Whistleblower Insider

Whistleblower Insider is written by the Constantine Cannon law firm team of experienced qui tam and whistleblower lawyers. It is updated daily to provide the latest whistleblower and fraud news and developments.

December 2, 2016

DOJ Catch of the Week — Allied Home Mortgage

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Allied Home Mortgage.  On Wednesday, a Houston jury found the entities formerly known as Allied Home Mortgage Capital Corp., Allied Home Mortgage Corp., and their president and chief executive officer Jim C. Hodge liable for violating the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”).  After a five-week trial, the jury awarded the United States roughly $93 million in damages, including more than $7 million against Hodge.  The Court will determine the amount of any penalties at a later date.  See DOJ Press Release.

According to the evidence presented at trial, the Federal Housing Administration (FHA) provides mortgage insurance to protect lenders against mortgage defaults and thus make home ownership possible for millions of American families who otherwise might not qualify.  In providing this insurance, the FHA — through the Department of Housing and Urban Development (HUD) — must accurately assess the risk of default on the loans it insures.  It does so by relying on assurances by lenders that they, and the loans they submit for insurance, comply with program requirements. click here for more »

December 2, 2016

In Their Own Words — Grassley

— “Whistleblowers are some of the most patriotic people I know — men and women who labor, often anonymously, to let Congress and the American people know when the government is not working so we can fix it.”

Senator Charles Grassley writing to FBI Director James Comey regarding a suspended FBI agent who blew the whistle on possible conflicts of interest in the Justice Department.

December 2, 2016

Whistleblower News From The Inside – December 2, 2016

By the C|C Whistleblower Lawyer Team

Princess Cruise Lines pleads guilty to intentional pollution of the seas – The company will pay $40 million and implement remedial procedures after an engineer’s report to authorities led to an investigation finding systemic and deliberate pollution by several ships.  DOJ

Justice for Victims of Fraud Act takes aim at Wells Fargo – The proposed legislation would allow consumers to sue Wells Fargo over the sham account scandal from earlier this year; without it, many would be forced into arbitration instead.  Money Magazine

Senator Grassley leads probe of suspended FBI whistleblower case – The Senate Judiciary Committee’s chairman is investigating why a FBI agent was suspended and stripped of his security clearance after he reported conflicts of interest he perceived in the U.S. Attorney’s Office.  The New Orleans Advocate

United settles allegations it routed a flight to benefit public official at investors’ expense – The airline’s parent company agreed to pay $2.4 million to settle charges that it established a flight route between Newark, NJ and Columbia, SC for David Samson, then-chairman of the Port Authority for New York and New Jersey, despite knowing the route would not be profitable.  SEC

FDA focused on increasing hospital reporting of medical device problems – The agency is exploring ways to improve the reporting system after finding that many problems are not reported as required.  Wall Street Journal

December 1, 2016

In Their Own Words — Williams

— “I gotta tell you I’m proud of it now. I’m proud to be a whistleblower.”

Wyndham Worldwide whistleblower Patricia Williams, commenting in the wake of a $20M retaliation award, on her role in blowing the whistle on the resort company. Read more here.

December 1, 2016

IRS Targets Pizza Pro President’s Pension Plunder

By the C|C Whistleblower Lawyer Team

The IRS often, and often unfairly, gets a bad rap, frequently for doing exactly what it exists to do: collect taxes and catch those who try to cheat their way out of paying their fair share. A recent U.S. Tax Court decision, in a case brought by the IRS against Arkansas restaurant equipment licensing company Pizza Pro, demonstrates the essential role the Service plays in cracking down on fraudsters’ creative schemes to bilk the U.S. government.

A bit of background: under U.S. tax laws, companies may deduct as work-related costs, certain contributions to employee benefit plans; however, “overfunded” plans—i.e. those in excess of statutory limitations—are subject to excise taxes. At first blush, this rule fits the stereotype of the greedy tax collector, skimming money even from pension plans. But a look at the facts turns that image on its head.

Pizza Pro was hauled into Tax Court for unpaid excise taxes related to a cushy pension plan set up to benefit a sole participant—Pizza Pro’s president Scott Stevens. Stevens’ exclusive, custom-made plan had a youthful normal retirement age of 45. And, not surprisingly, his company’s generous contributions to the plan exceeded statutory limitations.

Although Stevens and Pizza Pro sought to escape tax liability by neglecting to file appropriate forms related to excise tax liability, the IRS did its own math on the shady pension plan, and brought suit to recover the money it was owed. Stevens didn’t assert financial hardship or an inability to file the forms as defense, but rather attempted to throw his company’s former attorney under the bus with a poorly assembled and ultimately unsuccessful advice-of- counsel defense.

December 1, 2016

Whistleblower News From The Inside — December 1, 2016

By the C|C Whistleblower Lawyer Team

Texas home mortgage entities and CEO liable for $92M – A federal jury found two Texas-based home mortgage entities, Americus Mortgage Corp. and AllQuest Home Mortgage Corp., and their founder and CEO, Jim C. Hodge, liable for FCA and FIRREA violations; the jury awarded over $92M in damages, including over $7M against Hodge in his personal capacity. USAO SDNY

As a distracted Brazil mourns, lawmakers gut corruption bill – Shortly after Brazilian President Michel Temer declared a three-day mourning period for the Chapecoense players and others killed in a plane crash, Brazil’s scandal-plagued Congress held a marathon legislative session and gutted what was meant to be a pioneering anticorruption bill. The New York Times

Hospice with ties to Dr. Fata settles FCA suit for $200K – Michigan hospice provider Vitas Health Corporation Midwest allegedly paid kickbacks to imprisoned former oncologist Dr. Farid Fata, aka “Dr. Death,” in exchange for referrals. Fata administered chemotherapy to cancer-free patients. The Oakland Press

Malaysians worry Trump DOJ will drop corruption investigation into his “favorite prime minister” – Malaysia’s prime minister Najib Razak, embroiled in a multi-billion-dollar corruption case and subject to calls for his resignation from hundreds of thousands of his countrymen, has one thing to be grateful for: his onetime golfing partner is the next president of the United States, whose Justice Department happens to be pursuing that very same corruption case. Quartz

Wyndham Worldwide whistleblower awarded $20M in retaliation suit – A jury awarded whistleblower Patricia Williams $20M for retaliation she suffered as a result of exposing resort giant Wyndham Worldwide’s fraudulent sales scheme, which involved targeting vulnerable senior citizens to buy timeshares, in some cases even convincing them to upon new credit cards to do so. ABC 7 San Francisco

Regulators settle fraud complaint against Contura execs – West Virginia Environmental Protection Agency regulators softened accusations of fraud against the top executives of Wyoming’s Contura Energy after agreeing to a $15M settlement. Casper Star Tribune

November 30, 2016

Question of the Week: Does the Outsourcing of School Bus Services Present a Safety Risk?

By the C|C Whistleblower Lawyer Team

Last week, six students were tragically killed on their bus ride home from Woodmore Elementary School in Chattanooga, TN.  Three others remain critically injured.  Numerous complaints were previously filed against the bus driver, who worked for the private contractor Durham School Services.  Despite this well-documented history of unsafe and erratic behavior, the driver was not pulled from the route.  He has now been charged with vehicular homicide and the authorities from the National Transportation Safety Board are investigating in a separate proceeding.

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November 30, 2016

In Their Own Words — Yates

–“In 51 days, a new team will be running the department, and it will be up to them to decide whether they want to continue the policies that we’ve implemented in recent years.  But I’m optimistic.  Holding individuals accountable for corporate wrongdoing isn’t ideological; it’s good law enforcement.”

Deputy Attorney General Yates speaking at the 33rd Annual International Conference on the Foreign Corrupt Practices Act.


November 30, 2016

Whistleblower News From The Inside — November 30, 2016

By the C|C Whistleblower Lawyer Team

Flint family alleges retaliation by the Navy for speaking out on lead crisis – A Navy sailor claims he is being retaliated against for the activism work done by his wife to expose the water problem in Flint, Michigan.  CNN

Interview with Johnson & Johnson whistleblower Melayna Lokosky – The whistleblower whose case led to the conviction of two former executives at Johnson & Johnson as well as an $18 million Falls Claims Act settlement shares her experience.  Corporate Crime Reporter

Deputy Attorney General Yates speaks at the International Conference on the Foreign Corrupt Practices Act – Here are her remarks at the conference’s 33rd annual meeting.  DOJ

False Claims Act lawsuit against PharMerica dismissed – A lawsuit alleging that one of the nation’s largest long-term care pharmacies was engaged in a kickback scheme was thrown out on a finding that the plaintiff, who based his claims upon public documents, did not have personal knowledge of the alleged fraud.  New Jersey Law Journal

Florida settles prison whistleblower lawsuits for $800,000 – Several whistleblowers alleged that the state’s department of corrections abused inmates and attempted to cover-up the abuses and silence the whistleblowers.  Bradenton Herald

November 29, 2016

In Their Own Words — Washington Post Editorial Board

— “Money cannot make up for the shameful way city officials treated Mr. Payne.  Nor can it erase the damaging message the city sent to honest workers wondering how to respond when they see wrongdoing.”

Washington Post Editorial Board on the federal jury decision awarding Eric W. Payne $1.7 million and other relief for being wrongfully terminated from his D.C. government job because he blew the whistle on misconduct in city contracting.  Click here for more.