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United States Attorney General Jeff Sessions has announced that he will be pursuing prosecutions against individuals who have leaked information that has resulted in a major threat to national security and that the DOJ may begin issuing subpoenas to media outlets that have reported information thought to be leaked. The number of leaks and leak-related investigations has risen sharply since Mr. Trump took office, Mr. Sessions said.His department has received as many criminal referrals for investigations of the unauthorized disclosure of classified information during the first six months of this year as during the three previous years combined, he said.

Civil-liberties and press-advocacy groups reacted with alarm to Mr. Sessions’ announcement, in particular regarding the Justice Department’s effort to revisit rules put in place during the Obama administration to strengthen protections for reporters. Among the steps Mr. Sessions said the government was taking to combat leaks was to direct Deputy Attorney General Rod Rosenstein and FBI Director Chris Wray “to oversee all classified leak investigations and actively monitor the progress of each and every case.”

​He has also directed Justice Department prosecutors to prioritize cases involving unauthorized disclosures of classified information, ​adding that​the FBI has dedicated more resources to fighting leaks and has created a new counterintelligence unit to manage the cases, Mr. Sessions said.

Halliburton has agreed to pay a fine of $29.2 million to settle federal charges that it bribed an Angolan company to obtain oil field service contracts. This is the second settlement  in eight years Halliburton  paid up to settle a federal probe into deals with corrupt African nations. In 2009, Halliburton paid $559 million to end charges that one of its former units bribed Nigerian officials during construction of a gas plant in the late 1990s through the mid-2000s. At the time, it was the largest settlement a U.S. company paid to settle a federal bribery investigation. In both settlements, the company got off without admitting or denying wrongdoing. Halliburton said in a statement that it didn’t admit or deny the government’s findings. The company also said the Justice Department has ended its investigation into the matter and isn’t bringing charges.

The probes concerned contracts reached in 2008 with Angola’s state-oil company Sonangol. The SEC said Halliburton obtained $14 million in profit from the deals. The company agreed to retain an independent compliance consultant for 18 months to oversee anticorruption policies in Africa. The SEC said officials from Sonangol required the Houston company to work with a local Angolan business to satisfy local content rules for foreign firms. The SEC said Mr. Lorenz worked to retain a firm owned by a former Halliburton employee who was a friend of a Sonangol official, and said Mr. Lorenz didn’t conduct competitive bidding for some contracts.

In 2011, Halliburton said it was engaging its own investation  of potential violations of U.S. anticorruption laws in Angola. At the time, the company said it had received an anonymous email in December 2010 accusing some of its current and former personnel of breaking the rules set by the U.S. Foreign Corrupt Practices Act.

The Securities and Exchange Commission has  filed charges against Massachusetts businessman Patrick Muraca to stop an alleged ongoing fraud by misuing investments intended for the development of cancer diagnostic tests to instead pay personal expenses and fund his fiancée’s restaurant businesses.

According to the SEC’s complaint, Muraca established two pharmaceutical  companies and raising nearly $1.2 million by representing to investors that their money would be used to develop products to detect cancer and other diseases.  The SEC investigation revealed that the investor funds were deposited into Muraca’s personal bank account and alleges that at least $400,000 has been used to pay rent for the restaurants and fund other purchases by Muraca, including payments to a casino, automotive shop, and cigar shop.

The SEC alleges that investors were never informed of the alternative uses of their investments in NanoMolecularDX LLC and MetaboRX LLC, including the fact that Muraca characterized the general character of the businesses as “Serving Food; Restaurant” in separate documents he has filed with the Commonwealth of Massachusetts to do business in the state.

A new lawsuit accuses Wells Fargo & Co of racketeering  and fraud after it admitted charging several hundred thousand borrowers for auto insurance they did not ask for or need, causing many delinquencies. The  class action filed on Sunday in San Francisco federal court against Wells Fargo. The new charges are separate and different from the one where its  employees created as many as 2.1 million unauthorized customer accounts to meet sales goals.

Wells Fargo said late last week it would refund about $80 million to an estimated 570,000 customers who were wrongly charged for auto insurance from 2012 to 2017, including roughly 20,000 whose vehicles were repossessed. The San Francisco-based said this after The New York Times wrote about an internal report prepared for executives that detailed improper charges. The lead Plaintiff is Paul Hancock, a 34-year-old marketing consultant from Indianapolis.He alleges Wells Fargo charged him $598 for insurance though he repeatedly told the bank he had coverage from Allstate, and imposed a late fee after the unnecessary policy took effect.The lawsuit seeks unspecified damages, which could be tripled under federal racketeering law, for borrowers nationwide, and in California and Indiana.

Dmitrij Harder, former head of Chestnut Consulting Group, Inc. and a Russian naturalized German citizen and permanent resident alien in the U.S.  was sentenced to 5 years in prison in a $3.5 million bribery scheme paid to a European Banking official, who has a joint UK Russian citizenship. The indictment said that Harder made corrupt payments to a senior banker working at the European Bank for Reconstruction and Development (EBRD), Andrey Ryjenko . EBRD was established in 1991 to finance market boosting projects in the former Soviet Union, now Russia. In June, Ryjenko  was found guilty of conspiring to make or accept corrupt payments and sentence to 6 years by a UK Court.

Harder pled guilty to two violations of the Foreign Corrupt Practices Act (FCPA). The government says that the European bank apprved applications for two of Harder’s clients, Russian businesses Irkustsk Oil and Gas and Vostok Energy. One received an $85 million equity investment plus a $104 million loan. The other received a $40 million equity investment and $60 million loan. Chestnut Consulting got $8 million in fees from the clients for the bank’s approval of the applications. The moneys were paid to Tatjana Sanderson, sister of Ryjenko.

Russia owns 4% of the bank with a $1.2 billion contribution to EBRD’s $30 billion share capital. The US is a 10% shareholder and UK holds 8.7%. In 2014 the ERBD board voted to impose sanctions on Russia in line with US and European Union Sanctions for incursions into the Ukraine. The Russian portfolio in the bank was cut. Sanderson was not sentenced as she was deemed unfit mentally to stand trial. The case is unusual in that few cases of foreign bribes have resulted in significant jail time and in addition, there are two major Russian companies who benefitted from some of the transactions in the form of equity positions and loans.

Celgene Corporation will pay $280 million to settle a whistleblower case which  claims the pharma maker used illegal marketing practices to sell its cancer drugs Thalomid and Revlimid. The whistleblower who filed the case, Beverly Brown, a saleswoman who worked at Celgene for a decade, asserted hat the company  paid doctors and hired ghostwriters to  recommend uses for Thalomid which went far beyond the product’s approval, including treating blood cancer. She is represented by Reuben Guttman Esq. This was years before it was authorized by regulators. Brown said the company used the same schemes to promote Thalomid’s successor, Revlimid.

As part of the settlement, Brown may recover $84 million, or 30 percent of the recovery, under federal false-claims laws. Thalomid, Revlimid, and Celgene’s  successor drug, Pomalyst, accounted earned $8.4 billion, or about 75 percent, of Celgene’s revenue last year. .

While doctors have broad latitude in prescribing drugs, even for uses that aren’t approved, drugmakers are barred from enticing physicians to use medicines for illnesses not sanctioned by regulators. According to the Complaint, Celgene initially got U.S. Food and Drug Administration approval in 1998 for Thalomid to be used on leprosy patients. However,  the company hired more than 100 salespeople to hype the drug to cancer doctors, according to Brown.

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Foreign bribes made by U.S. companies to foreign officials or their relatives to get business  is a major focus of prosecutions by the Department of Justice—including bribes to Russian and Chinese officials. Prosecutions also include foreign corporations trading on a U.S. stock exchange.  The penalties are getting larger and more cases are being generated by whistleblowers with inside information on their employers. For example, last year, Teva Pharmaceutical a global generic drug maker paid $519 million to settle charges that it bribed officials in Russia, the Ukraine and in Mexico. The same year, Braskem S.A. the Brazilian based petrochemical maker paid $957 million for hiding millions of dollars in illicit bribes paid to the Brazilian government officials to win business. Bribes of foreign officials violates the Foreign Corrupt Practices Act (FCPA).Mount Sunapee lease holder Och-Ziff pays $413 million to settle foreign bribes concerning African diamonds and mining rights

Now, there is an additional target for foreign bribes; the foreign officials who take or arrange the bribes often in the form of wire transfers. While the Forieg Corrupt Practices Act (FCPA) does not apply to the bribe recipient, there are many other laws which are being used against them, including wire and mail fraud. In July of this year, federal prosecutors here were successful in prosecuting a South Korean government official when he was found guilty of laundering bribery proceeds in the United States. In this case, the official who was the Director of South Korea’s Earthquake Research Center was said to have demanded over one million dollars in bribe payments from two companies in exchange for providing them with business in Korea. This was the second prosecution this year of a foreign official for taking a bribe and laundering it here. The first involved a former Minister of Mines and Geology of the Republic of Guinea who was convicted by a federal jury in a scheme of laundering bribes paid to him by a Chinese fund.

While previously it was only the company  paying the bribes that was pursued by the S.E.C. or D.O.J..  That has now changed. The interesting question is what will this mean for doing business in Russia and China where the official taking the bribe may find themselves in court in the United States, when there is jurisdiction for prosecution due to wire transfers or sending the funds back to the U.S.? Over the past ten years, there have been scores of settlements arising from foreign bribes by U.S. companies in Russia, China, Mexico and elswhere. In the case of Russia, recent press reports have suggested that many bribes paid in Russia may be indirectly tied to Russian President Vladimir Putin through his friends and business associates. See The “Panama Papers”.Panama Papers still revealing on Sergei Roldugin and the secrets of Putin wealth

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According to Bloomberg news today, two whistleblowers are about to reap a $61 million reward from the Securities and Exchange Commission for assisting the agency in proving that JP Morgan & Chase failed to disclose to wealthy clients that it was directing them to investments that were most profitable for JP Morgan. SEC letters issued Wednesday telling six whistleblower applicants of a preliminary decision. It said two would share almost one quarter of the record settlement which the SEC had reached with the bank in December of 2015.JP Morgan has agreed to pay $307 million.

Under the SEC whistleblower program, the names of whistleblowers are not revealed. Part of the payment will go to the Commodity Futures Trading Commission (CFTC) which operates a separate whistleblower program. The CFTC has not made any whistleblower award determination in the JO MOrgan case, which means the whistleblower may receive even more moneys as a CFTC reward.

JP Morgan admitted disclosure failures from 2008-2013 relating to two units-its securities division and its nationally chartered bank. The reward is expected to be the largest to date awarded to a SEC whistleblower.

There is a constant drumbeat of daily news about Russia and investigations of possible collusion to fix the election. Also,  following the release of the “Panama Papers” stories about Russian corruption and offshore moneys leading  to friends of Vladimir Putin added to the fuel of interest in the Russian way of business. As a result, independent Counsel Robert Mueller will have lots of leads from the information previously released by the investigative media which may connect to his  investigation of meetings by election officials with Russian representatives.

Interestingly, a large number of U.S. companies not only still do business in Russia, but they own subsidiary companies there and those companies are doing quite well. However, a look at cases investigated and settled by either the Securities and Exchange Commission (SEC) or the Department of Justice (DOJ) reveals that many of the companies doing business in Russia are settling cases alleging that they have been paying substantial bribes to government officials in violation of the Foreign Corrupt Practices Act (FCPA). Also, there is another trend and that is that whistleblowers, seeking the allowed 15-30% reward of what the U.S. recovers are bringing forth cases under the False Claims Act (FCA) allowing for citizens or non-citizens to file cases on behalf of the government when they reveal new info not known by the Government. Because the whistleblowers are insiders with detailed information, often presenting supportive emails and document to corroborate their cases, the fact of cases alleging bribes to Russian officials is no longer uncommon.

What companies have settled such cases in recent years?

 

 

Largest Health Care Fraud Enforcement Action in Department of Justice History

 

WASHINGTON – Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced today the largest ever health care fraud enforcement action by the Medicare Fraud Strike Force, involving 412 charged defendants across 41 federal districts, including 115 doctors, nurses and other licensed medical professionals,for their alleged participation in health care fraud schemes involving approximately $1.3 billion in false billings. Of those charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics. Thirty state Medicaid Fraud Control Units also participated in today’s arrests. In addition, HHS has initiated suspension actions against 295 providers, including doctors, nurses and pharmacists. Attorney General Sessions and Secretary Price were joined in the announcement by Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting Director Andrew McCabe of the FBI, Acting Administrator Chuck Rosenberg of the Drug Enforcement Administration (DEA), Inspector General Daniel Levinson of the HHS Office of Inspector General (OIG), Chief Don Fort of IRS Criminal Investigation, Administrator Seema Verma of the Centers for Medicare and Medicaid Services (CMS), and Deputy Director Kelly P. Mayo of the Defense Criminal Investigative Service (DCIS).According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare, Medicaid and TRICARE for treatments that were medically unnecessary and often never provided. In many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed. The number of medical professionals charged is particularly significant, because virtually every health care fraud scheme requires a corrupt medical professional to be involved in order for Medicare or Medicaid to pay the fraudulent claims.  Aggressively pursuing corrupt medical professionals not only has a deterrent effect on other medical professionals, but also ensures that their licenses can no longer be used to bilk the system. Continue reading