Articles Posted in whistleblower

Foreign Soil SEC Corruption Cases Are Now Up Against a Ticking Clock

SEC corruptionA Supreme Court ruling, this summer, has put the U.S. Securities and Exchange Commission against the clock to wrap up foreign corruption cases.  According to an article by the Wall Street Journal, the recent ruling may impact SEC corruption cases when it comes to international anti-bribery laws.

The Ruling

Kobe SteelKobe Steel Admits to Falsifying Data in Another Blow to Japanese Businesses

Kobe, in Japan, is most well-known internationally for its luxury beef industry.  But now the name of the port city may be marred in scandal.  The Economist reports that Kobe Steel has admitted to falsifying data regarding its aluminum, copper and steel products.  Kobe Steel is one of the oldest industrial firms in all of Japan and 3 days after the bombshell admission its stock had fallen by $1.6 billion.

The False Data

Sergei Pavlovich Roldugin, born on September 28, 1951, is a Russian cellist and businessman, whose name will be well known to history. Aside from winning awards in the 1980’s as a cellist, he later held a professorship at the Saint Petersburg Conservatory from 2002-2005. Then, he shifted his focus to become an oil and media businessman but probably better known as Vladimir Putin’s best friend and the “secret caretaker” of Putin’s hidden wealth. Roldugin is a godfather to to Maria Putin, Vladimir’s daughter. Roldugin introduced Putin to his first wife and Roldugin’s brother Yevgenywas at KGB training school with Putin.

In 2015, 11.5 million documents were leaked by an anonymous source. They were called the Panama Papers. The documents belonged to a Panamanian law firm Mossack Fonseca.The leaked documents contain personal financial information about wealthy persons and public officials which were previously secret. Shell corporations were used for illegal purposes, including fraud, tax evasion, and evading international sanctions. According to  journalists  working on the data  , Roldugin — or at least his name — appears to be involved in network of up to $2 billion from Russian state banks has been hidden in offshore shell companies.

According to the Panama papers, there are five offshore entities lined to Roldugin; Sonnette Overseas, International Media Overseas, Sunbarn, Raytar and Sandalwood Continental, Inc. The firms are linked to Bank Rossiya. Bank Rossiya, Russia’s 17th biggest lender, according to the Treasury, was founded in 1990 by Yury Kovalchuk, Vladimir Yakunin and Andrey Fursenko, three associates of Putin who are also on the U.S. sanctions list. Kovalchuk holds about 38 percent of the bank, according to a regulatory filing. AO Bank Rossiya, a St. Petersburg-based lender owned by associates of Russian President Vladimir Putin, became the first financial institution to face U.S. sanctions over the Ukrainian crisis. The measure prohibits U.S. firms or individuals from doing business with Bank Rossiya, the U.S. Treasury said .. The firm has about $10 billion in assets, “numerous relationships” with banks in the U.S. and Europe, and was targeted because its owners are part of Putin’s inner circle.

Lafferty Enterprises doing business as Trans-Star Ambulance Services will pay $948,000 to resolve allegations  ambulance s that it filed fraudulent claims with the federal Medicare program. Medicare will only pay for an ambulance to take patients to and from dialysis if other forms of transportation pose a medical risk, and that was not the case in this instance, the government argued. This settlement is just one of scores of similar cases and recent Government allegations that ambulance companies are engaged in massive fraud by over-billing Medicare and Medicaid and also charging for services that are not allowed. In many instances, for example, the ambulance companies are billing for advanced care life support when the ambulance run does not provide advanced services.

As part of the settlement, Trans-Star will also have to undertake “substantial internal compliance reforms” and its claims will be reviewed by a third party for the next three years.

“It is vitally important that the resources available to federally funded healthcare programs be used only to pay for medically necessary services,” Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, said in a news release. “Our office and our agency partners are committed to protecting the integrity of these important programs on which so many of our citizens depend.”

More than 1,000 cities, counties, school districts and other government entities in California – including Los Angeles and Santa Clara County – will share in a $68.5 million settlement paid by Office Depot for allegedly overcharging them for office supplies. The lawsuit alleged that Office Depot  failed to give most of its California government customers the lowest price it was offering any government customer as required under its contracts. Other pricing misconduct also was alleged.

Participants in the contract are guaranteed to receive Office Depot’s best available prices for government purchasers, according to Sherwin’s complaint. But Office Depot allegedly gave Los Angeles, Santa Clara and the other California entities that are part of the settlement a lower discount rate than other government entities were given.

Federal regulations  require nursing homes to retain consulting pharmacists such as those provided by Omnicare to ensure that residents’ drug prescriptions are appropriate. The United States alleges that Omnicare solicited and received kickbacks from Abbott in exchange for purchasing and recommending the prescription drug Depakote for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes served by Omnicare.  Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients, the Government says. The government also alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott.

Abbott allegedly made payments to Omnicare described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote, an anti-seizure drug for patients with dementia. For example, according to the complaint, Omnicare solicited substantial contributions from Abbott and other pharmaceutical manufacturers to its “Re*View” program. Although Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents.

In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program. The complaint also alleges that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident. Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.

In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.

In a prior case in June, federal officials Wednesday accepted the company’s offer to pay $124.2 million to settle a suit accusing the company of allegedly offering improper financial incentives to skilled nursing facilities in northern Ohio in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries.

Last February, the company paid $4 milion to resolve allegations that Omnicare solicited and received kickbacks from California-based drug manufacturer Amgen Inc. in return for implementing programs designed to switch Medicaid beneficiaries from a competitor drug to Amgen’s Aranesp product.

In August 2012, it settled a 2007 lawsuit claiming it paid a kickback in buying a pharmacy company, and that it submitted false claims for reimbursement to government health insurers. Additional terms of the settlement were not released.

In May 2012, Omnicare settled another case with the U.S. Department of Justice for $50 million. The agency called it the “largest controlled substance settlement in history,” and said Omnicare gave nursing home residents medicines without a prescription, with missing prescription information or without documentation. It resulted in the company being agreeing to operate under a corporate integrity agreement with the federal government.

Finally, Omnicare agreed in November 2009 to pay $98 million to settle civil allegations by the U.S. government and various states that it took kickbacks from Johnson & Johnson.

Jeffrey Newman represents whistleblowers

Continue reading

The Justice Department recovered $2.3 billion from whistleblower cases alleging healthcare fraud schemes in fiscal 2014.

It was the fifth consecutive year the Justice Department recovered more than $2 billion from cases alleging fraud against Medicare,Medicaid and Tricare. 9. Whistle-blowers, are allowed to file lawsuits on behalf of the government. The government can later decide whether to intervene. In successful lawsuits, whistle-blowers are entitled to a percentage of the money recovered, leading to large rewards in some cases. In fiscal 2014, more than 700 whistle-blowers filed cases in healthcare and other areas, and reaped $435 million.

Much of the moneys recovered this year was from the pharmaceutical industry.Johnson & Johnson agreed to pay $1.1 billion in November 2013 to settle allegations that Johnson & Johnson promoted the drugs Risperdal, Invega and Natrecor for uses not approved by the FDA, causing providers to submit hundreds of millions of dollars in false claims to federal healthcare programs.

The Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

The amount is more than three times the $8 billion collected in FY 2013.  The largest civil collections were from affirmative civil enforcement cases, many of which were brought under the whistleblower provisions of the False Claims Act, in which the United States recovered government money lost to fraud or other misconduct or collected from  individuals and/or corporations for violations of federal health, safety, civil rights, tax, or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

The total includes all monies collected as a result of Justice Department-led enforcement actions and negotiated civil settlements.  It includes approximately $13.7 billion in payments made directly to the Justice Department, and $11 billion in indirect payments made to other federal agencies, states and other designated recipients.

The largest single source of collections came from civil penalties paid by financial institutions to resolve financial fraud claims stemming from the 2008 financial crisis, including significant amounts paid by JPMorgan and Citigroup Inc, to resolve federal and state civil claims related to the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS).  Both resolutions include record penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and in addition, also provide billions of dollars of relief to struggling homeowners.

Department collections also included hundreds of millions in fines from an ongoing   investigation into institutions involved in the manipulation of the London Interbank Offered Rate (LIBOR), including UBS Securities Japan Co. Ltd., and RBS Securities Japan Ltd., a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS).  Hundreds of millions in additional collections resulted from the department’s ongoing investigation into international price-fixing and bid rigging in the auto parts industry.  For instance, Bridgestone Corp., a company based in Tokyo, Japan, agreed to plead guilty and to pay a criminal fine for its role in a conspiracy to fix prices of automotive anti-vibration rubber parts installed in cars sold in the United States and elsewhere.

The department also collected millions in criminal penalties after resolving investigations into violations of the Foreign Corrupt Practices Act (FCPA). For instance, Diebold Inc., an Ohio-based provider of integrated self-service delivery and security systems, pleaded guilty to violating the FCPA by bribing government officials in China and Indonesia and falsifying records in Russia in order to obtain and retain contracts to provide ATMs to state-owned and private banks in those countries.

Jeffrey Newman represents whistleblowers

Continue reading

Kobi Kastiel, co-editor of the Harvard Law School Forum on Corporate Governance and Financial Regulation has come up with strong recommendations for corporations seeking to avoid SEC whistleblower cases: create an internal corporate fraud program to identify fraud issues.

Under the SEC Whistle-blower Program, eligible whistle-blowers can recover 10 percent –30 percent of the amount of any money sanctions collected that exceed $1 million in actions brought by the SEC . A successful corporate whistle-blowing program requires protections for the whistleblowers as many are afraid to report internally says Kastiel.

Jeffrey Newman represents whistleblowers

Bostwick Laboratories, Inc., an anatomic and pathology lab based in Uniondale, New York, has agreed to pay the United States$6,048,000 to resolve allegations regarding violations of the False Claims Act.

The qui tam complaint was filed in May 2008. It alleges that Bostwick Laboratories improperly billed Medicare and Medicaid for tests and services referred in violation of the Anti-Kickback Statute and for tests performed without a doctor’s order or consent. The Justice Department decided in June 2011 not to intervene in the case. In 2012, Senior District Judge S. Arthur Spiegel issued a well- reasoned order denying the defendants’ motions to dismiss. U.S. ex rel. Daugherty v. Bostwick Laboratories, et al., 2012 U.S. Dist. LEXIS 178641 (S.D. Ohio Dec. 18, 2012).

The case against Bostwick Laboratories settled after the company entered into settlement discussions with Mr. Daugherty and the United States based on its inability to pay the full value of the damages sought in the qui tam action.