditors play a fundamental role in protecting the reliability and integrity of financial reporting and must ensure that non-audit services do not come at the cost of their independence on audits of public companies,” said Anita B. Bandy, Associate Director of the SEC’s Division of Enforcement. “PwC repeatedly provided non-audit services without having effective quality controls in place for monitoring whether the services impaired its independence on audit engagements and were properly disclosed to audit committees.”

A furniture business executive who falsified documents to avoid more than $1.4 million in import duties on the Chinese goods he sold was sentenced to a year of home detention Monday.

Jeff Zeng, president of Blue Furniture Solutions, was also sentenced to spend two additional years on supervised release for his role in mislabeling customs forms to make it appear that wooden furniture subject to a 216 percent import tax was instead made of metal. Documents filed with U.S. District Court in Charleston show Zeng and Blue Furniture Solutions, located in Miramar, Fla., submitted 49 falsified customs forms in 2015 for 14,542 pieces of furniture used primarily in college dormitory rooms. Some of that furniture was imported through the Port of Charleston.

The United States has imposed new sanctions on Irans complex and extensive shipping that it uses to sell oil, and the U.S. will pay $15 million to anyone with information that disrupts the scheme. The reward could be rendered to individuals living within or outside the United States.

The Treasury Department placed sanctions on 26 individuals and “entities” affiliated with the Islamic Revolutionary Guards Corps Quds Force. The sanctions freeze any assets within the United States concerning those individuals or corporations affiliated with the shipping network. It also prevents them from doing business with Americans. It also identified 11 ships, placing anyone who owns or operates them on a Treasury list and exposing any port that lets them in, or firms that fuel or offload them, to future sanctions.

 Rostam Ghasemi, Iran’s former minister of petroleum oversees and operates the network.

 International SOS Assistance, Inc., International SOS Government Services, Inc., International SOS, LP, Air Rescue Americas, Inc. Arnaud Vaissié; and Pascal Rey-Herme (collectively, “International SOS”), will pay $940,000 settling allegations that it overcharged TRICARE, the health care insurance system for members of the military services and their families. The overcharges related to aeromedical evacuation services by concealing discounts it received from third-party air ambulance providers in violation of the False Claims Act.

International SOS, is a provider of overseas healthcare services for the government and it had negotiated discounts from third-party air ambulance providers, which it was required to pass along to TRICARE. Instead, International SOS did not disclose the actual cost of the aeromedical evacuation services during the quoting process; billed TRICARE at the higher non-discounted amount; and received payment from TRICARE for the inflated costs, which International SOS contends it retained as a fee.

This settlement resolves allegations in a lawsuit by a former International SOS Regional Flight Desk Manager, under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator here will receive $165,000 as his share of the recovery in the case. The relator was represented by Franklin J. Rooks, Jr., Esq. of Morgan Rooks, P.C., and Jared A. Jacobson, Esq. of Jared Jacobson Law, LLC.

IMG_0368-300x200Frederick Gooding, a physician of Wilmington, Delaware, was charged in an indictment with 11 counts of health care fraud following an investigation into his participation in a $12.7 million scheme that sought to defraud Medicare.

According to the Department of Justice, Gooding submitted claims to Medicare for injections and aspirations that had either never been received or had no necessary medical purpose. Gooding continued this scheme from January 2015 to August 2018, stealing a total of $12.7 million during that time. To cover-up the health care fraud scheme, Gooding allegedly falsified numerous medical documents to show that the prescriptions and services he billed Medicare for were medically necessary.

Gooding was arrested for these allegations on August 1st, 2019, and the indictment was announced on August 2nd, 2019 by Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu of the District of Columbia, Acting Assistant Director in Charge John P. Selleck of the FBI’s Washington Field Office, Special Agent in Charge Maureen Dixon of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Philadelphia Regional Office and District of Columbia’s Inspector General Daniel W. Lucas.

Universal Health Services announced   a settlement of federal civil complaints against its behavioral health facilities for $127 million, pending federal approval.

The hospital chain said it reached the agreement with the U.S. Department of Justice’s Civil Division and on behalf of various states’ attorneys general. It will resolve accusations against the company’s behavioral health facilities. The agreement is still subject to requisite approvals and the execution of a definitive settlement and related agreements, according to UHS.

UHS also said the DOJ’s Criminal Fraud Section has closed a separate investigation into the company’s operations. UHS Spokeswoman Jane Crawford said the DOJ did not file charges against UHS at the close of that investigation.