COMPANY THAT ALLEGEDLY ENCOURAGED DOCTORS TO SUBMIT INFLATED CLAIMS SETTLES WITH THE GOVERNMENT

The following excerpt is from the Department of Justice website:
Friday, March 23, 2012
Pennsylvania- Based Eusa Pharma (USA) Inc. to Pay U.S. $180,000 for Allegedly Submitting Inflated Claims to Medicare
WASHINGTON – EUSA Pharma (USA) Inc. has agreed to pay the United States $180,000 to resolve claims that it violated the False Claims Act by allegedly encouraging doctors to submit inflated claims to Medicare for imaging scans, the Justice Department announced today.  EUSA Pharma (USA) is headquartered in Langhorne, Pa.

The United States alleged that EUSA Pharma, which makes and sells ProstaScint, a radiopharmaceutical, advised health care providers to submit multiple claims for certain imaging scans performed following use of ProstaScint, after the Society of Nuclear Medicine informed the company that only one claim should be submitted for these scans.

“Today’s settlement demonstrates our commitment to ensuring that the Medicare Trust Fund is used to pay for necessary medical care and is not depleted as a result of marketing schemes intended to increase sales by inflating government reimbursements,” said Stuart F. Delery, Acting Assistant Attorney General of the Justice Department’s Civil Division.  “We will continue to hold accountable those who abuse public health care programs at the expense of taxpayers.”

Today’s settlement resolves a lawsuit filed by former EUSA Pharma employee Ann-Marie Williams under the qui tam, or whistleblower provisions, of the False Claims Act.  Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery.  Ms. Williams will receive $30,600 as her share of the government’s recovery.

This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $6.7 billion since January 2009 in cases involving fraud against federal health care programs.  The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $8.9 billion.

FEDERAL EXPRESS RESOLVES DISCRIMINATION CHARGES

The following excerpt is from the Department of Labor website:
Shipping giant FedEx to pay $3 million to settle charges of hiring discrimination brought by US Department of Labor
Company will pay back wages and interest to more than 21,000 applicants rejected for jobs at 23 facilities in 15 states; reform hiring practices
WASHINGTON — The U.S. Department of Labor's Office of Federal Contract Compliance Programs today announced that it has entered into a conciliation agreement to resolve allegations of hiring discrimination by federal contractors FedEx Ground Package System Inc. and FedEx SmartPost Inc., both subsidiaries of Memphis, Tenn.-based FedEx Corp. The agreement concludes compliance reviews that spanned seven years and numerous FedEx facilities in multiple states, and includes the largest single financial settlement negotiated by OFCCP since 2004.

"We are committed to building an economy that lasts — one in which every qualified worker gets a fair shot to compete for jobs, and every employer plays by the same set of rules," said Secretary of Labor Hilda L. Solis. "This settlement is proof that we will aggressively protect workers, promote workplace diversity and enforce the laws governing federal contractors."

During a series of regularly scheduled reviews, OFCCP compliance officers found evidence that FedEx's hiring processes and selection procedures violated Executive Order 11246 by discriminating on the bases of sex, race and/or national origin against specific groups identified at 23 facilities in 15 states. The affected workers include men and women as well as African-American, Caucasian and Native American job seekers, as well as job seekers of Hispanic and Asian descent. The reviews also uncovered extensive violations of the executive order's record-keeping requirements.

Under the terms of the conciliation agreement, the companies will pay a total of $3 million in back wages and interest to 21,635 applicants who were rejected for entry-level package handler and parcel assistant positions at 22 FedEx Ground facilities and one FedEx SmartPost facility. FedEx also has agreed to extend job offers to 1,703 of the affected workers as positions become available. The 21,635 rejected job seekers represent one of the largest classes of victims of any case in OFCCP's history.

"Being a federal contractor is a privilege and means you absolutely, positively cannot discriminate, not when you are profiting from taxpayer dollars," said OFCCP Director Patricia A. Shiu. "Under this agreement, FedEx will have to really examine and revamp its hiring practices across the entire company. The American people ought to have confidence that one of our nation's most trusted brands will not tolerate discrimination."

In addition to the financial remedies and job offers, FedEx Ground has committed to wide-ranging reforms. The company has promised to correct any discriminatory hiring practices, develop and implement equal employment opportunity training, and launch extensive self-monitoring measures to ensure that all hiring practices fully comply with the law. FedEx Ground also has agreed to engage an outside consultant to perform an extensive review of the company's hiring practices and provide recommendations to change and improve those practices, to train incumbent and future supervisors and employees, and to monitor compliance with the equal employment opportunity laws enforced by OFCCP. Finally, the company will take necessary steps to comply with all record-keeping requirements.
FedEx Ground is based in Coraopolis, Pa. The 22 FedEx Ground facilities where OFCCP found violations are located in Sun Valley and Sacramento, Calif.; Tampa, Fla.; Ellenwood, Ga.; Carol Stream and Chicago, Ill.; Indianapolis and Jeffersonville, Ind.; Lenexa, Kan.; Livonia, Mich.; St. Paul, Minn.; South Hackensack, N.J.; Albany and Brooklyn, N.Y.; Greenville, N.C.; Addyston and Grove City, Ohio; Lewisberry, Pa.; Fort Worth, Houston and South Houston, Texas; and North Salt Lake City, Utah. OFCCP also conducted compliance evaluations at two FedEx Ground facilities in Phoenix, Ariz., and San Antonio, Texas, but found no violations.

FedEx SmartPost is based in New Berlin, Wis. The FedEx SmartPost facility where OFCCP found violations is located in Charlotte, N.C.

HHS SECRETARY CALLS ON HEALTH INSURANCE COMPANIES TO STOP UNREASONABLE RATE HIKES

The following excerpt is from the Department and Human Services website:
Health insurance rate hikes in nine states deemed excessive by HHS
Secretary Sebelius calls on insurance companies to drop unreasonable rate hikes
Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that health insurance premium increases in nine states have been deemed “unreasonable” under the rate review authority granted by the Affordable Care Act.

"Thanks to the Affordable Care Act consumers are no longer in the dark about their health insurance premiums," said Secretary Sebelius.  "Now, insurance companies are required to justify rate increases of 10 percent or higher.  It’s time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so."

Secretary Sebelius also released a new report today showing that, six months after HHS began reviewing proposed health insurance rate increases, consumers are already seeing results.  Since the rate review program took effect in 2011, health insurers have proposed fewer double-digit rate increases. Furthermore, more states have taken an active role in reducing rate increases, and consumers in all states are getting straight answers from their insurance companies when their rates are raised by 10 percent or more.  As of March 10, 2012, the justifications and analysis of 186 double-digit rate increases for plans covering 1.3 million people have been posted at HealthCare.gov, resulting in a decline in rate increases.  According to the report, in the last quarter of 2011 alone, states reported that premium increases dropped by 4.5 percent, and in states like Nevada, premiums actually declined.

In the decisions announced today, HHS determined, after independent expert review, that two insurance companies have proposed unreasonable health insurance premium increases in nine states—Arizona, Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin, and Wyoming.  The excessive rate hikes would affect over 42,000 residents across these nine states.
In these nine states, the insurers have requested rate increases as high as 24 percent. These increases were reviewed by independent experts to determine whether they are reasonable.  In this case, HHS determined that the rate increases were unreasonable, because the insurer would be spending a low percentage of premium dollars on actual medical care and quality improvements, and because the justifications were based on unreasonable assumptions.

Most rates are reviewed by states and many states have the authority to reject unreasonable premium increases.  Since the passage of the health care law, the number of states with this authority increased from 30 to 37, with several states extending existing “prior authority” to new markets.
The report released today shows that:
States like Texas, Kentucky, Nevada and Indiana are reporting fewer requests for rate increases over 10 percent.

States like California, New York, Oregon, and many others, have proactively lowered rate increases for their residents.

The rate review program has made insurance companies explain their increases, and more than 180 have been posted publicly and are open for consumer comment on companyprofiles.healthcare.gov.
This initiative is one of many in the health care law to ensure that insurance companies play by the rules, prohibiting them from dropping coverage when a person gets sick, billing consumers into bankruptcy through annual or lifetime limits, and, soon, discriminating against anyone with a pre-existing condition.

BCI AIRCRAFT LEASING INC., AND OTHERS CONVICTED OF FRAUD AND OBSTRUCTION

The following excerpt is from the Securities and Exchange Commission website:
March 20, 2012
The Securities and Exchange Commission (“Commission”) announced that on March 14, 2012, a federal jury convicted Brian Hollnagel and BCI Aircraft Leasing Inc. on seven criminal counts, including fraud and obstruction charges for engaging in a fraudulent financing scheme that raised more than $50 million from investors and lenders. Brian Hollnagel, 38, of Chicago, the owner, president, and chief executive officer of BCI Aircraft Leasing Inc., and the corporation itself were each convicted of six counts of wire fraud and one count of obstruction of justice for obstructing the Commission’s 2007 lawsuit against them. As part of this verdict, Hollnagel and BCI were convicted of committing fraud and obstruction in connection with the provision of fraudulent court-ordered accountings of investor LLCs to the SEC during that litigation. U.S. v. Brian Hollnagel et al., Criminal Action No. 1:10-cr-0195 (N.D. Ill.) (St. Eve., J.).

On August 13, 2007, the Commission filed a civil injunctive complaint alleging that Defendants Hollnagel and BCI, from approximately 1998 through 2007, raised at least $82 million from approximately 120 investors as part of a fraudulent scheme in which the Defendants commingled investor funds, used investor funds to pay other investors, and failed to use investor funds as represented. The Complaint alleged that, as a result of their conduct, the Defendants violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission’s action remains pending.

U.S. GOVERNMENT FILES LAWSUIT AGAINST AT&T

The following excerpt is from the U.S Department of Justice. 
Thursday, March 22, 2012
United States Files Lawsuit Against AT&T in Telecommunications Relay Services Fraud Case Government Alleges AT&T Improperly Billed the FCC for Reimbursement
The United States has filed a complaint against AT&T Corporation under the False Claims Act for conduct related to its provision of Internet Protocol (IP) Relay services, the Justice Department announced today.   AT&T is a global conglomerate that provides a wide variety of telecommunications services, including Telecommunications Relay Services (TRS) for the deaf and hard-of-hearing.

IP Relay is a text-based communications service designed to allow hearing-impaired individuals to place telephone calls to hearing persons by typing messages over the Internet that are relayed by communications assistants (CAs) employed by an IP Relay provider.   IP Relay is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to IP Relay users.   The FCC, through the TRS Fund, reimburses IP Relay providers at a rate of approximately $1.30 per minute.   In an effort to reduce the abuse of IP Relay by foreign scammers using the system to defraud American merchants with stolen credit cards and by other means, the FCC in 2009 required providers to verify the accuracy of each registered user’s name and mailing address.

The United States alleges that AT&T violated the False Claims Act by facilitating and seeking federal payment for IP Relay calls by international callers who were ineligible for the service and sought to use it for fraudulent purposes.   The complaint alleges that, out of fears that fraudulent call volume would drop after the registration deadline, AT&T knowingly adopted a non-compliant registration system that did not verify whether the user was located within the United States.   The complaint further contends that AT&T continued to employ this system even with the knowledge that it facilitated use of IP Relay by fraudulent foreign callers, which accounted for up to 95 percent of AT&T’s call volume.   The government’s complaint alleges that AT&T improperly billed the TRS Fund for reimbursement of these calls and received millions of dollars in federal payments as a result.

“Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice.   “We will pursue those who seek to gain by knowingly allowing others to abuse this program.”

“Taxpayers must not bear the cost of abuses of the Telecommunications Relay system,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania.  “Those who misuse funds intended to benefit the hearing- and speech-impaired must be held accountable.”

The claims in the United States’ complaint are allegations only; there has been no determination of liability.

The United States’ complaint was filed in a lawsuit originally brought under the qui tam, or whistleblower, provisions of the False Claims Act by Constance Lyttle, a former CA who worked in one of AT&T’s IP Relay call centers.   Under the act’s qui tam provisions, a private citizen, known as a “relator,” can sue for fraud on behalf of the United States, which has the option of taking over the case.   If the lawsuit is successful, the relator is entitled to a share of any recovery.

HARBERT COMPANIES AGREE TO PAP $47 MILLION TO RESOLVE FALSE CLAIMS ACT ALLEGATIONS

The following excerpt is from the Department of Justice website:
Tuesday, March 20, 2012
Harbert Corporation, Harbert International, Inc., Bill Harbert International Constructions Inc., Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment have agreed to pay the United States $47 million to settle claims that they submitted false claims, and caused others to submit false claims, to the U.S. Agency for International Development (USAID), the Justice Department announced today.
                                                                                                         
The settlement resolves claims under the False Claims Act that the Harbert entities conspired to rig the bids on a USAID-funded construction contract that was bid and performed in Cairo, Egypt, in the late 1980s and early 1990s.   Harbert International Inc. was part of a joint venture that bid on, and was ultimately awarded, Contract 20A to build a sewer system.   The United States alleges that various Harbert entities entered into agreements with other potential bidders on Contract 20A to ensure that the joint venture would win the bid.   The United States contends that other potential bidders agreed to either not bid or bid intentionally high in return for a payoff.   The United States previously obtained a judgment against Harbert Construction Services (U.K.) Ltd. and Bilhar International Establishment on these claims.  
         
“Attempts to collude or rig bids undermine the integrity of the government contracting process,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.   “As this case demonstrates, we will take action against those who seek to abuse that process and pad their profits at taxpayer expense.”

 "This case demonstrates our endurance in the fight against corporations that attempt to defraud the government," said Vincent H. Cohen, Jr., Principal Assistant U.S. Attorney  of the District of Columbia "Two decades after a bid-rigging conspiracy corrupted a massive construction project in Egypt, we have obtained a $47 million settlement on behalf of the American taxpayer.  Our resolve in this matter should serve as a warning to other contractors who are thinking about abusing the contracting process."

The allegations that the Harbert entities conspired to rig the bidding on the contract were first made in a lawsuit that whistleblower Richard F. Miller filed in the U.S. District Court for the District of Columbia in 1995.   Under the qui tam provisions of the False Claims Act, private citizens may file actions on behalf of the United States alleging the submission of false claims and share in any recovery.   The claims settled by this agreement against Harbert Corporation, Harbert International Inc., and Bill Harbert International Constructions Inc. are allegations only, and there has been no determination of liability.

“It’s been a very long road to justice in this case.   We are pleased that it has ended with this significant recovery of taxpayer funds,” said Michael G. Carroll, Acting Inspector General, USAID.

This matter was handled by the Commercial Litigation Branch of the Civil Division, the U.S. Attorney’s Office for the District of Columbia and USAID’s Office of Inspector General.

SEC ALLEGES MAN USED HIS COMPANIES TO SWINDLE INVESTORS

The following excerpt is from the SEC website:
March 14, 2012
The Securities and Exchange Commission today charged a New York City area fund manager with misleading investors and pocketing undisclosed commissions in connection with several pooled investment vehicles he operated.

The SEC alleges that Mazzola, who lives in Upper Saddle River, N.J., and his firms Felix Investments, LLC, and Facie Libre Management Associates, LLC, created two funds to buy securities of Facebook and other high profile technology companies. However, Mazzola and his firms engaged in improper self-dealing – earning secret commissions above the 5 percent disclosed in offering materials on the funds’ acquisition of Facebook stock and on re-sales of fund interests to new investors. The hidden charges essentially raised the prices paid by their investors for Facebook stock because it created a disincentive for Mazzola and his firms to negotiate a lower price for fund investors. They also sold Facie Libre fund interests despite knowing the funds lacked ownership of certain Facebook shares.

According to the SEC’s complaint filed in federal court in San Francisco, Mazzola and his firms also made false statements to investors in other funds they created to invest in various pre-IPO companies. For instance, they misled one investor into believing a Felix fund had successfully acquired stock of Zynga. They also made false representations about Twitter’s revenue to attract investors to their Twitter fund.

The SEC’s lawsuit charges Mazzola, Felix Investments, and Facie Libre Management Associates with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) thereunder. It also charges Mazzola and Facie Libre Management Associates with violating Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Commission seeks court orders prohibiting them from engaging in securities fraud and requiring them to disgorge their ill-gotten gains and pay financial penalties.

Separately, the Commission initiated a settled administrative proceeding against Laurence Albukerk and his company EB Financial Group LLC, for failing to disclose in their offering materials certain compensation they earned in connection with two Facebook funds they managed. Without admitting or denying the SEC’s findings, Albukerk and EB Financial consented to entry of a SEC order finding that they violated Section 17(a)(2) of the Securities Act and Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. Albukerk and EB Financial also agreed to pay disgorgement and prejudgment interest of $210,499 and a penalty of $100,000.

The Commission also initiated a settled administrative proceeding against SharesPost, Inc., an online platform that facilitated certain secondary market transactions, and its CEO, Greg Brogger, for effecting securities transactions without registering as a broker-dealer. SharesPost and Brogger consented to an SEC order finding that SharesPost committed and Brogger caused a violation of Section 15(a) of the Exchange Act of 1934. They agreed to pay penalties of $80,000 and $20,000 respectively.

OFFICERS OF UNITED AMERICAN VENTURES, LLC., MUST PAY $10.5 MILLION

The following excerpt is from the U.S. Securities and Exchange Commission website:
March 13, 2012
The U.S. Securities and Exchange Commission announced today that a federal judge has ordered two current and former officers of United American Ventures, LLC to pay a total of $2 million in civil penalties and to disgorge over $8.5 million in ill-gotten profits in a securities fraud case.

The SEC litigated the case beginning in June 14, 2010 when the agency charged Eric J. Hollowell of Newport Beach, California, Philip Lee David Jack Thomas of Irvine, California, Matthew A. Dies of Corona, California, Anthony J. Oliva of Placitas, New Mexico, and United American Ventures, LLC, and Integra Investment Group, LLC with securities fraud. The complaint alleged that United American Ventures, LLC, which is also known as UAV, raised $10 million from at least 100 investors through the unregistered and fraudulent sale of convertible bonds. According to the complaint, Hollowell and Thomas founded UAV, with Hollowell acting as the company’s president from 2006 until 2009, when Thomas took over as president of the company.

The Honorable Judith C. Herrara in federal court in New Mexico granted judgment in favor of the SEC on March 2, 2012, finding Hollowell, Thomas, and United American Ventures, LLC jointly liable for disgorgement of $8,652,942 and prejudgment interest of $426,430. The court also assessed civil penalties of $1,000,000 each against Hollowell and Thomas. The court had previously enjoined Hollowell and Thomas from violating Section 10(b) of the Securities Exchange Act of 1934 as well as other provisions of federal securities laws.

The court also granted judgment in favor of the SEC finding Oliva and Integra Investment Group, LLC jointly liable for $284,039 in disgorgement, and Dies liable for $54,381 in disgorgement. It assessed a $130,000 civil penalty against Oliva and a $54,381 penalty against Dies.

SEC CHARGES ARGYLL INVESTMENTS LLC WITH FRAUD IN STOCK LENDING SECHEME

The following excerpt is from the SEC website:
March 16, 2012
SEC Charges Senior Executives at California-Based Firm in Stock Lending Scheme
The Securities and Exchange Commission today charged two senior executives and their California-based firm with defrauding officers and directors at publicly-traded companies in an elaborate $8 million stock lending scheme.

The SEC alleges that Argyll Investments LLC’s purported stock-collateralized loan business is merely a fraud perpetrated by James T. Miceli and Douglas A. McClain, Jr. to acquire publicly traded stock from corporate officers and directors at a discounted price from market value, separately sell the shares for full market value in order to fund the loan, and use the remaining proceeds from the sale of the collateral for their own personal benefit. Miceli, McClain, and Argyll typically lied to borrowers by explicitly telling them that their collateral would not be sold unless a default occurred. However, since Argyll had no independent source of funds other than the borrowers’ collateral, Argyll often sold the collateral prior to closing the loan and then used the proceeds to fund it.

Also charged in the SEC’s complaint filed in U.S. District Court for the Southern District of California is a broker through which Argyll attracted potential borrowers. The SEC alleges that AmeriFund Capital Finance LLC and its owner Jeffrey Spanier violated the federal securities laws by brokering numerous transactions for Argyll while not registered with the SEC.

The SEC alleges that Miceli and McClain induced at least nine corporate officers and directors since 2009 to transfer ownership of millions of shares of stock to Argyll as collateral for purported loans. Miceli and McClain promised to return the stock to the borrowers when the loans were repaid. However, rather than retaining the collateral shares as required, they sold the shares without the borrowers’ knowledge before or soon after funding the loans. In many cases, they used the proceeds from the collateral sales to fund the loans. Because Argyll typically loaned the borrowers 30 to 50 percent less than the current market value of the shares, the company retained substantial proceeds even after funding the loans. As a result of the scheme, Argyll reaped more than $8 million in unlawful gains that Miceli and McClain used in part toward their personal expenses.
In addition to the fraud charges against Miceli, McClain, and Argyll, the SEC alleges that they violated the federal securities laws by improperly selling the collateral shares — all of which were restricted securities — into the public markets in unregistered transactions. They also failed to register with the SEC as brokers or dealers.

The SEC’s complaint alleges that Miceli, McClain, and Argyll violated Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 5(a) and 5(c) of the Securities Act of 1933, and that Spanier and AmeriFund violated Section 15(a) of the Exchange Act. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The SEC’s investigation was conducted by Jacob D. Krawitz, Anthony S. Kelly, and Anik Shah, and supervised by Julie M. Riewe. The SEC’s litigation effort will be led by Dean Conway.
The SEC thanks the U.S. Attorney’s Office for the Southern District of California and the Federal Bureau of Investigation for their assistance with this matter.