— “THE AGENCY IS BUREAUCRATIC, MYOPIC, AND NOT LEVERAGING WHISTLEBLOWER INFORMATION AND PRIVATE LEGAL RESOURCES TO ACHIEVE MISSION SUCCESS.”
Patrick Burns of Taxpayers Against Fraud discussing the IRS whistleblower program.
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.
Patrick Burns of Taxpayers Against Fraud discussing the IRS whistleblower program.
Modern Healthcare recently reported that although enrollment in the Medicare Managed Care Program (also known as Medicare Advantage or Medicare Part C) has grown by 8% on average since 2010, several top Medicare Advantage Plans are losing membership. Highmark, Blue Cross and Blue Shield of North Carolina, HealthNow New York, Wellcare Health Plans, Horizon Blue Cross and Blue Shield of New Jersey, Universal American Corp., MVP Health Care, and Hawaii Medical Service Association have all lost more than 10,000 members in the last year. A major cause of these losses appears to be increased medical costs. These increased costs led the plans to increase their prices and reduce benefits. Not surprisingly, this made these plans less competitive in the market.
Chicago joins whistleblower lawsuit against red light camera company – The city has elected to join the case against Redflex brought by the company’s former executive vice president, alleging bribery at city hall and asking for over $300 million. Chicago Tribune
Tax whistleblower earns $11.6 million bounty – The anonymous whistleblower is slated to receive the award for reporting tax fraud to the IRS. Corporate Crime Reporter
Russian nuclear energy official pleads guilty to money laundering charge – Vadim Mikerin conspired to violate the Foreign Corrupt Practices Act by sending over $2 million in bribes to steer uranium sales from Russia to U.S. companies. Wall Street Journal
“Concussion” movie highlights role of NFL whistleblower – The trailer for the movie, which stars Will Smith as the whistleblowing doctor who exposed the effects of head trauma on NFL players, is here: The Guardian
Detroit-area doctor guilty of $5.7 million Medicare fraud – Laran Lerner handed out unnecessary controlled substances in order to attract patients and then billed the government for the drugs as well as other unnecessary testing and unperformed office visits. DOJ
Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi, on the backpay recovery to Cheryle Robbins and her supporters. BenefitsPro
$6 Million Settlement for Alleged Violations Related to Small Business Administration Loan Program – The Department of Justice announced that EDF Resource Capital Inc. and its CEO, Frank Dinsmore, have agreed to resolve allegations that they violated the False Claims Act and otherwise failed to remit payments owed to the Small Business Administration (SBA) under the 504 loan program, including but not limited to EDF’s failure to maintain adequate reserves under the loan program. Under the settlement agreement, EDF and Dinsmore have agreed to make payments and turn over certain assets to the United States for a total settlement of approximately $6 million. DOJ
7th Circuit Rules Whistleblower Award is Ordinary Income, not Capital Gain — A Wisconsin man who won a $7 million award for blowing the whistle on Medicare fraud lost a bid to treat that income as a capital gain on his income tax return. In Patrick v. Commissioner, issued on August 26, 2015, the 7th U.S. Circuit Court of Appeals upheld the IRS position that the payment is more akin to a reward or bounty for work done to reveal the fraud than a return on an investment, and that Craig Patrick and his wife must report the money as ordinary income, subject to a higher tax rate. Milwaukee J-S
PoleZero Corporation Agrees to Pay $2.8 Million to Resolve False Claims Act Allegations in Whistleblower Action — Department of Defense contractor PoleZero Corporation, owned by Dover Corporation since 2007, has agreed to pay the United States $2,800,000 to resolve allegations under the False Claims Act that the company caused false claims to be submitted to the Department of Air Force for communications equipment. Pole Zero is a subcontractor that provided radiofrequency filters (RF filters) and integrated co-site equipment (ICE) to the United States Air Force for use in its E-3 AWACS Aircraft program. The settlement agreement resolves allegations that from 2004-2013 Pole Zero knowingly provided RF filters and ICE equipment that failed to meet contractual specifications. The case was brought as a whistleblower action, and as part of the settlement, the whistleblower will receive $504,000. DOJ
Whistleblower awarded backpay and pension credits — A whistleblower and two former coworkers who supported her efforts have been awarded $630,000 in lost wages and damages after the Department of Labor won a consent judgment against the Cement Masons Southern California Trust Funds. Cheryle Robbins, who was director of the fund’s audit and collections department, reported what she believed was lawbreaking behavior by a trustee; when the fund found out about her involvement, they first placed her on administrative leave, then eliminated her position. BenefitsPro
SEC Halts California-Based Oil and Gas Investment Fraud — The Securities and Exchange Commission announced fraud charges and an emergency asset freeze to halt a California-based scheme involving purported investments in oil and gas projects. According to the SEC’s unsealed complaint, filed in federal court in Los Angeles, Harrison Schumacher and his two companies Quantum Energy LLC and Quaneco LLC allegedly raised approximately $12.3 million from more than 300 investors nationwide in connection with five offerings that were not registered with the SEC. For each of the offerings, Schumacher and Quantum diverted investor funds from the stated purpose of exploration and development of oil and gas resources to instead cover undisclosed corporate business overhead expenses and Schumacher’s compensation, commingling funds in Quantum’s operating accounts, which was then used to pay Schumacher’s lavish personal expenses including a Porsche. SEC
Meet the Private Watchdogs Who Police Financial Institutions — The Wall Street journal details how the use of so-called outside monitors to police financial institutions that have misbehaved has exploded in recent years, as authorities increasingly insist on them as a condition for not pursuing criminal or civil charges against companies. Banks and other companies frequently grumble about excessive prying by monitors, and about the seven or eight-figure bills they run up. Using the firing of the third monitor hired to keep an eye on Western Union in four years as an example, the Journal notes that the monitors themselves can be vulnerable if they clash with the companies they are supervising. WSJ
California State Auditor Issues Whistleblower Report — The California State Auditor released its annual report regarding the California Whistleblower Protection Act, under which it is empowered to investigate complaints that state agencies and employees have engaged in improper governmental activities. The whistleblower act defines an “improper governmental activity” as any action by a state agency or employee relating to state government that violates state or federal law, is wasteful, or involves gross misconduct, incompetence, or inefficiency. According to the report, over the past year the State Auditor received 1,207 reports, and conducted investigations in to violations of state law including failure to seek competitive bids, increase rental rates, properly dispose of surplus property, and adequately supervise. State Auditor
A pharmaceutical company was recently reprimanded by the FDA for its misleading marketing tactics on an unexpected forum—Kim Kardashian‘s Instagram feed. The new mother’s failure to address the full safety profile of morning sickness drug, Diclegis, prompted the FDA to issue a warning letter to the drug’s manufacturer. This sort of enforcement is representative of the new focus of FDA regulation emerging in response to recent wins by big-pharma against enforcement of “off-label marketing” rules. While the Kardashian warning was a good start, the recent furor over “super mutant head lice,” prompted by arguably inappropriate prescriptive advice by authors of a recent study, demonstrates that the FDA must be prepared to address misleading claims of drug safety and efficacy in all their forms.
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The precipitous drop in the stock market on Monday, August 24, was particularly hard on small investors. The Washington Post reports:
“Millions of these Main Street investors were locked out during the crucial hour when the worst hit, just as markets opened Monday. Popular trading platforms run by TD Ameritrade, Scottrade and others ran slow or not at all as panic grabbed hold. It took just six minutes for the Dow Jones industrial average to suffer its biggest drop in history. And these investors could only watch.
“‘It makes me wonder if a guy like me has a fair chance or not,’ said Israel Hernandez, a lawyer in Casa Grande, Ariz., who could not log onto his online broker.
“In a blink, mayhem descended. Strange glitches emerged. Stocks fell like rocks, only to shoot back up minutes later. Exchanges spit out the wrong prices for widely held funds.”
Larry Klayman, attorney representing NSA whistleblowers in their lawsuit. Click here for more.
NSA whistleblowers sue government for $100 million — Five former government officials quietly filed a federal lawsuit last week seeking more than $100 million for alleged retaliation after blowing the whistle on what they viewed as wasteful spending and disregard for civil liberties at the National Security Agency. US News and World Reports
Morgan Stanley hit with $20M whistleblower suit from ex-brokers — Two former Morgan Stanley brokers in the firm’s midtown Manhattan branch have sued the firm and a branch manager for $20 million in damages saying they were wrongfully terminated after blowing the whistle on alleged fraudulent activity and violations of securities laws at the branch. Investment News
Dole CEO liable for $148 million over unfair buyout — The billionaire chief executive of Dole Food Co. and his top lieutenant must pay $148.2 million of damages to shareholders they shortchanged when the produce company went private in 2013. Reuters
Another bank has reached a resolution under Swiss Bank Program — Hypothekarbank Lenzburg AG admitted it offered a variety of traditional Swiss banking services that assisted U.S. clients in the concealment of assets and income from the IRS. DOJ
Former coach files whistleblower, defamation suit —A former TN middle school football coach is suing the team’s head coach and county school board for $700,000 for alleged defamation and wrongful termination for speaking out about abuse. The Tennessean
Vermont Attorney General William Sorrell, describing his office’s inquiry into fraud allegations at a private psychiatric hospital that federal prosecutors declined to pursue and a federal court later dismissed.