Articles Posted in Whistleblower Cases

MV Marguerita Alleged Fraud of Oil Record Books

The German cargo ship MV Marguerita was detained under the impression that it had entered the U.S. waters and the port in Portland at least eight times with falsified oil record books. This was only determined after a thorough investigation by the Coast Guard. They were able to determine that one of the engineers was using extra pipes and hardware to dispose of the oil. The act that alerted the authorities to this crime was the whistleblowing from Czech seaman Jaroslav Hornof who bravely spoke out against this crime and was commended for his courage. In an affidavit, Hornof said he learned that one of the chief engineers on the Marguerita was using extra pipes to discharge oily water into the ocean. When the engineer denied doing so, Hornof made secret videos of the dumping and turned them over to the United States authorities. He gave the authorities his information and they eventually boarded the ship. Under investigation, the Coast Guard was able to determine that they falsified the oil record books and dumped oil directly into the ocean, which is in direct violation of an international treaty.

Reward for Whistleblowing

The woman who accused Supreme Court nominee Brett Kavanaugh of forcing himself on her when they were in high school has come forward, detailing that the Washington Post Kavanaugh pinned her down, groped her over her clothes, and tried to take off her bathing suit and outer clothing in an assault. Christine Blasey Ford, a professor at Palo Alto University in California, spoke to the Washington Post.

In the Post article published Sunday, Ford said she was the author of aletter to Sen. Dianne Feinstein (D-CA) that was eventually sent to the FBI about the alleged incident. According to The Washington Pose, Ford said that one summer in the early 1980s, Kavanaugh and a friend — both “stumbling drunk,”   corralled her into a bedroom during a gathering of teenagers at a house in Montgomery County.“I thought he might inadvertently kill me,” said Ford, now a 51-year-old research psychologist in northern California. “He was trying to attack me and remove my clothing.” Ford said she was able to escape when Kavanaugh’s friend and classmate at Georgetown Preparatory School, Mark Judge, jumped on top of them, sending all three tumbling. She said she ran from the room, briefly locked herself in a bathroom and then fled the house.

Ford said she told no one of the incident in any detail until 2012, when she was in couples therapy . The therapist’s notes, portions of which were provided by Ford and reviewed by The Washington Post, do not mention Kavanaugh’s name but say she reported that she was attacked by students “from an elitist boys’ school” who went on to become “highly respected and high-ranking members of society in Washington.” The notes say four boys were involved, a discrepancy Ford says was an error on the therapist’s part. Ford said there were four boys at the party but only two in the room.  Her husband, Russell Ford, said in an interview that in the 2012 sessions, she recounted being trapped in a room with two drunken boys, one of whom pinned her to a bed, molested her and prevented her from screaming. He said he recalled that his wife used Kavanaugh’s last name and voiced concern that Kavanaugh — then a federal judge — might one day be nominated to the Supreme Court.


The enforcement Chief of the Commodities Futures Trading Commission which oversees the $50 trillion futures market, Aitan Gielman, says flatly that there is a massive amount of fraud in the marketplace including front-running, insider trading and Ponzi schemes that the oversight agency is not pursuing  because Congress has starved the agency of resources. As a result, investors and taxpayers are being cheated because the markets are being manipulated. All the while the wrongdoers are making hundreds of millions off the back of the average person. Front-running, also known as forward trading happens when a trader takes advantage of market movements and trades on his or his company’s assets based on advanced knowledge of a pending order. For example, this is the case when a trader learns of a large client order and uses his own or his company’s account before the client’s order is executed. Front running is happening in stocks, index funds, foreign exchange markets, securities, commodities and front runners are now using high speed computer programs to trade ahead of the clients.  Where the front runner uses information not available to the public, the practice is clearly illegal. Little is being done to stop it.

The infrequent cases result in large payments but no significant incarceration. In January 2018, SBC Holdings paid $101 million to settle criminal charges that the bank engaged in “front-running” on foreign exchange to defraud two clients in 2010-2011, according to court documents.The bank will pay a $63 million criminal penalty and $38 million in disgorgement and restitution to settle the charges under a deferred prosecution agreement in which HSBC accepts responsibility for its employees’ actions, the documents said. Under the agreement, HSBC will forgo any criminal charges in the case as long as the bank adheres to the terms of the settlement.HSBC had been charged in U.S. District Court in New York with two counts of wire fraud in connection with the alleged scheme. HSBC FX traders misused confidential information from clients to execute British pound FX transactions on two occasions in 2010 and 2011, with the bank taking in a combined $46 million in profits on the two transactions to the traders’ and HSBC’s benefit, according to court documents.

The settlement payment is the latest by HSBC over foreign-exchange trading issues. In October, the bank was fined $175 million by the Federal Reserve Board for failing to detect its FX traders’ misuse of client information. In November 2014, HSBC paid $275 million to the Commodity Futures Trading Commission and $341 million to the U.K. Financial Conduct Authority to settle charges that it manipulated FX benchmark rates.

CBS News will air a segment featuring biofuels fraud whistleblower, Alex Chepurko on August 31 at 9 pm EST 8 Central on its  Whistleblower Program. It overviews Chepurko’s  blowing the whistle on a nationwide biofuels scam.

While working for Caravan, Chepurko a nationwide scam as the company was selling finished biodiesel to another company that pretended it made biodiesel and then applied for the government incentives and tax breaks for making green energy products. Chepurko’s disclosures resulted in several individuals going to jail and the United States recouping millions of dollars for taxpayers from Caravan, and others involved in the scam, to resolve claims of fraud brought by Chepurko and pursued by Colapinto.

Chepurko is represented by the qui tam whistleblower firm of Kohn, Kohn & Colapinto, LLP Chepurko went up against Caravan Trading, a New Jersey-based company that made $50 million a year buying and selling the raw materials for making biofuel.  Biofuel is a type of diesel derived from products like soybean, corn and recycled cooking oil.

Customs and border officers seized and destroyed some 34,143 shipments containing counterfeit items in the 2017 fiscal year. The largest counterfeiter is China. Thousands of shipments of counterfeit goods went undetected and made it into the United States.

The CBP seized 8.2% more shipments of counterfeit goods in 2017 compared to the year before, when it seized 31,560 shipments. However, the value of the counterfeit items seized was considerably less, dropping from $1.38 billion in 2016 to $1.21 billion in 2017.

Counterfeit items are almost all luxury goods like watches, jewelry, electronics, and accessories. People are often duped into buying counterfeit versions of name brand goods when they see a deal that seems too good to be true. Some bogus items can actually be dangerous.

 The William Beaumont Hospital in Michigan will pay $84.5 million settling a False Claims Act case over improper financial relationships with eight referring physicians, resulting in the submission of false claims to the Medicare, Medicaid and TRICARE program. Federal anti-Kickback ‘laws prohibit offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  The Physician Self-Referral Law, commonly known as the Stark Law, prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper financial arrangement, including the payment of compensation that exceeds the fair market value of the services actually provided by the physician and the provision of free or below-market rent and office staff.  The settlement resolves  the case which stated that between 2004 and 2012, Beaumont provided compensation substantially in excess of fair market value and free or below-fair market value office space and employees to certain physicians to secure their referrals of patients in violation of the Anti-Kickback Statute and the Stark Law, and then submitted claims for services provided to these illegally referred patients, in violation of the False Claims Act.  The settlement also resolves claims that Beaumont allegedly misrepresented that a CT radiology center qualified as an outpatient department of Beaumont in claims to federal health care programs.  As a result of this settlement, Beaumont will pay $82.74 million to the United States and $1.76 million to the State of Michigan.

The allegations resolved by the settlement were brought in four lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  The four qui tam cases are captioned:  United States ex rel. David Felten, M.D., Ph.D. v. William Beaumont Hospitals, et al., No. 2:10-cv-13440 (E.D. Mich.), United States ex rel. Karen Carbone v. William Beaumont Hospital, No. 11-cv-12117 (E.D. Mich.), United States ex rel. Cathryn Pawlusiak v. Beaumont Health System, et al., No. 2:11-cv-12515 (E.D. Mich.), and United States ex rel. Karen Houghton v. William Beaumont Hospital, No. 2:11- cv-14312 (E.D. Mich.).  The whistleblower shares to be awarded in the cases have not yet been determined.


Medical device maker, Alere Inc.  will pay $33.2 million to settle a whistleblower lawsuit which asserts that the company knowingly sold materially unreliable point-of-care diagnostic testing devices to hospitals. Alere will pay the federal government $33.2 million, of which $4.8 million will be paid to the participating states. Arkansas is set to receive $140,611.56. Alere is accused of selling its Triage devices to hospitals, which are used in emergency departments for the diagnosis of acute coronary syndromes, heart failure, drug overdose and other serious conditions, from 2006 through 2012. Alere received multiple complaints from providers that “put it on notice that certain devices it sold produced erroneous results that had the potential to create false positives and false negatives that adversely affected clinical decision-making.” Despite those warnings, Alere failed to take corrective action until the Food and Drug Administration issued a national product recall in 2012. Because of this conduct, the states allege that between January 1, 2006 and June 12, 2012, Alere knowingly submitted or caused the submission of false or fraudulent claims for the Triage devices to be submitted to, or caused purchases by, Medicaid.


“Alere not only cost government Medicaid programs money, the company put patients’ lives at risk by selling devices that gave false readings, despite receiving complaints about the accuracy of the equipment,” said Attorney General Rutledge. “These acts are not acceptable and will not be tolerated as long as I am Attorney General of Arkansas. Patient safety should always be health care providers’ number one concern.”

 3M Company (3M), has agreed to pay $9.1 million to resolve allegations that it knowingly sold the dual-ended Combat Arms Earplugs, Version 2 (CAEv2) to the United States military without disclosing defects that hampered the effectiveness of the hearing protection device.    Specifically, the United States alleged that 3M, and its predecessor, Aearo Technologies, Inc., knew the CAEv2 was too short for proper insertion into users’ ears and that the earplugs could loosen imperceptibly and therefore did not perform well for certain individuals.  The United States further alleged that 3M did not disclose this design defect to the military.

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery.  As part of today’s resolution, the whistleblower will receive $1,911,000.  The case is captioned United States ex rel. Moldex-Metric v. 3M Company, Case No. 3:16-cv-1533-MBS (D.S.C.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Waveney Blackman, the owner of WaveCare HEalth Services, a company that provided durable medical equipment pleaded guilty today to a federal charge of health care fraud for carrying out a scheme in which she fraudulently obtained more than $9.4 million in District of Columbia Medicaid payments.According to the plea documents, Blackman devised and executed a scheme to submit false and fraudulent claims to Medicaid for durable medical equipment, including incontinence and wound care supplies, which she knew were not purchased or provided to Medicaid beneficiaries.  From January 2010 through approximately June 2016, Blackman sent and caused employees to send false and fraudulent invoices to a biller engaged by the company, which were then submitted to Medicaid.  All told, she submitted and caused the submission of at least $9.8 million in false and fraudulent claims to Medicaid.  Blackman, through WaveCare, fraudulently obtained $9,431,979 from Medicaid.

Waveney Blackman, 71, of Bowie, Maryland, pleaded guilty in the U.S. District Court for the District of Columbia.  Her sentencing is scheduled on Oct. 18 before the Honorable Thomas F. Hogan.

Blackman was the sole owner and chief executive officer of WaveCare Health Services LLC, also known as WaveCare Healthcare Services LLC.  The company, based in the District of Columbia, was a provider of durable medical equipment, including wound care and incontinence supplies, to Medicaid beneficiaries and others.  It became a Medicaid provider in 2008.

Jon E. Montroll from Saginaw, Texas is facing up to 20 years in prison for stealing thousands of Bitcoins from customer funds, running an unregistered securities exchange, and lying to US security regulators after his cryptocurrency exchange, BitFunder, was hacked, says Bloomberg news.  Montroll pleaded guilty to securities fraud and obstruction of justice before US Magistrate Judge James L Cott on July 21, 2018, and now faces up to 20 years in prison. Montroll, 37, operated two defunct cryptocurrency services. One of the services was WeExchange Australia Pty Ltd, a cryptocurrency exchange and Bitcoin depository.  BitFunder was a service whichaided the sale of virtual shares from business entities in exchange for cryptocurrencies like Bitcoin.

The  SEC says that  Montroll also did not register his securities exchange. “Platforms that engage in the activity of a National securities exchange, regardless of whether that activity involves digital assets, tokens, or coins, must register with the SEC or operate pursuant to an exemption,” said Marc Berger, the director of the SEC’s New York Regional Office.

Montroll  defrauded  investors by taking the Bitcoin deposits from WeExchange users’ and spending it on himself. Instead of providing the services required, he exchanged the cryptocurrencies for fiat currency and spent the money on personal expenses like travel and groceries.