Articles Posted in Whistleblower law

SECChanges to the CFTC Whistleblower Program Could Encourage More People to Come Forward

 Don’t kick yourself for not realizing The Commodity Futures Trading Commission even had its own whistleblower program.  As a new write-up in Forbes points out, the CFTC program has been a bit slow to take off, compared to the SEC whistleblower program, but that could all be changing soon. The Dodd-Frank Wall Street Reform and Protection Act, created the SEC whistleblower reward program and the CFTC whistleblower reward program in 2010.  After the financial crisis of 2007-2008 the CFTC has been transitioning to bring more transparency and stricter regulation to the multi-trillion dollar swaps market.  Now the final rules for its whistleblower program have been issued.

The Changes

A new report by Medicare and Medicaid services reveals rampant and widespead abuse and neglect of the elderly in U.S. nursing homes. Among the findings: 1) Failure to contact law enforcement even when there is evidence of abuse and neglect; 2) 80% of cases involved rape or sexual assault. The U.S. Department of Health and Human Services’ Office of Inspector General conducted the audit, releasing its initial findings in August.A final report examining eight randomly selected states is expected next summer.”We’re suggesting to CMS they conduct periodic data matches, like we did, to identify potential cases of abuse and neglect,” said Dave Lamir, regional inspector general who worked the team of auditors who produced the report.

In 28 percent of suspected abuse and neglect cases nationally, law enforcement was not notified. Eighty percent of the cases involved an alleged rape or sexual assault. CMS has taken no enforcement actions nor assessed penalties for failing to report. Five potential cases were found in Pennsylvania.All the suspected cases – identified by comparing Medicare claims to emergency room records in 33 states – were referred to state Medicaid Fraud Control Units. In Pennsylvania, the unit is operated by the attorney general’s office.

Joe Grace, a spokesman for Attorney General Josh Shapiro, did not make the unit available for interview and he declined to answer questions about the five cases referred to Shapiro’s office.

Internet Connected Toys Could Put Children at Risk Because of Security Flaw

connected toys
A consumer watchdog group is urging toy retailers to take some connected toys off the shelves this Christmas.  The group says security flaws in the toys can put children at risk of hackers talking to them while the toy is in use.  The Guardian says the consumer advocates are specifically worried about Wi-Fi and Bluetooth enabled toys after an investigation revealed troubling failures.

The Investigation

Big Pharma Knows How Laws Work and They Can Use Them Against the DEA

 Why did Congress, in the middle of the greatest drug crisis in the nation pass a law that stripped the Drug Enforcement Administration of its ability to sue companies violating drug distribution laws? The answer Massive millions of dollars contributed by lobbiests for the drug manufacturers and distributors and a unbridled propaganda campaign written and implemented in part by former DEA lawyers who went to work for private law firms representing the drug companies. The worst of American politics and lack of morality. These are the fact based conclusions of a joint 60 minutes and Washington Post investigation into the passage of a bill called “The Marino Law.”

The Undercutting Law

The Securities and Exchange Commission has passed a new rule requiring all public companies to disclose remarkds and inquiries by independent auditors starting in January 2018. The Wall Street Journal reports that the SEC’s new rule has been in motion for a few years now, the real surprise is how quickly it will impact companies across the United States. The publication says, this move will take effect immediately and will allow auditors to say more about their reviews of a company’s finances.  This new information will be included as an expanded audit report and will include a letter on whether or not the auditor agrees that the company has accurately presented its financial statements.  Auditors and companies alike will have to get up to speed fairly quickly, here’s a look at a timeline:

  • 2018: Full disclosure of about the auditor’s association with a company required early next year.
  • 2019: Starting in mid-2019 the “critical audit matters” must be included for large companies.

The Securities and Exchange Commission (SEC) has launched a new and powerful unit to address “cyber-based threats and protect retail investors”. Branding its new division the Cyber Unit, the SEC says it will focus on offenses related to:

  • Misconduct perpetrated using the dark web
  • Market manipulation schemes involving false information spread through electronic and social media

The owner of the nursing home where eight patients died after the air conditioner stopped working during hurricane Irma, had a history of fraud charges including a False Claims Act case which was settled in 2006 for $15.4 million. In that case Dr. Jack Michel and five others were alleged to have agreed to send patients to his Miami hospital, Larkin Community, for unnecessary treatment according to The Department of Justice. DOJ said that Michel received kickbacks as part of the deal and some of the patients came from assisted living facilities he owned.

The facility where the eight patients died also had a poor records and an inspection rating much below average before Hurricane Irma. The building was said to be in disrepair and it was fined $5500.

On September 10, this year, during Hurricane Irma, according to state regulators the Rehab Center at Hollywood Hills became aware that its air conditioning equipment had stopped operating. Between 1:30 am and 5 am, several residents suffered respiratory arrest or cardiac distress. Health Department spokesman reported that as late as 7:30 am, the nursing home reported that they had partial power and that the generator was operational. Rescue workers found eight patients had died, allegedly as a result of dehydration and scorching heat levels. There was a hospital three minutes away.

Even though Congress passed a law called the Trade Agreement Act (TAA) that goods purchased by the federal government cannot be made in China, Taiwan, Malaysia and South Africa, this is regularly ignored by manufacturers and re-sellers. The purpose of the law is to prevent unfair competition and to allow nations agreeing with the law to get pricing benefits. Eligible countries include Canada, Mexico, England, France and Japan. Here are just a few examples of companies that paid to settle False Claims Act cases alleging they sold products to the United State even when they were made in the restricted nations:

Samsung Electronics paid $2.3 million to settle allegations it sold products to the US on GSA contracts in violation of the TAA;

OfficeMax Inc. paid $9.8 million to settle allegations it sold office supply products manufactured in China in violation of the TAA;

The Motor Vehicle Safety Whistleblower Act is a law passed by Congress om 2015 which offers monetary rewards to auto industry insiders who report serious safety violations of cars. The law allows employees or contractors of a car manufacturer, parts supplier or dealership who report serious violations of federal safety laws to get upto  30 percent of any money sanctions over $1 million that the government recovers based on that information.

Whistleblowers can reveal any violation, even those which happened before the law’s passage that originated anywhere in the world, as long as the cars or components were sold in the U.S.. This law can be engaged by anyone in the world and whistleblowers do not have to live in the U.S. to bring a claim. They can do so through a U.S. lawyer. The whistleblowers are protected from retaliation and can remain anonymous.

Jeffrey Newman represents whistleblowers in various states.

The Securities and Exchange Commission (SEC) today announced that a municipal financing authority in Beaumont, California, and its then-executive director have agreed to settle charges that they made false statements about prior compliance with continuing disclosure obligations in five bond offerings. Also settling charges are the underwriting firm behind those offerings and its co-founder for failing to conduct reasonable due diligence on the continuing disclosure representations.

The SEC’s Enforcement Division uncovered the violations as part of a review of municipal issuers and underwriters that did not voluntarily self-report under the agency’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative.  The Beaumont Financing Authority and the underwriter, O’Connor & Company Securities Inc., would have been eligible for more lenient remedies had they self-reported during the MCDC Initiative.

According to the SEC’s order, the Beaumont Financing Authority had issued approximately $260 million in municipal bonds in 24 separate offerings from 2003 to 2013 for the development of public infrastructure.  For each of those offerings, a community facilities district established by Beaumont agreed to provide investors with annual continuing disclosures, including important financial information and operating data.  From at least 2004 to April 2013, the district regularly failed to provide investors with the promised information.  The Beaumont Financing Authority failed to disclose this poor record of compliance when it conducted the 2012 and 2013 offerings totaling more than $32 million.  As a result, the bonds appeared more attractive and investors were misled about the likelihood that the district would comply with its continuing disclosure obligations in the future.