Defense contractor International SOS Assistance pays $940,000 settling case on not giving discounts to TRICARE military health insurance

September 6, 2019, 11:23 am

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 International SOS Assistance, Inc., International SOS Government Services, Inc., International SOS, LP, Air Rescue Americas, Inc. Arnaud Vaissié; and Pascal Rey-Herme (collectively, “International SOS”), will pay $940,000 settling allegations that it overcharged TRICARE, the health care insurance system for members of the military services and their families. The overcharges related to aeromedical evacuation services by concealing discounts it received from third-party air ambulance providers in violation of the False Claims Act.

International SOS, is a provider of overseas healthcare services for the government and it had negotiated discounts from third-party air ambulance providers, which it was required to pass along to TRICARE. Instead, International SOS did not disclose the actual cost of the aeromedical evacuation services during the quoting process; billed TRICARE at the higher non-discounted amount; and received payment from TRICARE for the inflated costs, which International SOS contends it retained as a fee.

This settlement resolves allegations in a lawsuit by a former International SOS Regional Flight Desk Manager, under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator here will receive $165,000 as his share of the recovery in the case. The relator was represented by Franklin J. Rooks, Jr., Esq. of Morgan Rooks, P.C., and Jared A. Jacobson, Esq. of Jared Jacobson Law, LLC.

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US imposes new sanctions on Irans shipping network selling oil and offers reward of $15 million for info that disrupts the operations

September 6, 2019, 1:28 pm

≫ Next: Furniture business exec who falsified documents evading $1.4 million in duties on Chinese goods sentenced to one year home detention

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The United States has imposed new sanctions on Irans complex and extensive shipping that it uses to sell oil, and the U.S. will pay $15 million to anyone with information that disrupts the scheme. The reward could be rendered to individuals living within or outside the United States.

The Treasury Department placed sanctions on 26 individuals and “entities” affiliated with the Islamic Revolutionary Guards Corps Quds Force. The sanctions freeze any assets within the United States concerning those individuals or corporations affiliated with the shipping network. It also prevents them from doing business with Americans. It also identified 11 ships, placing anyone who owns or operates them on a Treasury list and exposing any port that lets them in, or firms that fuel or offload them, to future sanctions.

 Rostam Ghasemi, Iran’s former minister of petroleum oversees and operates the network.

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Furniture business exec who falsified documents evading $1.4 million in duties on Chinese goods sentenced to one year home detention

September 20, 2019, 3:30 am

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A furniture business executive who falsified documents to avoid more than $1.4 million in import duties on the Chinese goods he sold was sentenced to a year of home detention Monday.

Jeff Zeng, president of Blue Furniture Solutions, was also sentenced to spend two additional years on supervised release for his role in mislabeling customs forms to make it appear that wooden furniture subject to a 216 percent import tax was instead made of metal. Documents filed with U.S. District Court in Charleston show Zeng and Blue Furniture Solutions, located in Miramar, Fla., submitted 49 falsified customs forms in 2015 for 14,542 pieces of furniture used primarily in college dormitory rooms. Some of that furniture was imported through the Port of Charleston.

Zeng, a U.S. citizen, said during his sentencing hearing the scheme was “the most embarrassing and shameful moment of my life.” He said he disagreed with the U.S. government’s imposition of the anti-dumping duties and mislabeled the customs forms to benefit his company and his birth country where the furniture was produced.

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SEC charges Price Waterhouse with violating auditor independence rules and PWC agrees to pay $7.9 million to settle the case

September 23, 2019, 12:09 pm

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Accounting firm PricewaterhouseCoopers LLP was charged by the Securities & Exchange Commission with improper professional conduct in connection with 19 engagements on behalf of 15 SEC-registered issuers and violating auditor independence rules in connection with engagements for one issuer where the firm performed prohibited non-audit services. The SEC also charged PwC partner Brandon Sprankle with causing the firm’s independence violations. Both respondents have agreed to settle the charges and PwC will pay over $7.9 million in monetary relief.

The SEC’s order finds that PwC violated the SEC’s auditor independence rules by performing prohibited non-audit services during an audit engagement, including exercising decision-making authority in the design and implementation of software relating to an audit client’s financial reporting, and engaging in management functions. In connection with performing non-audit services for 15 SEC-registered audit clients, the order states that PwC violated Public Company Accounting Oversight Board (PCAOB) Rule 3525, which requires an auditor to describe in writing to the audit committee the scope of work, discuss with the audit committee the potential effects of the work on independence, and document the substance of the independence discussion. According to the order, PwC’s actions deprived numerous issuers’ audit committees of information necessary to assess PwC’s independence. As further detailed in the order, the violations occurred due to breakdowns in PwC’s independence-related quality controls, which resulted in the firm’s failure to properly review and monitor whether non-audit services for audit clients were permissible and approved by clients’ audit committees.

“Auditors play a fundamental role in protecting the reliability and integrity of financial reporting and must ensure that non-audit services do not come at the cost of their independence on audits of public companies,” said Anita B. Bandy, Associate Director of the SEC’s Division of Enforcement. “PwC repeatedly provided non-audit services without having effective quality controls in place for monitoring whether the services impaired its independence on audit engagements and were properly disclosed to audit committees.”

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Swedish telecom giant Ericsson sets $1.23 billion in reserves to cover fines relating to foreign bribes in China, Greece, Vietnam and more

September 27, 2019, 8:27 am

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Ericsson, the Swedish multinational networking and telecommunications company has reserved $1.23 billion to cover fines associated with foreign bribes made by the company in China, Djibouti, Indonesia, Kuwait, Saudi Arabia and Vietnam, based on an investigation. Ericson has a 35% share in the 2-5G mobile market network and is the major competitor to Huaweri, the Chinese telecom company. The $1.23 billion reserve provision covers $1 billion in estimated combined penalties from forthcoming settlements with the Justice Department and SEC. The remainder accounts for costs related to other investigation. Ericsson Chief Legal Officer Xavier Dedullen said the company had so far disciplined 65 employees in relation to the FCPA violations, 49 of whom were no longer with the company.  Ericsson’s settlements could include the imposition of an independent monitor to oversee the company’s compliance reforms.

If you are aware of any foreign bribes by companies traded on the US stock exchanges, you may be able to become a whistleblower under the False Claims Act (FCA) and recover up to 30% of what the Government recovers in any investigation of such bribes. US laws prevent making bribes to foreign officials or their families in order to get business in other countries. Jeffrey Newman represents whistleblowers. His email is  Jeffrey.Newman1@gmail.com

 

 

 

 

 

 

 

 

BMO Harris Financial and BMO Asset Management Corp to pay SEC over $37 million for failing to disclose conflicts and management fees

September 30, 2019, 12:03 pm

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The Securities and Exchange Commission today announced that two BMO advisers have agreed to pay over $37 million to settle charges regarding their failure to tell clients about certain aspects of how the advisers selected investments in their retail investment advisory program, known as the Managed Asset Allocation Program (MAAP), which included the selection of more expensive investments from which BMO advisers profited.

According to the SEC’s order, when selecting investments for clients, BMO Harris Financial Advisors Inc. (BMO Harris) and BMO Asset Management Corp. (BMO Asset Mgmt) preferred mutual funds managed by BMO Asset Mgmt (proprietary funds) and invested approximately 50% of MAAP client assets in proprietary funds. This practice resulted in payment of additional management fees to BMO Asset Mgmt, however, the SEC’s order found that neither BMO adviser disclosed this practice or the associated conflict of interest to clients. Moreover, the SEC’s order found that, when considering mutual funds for MAAP, BMO Asset Mgmt evaluated the lower-cost institutional share class for both proprietary and non-proprietary funds, but the higher-cost, non-institutional share class for proprietary mutual funds always was selected for MAAP.

In addition, the SEC found that BMO Harris failed to disclose its conflicts of interest arising from investing MAAP client assets in higher-cost share classes of certain mutual funds, including funds managed by BMO Asset Mgmt, when lower-cost share classes were available. By selecting the higher-cost share classes, BMO Harris received revenue sharing payments and avoided paying certain transaction costs, while clients received lower returns on these investments.

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Blockchain tech company Block.one must pay $24 Million for unregistered initial coin offering of digital tokens raising several billion

October 1, 2019, 12:50 pm

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The Securities and Exchange Commission ordered blockchain technology company Block.one to pay $24 million to settle charges it conducted an unregistered initial coin offering of digital tokens (ICO) raising the equivalent of several billion dollars over approximately one year.  The company agreed to pay.

According to the SEC’s order, Block.one, which has operations in Virginia and Hong Kong, conducted an ICO between June 2017 and June 2018.  The order finds that Block.one stated it would use the capital raised in the ICO for general expenses, and also to develop software and promote blockchains based on that software.  Block.one’s offer and sale of 900 million tokens began shortly before the SEC released the DAO Report of Investigation and continued for nearly a year after the report’s publication, eventually raising several billion dollars worth of digital assets globally, including a portion from US investors.  Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements.

“A number of US investors participated in Block.one’s ICO,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement.  “Companies that offer or sell securities to US investors must comply with the securities laws, irrespective of the industry they operate in or the labels they place on the investment products they offer.”

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Whistleblower case says Huntington Ingalls biggest US military ship builder falsified tests on submarine coating placing American lives at risk

October 4, 2019, 2:53 pm

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A whistleblower has filed a False Claims Act in Federal Court alleging that the sound-dampening coating was improperly affixed  causing the coating to “de-bond” and slip off the submarines while underway. According to the complaint, “since the inception of the program, Virginia-class submarines have been plagued with problems with their exterior hull coating system,” including an incident in 2007 on the USS Virginia, the first submarine of its class.

The complaint asserts that the failure of the Special Hull Treatment on Virginia-class submarines squarely on Huntington Ingalls’ Newport News Shipbuilding facility: “The failure of the sound-absorbing material is a direct result of NNS’ failure to adhere to proper Navy contract specifications and a direct effort to conceal that lack of qualifications and certifications required by the Navy.”

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Federal judge denies Pratt & Whitney effort to dismiss whistleblower suit which says the company falsified inspection report on jet engines

October 24, 2019, 12:22 pm

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A federal judge has denied Pratt & Whitney’s motion to dismiss a whistle-blower suit alleging that the company falsified inspection reports and selling billions of dollars of possibly defective jet engines to the military between 2012 and 2015. But Judge Janet C. Hall, said the latest version of the complaint by former Pratt engineer of metallurgist Peter J. Bonzani, Jr. can proceed because it contains information Bonzani recently obtained about the company’s F119 engine contract with the U.S. Air Force. Bonzani claims that  Pratt learned in  2015 that it had been using defective equipment for at least three years to test and certify the seal coatings applied by spray-on process to integrally bladed rotors in the F119 engine core.

The faulty tests raise questions about Pratt’s certifications that the rotor components can withstand the enormous stresses of engine operation, the suit claims, and create a risk to the military of “premature wear, poor performance and possible catastrophic engine failures.”The proper sealing of these engine parts is critical to the engine function of jet fighter aircraft as these planes are designed to fly at higher pressures, lower bypass ratios, hotter temperatures, and within tighter tolerances compared to most commercial engines,” the lawsuit asserts. The Air Force uses the F119 in its F-22 fighter jet. But Bonzani contends in the suit that the allegedly defective process in place at Pratt’s Middletown plant may have affected engines the company built over the same period for the commercial Airbus A320NEPO and the F-35 fighter jet.

Bonzani provided robotics and thermal spray expertise to Pratt & Whitney as an independent contractor and later as a full-time employee, he said in his lawsuit. He says he was assigned to investigate after tests showed that the spray coating being applied to engine components in Middletown suddenly and inexplicably fell beneath quality control standards in 2015. The suit also says that Pratt had been using wrong-sized and worn spray equipment. When the equipment was replaced, the suit claims, subsequent tests showed quality measures were not being met. Bonzani said Pratt immediately suspended him and fired him 90 days after he brought what he called the defective testing procedures to the attention of management in Nov. 2015.

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Tenet Healthcare to pay $66 million to settle whistleblower suit asserting billing Medicare for docs who received kickbacks

November 9, 2019, 1:05 pm

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Tenet Healthcare Corp. has agreed in principle to pay the federal government about $66 million to settle a whistleblower lawsuit alleging it billed public programs for medical services provided by physicians having improper financial relationships with a hospital partly owned by Tenet.

Tenet disclosed the tentative settlement in its recent quarterly filing with the Securities and Exchange Commission. It said it had established a reserve of $68 million for the matter. It anticipated the agreement could be completed as early as the first quarter of 2020. The lawsuit, alleged unlawful conduct by and a conspiracy among a group of Oklahoma orthopedic surgeons, the surgical hospital they created—the Oklahoma Center for Orthopaedic and Multispecialty Surgery in Oklahoma City—and USPI, a Tenet-owned unit that owns a stake in the hospital along with a healthcare system and physicians. The whistleblower was Clinic administrator Wayne Allison claimed the defendants engaged in kickbacks, unlawful compensation and unearned reimbursements. His attorney is Michael Burrage of Oklahoma.

The company said the case is stayed until next month while the parties work to finalize the settlement.

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