DOJ FILES LAWSUIT ALLEGING DISABILITY-BASED DISCRIMINATION AGAINST MISSISSIPPI DEVELOPER

FROM:  U.S. JUSTICE DEPARTMENT 

Friday, May 23, 2014

Justice Department Files Lawsuit Alleging Disability-Based Discrimination by Mississippi Developer

The Justice Department filed a lawsuit against Mississippi-based developer Dawn Properties Inc. (Dawn) and its affiliated companies for violating the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA).  The lawsuit alleges that the defendants violated these laws when they designed and constructed five or more residential properties with barriers that make them inaccessible to persons with disabilities.

“For over two decades, the Fair Housing Act and ADA have required those who design and build multifamily housing complexes to make them accessible to persons with disabilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division.  “When residential complexes are built with steps but without ramps or other means of access for wheelchair users, Americans with disabilities are denied the basic right to equal housing opportunities.”

“When a developer fails to comply with the Fair Housing Act and the Americans with Disabilities Act, it deprives those with disabilities of their fundamental right to live and raise families in the environment of their choosing,” said U.S. Attorney Gregory K. Davis for the Southern District of Mississippi.

The suit, filed in the U.S. District Court in Gulfport, Mississippi, alleges that The Lexington (Ridgeland, Mississippi), The Beach Club (Long Beach, Mississippi), The Belmont (Hattiesburg, Mississippi), Grand Biscayne (Biloxi, Mississippi) and Inn by the Sea (Pass Christian, Mississippi) have significant barriers, including steps leading to building entrances, non-existent or excessively sloped pedestrian routes from apartment units to site amenities (such as playgrounds, picnic areas and clubhouses or leasing offices), insufficient maneuvering space for wheelchairs in bathrooms and kitchens, excessively high light switches and environmental controls, and inaccessible parking.

The suit seeks a court order requiring the defendants to bring properties they have designed and constructed since 1991 into compliance with the FHA and the ADA, as well as monetary damages for persons harmed by the lack of accessibility and civil penalties to the United States.  The suit also names Dawn’s affiliates Southern Cross Construction Company Inc., Ridgeland Construction One LLC, The Beach Club LLC, The Beach Club II LLC, The Belmont of Lamar LLC, Grand Biscayne Apts. LLC and Seainn LLC, as well as the current owners of the complexes who are necessary parties to the litigation.

U.S. GOVERNMENT FILES COMPLAINT AGAINST CA INC. FOR ALLEGED FALSE CLAIMS ACT VIOLATIONS

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, May 29, 2014

Government Files Complaint Against CA Inc. for False Claims on GSA Contract

The government has filed a complaint against CA Inc. (CA) for violations of the False Claims Act in connection with a General Services Administration (GSA) contract, the Justice Department announced today.  CA manufactures and sells information technology products and is headquartered in Islandia, New York.

“We expect companies that do business with the government to comply with their contractual obligations,” said Assistant Attorney General of the Justice Department’s Civil Division Stuart F. Delery.   “As this case demonstrates, we will take action against those who seek to abuse the government’s procurement process.”      

“Too many federal contractors think they can get away with overcharging the government,” said U.S. Attorney for the District of Columbia Ronald C. Machen Jr.  “Our complaint alleges that CA broke its promise to give the government the same prices it was giving commercial customers.  We look forward to vigorously pressing these claims in court and recovering every dollar that is owed to the American taxpayer.”

In September 2002, CA entered into a GSA contract to provide software licenses, software maintenance, training and consulting services to various government agencies.  The government’s complaint alleges that, since at least 2006, CA knowingly overcharged the government for software licenses and maintenance in various ways.  For example, the government alleges that CA provided incomplete and inaccurate information to GSA contracting officers during negotiation of contract extensions.  At the time CA negotiated these extensions, applicable regulations and contract provisions required CA to fully and accurately disclose how it conducted business in the commercial marketplace, so GSA could use that information to negotiate a fair price for government customers.  The government also alleges that CA failed to truthfully update its discounting practices during the life of the GSA contract.  CA repeatedly certified to GSA that its discounting policies and practices had not changed, when in fact its discounts to commercial customers had increased.

The government’s complaint also alleges that, since 2002, CA failed to apply properly the contract’s price reduction clause.  The contract required CA to monitor discounts to certain commercial customers, compare these discounts to the discounts given to the government and, if the commercial discounts were higher, pass on those higher discounts to the government.  The government alleges that CA failed to make those comparisons or, when it did make such comparisons, failed to do so correctly, resulting in the government overpaying for CA’s information technology.

CA’s contract is a Multiple Award Schedule (MAS) contract.  Under the MAS program, GSA pre-negotiates prices and contract terms for subsequent orders by federal agencies.  Agencies that purchase under CA’s contract include the Department of Defense, the Department of Energy, the Department of Health and Human Services and the Department of Labor.

“Companies doing business with the federal government on a GSA schedule must disclose current, accurate, and complete commercial discounts, so that GSA can get the best prices on behalf of American taxpayers,” said GSA Acting Inspector General Robert C. Erickson.  “We will continue to investigate all allegations indicating that the federal government may have been overcharged by a contractor.”

Some of the allegations that are the subject of the government’s complaint were filed in a lawsuit originally brought by Dani Shemesh, a former employee of CA Israel Ltd., under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government and to share in any recovery.  The Act also authorizes the government to intervene and assume primary responsibility for litigating the lawsuit, as the government has done in this case.  The government had previously notified the court that it intended to join in Shemesh’s lawsuit and file its own complaint.

This investigation reflects a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia and the GSA’s Office of Inspector General.

The qui tam case is captioned United States ex rel. Dani Shemesh v. CA Inc., No. 09-1600 (D.D.C.).  The complaint filed by the government contains allegations only; there has been no determination of liability.

FTC WANTS STUDENTS PROTECTED DURING EDUCATION TECHNOLOGY COMPANY'S BANKRUPTCY

FROM:  FEDERAL TRADE COMMISSION 

FTC Seeks Protection for Students’ Personal Information in Education Technology Company ConnectEdu’s Bankruptcy Proceeding

The Federal Trade Commission has authorized staff of the FTC’s Bureau of Consumer Protection to send a letter to the court overseeing the bankruptcy proceedings of education technology company ConnectEdu raising concerns about the proposed sale of the company’s assets, which include student information. The company collected data from high school and college students, along with their parents and counselors, to provide guidance on career choices.

In its privacy policy, ConnectEdu promised consumers that prior to any sale of the company, consumers would be notified and have the ability to delete their personally identifiable data. The letter states that the terms of the sale of the company and its subsidiary Academic Management Systems, Inc., in bankruptcy do not provide consumers the notice and choice set forth in the privacy policy and could potentially run afoul of both the FTC Act and the Bankruptcy Code.                                                                                                                      

Commission staff has weighed in before to help protect consumers’ privacy interests in bankruptcy proceedings such as in Borders bookstores and XY Magazine.

The Commission vote approving the issuance of the letter was 5-0.  The letter was filed in In re ConnectEdu, Inc., No. 14-11238, in U.S. Bankruptcy Court in the Southern District of New York.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

SEC CHARGES COMPANY DIRECTOR, FAMILY MEMBERS WITH INSIDER TRADING

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged a former director of a Long Island-based vitamin company and others in his family circle with insider trading ahead of the company’s sale to a private equity firm.

The SEC alleges that board member Glenn Cohen learned that NBTY Inc. was negotiating a sale to The Carlyle Group and tipped his three brothers and a brother’s girlfriend with the confidential information.  Craig Cohen, Marc Cohen, Steven Cohen, and Laurie Topal all traded on the inside information that Glenn Cohen provided and reaped illicit profits totaling $175,000.

The four Cohens and Topal agreed to settle the SEC’s charges by paying a total of more than $500,000.

“As a board member at NBTY for more than 20 years, Glenn Cohen knew the importance of maintaining the confidentiality of company information.  Unfortunately, when presented with exclusive details about an impending sale, he breached his duty to NBTY shareholders in order to enrich his own family members,” said Amelia A. Cottrell, associate director in the SEC’s New York Regional Office.  “Directors of public companies who abuse their access to confidential company information at shareholder expense must be held accountable.”

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Glenn Cohen first learned in May 2010 that NBTY management was negotiating to sell the company.  He shared the nonpublic information with his three brothers and Topal, who is the girlfriend of Marc Cohen.  All four purchased NBTY shares as a result.  The next month, Glenn Cohen attended additional board meetings as negotiations between NBTY and Carlyle progressed.  As more information became available to the board, Steven and Craig Cohen purchased additional NBTY shares.  On July 15, Carlyle announced its acquisition of NBTY at a per-share price that was 47 percent above the prior day’s closing price, enabling the Cohens and Topal to profit significantly when they all sold their NBTY shares that same day.

The SEC’s complaint charges the Cohens and Topal with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  In a settlement that would permanently enjoin them from violations of Section 10(b) and Rule 10b-5, they agreed to the following sanctions:

Glenn Cohen: penalty of $153,613.25 and barred from serving as an officer or director of a public company.
Craig Cohen: disgorgement of $71,932, prejudgment interest of $9,606, and a penalty of $71,932.
Marc Cohen: disgorgement of $21,454, prejudgment interest of $2,865, and a penalty of $21,454.
Steven Cohen: disgorgement of $60,226, prejudgment interest of $8,042, and a penalty of $60,226.
Laurie Topal: disgorgement of $21,780, prejudgment interest of $2,908, and a penalty of $21,780.
The Cohens and Topal neither admitted nor denied the charges in the settlement, which is subject to court approval.

The SEC’s investigation has been conducted by Daniel Marcus of the SEC’s Market Abuse Unit in New York along with Alexander Vasilescu and Jacqueline Fine of the New York Regional Office.  The case was supervised by Ms. Cottrell and Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation.

FTC, COMPANIES SETTLE ALLEGED DECEPTIVE CLAIMS OF TREATING DISEASE WITH GENETICALLY MODIFIED NUTRITIONAL SUPPLEMENTS

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Approves Final Consent Orders Settling Charges that Companies Deceptively Claimed Their Genetically Modified Nutritional Supplements Could Treat Diseases

Following a public comment period, the Federal Trade Commission has approved final consent orders settling charges that two marketers of genetically customized nutritional supplements deceptively advertised that their personalized nutritional supplements treat diabetes, heart disease, arthritis, insomnia, and other ailments. The orders also settle charges that the companies’ data security practices were lax. The Commission also approved responses to the two comments received during the public comment period.

First announced in January 2014, this case marks the first law enforcement action taken by the Commission against marketers of purported personalized genomics products. The final settlements prohibit GeneLink, Inc. and its former subsidiary, foruTM International Corp., from claiming that any drug, food, or cosmetic will treat, prevent, mitigate, or reduce the risk of any disease – by modulating the effect of genes, or based on a consumer’s customized genetic assessment – unless the claim is true and supported by at least two adequate and well-controlled studies. Under the orders, claims that a product effectively treats or prevents a disease in persons with a particular genetic variation must be backed up with randomized controlled trials conducted on subjects who have that genetic variation. The orders also prohibit GeneLink and foruTM International from misrepresenting scientific research regarding any drug, food, or cosmetic, or any genetic test or assessment and from providing their affiliates with the means to make the prohibited health claims.      

Under the orders, the companies also are prohibited from misrepresenting their privacy and security practices. They are required to establish and maintain comprehensive data security programs and submit to security audits by independent auditors every other year for 20 years.

The Commission vote to approve the final orders in this case was 3-1-1, with Commissioner Ohlhausen dissenting and Commissioner McSweeny not participating. (FTC File No. 112 3095.)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

Labor Department News Releases Update

Labor Department News Releases Update

DEPUTY AG COLE'S COMMENTS ON GUILTY PLEA BY CREDIT SUISSE IN OFFSHORE TAX EVASION SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Deputy Attorney General James M. Cole Speaks at Press Conference Announcing Guilty Plea in Credit Suisse Offshore Tax Evasion Case

Washington, D.C. ~ Monday, May 19, 2014

After an exhaustive, multi-year investigation into the use of illegal offshore bank accounts at Credit Suisse, today we have announced an historic guilty plea by the bank and the largest monetary penalty of any criminal tax case ever.

Today’s guilty plea is an appropriate resolution, given the duration and breadth of Credit Suisse’s conduct.  Credit Suisse engaged in serious wrongdoing, first, when it aided and abetted U.S. tax evasion, and then when it failed to take immediate steps to remedy this conduct and cooperate in our investigation.  Today Credit Suisse has admitted that conduct and faces significant consequences for it.  Its agreement to pay fines and restitution in excess of 2 and a half billion dollars reflects both the significance of the problem at the bank and the bank’s acceptance of responsibility for it.

Credit Suisse is taking the appropriate steps to put its criminal conduct behind it and move toward a new era of compliance.  Through this guilty plea and Credit Suisse’s civil resolutions with the Securities and Exchange Commission, the Federal Reserve, and the New York Department of Financial Services, Credit Suisse has committed to working with U.S. law enforcement and banking regulators in order to ensure that its wrongdoing remains in the past.  We acknowledge Credit Suisse’s efforts in this regard, and I expect that as the Bank moves forward, it will continue on its new path of compliance with U.S. tax laws.

In coming to today’s resolution, we are mindful that guilty pleas by a bank can have impacts far beyond the parties to the plea.  This plea demonstrates that the Department of Justice and bank regulators are prepared hold banks and their relevant employees accountable while being mindful of the impacts on depositors and the American public.  The coordination required for this result can take considerable time, as in this case, but it is work that we deem important.

In several public statements, I have promised additional public developments with respect to the Department’s investigations into the use of secret offshore bank accounts in Switzerland and elsewhere, and one of those developments has come to pass with today’s plea.  But there have been many other notable actions in the past few months in our ongoing efforts to combat the use of foreign bank accounts to evade U.S. taxes.  Eight individuals affiliated with Credit Suisse have been indicted by the United States Attorney’s office for the Eastern District of Virginia for their role in conspiring to assist U.S. clients in concealing their income and assets from the IRS.  Two of them have pleaded guilty in recent weeks.  In January 2013, Wegelin Bank, another Swiss bank, pled guilty to conspiracy to evade taxes.  We have targeted 13 other Swiss banks for similar conduct.  Just recently, a Swiss asset management firm, Swisspartners Group, entered into a multi-million-dollar settlement with the U.S. Attorney’s Office for the Southern District of New York, and produced account files of its clients.  We have also had over 100 Swiss banks come forward as part of a program we put in place with the support of the Swiss government.  Under this program, these banks, which were not under investigation, will pay penalties for the violations of US law that were committed at their institutions, and provide us with information that will lead to the identification of their US clients who evaded paying their taxes.  We also have had over 43,000 US taxpayers enter into the IRS voluntary disclosure program and pay over $6 billion in back taxes and penalties to the United States Treasury.

The Department is committed to robust enforcement in the offshore area, not just in Switzerland, but wherever in the world it is found.  We have taken public actions in India, Israel, Luxembourg, the Cayman Islands and several other Caribbean countries.  And we are engaged in law enforcement actions around the world that are not yet public.  The Department’s approach to investigating and prosecuting these cases is multi-faceted, and we are committed to using the many law enforcement tools at our disposal – from grand jury subpoenas to John Doe summonses, to whistleblowers and cooperating witnesses – to gather information and evidence to identify wrongdoers and hold them to account.

While today’s action is a significant milestone in our law enforcement efforts, our work in the offshore area is far from done, and we expect additional public actions in this area in the coming months.

Today I commend the efforts of the Tax Division led by Assistant Attorney General Kathryn Keneally, and the U.S. Attorney’s Office for the Eastern District of Virginia, led by U.S. Attorney Dana Boente.  I also applaud the work and support of the Internal Revenue Service, especially intensive investigative efforts of the Criminal Investigation Division, led by Chief Richard Weber.  We also appreciate the efforts of the Swiss government and banking regulators in reaching a just result and bringing the Credit Suisse matter to a close.