An executive and two companies pleaded guilty in federal court  to marketing packages of cheese containing unacceptable amounts of wood pulp as “100 percent real parmesan and romano cheese.”

Castle Cheese Company executive Michelle Myrter, 44, pleaded guilty to a misdemeanor of aiding and abetting to introduce misbranded and adulterated products to interstate commerce. Two other companies, Universal Cheese & Drying, Inc. and International Packing LLC also pleaded guilty to conspiring to introduce misbranded cheese and money laundering.

Each corporation faces a fine of $500,000. Myrter can face a one-year sentence in prison, a $100,000 fine or both depending on the seriousness of the offense and her past legal history.

The Department of Justice has issued a subpoena for records from General Electric’s financial services business, according to GE in a securities filing.  GE disclosed Friday in its securities filing that its lending unit, GE Capital and a former subsidiary made subprime loans.

The Justice Department sought records from GE as part of a nationwide investigation of subprime mortgages for the purchase and sale of residential properties.

Jeffrey Newman represents whistleblowers

The United States’ largest distributor of endoscopes and related equipment will pay $623.2 million to resolve criminal charges and civil claims relating to a scheme to pay kickbacks to doctors and hospitals, U.S. Attorney Paul J. Fishman of the District of New Jersey and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division announced today.  U.S. Attorney Fishman and Principal Deputy Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division also announced that a subsidiary of the distributor will pay $22.8 million to resolve criminal charges relating to the Foreign Corrupt Practices Act (FCPA) in Latin America.

Anti-Kickback Statute Violations

Olympus Corp. of the Americas (OCA) was charged in a criminal complaint filed today in Newark, New Jersey, federal court with conspiracy to violate the Anti-Kickback Statute (AKS), which prohibits payments to induce purchases paid for by federal health care programs.  OCA has entered into a three-year deferred prosecution agreement (DPA) that will allow it to avoid conviction if it complies with the reform and compliance requirements outlined in the agreement.

John Slowik  who worked as the compliance officer for Olympus America, will soon collect $51 million as part of the settlement paid by Olympus to the Government in a case in which the government alleged the company paid Latin American doctors kickbacks to use its medical devices.

In a qui tam whistleblower suit, he alleged that the company ignored his efforts to stop it from giving financial rewards to hospitals and physicians for buying Olympus endoscopes, which are used to examine the digestive tract.

Slowik said  in court papers that when he took steps to stop the kickbacks, he was bounced from his compliance job and subjected to “systematic harassment” that made him physically ill.

Sentencing will be in June. Jurors found Kuchipudi guilty on one count of conspiracy to defraud the United States and nine counts of illegally soliciting or receiving benefits in return for referrals of patients covered under a federal health care program, said Joseph Fitzpatrick, a spokesman for the U.S. attorney’s office in Chicago.

A U.S. appeals court on Monday revived a $1 billion lawsuit accusing defense contractor Raytheon Co of fraudulently overbilling the federal government under a contract to develop a weather sensor for a costly environmental satellite system.The court said Mateski’s claims went beyond publicly disclosed problems in developing the National Polar-Orbiting Operational Environmental Satellite System, which suffered from delays and cost overruns, including problems outlined in a U.S. Government Accountability Office report from November 2005.

By a 3-0 vote, the 9th U.S. Circuit Court of Appeals in Pasadena, California said the engineer Steven Mateski could pursue claims that Raytheon violated the federal False Claims Act for at least a decade starting in 2002.

Mateski alleged that Raytheon, his employer from 1997 to 2006, mismanaged its subcontract to develop the Visible Infrared Imaging Radiometer Suite sensor for the NPOESS, on which Northrop Grumman Corp held the main contract.

The United States has filed a complaint against BAE Systems Tactical Vehicle Systems LP (BAE) for knowingly overcharging the Army for materials under a military truck contract, the Justice Department announced today.  BAE is a subsidiary of BAE Systems Inc., headquartered in Arlington, Virginia, which is owned by BAE Systems plc, a global defense, security and aerospace company headquartered in London.  BAE is located in Sealy, Texas.

“Those who do business with the United States must act in good faith,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “We will ensure that contractors do not abuse the military’s procurement process at the expense of our troops abroad and the taxpayers at home.”

In 2008, the Army Tactical Command Life Cycle Management Command, in Warren, Michigan, awarded BAE a contract to build more than 20,000 trucks for the military, known as Family of Medium Tactical Vehicles (FMTVs).  Government procurement law requires contractors negotiating government contracts above a threshold price, to disclose cost or pricing data relevant to the negotiations.  The purpose of requiring a contractor to disclose this information is to put the government on equal footing with the contractor and ensure a fair and reasonable price.  The government alleges that BAE knowingly inflated the price of the FMTV contract by concealing cost and pricing data on numerous parts and materials during contract negotiations, despite having certified that the data it had disclosed was accurate, complete and current.

Bard College will pay $4 million for violating the False Claims Act concerning federal grants concerning the use of Title IV student aid funds. The wrongdoing was revealed by two former students of the college under The False Claims Act, allowing private individuals to file suits on behalf of the United States and share in the proceeds of the suit.

The allegations were that Bard got funds under the Teacher Quality Partnership Grant Program despite failing to comply with the conditions of the grant.The settlement also resolves allegations that Bard awarded, disbursed, and received Title IV student loan funds at campus locations before such locations were accredited or before providing notice of such locations to the Department of Education, in violation of applicable regulations and Bard’s Title IV Program Participation Agreements with the Department of Education.

Jeffrey Newman represents whistleblowers

Two financial firms, Cayman National Securities Ltd. and Cayman National Trust Ltd. both affiliates with Cayman National Corp., based in the Cayman Islands have pleaded guilty to helping U.S. taxpayers hide more than $130 million in offshore accounts, the Justice Department said Wednesday.

All of those companies provided investment brokerage and trust management services to individual and entities.

The two firms must pay more than $6 million in fines and will provide U.S. authorities with the files of up to 95% of their U.S. clients trying hide assets or income from the Internal Revenue Service. The IRS is expected to examine potential cases against them.

Syracuse-based Hayner Hoyt Corporation has agreed to pay $5 million, plus interest, to resolve allegations that its chairman and chief executive officer, Gary Thurston, its president, Jeremy Thurston, employees, Ralph Bennett and Steve Benedict and Hayner Hoyt affiliates LeMoyne Interiors and Doyner Inc., engaged in conduct designed to exploit contracting opportunities reserved for service-disabled veterans.

The United States has long used government contracting to promote small businesses in general and specifically small businesses owned by veterans who have service-connected disabilities.  Congress has established a targeted procurement program for the U.S. Department of Veterans Affairs (VA), which requires the VA to set annual goals for contracting with service-disabled veteran-owned small businesses.  To be eligible for these contracts, an applicant must qualify as a “small business.”  In addition to being a small business, a service-disabled veteran must own and control the business and handle its strategic decisions and day-to-day management.

The settlement resolves allegations that the defendants orchestrated a scheme designed to take advantage of the service-disabled veteran-owned small business program to secure government contracts for a now-defunct company, 229 Constructors LLC, that Gary and Jeremy Thurston created and controlled and subcontracts for Hayner Hoyt and its affiliates.  The Thurstons – neither of whom is a veteran – exerted significant influence over 229 Constructors’ decision-making during the bid, award and performance of these contracts in various ways, including by staffing the company entirely with then-current and former Hayner Hoyt employees and their spouses.  They also provided 229 Constructors with considerable resources, which provided it with a competitive advantage over legitimate service-disabled veteran-owned small businesses neither affiliated with nor controlled by a larger, non-veteran owned corporation.  Hayner Hoyt officials caused false certifications and statements to be made to the government representing that 229 Constructors met all requirements to be a service-disabled veteran-owned small business when they knew, or should have known, that 229 Constructors did not meet such requirements.  By diverting contracts and benefits intended for our nation’s service-disabled veterans to Hayner Hoyt and its affiliates, the defendants undercut Congress’s intent of encouraging contract awards to legitimate service-disabled veteran-owned small businesses.

John Henry’s fledgling medical news organization, The Boston Globe Life Sciences Media, LLC d/b/a STAT, HQ’d in Boston is taking on Pursue Pharma to try to obtain thousands of documents sealed by court order, including a deposition of Dr. Richard Sackler, a Purdue board member and former company president.

In a STAT article released today, it was revealed that STAT is asking a Kentucky court to unseal documents which could provide information on how the company marked the pain pill OxyContin including what the top execs knew about how addictive it was.https://mail.google.com/mail/u/0/?tab=wm#search/STAT+/15379b599656ba97

Purdue has been the defendant in many state and federal lawsuits concerning its marketing of the drug, which some assert is a cause of the national opioid abuse crisis. STAT’s motion to unseal is included in today’s article and argues that under law, the public has the right of access to the documents sought and that they were improperly sealed in the first place. As part of a settlement with the State of Kentucky, Purdue paid $24 million but the state agreed to completely destroy or return all of the records produced by the company in the litigation.

Toshiba Corp. is under investigation by the U.S. government over allegations that it hid $1.3 billion in losses at its nuclear power operations. The Department of Justice and Securities and Exchange Commission are looking into whether fraud was committed over allegations that it hid $1.3 billion in losses at its nuclear power operations, according to reports in The Chicago Tribune and other publications.  Other allegations include those that the company falsified financial statements and documents involving its issuance of corporate bonds.

Jeffrey Newman represents whistleblowers

Federal prosecutors are saying that  Advanced BioHealing Inc. executive Todd Clawson and others paid kickbacks to VA podiatrists and clinicians who promoted the company’s product, a “biologic” wound dressing. Clawson has been charged with bribery and health care fraud.

Advanced BioHealing, a  Westport, Connecticut company, produces a “living skin equivalent” dressing  to treat diabetes-related foot sores. The company was granted a large federal contract for the product – Dermagraft – in late 2008 shortly after Clawson went to work there. According to the court papers, Clawson served as director of the Advanced BioHealing division selling to the federal government. As such, he managed a team of 35 salespersons and was primarily concerned with selling the bioengineered bandages to the VA.

The Securities and Exchange Commission  will delay IEX’s bid to become a full-fledged stock exchange and pointed to a recent tweak to its business model as the reason.

IEX wants to put a 350 microsecond “speed bump” on stock orders as a way to keep out ultrafast traders from taking advantage of slower investors.Rivals, including the New York Stock Exchange and  Citadel, who called the speed bump unfair and claimed it would violate existing rules that require exchanges to provide instantaneous quotes.

IEX also says it has plans that would allow its own brokerage clients to bypass the speed bump, which is more than weird.

Cardiovascular Systems has agreed to pay an $8 million settlement with the plaintiff in a False Claims Act lawsuit based on allegations from a former sales rep that the company ran kickbacks and an off-label marketing scheme to boost sales of its orbital artherectomy devices.

The lawsuit alleges CSI induced physicians to use its products by offering free, all-expense-paid training programs “followed by explicit demands by CSI employees that attendees use CSI products on future patients,” giving away product for free, 3rd-party referral channel marketing, and “sham Speaker Bureau payments for high-prescribers and others whom CSI sought to cultivate,” according to the complaint filed in the U.S. District Court for Western North Carolina. Thams worked for CSI as a district sales manager from 2012 to 2013, according to the complaint.

The lawsuit also accused the company of running an off-label promotion scheme to push sales of its unapproved 4 French catheter. It alleges that CSI also promoted its devices for use in areas of the body it’s not approved for, such as the coronary arteries, and for conditions such as chronic total occlusion for which it is not approved.

Respironics Inc., based in Murrysville, Pennsylvania, has agreed to pay $34.8 million to resolve alleged False Claims Act violations for paying kickbacks in the form of free call center services to durable medical equipment (DME) suppliers that bought its masks for patients with sleep apnea, the Department of Justice announced today.    

“The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier’s judgment has not been compromised by illegal payments from equipment manufacturers.

The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program, such as Medicare, Medicaid or TRICARE.  Claims submitted to these programs in violation of the Anti-Kickback Statute are also false claims under the False Claims Act.

The Securities and Exchange Commission announced last week that it deems it appropriate and in the public interest that public administrative and cease and desist proceedings be issued under the SEC Act against Swiss pharma giant Novartis (NOVN: VX), alleging bribery activities in China.

The SEC statement said: “From at least 2009 to 2013, certain employees and agents of Novartis subsidiaries conducting business in China engaged in transactions and provided things of value to foreign officials, principally healthcare professionals (HCPs). These payments took varied forms and were intended to influence the HCPs and thereby increase sales of Novartis pharmaceutical products.

Novartis has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act by making illegal payments to health care providers in China. In doing so, the company became the latest drugmaker to be fined for paying bribes in order to boost sales in a foreign country. However, it is by no means the largest amount, It will be recalled that, in 2014, a Chinese court fined GlaxoSmithKline (LSE: GSK) £297 million ($420 million) after finding the company guilty of bribing non-government personnel in the country (The Pharma Letter September 19, 2014). The Changsha Intermediate People’s Court in Hunan Province, China, ruled that GSK China Investment Co Ltd had, according to Chinese law, offered money or property to non-government personnel in order to obtain improper commercial gains, and been found guilty of bribing non-government personnel.

Station KXAS-TV , NBC 5 in Texas has released a news report based on an FBI affidavit for a search warrant. It says that the owner of a nursing home company regularly directed nurses to overdose hospice patients with drugs including morphine to speed their deaths and maximize profits. The news story says that one text said “you need to make this patient go bye-bye. The company in question is Novus Health Care Services Inc. in Texas.

The same person apparently told health care executives over lunch that he wanted to “find the patients who would due in 24 hours..”  Hospice care providers do not necessarily make more money for longer hospice stays due to an aggregator cap which limits Medicare and Medicaid payments. More information is expected to be released on this investigation soon.

Jeffrey Newman represents whistleblowers.

 Facebook has now been ordered to pay taxes in the UK, over any profits brought in by its advertisement business in Britain. The world’s largest social network will no longer be able to route revenues contributed by its largest advertisers, through Ireland. Facebook profits  by displaying users ads in News Feed, Pages,  for of small to large scale businesses. Its biggest customers in the UK include Unilever, Sainsbury’s, Tesco, and advertising company WPP. Ad revenues collected from these companies, previously run through Ireland, will now have to go through UK tax authorities.

However, small businesses who book advertising space online, with little or no interaction with Facebook staff, will still be able to make use of the Irish option.

This means Facebook will pay significantly higher revenues in the UK, and  a higher level of corporate tax on its profits there. Corporate tax on a business’ profit is currently set at 20%. The higher tax bill goes into effect in April, and the first batch of tax Facebook will pays based on the new arrangement, will be in 2017. It is highly likely that it was international pressure regarding tax practices that forced the company into acceding to the revised agreement.

The U.S. Justice Department says it’s reviewing the “Panama papers” tax evasion leak for evidence of possible criminal wrongdoing that might have a link to the United States or to its financial system. Spokesman Peter Carr said the department is aware of the Panama Papers data leak containing information on the offshore financial dealings of wealthy, famous and powerful people around the world. He says the department is reviewing the reports but can’t comment on specific documents. He said “the U.S. Department of Justice takes very seriously all credible allegations of high level, foreign corruption that might have a link to the United States or the U.S. financial system.” So far there have been no Americans openly named in the documents but thousands of Europeans have been named..

Reports by  media outlets reveals information on the offshore assets and services of politicians, businesses and celebrities, based on a cache of 11.5 million records. Among the countries with past or present political figures named are Iceland, Ukraine, Pakistan, Saudi Arabia, Russia and Argentina. In Australia, the tax agency said it was investigating more than 800 wealthy people for possible tax evasion linked to their alleged dealings with Mossack Fonseca, the Panamanian law firm with international offices that provide offshore financial services.

The documents provided to Suddeutsche Zeitung, amounting to about 2.6 terabytes of data, included emails, financial spreadsheets, passports and corporate records detailing how powerful figures used banks, law firms and offshore shell companies to hide their assets. The data dated from 1977 through the end of 2015, it said.