DALLAS COMPANY CHARGED WITH MISBRANDING DRUGS CAUSING THREE DEATHS

The following excerpt is from the Department of Justice website: Friday, February 10, 2012 "U.S. Files Criminal Charges Against Dallas Company in Connection with Misbranded Drug Shipment That Led to Three Deaths The Justice Department, at the request of the Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI), has charged Gary D. Osborn and his corporation, ApothéCure Inc., with two misdemeanor criminal violations of the Federal Food, Drug and Cosmetic Act (FDCA) in connection with their interstate shipment of two lots of misbranded colchicine injectable solution that led to the deaths of three people in the Pacific Northwest. The United States filed the criminal information in the U.S. District Court for the Northern District of Texas. ApothéCure is a compounding pharmacy. The company, founded in 1991, is located in Dallas. Colchicine is used to prevent gout attacks (sudden, severe pain in one or more joints caused by abnormally high levels of a substance called uric acid in the blood) in adults, and to relieve the pain of gout attacks when they occur. The government’s charges are based on ApothéCure’s February 2007 shipment of 72 vials of compounded colchicine to a now-defunct medical center in Portland, Ore. On March 19, 2007, a patient in Yakima, Wash., received colchicine from this shipment. That patient died after receiving the infusion. The medical examiner there determined that the cause of death was multiple organ failure and acute colchicine toxicity. On March 30, 2007, colchicine from ApothéCure was administered to two other patients who were suffering from back pain. Within hours of receiving the colchicine injections, both patients became seriously ill and were taken to local hospitals. Both patients died shortly thereafter. The medical examiner in Oregon determined colchicine toxicity to be the cause of death for both patients. FDA testing of vials selected from the lethal shipment revealed that some of the vials were super-potent, containing 640 percent of the level of colchicine declared on the label. Other vials were determined to be sub-potent, and contained less than 62 percent of the declared levels on the labels. “The criminal charges we are filing today allege that the drugs mixed by Mr. Osborn’s company were misbranded which led to the tragic deaths of three people,” said Tony West, Assistant Attorney General of the Civil Division of the Department of Justice. “We can’t allow those who fail to take care that their products are safe to escape accountability, and today's enforcement action demonstrates we won’t.” The criminal information filed today charges that ApothéCure committed two prohibited acts under the FDCA by shipping misbranded drugs in interstate commerce. Mr. Osborn, as the person with responsibility over the firm’s operations, is strictly liable under the FDCA for the firm’s failure to follow federal law. In addition to the federal government’s criminal charges, Attorneys General have pursued civil actions in Texas and Oregon against Mr. Osborn and ApothéCure. Assistant Attorney General West acknowledged the close partnership with the FDA and OCI, which referred this matter to the Justice Department. The case is being prosecuted by Trial Attorneys John Claud and Patrick Runkle of the Civil Division’s Consumer Protection Branch. A criminal misdemeanor information is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt."

FINANCE COMPANY TO PAY NEARLY $4 MILLION TO RESOLVE MORTGAGE FRAUD CASE

The following excerpt is from the Department of Justice website: Friday, February 10, 2012 “Pennsylvania-based Lender to Pay U.S. $3.9 Million to Resolve False Claims Liability Related to Two Nursing Home MortgagesCare Facilities Located in New York and California Capmark Finance LLC in Horsham, Pa., has agreed to pay the United States $3.9 million, to settle a False Claims Act lawsuit, the Justice Department announced today.   The lawsuit, filed in the Central District of California, alleges that Capmark made false statements in connection with two nursing home mortgage loans insured by the U.S. Department of Housing and Urban Development (HUD).   Shortly after the United States filed its complaint in 2009, Capmark filed for bankruptcy protection.     The United States alleges that Capmark misrepresented material facts critical to the borrowers’ creditworthiness in the two loan applications and that Capmark’s false statements induced HUD to insure the loans, both of which defaulted, causing a loss to the government.   The two nursing homes were Canoga Care Center in Canoga Park, Calif., and Hudson Valley Care Center in Ghent, N.Y.   The allegations arise from investigation and audit work conducted by the HUD Office of Inspector General.   This case was handled by the Justice Department’s Civil Division with the assistance of HUD’s Office of General Counsel, Program Enforcement Branch.   “Today’s action should be a reminder to all FHA mortgage lenders.   Attesting to things you know to be false is not only lying, it is against the law and there will be consequences,” said Helen Kanovsky, HUD’s General Counsel.   This law enforcement action is in part sponsored by the interagency Financial Fraud Enforcement Task Force.   The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.   It includes representatives from a broad range of federal agencies, including regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.   The task force is working to improve efforts across the federal executive branch and, with state and local partners, investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial rimes."

HEDGE FUND WHITMAN CAPITAL CHARGED WITH ALLEGED INSIDER TRADING BY SEC

The following excerpt is from the SEC website: “Washington, D.C., Feb. 10, 2012 — The Securities and Exchange Commission today charged a hedge fund manager and his Menlo Park, Calif.-based firm for their involvement in the insider trading ring connected to Raj Rajaratnam and hedge fund advisory firm Galleon Management. The SEC alleges that Douglas F. Whitman and Whitman Capital illegally traded based on material nonpublic information obtained from Rajaratnam associate Roomy Khan, who was Whitman's friend and neighbor. Khan tipped Whitman with confidential details about Polycom Inc.'s fourth quarter 2005 earnings and Google Inc.'s second quarter 2007 earnings prior to the public announcements of those financial results by the companies. Whitman Capital reaped nearly $1 million in ill-gotten gains by trading on Khan's illegal tips. "Whitman engaged in what even he termed 'slimeball' activity and together with Khan brought new illicit meaning to the maxim 'help thy neighbor,'" said George S. Canellos, Director of the SEC's New York Regional Office. Sanjay Wadhwa, Associate Director of the SEC's New York Regional Office and Deputy Chief of the Market Abuse Unit, added, "This action should send a strong signal that the SEC will continue to pursue every angle of the Galleon investigation to hold accountable those who have undermined the integrity of our markets by engaging in illegal insider trading." According to the SEC's complaint, filed in federal court in Manhattan, the inside information about Polycom and Google used by Whitman is the same information that the SEC has previously alleged Khan provided to many of her hedge fund contacts, including Rajaratnam as well as Robert Feinblatt and Jeffrey Yokuty at Trivium Capital. The SEC alleges that Khan illegally tipped Whitman in January 2006 with information about Polycom's quarterly financial results, and she noted that these details were nonpublic and acquired from a source at Polycom. Whitman Capital accumulated 132,263 shares of Polycom stock in the next two weeks. When the company announced its results on January 25, Whitman Capital liquidated its entire Polycom position for a profit of more than $360,000. On at least one later occasion, in September 2008, Whitman asked Khan to contact her Polycom source to obtain inside information about the company's upcoming earnings so the two could "short it." When Khan rebuffed Whitman citing a fear of getting caught, Whitman suggested that she use "Skype" to avoid detection. Whitman later stated that he would stop speaking to Khan if she wasn't going to be a "slimeball" anymore. The SEC further alleges that Khan illegally tipped Whitman with inside information about Google's quarterly financial results shortly before the company's post market-close earnings announcement on July 19, 2007. At Whitman's insistence, Khan identified her Google source as an employee of an investor relations firm used by Google. Whitman Capital funds then purchased 2,761 Google put option contracts based on the tip from Khan. On July 20, Whitman Capital closed the put option positions and generated ill-gotten profits of more than $620,000. Afterwards, Whitman sent Khan a large floral arrangement to thank her for the tip. The SEC's complaint charges Whitman and Whitman Capital with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties. The SEC has charged 30 defendants in its Galleon-related enforcement actions, which have exposed widespread and repeated insider trading at numerous hedge funds and by other traders, investment professionals, and corporate insiders located throughout the country. The insider trading occurred in the securities of more than 15 companies for illicit profits totaling more than $91 million. The SEC's investigation, which is continuing, has been conducted by John Henderson and Joseph Sansone - members of the SEC's Market Abuse Unit in New York - and Diego Brucculeri and James D'Avino of the New York Regional Office. Kevin McGrath and Valerie Szczepanik will lead the SEC's litigation effort. The SEC thanks the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation for their ongoing assistance in the matter.”

CELL PHONE GIANT TO PAY OVER $125,000 FOR VIOLATION OF COMMUNITY RIGHT-TO-KNOW ACT

The following excerpt is from an EPA e-mail:  February 10, 2012 WASHINGTON – The U.S. Environmental Protection Agency (EPA) today announced an agreement with New Cingular Wireless to resolve violations of the Emergency Planning and Community Right-to-Know Act (EPCRA). New Cingular Wireless voluntarily disclosed reporting violations to EPA, which related to the presence of sulfuric acid, diesel, and lead at 642 cellular facilities in 35 states and Puerto Rico, after performing a comprehensive audit of their operations. EPCRA requires facilities to report information about the chemicals and hazardous materials they have onsite to ensure that local emergency planners have the information they need to protect people’s health in the event of a release or emergency.   New Cingular Wireless was created in October 2004 through the merger of AT&T Wireless and Cingular Wireless PCS, LLC. This settlement concerns violations occurring at legacy Cingular Wireless sites from 2001 to 2003 and at New Cingular Wireless sites from October 2004 to 2006, specifically, violations at cellular sites, transmitter sites, switching stations, and warehouses. All of the violations disclosed by the company have been corrected, and the company has made improvements to its battery inventory, recordkeeping and management systems to prevent the reoccurrence of these violations.     Since EPA reached its first audit policy settlement with a telecommunications company in 1998, nearly 40 telecommunications businesses have disclosed EPCRA violations. In doing so, they have enhanced facility and emergency response personnel’s capabilities to react to hazardous chemical emergencies at nearly 5,000 facilities. The audit policy provides incentives to companies that voluntarily discover, promptly disclose, and expeditiously correct environmental violations. The companies must also take steps to prevent future violations. EPA may reduce or waive penalties for certain violations if the facility meets the conditions of the policy.   Under the settlement, New Cingular Wireless will pay a civil penalty of $125,728.  

SERVICE MEMBERS INCLUDED IN FEDERAL STATE MORTGAGE SERVICING AGREEMENT

The following excerpt is from the Department of Justice website: February 9, 2012 “ Servicemembers for Wrongful Foreclosures Agreement Reached as Part of the $25 Billion Federal-State Mortgage Servicing Agreement The settlement agreement with the nation’s five largest servicers announced today by Attorney General Eric Holder and the Department of Justice’s federal and state partners includes substantial financial compensation to homeowners who are servicemembers and establishes significant new protections for servicemembers in the future.  The financial compensation to servicemembers is in addition to the $25 billion settlement.   JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) have agreed to conduct a full review, overseen by the Department of Justice’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of the Servicemembers Civil Relief Act (SCRA) since Jan.1, 2006.   Wells Fargo, Citigroup and Ally will be required to provide any servicemember who was a victim of a wrongful foreclosure a minimum payment of $116,785 plus the servicemember’s lost equity and interest for violating the SCRA.   The servicemember’s payment could be higher as a result of the review conducted by the banking regulators.   To ensure consistency with an earlier private settlement, JP Morgan Chase will provide any servicemember who was a victim of a wrongful foreclosure either his or her home free and clear of any debt or the cash equivalent of the full value of the home at the time of sale.   In addition, servicemebers will receive compensation for any additional harm suffered.   All compensation for servicemembers wrongfully foreclosed on is in addition to the $25 billion settlement amount.   In addition, Citigroup, Wells Fargo and Ally have also agreed to conduct a thorough review, overseen by the Department of Justice’s Civil Rights Division, to determine whether any servicemember, from January 1, 2008 to the present, was charged interest in excess of 6% on his or her mortgage, after a valid request to lower the interest rate, in violation of the SCRA.  Servicers will be required to provide any servicemember who was wrongfully charged interest in excess of 6% with a payment equal to a refund, with interest, of any amount charged in excess of 6% plus triple the amount refunded or $500, whichever is larger.   This compensation for servicemembers is in addition to the $25 billion settlement amount.   JP Morgan Chase had already compensated servicemembers charged interest in excess of 6% on their mortgage through the earlier private settlement.   “The men and women who serve our nation in the armed forces deserve, at the very least, to know that we will protect their rights while they are serving our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We appreciate that Wells Fargo, JP Morgan Chase, Citigroup and Ally agreed, through this settlement, to compensate servicemembers whose rights were violated.”   All four servicers agreed to numerous other measures, including SCRA training for employees and agents and developing SCRA policies and procedures to ensure compliance with the SCRA. The servicers will also repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining amounts owed under the mortgages.   The joint federal-state agreement also includes expanded protections for servicemembers.    The SCRA prohibits foreclosures on servicemembers without court orders on mortgages that were originated before military service began. The settlement extends this protection to all servicemembers, regardless of when their mortgage was secured, if they were receiving Hostile Fire/Imminent Danger Pay and were stationed away from their home within nine months of the foreclosure.   The agreement requires all five servicers to provide certain servicemembers who are forced to move because of Permanent Change in Station (PCS) orders  access loan modifications without going into default or, in the event that they must sell their home at a loss, but are ineligible for funding from the Department of Defense’s Homeowners’ Assistance Program (HAP), with short sale agreements and mandatory deficiency waivers.   On the servicemember relief, the Department worked closely with the Delaware Attorney General’s Office, who led the servicemember negotiations on behalf of the state attorneys general   In May 2011, the Department of Justice reached a more than $20 million settlement with Bank of America for wrongfully foreclosing on servicemembers without court orders.    That settlement only resolved allegations related to non-judicial foreclosures.    The Department did not release as part of today’s announced settlement any potential claims related to judicial foreclosures or possible 6% violations by Bank of America.   The JP Morgan Chase investigation was handled jointly by the Civil Rights Division and the United States Attorney’s Office in South Carolina.”  

TAX PREPARATION COMPANIES PRINCIPALS BANNED FROM PREPARING TAX RETURNS FOR OTHERS

The following excerpt is from the Department of Justice website: Wednesday, February 8, 2012 “U.S. Court Bars Two in Alabama from Preparing Federal Tax ReturnsMontgomery Pair Allegedly Asserted Bogus Refund Claims on Customers’ Returns A federal court has permanently barred Paul E. Foster Jr. and Sheree McDade, both of Montgomery, Ala., from preparing federal tax returns for others, the Justice Department announced today.   The civil injunction order, to which Foster and McDade agreed without admitting the government’s allegations, was signed by Chief Judge W. Keith Watkins of the U.S. District Court for the Middle District of Alabama.   The government complaint alleged that Foster and McDade, through businesses called Miami Tax, Paul’s Tax Service and Advance Taxes Inc., prepared tax returns for customers that reported phony business expenses for fictitious businesses, inflated earned income and falsely claimed dependents in order to increase refunds based on the earned income tax credit.   The complaint also alleged that at least 48 returns that Foster and McDade prepared for the 2008 tax year contained false claims for the first-time homebuyer tax credit.   According to the complaint, Foster and McDade’s misconduct has thus far resulted in $1 million of lost tax revenue, plus resources spent by the Internal Revenue Service (IRS) to assess and collect unpaid taxes from the customers.   The court ordered Foster and McDade to send a copy of the injunction order to all customers for whom they prepared a federal tax return for tax years 2006 and later.   The court also ordered the pair to provide the government with a list of those customers.”