The Securities and Exchange Commission has announced that SandRidge Energy, an oil and gas company, must pay $1.4 million to settle charges that it retaliated against a whistleblower and used illegal language in separation agreements. It is the first time a company was penalized for actions against a whistleblower since the passage of  provisions of the Dodd-Frank Act took effect in August 2011. SandRidge also was charged with using illegally restrictive language in separation agreements that impeded outgoing employees from communicating with the SEC. It was the second company in two days to settle with the commission over excessively restrictive separation agreements.

The SEC found that the whistleblower had expressed concerns internally about how the company was calculating its reserves. The employee was offered a promotion but turned it down, according to the SEC.

Months later, senior management concluded that the employee was disruptive and could be replaced by someone “who could do the work without creating all the internal strife,” the commission said in a press release.

Teva Pharmaceutical Industries Ltd. (Teva), the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary, Teva LLC (Teva Russia), agreed to resolve criminal charges and to pay a criminal penalty of more than $283 million in connection with schemes involving the bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA). In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Teva, whereby the company agreed to pay approximately $236 million in disgorgement to the SEC, including prejudgment interest.  Thus, the combined total amount of U.S. criminal and regulatory penalties to be paid by Teva is nearly $520 million. According to the companies’ admissions, Teva executives and Teva Russia employees paid bribes to a high-ranking Russian government official intending to influence the official to use his authority to increase sales of Teva’s multiple sclerosis drug, Copaxone, in annual drug purchase auctions held by the Russian Ministry of Health.  The corrupt arrangement occurred at the same time that the Russian government was seeking to reduce the amount spent on costly foreign pharmaceutical products, such as Copaxone.  Between 2010 and at least 2012, pursuant to an agreement with a repackaging and distribution company owned by the Russian government official, Teva earned more than $200 million in profits on Copaxone sales to the Russian government.  Moreover, the Russian official earned approximately $65 million in corrupt profits through inflated profit margins granted to the official’s company.

Teva also admitted to paying bribes to a senior government official within the Ukrainian Ministry of Health to influence the Ukrainian government’s approval of Teva drug registrations, which were necessary for the company to market and sell its products in the country.  Between 2001 and 2011, Teva engaged the official as the company’s “registration consultant,” paid him a monthly fee and provided him with travel and other things of value totaling approximately $200,000.  In exchange, the official used his official position and influence within the Ukrainian government to influence the registration in Ukraine of Teva pharmaceutical products, including Copaxone and insulins.

In addition, Teva admitted that it failed to implement an adequate system of internal accounting controls and failed to enforce the controls it had in place at its Mexican subsidiary, which allowed bribes to be paid by the subsidiary to doctors employed by the Mexican government.  Teva admitted that its Mexican subsidiary had been bribing these doctors to prescribe Copaxone since at least 2005.  Teva executives in Israel responsible for the development of the company’s anti-corruption compliance program in 2009 had been aware of the bribes paid to government doctors in Mexico.  Nevertheless, Teva executives approved policies and procedures that they knew were not sufficient to meet the risks posed by Teva’s business and were not adequate to prevent or detect payments to foreign officials.  Teva also admitted that its executives put in place managers to oversee the compliance function who were unable or unwilling to enforce the anti-corruption policies that had been put in place.

Swiss banking giant Credit Suisse Group AG  must pay $2.48 billion to US authorities in settlement of the case linked to the wrongful sale of Mortgage Backed Securities (MBS) which led to one of the worst economic crisis ever witnessed. The bank will also compensate affected customers by paying $2.8 billion over a period of five years since this settlement. The bank said in its statement that the deal could be changed depending upon the final negotiations of the board of directors. The statement made by the bank also said: “Credit Suisse will take a pre-tax charge of approximately $2 billion in addition to its existing reserves against these matters. This will be taken in our 4Q 2016 financial results.”

The news of Credit Suisse’s settlement came after the news of Deutsche Bank’s agreement with the Department of Justice for $7.2 billion; this amount was a significant achievement for the German banking giant as it was handed over a bill of $14 billion in September for the settlement of this case.

The deal shows the effort put in by the Justice Department to hold European banks accountable for the deals they made which resulted in the crises of 2008. The crisis caused by the collapse of the US housing market was triggered by securities having sub-prime mortgages as their underlying security. Barclays was also sued by the DOJ over the same issue last Thursday.

United Shore Financial Services LLC (USFS) has agreed to pay the United States $48 million to  end allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.  It is headquartered in Troy, Michigan.

“The federal government insures loans on the condition that lenders comply with certain rules to safeguard federal funds,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.  “When lenders breach their duty of due diligence and make risky loans that go bad, taxpayers pay the bill.  By holding accountable lenders who fail to comply with underwriting requirements, we hope to send a message to all lenders that they must comply with government standards for federally insured loans.”

“USFS acknowledged that it failed to comply with FHA underwriting and quality control (QC) requirements, resulting in improperly originated mortgages,” said U.S. Attorney John W. Vaudreuil for the Western District of Wisconsin.  “While USFS deserves credit for acknowledging and resolving its conduct, that conduct not only resulted in substantial losses of public funds, but also put Wisconsin homeowners at risk of losing their homes or ruining their credit.  This large settlement should send a clear message that such conduct will not be tolerated.”

Universities and colleges nation-wide which receive billions of dollars in federal funds through research grants and student financial aid. Because of this the government is examining the receipt and use federal funding which, if fraudulent can involve civil False Claims Act (FCA), a federal statute used to fight  fraud against the government. Violations of the FCA by submitting false claims to the government face treble damages and penalties ranging from $10,781 to $21,563 per violation. There has been a significant increase in the number and types of cases brought under the FCA.  and indications are that the Department of Justice and Department of Education will be watching Colleges and Universities closely for fraud in obtaining or using federal funds in 2017. In 2016, the U.S. Department of Justice (DOJ) recovered more than $4.7 billion in settlements and judgments from civil cases involving fraud against the government under the FCA, a $1.2 billion increase over the $3.5 billion recouped last year in 2015. Some if the cases brought against Universities and Colleges included:

• The University of Missouri-Columbia paid $2.2 million to settle allegations that it submitted false claims to Medicare for payment of radiology services in violation of the FCA. The university was alleged to have falsely certified that interpretive reports prepared by resident physicians were reviewed by attending physicians, which review was required in order to be eligible for Medicare payment.
• The University of Florida paid the government nearly $20 million just to settle FCA allegations that it improperly charged the U.S. Department of Health and Human Services (HHS) for salary and administrative costs in connection with hundreds of federal grants. The settlement resolved claims against the university for its alleged misuse of funds from 2005 through 2010 that, according to the university, resulted from a problem in its internal bookkeeping system used to track grant reimbursements.

The Securities and Exchange Commission announced that it had awarded more than $5.5 million to a whistleblower.

According to the SEC, the whistleblower directly reported critical information to the commission about an ongoing scheme at their workplace, and that led to a successful enforcement action that ended the scheme.

Many of America’s largest companies create and maintain subsidiaries in offshore tax havens. This allows them to avoid paying an estimated $90 billion in federal taxes each year, according to a report by Citizens for Tax Justice and the IRS. Depending on how these subsidiaries are set up, they may or may not meet the letter of the law but the time is now ripe to encourage Congress and President Elect Trump to close the loopholes to these unpatriotic corporations in order to strengthen the American Economy. An analysis of filings in the Securities and Exchange Commission, 72 percent of the Fortune 500 companies have subsidiary tax haven jrusdictions and they hold over $2.6 trillion in profits offshore for tax purposes.

Here is the list of the world’s worst tax havens, according to Oxfam:

1. Bermuda

Walter Neil Simmons, 47, of Gilbert, an emergency medicine doctor who has worked at two metro Phoenix hospital chains, was indicted in October in U.S. District Court in Dallas on one count of conspiracy to commit health-care fraud. The federal charge carries a maximum sentence of 10 years in federal prison and a $250,000 fine. The government alleges that the fraud involved prescribing “compounded” drugs such as pain, scar and migraine creams to military families covered by Tricare, the federal health insurance program for active-duty and retired military and family members.

There have been two other federal probes alleging pharmacies paid kickbacks to doctors who ordered expensive compounded drugs for patients. One involved a California pharmacy that billed the state’s worker’s compensation program for pricey markups. In another, a Florida doctor was indicted on a charge of taking kickbacks for sending prescriptions, which billed Tricare and Medicare for creams that cost as much as $21,000 for a one-month supply, according to a federal indictment.

The Federal Trade Commission  and New York Attorney General have filed a suit against Quincy Bioscience LLC, which makes the memory supplement Prevagen, , alleging  that there is no proof the supplement works.

The medicine, which costs $24 to $68 for 30 pills, is advertised on cable and broadcast television, according to the FTC, which is seeking refunds for customers who bought Prevagen. The lawsuit, which was filed in the U.S. District Court for the Southern District of New York, said that Quincy Bioscience had sold some $165 million worth of Prevagen between 2007 and mid-2015, according to court filings.It says that Quincy Bioscience based much of its advertising for Prevagen on a single study, called the Madison Memory Study, which gave the drug or a placebo to 218 people and then had them perform certain tasks on a computer.

Shire Pharmaceuticals LLC and other subsidiaries of Shire plc (Shire) must pay the government $350 million to settle federal and state False Claims Act allegations that Shire and the company it acquired in 2011, Advanced BioHealing (ABH), employed kickbacks and other unlawful methods to induce clinics and physicians to use or overuse its product “Dermagraft,” a bioengineered human skin substitute approved by the FDA for the treatment of diabetic foot ulcers.  Shire plc is a multinational pharmaceutical firm headquartered in Ireland, with its United States operational headquarters in Lexington, Massachusetts.  Shire sold the assets associated with Dermagraft in early 2014.

“This settlement represents the largest False Claims Act recovery by the United States in a kickback case involving a medical device,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Kickbacks by suppliers of healthcare goods and services cast a pall over the integrity of our health care system.  Patients deserve the unfettered, independent judgment of their health care professionals.”

The settlement resolves allegations that Dermagraft salespersons unlawfully induced clinics and physicians with lavish dinners, drinks, entertainment and travel; medical equipment and supplies; unwarranted payments for purported speaking engagements and bogus case studies; and cash, credits and rebates, to induce the use of Dermagraft. The Anti-Kickback Statute prohibits, among other things, the payment of remuneration to induce the use of medical devices covered by Medicare, Medicaid and other federally-funded health care programs, including the Department of Veterans Affairs (VA).  Claims filed in violation of the Anti-Kickback Statute are considered false or fraudulent under the False Claims Act.  In addition, the Anti-Bribery statute and the Federal Acquisition Regulations prohibit bribes to government officials or employees, including VA physicians, to obtain a contract or favorable treatment under a supply contract.  The United States alleged that as a result of its violation of these provisions, Shire submitted or caused to be submitted to federally-funded health care programs hundreds of millions of dollars of false claims for Dermagraft.

 
Former Employee Claimed Company Falsified Bills for Ambulance Services to Fraudulently Qualify for Higher Medicare Reimbursements in Violation of the False Claims Act

BOSTON – January 13, 2017 – Jeffrey Newman Law, a law firm dedicated to representing whistleblowers nationwide, today announced that MedStar Ambulance, Inc. and its related companies have agreed to pay $12.7 million to settle a False Claims Act lawsuit alleging the company fraudulently billed Medicare for unqualified ambulance services.

The whistleblower, former billing manager Dale Meehan, represented by Attorney Jeffrey Newman Esq. of Boston, alleged MedStar knowingly and fraudulently billed Medicare for ambulance services by billing for ambulance transports that were not medically necessary and by up-coding the runs to exact higher payments from the government.

Moody’s Corporation will pay announced that it has reached an agreement with the U.S. Department of Justice (DOJ) and the attorneys general of 21 U.S. states and the District of Columbia to resolve pending and potential civil claims related to credit ratings that Moody’s Investors Servicec credit ratings for Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDO) during the financial crisis period.

Moody’s stands behind the integrity of its ratings, methodologies and processes, and the settlement contains no finding of any violation of law, nor any admission of liability.

Under the terms of the agreement, Moody’s will pay a $437.5 million civil penalty to the DOJ to resolve potential civil claims asserted under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). The company has also agreed to pay $426.3 million, to be divided among the participating states and the District of Columbia, to resolve pending and potential state civil claims. The financial impact to the Company will be recorded in the fourth quarter of 2016. The estimated impact is an approximate $702 million after-tax charge or approximately $3.62 per share.

Credit Suisse must pay $5.28 billion to settle Department of Justice chargesrelated to Credit Suisse’s conduct in the packaging, securitization, issuance, marketing and sale of residential mortgage-backed securities (RMBS) between 2005 and 2007.  The resolution announced today requires Credit Suisse to pay $2.48 billion as a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).  It also requires the bank to provide $2.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing.  Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Credit Suisse between 2005 and 2007.

Under the terms of this settlement, Credit Suisse will pay $2.48 billion as a fine for its conduct. And Credit Suisse has pledged $2.8 billion in relief to struggling homeowners, borrowers, and communities affected by the bank’s lending practices.

“Credit Suisse claimed its mortgage backed securities were sound, but in the settlement announced today the bank concedes that it knew it was peddling investments containing loans that were likely to fail,” said Principal Deputy Associate Attorney General Bill Baer. “That behavior is unacceptable. Today’s $5.3 billion resolution is another step towards holding financial institutions accountable for misleading investors and the American public.”

The largest money transfer company Western Union must  pay $ 586 million for willingly allowing criminals to use its services for money laundering and fraud, federal authorities announced Thursday. The company admitted to “aiding and abetting wire fraud,” a joint statement by by the Department of Justice and Federal Trade Commission stated. The company owed consumers protection against fraud but instead  “looked the other way” and even helped fraudsters, authorities said.

Authorities said that Chinese illegal immigrants used the service to send hundreds of millions of dollars to their human smugglers and Western Union agents helped structure the transactions to avoid federal reporting requirements.Fraudsters posing as family members in need convinced tens of thousands of consumers to send money through the service and complicit Western Union agents often processed the fraudulent payments in return for a cut of the proceeds.

Western Union — which has more than half a million locations in more than 200 countries — apparently knew of fraudulent transactions between 2004 and 2012, but failed to discipline more than 2,000 agents involved, authorities said.As part of the agreement with the authorities, Western Union will  implement stricter policies to prevent future fraud and money laundering.

Walgreen’s has agreed to pay $50 million to settle  a civil fraud lawsuit against it which alleged it  violated the federal Anti-Kickback Statute (“AKS”) and False Claims Act (“FCA”) by enrolling hundreds of thousands of beneficiaries of government healthcare programs (“government beneficiaries”) in its Prescription Savings Club program (“PSC program”). Specifically, the Government’s Complaint alleges that Walgreens violated the AKS and FCA by providing government beneficiaries with discounts and other monetary incentives under the PSC program, in order to induce them to patronize WALGREENS’ pharmacies for all of their prescription drug needs. The Complaint further alleges that WALGREENS understood that allowing government beneficiaries to participate in the PSC program was a violation of the AKS, but that it nevertheless marketed the program to government beneficiaries and paid its employees bonuses for each customer they enrolled in the program, without verifying whether the customers were government beneficiaries. The settlement will also resolve numerous state law civil fraud claims.

Under the settlement, WALGREENS is required to pay approximately $46.21 million to the United States and has admitted and accepted responsibility for conduct alleged in the Government’s Complaint. Further, as part of the settlement, WALGREENS will pay approximately $3.79 million to resolve the state law civil fraud claims. Walgreens admits to having paid bonuses to employees for enrolling customers in its prescriptions savings program without verifying whether the customers were Medicare or Medicaid beneficiaries, despite stated company policy against enrolling such beneficiaries based on federal statutes. Today’s settlement is a message to other retailers that there will be consequences for such conduct.”

As part of the settlement, WALGREENS admitted, acknowledged, and accepted responsibility for the following conduct:

CVS and Walgreens, the two largest pharmacies in Texas have been charged with cheating the Medicaid program by exagerrating prices on medications and raking in larger reimbursements than they would be allowed.

CVS’ filed a lawsuit in December, stating that the pharmacy had the state’s blessing to use the prices that are now asserted for Medicaid reimbursement. Weeks later, the state filed a lawsuit of its own, accusing CVS of submitting fraudulent reimbursement requests since 2005. That lawsuit, unsealed this month at the end of a five-year investigation, says CVS inflated prices reported to Medicaid by as much as 670 times the customary price. For example, the lawsuit says the pharmacy falsely reported a $999.99 price for over-the-counter eye drops.

The state estimates CVS has made between $128 million and $130 million by falsely reporting the prices, according to Raymond Winter, division chief of the attorney general’s civil Medicaid fraud division.

The Securities and Exchange Commission (SEC) has awarded three whistleblowers  more than $7 million for providing the agency information used to prosecute the perpetrators of an investment scheme. The information the whistleblowers provided helped the SEC recover more than $935 million in financial remedies for those harmed by the scheme, the agency said.

One whistleblower provided information that was a primary impetus for the start of the SEC’s investigation, earning him the lion’s share of the award money: more than $4 million. The other two whistleblowers provided new information during the agency’s investigation, which was deemed to have significantly contributed to the success of its enforcement action, earning them more than $3 million to split.

“Whistleblowers played an important role in the success of this case as they helped our agency detect and prosecute a scheme preying on vulnerable investors,” Chief of the SEC Office of the Whistleblower Jane Norberg said in a press release. “Whistleblowers not only helped us open the investigation but provided critical information after the investigation was already underway.”

Last week, it was revealed that Prosecutors say that a former government lawyer named Jeffrey Wertkin tried to sell a whistleblower’s sealed, confidential lawsuit against a Silicon Valley company, for $310,000. He wore a wig to try to disguise him but the man Wertkin was selling to was actually an FBI undercover agent.  Wertkin, 40, worked a coveted job at the Justice Department in 2010 focusing  on cases related to health-care. He remained there until April 2016, when he left for a job at Akin Gump in Washington. His government pay was about $150,000 per year. At  Akin Gump, where Wertkin defended companies sued under the whistle-blower law, attorneys with his background earn as much as $600,000 or more.  According to press reports quoting inside sources,  FBI agents may be questioning Justice Department Trial Lawyers to try to determine where the leaked Complaint came from. If that is the case, this investigation comes at a time when a new Attorney General has just stepped into position at DOJ. It is not clear as to whether Wertkin will cooperate with the Government investigation in order to receive a more lenient sentence. If so, his source could be revealed in a shorter amount of time.

This is a highly unusual case. Wertkin was a senior level trial attorney at line Justice. He  tried a case claiming that hospice chain Aseracare Inc. falsely certified patient eligibility for Medicare funding. The case is on appeal after a judge overturned a verdict for the government. He also handled a case alleging Pharmerica Corp. submitted false claims to Medicare for improperly dispensed drugs, which ended in a $31.5 million settlement, and a suit against Medco Health Solutions Inc. over kickback allegations. That settled for $7.9 million. Justice Department lawyers specializing in False Claims Act cases conduct  investigations in secret after whistle-blowers file a lawsuit accusing companies of defrauding the government. Cases are filed under “seal” to give the government time to investigate. Legally, that suit may not be revealed to anyone outside the government. Companies usually don’t learn about a suit until the government nears the end of its probe.

Mr. Wertkin was arraigned last week on a charge of criminal contempt of court and was released on $750,000 bond. Mr. Wertkin, 40, had recently joined Akin Gump in April after six years as a trial lawyer at the Justice Department. The plan was for him to take a prominent role handling cases for corporate clients.

Multiple federal agencies including the Internal Revenue Service’s Criminal Investigation Division and the Commerce Department, raided  and searched three of Caterpillar’s facilities in Illinois — including its headquarters . The search warrant, issued by Justice Harold Baker, United States District Court Judge from the Central District Federal Court in Illinois, specified a search for evidence of misleading reports related to the company’s exports. It included requests for documents regarding the export of any product from the United States or from any U.S. company and also sought documents regarding the relationship between Caterpillar Inc. and CSARL or any other foreign country.

The investigation may relate to a Report issued by the United States Senate In 2014,  titled ‘Caterpillar’s Offshore Tax Strategy.’ The report alleges Caterpillar used the subsidiary to avoid paying $2.4 billion in taxes over a period of 13 years. It discusses the details of which Caterpillar has shifted much of its profits to Switzerland and references dealings of Caterpillar subsidiary CSARL in Switzerland was the focus of the search, agents were authorized to collect documents about Caterpillar’s sales outside the U.S. and shipments to any other foreign country.

Also in a related event, in a lawsuit filed by Daniel Schlicksup alleging wrongful termination, allegations were made that the company shifted profits overseas to offshore shell companies in order to avoid paying more than $2 billion in U.S. Taxes.