Articles Posted in Whistleblower law

Franklin Resources will pay $13,850,000 and make other provisions to settle a lawsuit alleging that defendants breached their Employee Retirement Income Security Act (ERISA) fiduciary duties by causing Franklin Templeton’s 401(k) plan to invest in funds offered and managed by Franklin Templeton when better-performing and lower-cost funds were available. The case was settled shortly before trial of the lawsuit.

The company will also select a non-proprietary target-date fund (TDF) for its 401(k) investment lineup and increase the company match contribution rate for three years. According to the settlement agreement in addition to the settlement payment, the fiduciaries to the plan with responsibility for selecting plan investment options will add a nonproprietary target-date fund option (TDF) to the investment lineup, which will be maintained as a plan investment option for the duration of the compliance period in addition to the plan’s qualified default investment alternative (QDIA)—the LifeSmart Target Date Funds. “The choice of TDF will be made by the fiduciaries responsible for selecting Plan investment options in a manner consistent with their fiduciary oversight responsibilities, following a search of nonproprietary TDF options conducted by the Plan’s independent investment consultant, Callan Associates, Inc.,” the settlement agreement says. Franklin is listed on the New York Stock Exchange under In 1973 the company’s headquarters moved from New York to California . As of March 2017, Franklin Templeton Investments had US$740 billion in assets under management (AUM) on behalf of private, professional and institutional investors.

A month before the trial in the case was set to begin, the parties in the lawsuit announced they had reached a settlement but needed 60 days to file a motion for preliminary approval.

Contractors Areva and Chicago Bridge and Iron gave kickbacks in the form of football tickets, hunting rifles, cellphones and NASCAR race tickets to get work on a factory at the Savannah River nuclear storage facility says a lawsuit filed by the U.S. Government.
The cost of those kickbacks was later charged to taxpayers, according the False Claims Act complaint filed by the U.S. Department of Justice.

The contractors were hired to build the plant which  would turn weapons-grade plutonium into fuel for nuclear power plants. The contractors  scheme defrauded hat bilked taxpayers out of $6.4 million according to the Complaint. The suit also concerns over a federal construction effort that was marred by schedule delays, cost overruns and questionable spending.

South CarolinaUniversity, will pay $2.5 million to settle federal claims under the False Claims Act of submitting false claims to the U.S. Department of Education in violation of the federal ban on incentive-based compensation, the Justice Department announced today.   The settlement resolves allegations that between 2014 and 2016, NGU hired Joined Inc., a company partially owned by NGU, to recruit students to NGU and compensated Joined based on the number of students who enrolled in NGU’s programs, in violation of the prohibition on incentive compensation. The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblowerprovisions of the False Claims Act by Maurice Shoe, the co-owner of Joined. Mr. Shoe is represented by the firm of  Guttman, Buschner & Brooks (“GBB”), The Act permits private parties to sue on behalf of the government for false claims and to receive a share of any recovery.  As part of today’s resolution, the whistleblower will receive $375,000.

Title IV of the Higher Education Act (HEA) prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based on the recruiters’ success in securing student enrollment.  The incentive compensation ban protects students against aggressive admissions and recruitment practices that serve the financial interests of the recruiter, rather than the educational needs of the student.

“Offering unlawful financial incentives for recruiting undermines the integrity of our higher education system,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “Prospective students are entitled to make enrollment decisions without the improper influence of recruiting companies who pursue their own financial gain at the expense of the students’ best interests.”“This settlement will help ensure that schools and recruitment services put the educational interests of students and potential enrollees first,” said U.S. Attorney Sherri A. Lydon for the District of South Carolina.  “It should serve as a warning to institutions that would attempt to maximize enrollments to line their own pockets, disregarding the best interests of students in the process.  Through False Claims Act cases like this one, the U.S. Attorney’s Office will continue to help protect federal taxpayer dollars from waste, fraud, and abuse.”

General Electric said this week that it reached a tentative agreement with the Department of Justice that it would  pay a fine of $1.5 billion for the lending activities of its shuttered subprime lending unit, WMC Mortgage. Last year,  the company  booked a reserve of $1.5 billion that may be used as a settlement with the DOJ over the company’s subprime lending from 2005 through 2007. When GE first disclosed that it booked the reserve amount, the company said that settlement would stem from an investigation into WMC’s mortgage business that the DOJ launched in late 2015.

According to GE, the DOJ claimed last year that WMC and GE Capital violated FIRREA rules in connection with the lender’s origination and sale of subprime mortgage loans in 2006 and 2007.

GE said that it was exploring whether an “acceptable settlement” could be reached in this matter and as part of that exploration, GE recorded a $1.5 billion reserve to cover the potential settlement, leading to this proposed settlement.

A skilled nursing facility and its administrator have agreed to pay $1.5 million to settle a False Claims Act case alleging illegal kickbacks and a referral scheme for Medicare and Tricare patients. The United States alleged that these financial arrangements violated the physician self-referral law, commonly known as the “Stark Law,” and the Anti-Kickback Statute, giving rise to liability under the False Claims Act. Pursuant to two separately executed settlement agreements, Dr. Krumins has agreed to pay $500,000, and Conway Lakes, Clear Choice, Cleveland, Fraser, and File have agreed collectively to pay $1 million to the United States.Conway Lakes NC, LLC; its former Administrator, Matthew File; its management company, Clear Choice Health Care, LLC; Clear Choice’s part-owner and President, Jeffrey Cleveland; Clear Choice’s part-owner and Senior Vice President, Geoffrey Fraser; and an Orlando-area orthopedic surgeon, Dr. Kenneth Krumins, agreed to pay $1.5 million to resolve allegations that they engaged in a kickback scheme related to the referral of Medicare and TRICARE patients.

The settlements announced today resolve allegations that Conway Lakes, through File, Cleveland, Fraser, and Clear Choice, conspired to pay Dr. Krumins under a sham “medical director” agreement to induce him to illegally refer Medicare and TRICARE patients to Conway Lakes for rehabilitation services that were billed to the United States. Dr. Krumins’s settlement agreement also resolves allegations that he engaged in a similar kickback scheme with a related home health agency.

The allegations resolved by the settlement agreements were originally brought in a lawsuit filed by a former employee of Conway Lakes, Jonathan Montes de Oca, under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act permits private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery.  Mr. Montes de Oca will receive $267,000 of the proceeds from the settlements. He is represented by Morgan and Morgan.

Two Chinese hackers  Zhu Hua (朱华), aka Afwar, aka CVNX, aka Alayos, aka Godkiller; and Zhang Shilong (张士龙), aka Baobeilong, aka Zhang Jianguo, aka Atreexp, both nationals of the People’s Republic of China (China), were charged with conspiracy to commit computer intrusions, conspiracy to commit wire fraud, and aggravated identity theft according to the U.S Department of Justice. Zhu and Zhang were members of a hacking group operating in China known within the cyber security community as Advanced Persistent Threat 10 (the APT10 Group).  The defendants worked for a company in China called Huaying Haitai Science and Technology Development Company (Huaying Haitai) and acted in association with the Chinese Ministry of State Security’s Tianjin State Security Bureau.
Through their involvement with the APT10 Group, from at least in or about 2006 up to and including in or about 2018, Zhu and Zhang conducted global campaigns of computer intrusions targeting, among other data, intellectual property and confidential business and technological information at managed service providers (MSPs), which are companies that remotely manage the information technology infrastructure of businesses and governments around the world, more than 45 technology companies in at least a dozen U.S. states, and U.S. government agencies.  The APT10 Group targeted a diverse array of commercial activity, industries and technologies, including aviation, satellite and maritime technology, industrial factory automation, automotive supplies, laboratory instruments, banking and finance, telecommunications and consumer electronics, computer processor technology, information technology services, packaging, consulting, medical equipment, healthcare, biotechnology, pharmaceutical manufacturing, mining, and oil and gas exploration and production.  Among other things, Zhu and Zhang registered IT infrastructure that the APT10 Group used for its intrusions and engaged in illegal hacking operations.

“The indictment alleges that the defendants were part of a group that hacked computers in at least a dozen countries and gave China’s intelligence service access to sensitive business information,” said Deputy Attorney General Rosenstein.  “This is outright cheating and theft, and it gives China an unfair advantage at the expense of law-abiding businesses and countries that follow the international rules in return for the privilege of participating in the global economic system.”

    The Food and Drug Administration regulators may  enact a ban on electronic cigarettes, if manufacturers do not stop marketing the products to teens and take significant steps tostop the teen vaping epidemic in the United States.  At a public hearing on teen vaping , FDA Commissioner Scott Gottlieb said that a full ban on electronic nicotine delivery systems  may be necessary to protect the nations youth.  E-cigarette use spiked to 78% among high school students and 48% among middle school students over the last year, making it the most popular form of tobacco use among the nation’s teens.

    Recently the Surgeon General issued a warning the public about the long-term health risks and addiction teens face by taking up the habit. Studies have also shown recently that teen use of e-cigarettes quadruples their risk of smoking traditional tobacco cigarettes later in life. Teenagers also face other health risks related to toxic chemical exposure  and respiratory side effects.

    More than 1.5 million teens began vaping from 2017 to 2018; a statistic that is startling for many regulators. For several months the agency has warned that if e-cigarette companies don’t end advertising campaigns aimed at underage users, the agency could enact a full ban on all e-cigarette and vaping products.

     A British national Nick Stride, who rendered information to an American journalist in 2-14, exposing Igor Shuvalov’s story may soon be deported along with his family from Australia according to SBS news. https://www.sbs.com.au/news/australia-reportedly-set-to-deport-kremlin-whistleblower-and-family Stride was a glazing expert hired as a contractor by Shuvalov, to work on a palace near Moscow in 2006. He is married to Russian Ludmila Kovaleva. The person who hired him was Russia’s former Deputy Prime Minister Igor Shuvalov and has been living in Perth with his family since 2012. Mr   Stride was the source behind 2014 expose in the Foreign Policy magazine on Mr Shuvalov’s unexplained wealth.
    In that article, published in Foreign Policy (    ) it is alleged that Shuvalov, then Vladimir Putin’s economic aid and now Russia’s first deputy prime minister, used offshore companies to buy close to $2 million in building materials from a Belgian contractor to build a greenhouse on the estate. It is alleged that Mr Shuvalov, who was Deputy Prime Minister at the time, had amassed a wealth of at least $220 million through questionable business practices.Mr. Stride and his family first fled to the United Kingdom in 2010 but feared they were still “within Russian reach” sought political asylum in Australia. Their asylum bid was rejected in 2012.
    Mr Stride and his children face deportation to the United Kingdom, while his wife Ludmila Kovaleva, who is a Russian national also faces being deported. Journalist Michael Weiss, who was the author of the 2014 article, tweeted earlier this week that his source, Mr Stride, was in “immediate danger” and had asked for help.Mr. Weiss said he only revealed his source at Mr Stride’s request because of the urgency of his situation.

    Regulators found that the company had used “defeat” devices to cover up its true emissions figures, even though FCA insisted it had done nothing illegal.

    “Fiat Chrysler tried to evade these standards by installing software to cheat emissions testing,” California Attorney General Xavier Becerra said.

    fish fraudFood fraud is the act of mislabeling an edible item in order to sell cheap alternatives for a higher price, and it costs the industry around $35 billion a year. Out of all food items for sale, the easiest victim of fraud is the seafood market. This is not only due to its increasing popularity stirred by the sushi craze, but also do to where Americans receive this massive amount of fish from. Nearly 90%, or 6 billion pounds per year, of the fish eaten annually by Americans is imported, which makes it extremely susceptible to overlooked mislabeling and fraud. This is all according to reports from the Food and Agriculture Organization of the United Nations.

    The most recent findings of this fishy food fraud come from the office of the New York Attorney General. Spending the last year conducting thorough research into the subject of fish in the nation, the New York AG’s office bought seafood at 29 supermarket brands across 155 different locations. The list of fish bought included snapper, grouper, cod, wild salmon, halibut, sole, striped bass, and white tuna, assuring that the most commonly bought fish where investigated. The results were less than satisfactory after DNA testing at the Ocean Genome Legacy Center, a laboratory at Northeastern University, found that many were mislabeled. The results including 27.6% of samples sold as wild salmon, 67% of red snapper, and 87.5% of lemon sole, being marked as fish fraud. This report also shows that two-thirds of the entire state’s supermarkets had at least one occurrence of fish mislabeling. That being said, fish fraud is nothing new.

    Many citizens who are concerned about the quality of their food, or the quality of their health, may recall back in 2013 when the nonprofit ocean protection group Oceana released their findings concerning the tuna sold in restaurants and grocery stores. Oceana took a nationwide sample and found that 59% of what was categorized as tuna, was, in fact, an unappealing escolar. Escolar is not only a less appetizing alternative to tuna, but it also can lead to some unpleasant health issues such as oily rear leakage. Sadly, this was only the second largest misrepresentation of seafood in the nation, behind the time 87% of snapper was misrepresented as any of six other species. Oceana also conducted one of the biggest seafood fraud investigations from 2010 to 2012 and found that based on U.S. Food and Drug Administration guidelines, 33% of the samples analyzed were mislabeled. Basically, this is no fluke, but as unsettling as this all may sound, there is a light at the end of the tunnel.