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.

October 24, 2016

Financial Spoofs No Laughing Matter: Chicago Speed-Chess Champ Can’t Outmaneuver CFTC

By the C|C Whistleblower Lawyer Team

Although some take issue with cheeky parody, most of us love a good spoof. Unless, that is, the spoof is the sort that lands you in hot water with financial regulators. Chicago-based trader and speed-chess champ Igor Oystacher and his firm, 3Red Trading LLC, found out the hard way that spoofing, at least in financial industry jargon, is no laughing matter. Indeed, financial spoofing—i.e. bidding on, or offering, futures with the intent to cancel before execution—was explicitly outlawed in 2010 with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

Oystacher’s spoofs—which allegedly involved manipulation of at least six contract commodities markets including those for copper, crude oil, and natural gas—not only had Oystacher laughing all the way to the bank, but also brought him to the attention of the Commodities Future Trading Commission (CFTC). The CFTC hauled Oystacher into court in October 2015, alleging he ran a years-long scheme through which he “created the appearance of false market depth” and then exploited that depth and the resulting harm to other market participants to line his own pockets.  click here for more »

October 24, 2016

In Their Own Words — Hayes

— “These companies promoted a culture of lies and lawlessness that left a trail of pollution in the Pacific Ocean. Knowing that the Coast Guard was going to do an inspection of their shipping vessel, corporate managers allowed the Chief Engineer to present falsified documents. The significant fines imposed in this case send a clear message that those who spoil our environment by putting their business interests ahead of our laws will be held responsible.”

U.S. Attorney Annette L. Hayes, W.D. Washington, on the penalty imposed on Angelekos and Gallia Graeca. Click here for more.

October 24, 2016

Whistleblower News From the Inside — October 24, 2016

By the C|C Whistleblower Lawyer Team

Chinese TV series titillates with glimpses of the lifestyles of the powerful and corrupt – “Always on the Road” is meant to show that President Xi is serious about eliminating graft.  But it also illustrates how party officials indulged their taste for jewelry, trips to the World Cup and delicacies like crocodile meat while preaching clean living. One tip from a former official: pour expensive liquor into a spring water bottle and drink from that.  NY Times

Greek shipping vessel’s owner and operator fined $1.3 million for dumping oily waste at sea — The ship operator, Angelakos (Hellas) S.A., and the owner, Gallia Graeca Shipping Ltd., were found guilty of discharging 5,000 gallons of oily bilge water. They concealed these incidents from the Coast Guard by making false statements to inspectors and making false statements and omissions in the ship’s oil record book.  Marine Log

Moody’s expects feds to sue over bond grades issued before 2008 housing market collapse –  Credit ratings played a central role in the last financial crisis as firms awarded positive marks to residential mortgage bonds that later went bad, triggering widespread losses. Firms have paid about $2 billion in fines and settlements so far, the largest being S&P’s $1.5 billion settlement. It is said that Moody’s settlement is also likely to be large although the firm’s tight controls on internal communication may make the case more difficult.  WSJ

Whistleblower claims DoD audit agency has culture of intimidation – J. Kirk McGill, a Defense Contract Audit Agency auditor, says his reports of suspected fraud by contractors were not pursued. He also claims that DCAA policy makes it difficult to include fraud allegations in a final audit report. McGill notified Congress of his concerns, leading to hearings and a validation of his claims. POGO

Hudson Valley Associates settles Medicare/Medicaid false claims suit—The hematology-oncology medical practice was accused in a whistleblower suit of improperly waiving copayments and billing Medicare for them; overbilling Medicare and Medicaid for evaluation and management services; billing for services without documenting that they were medically necessary or actually performed. LoHud

October 21, 2016

DOJ Catch of the Week — Omnicare, Inc.

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Omnicare, Inc.  On Monday, the Ohio-based nursing home pharmacy, the largest in the country, agreed to pay roughly $28 million to resolve charges of violating the False Claims Act by soliciting and receiving kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug, Depakote, for nursing home patients.  CVS Health Corporation acquired Omnicare last year, about six years after Omnicare ended the alleged misconduct.

According to the government, Omnicare disguised the kickbacks it received from Abbott in several ways.  One of them was through supposed “grants” and “educational funding” through Omnicare’s “Re*View” program.  Omnicare claimed the program was a health management and educational program but the government described it as simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers to use their drugs on elderly nursing home residents.  The government also pointed to alleged agreements with Abbott under which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident.  Finally, the government claimed Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management and made other payments to local Omnicare pharmacies. click here for more »

October 21, 2016

Japanese Drug Manufacturer Nippon Forms Human Chain to Evade FDA Inspection

By the C|C Whistleblower Lawyer Team

Talk about acting guilty. Japanese drug manufacturer Nippon Fine Chemical was so concerned about US Food and Drug Administration (FDA) violations that the quality control manager literally created a “shoulder-to-shoulder” wall of people in an attempt to prevent an FDA inspector from entering portions of the lab used to analyze drugs for US distribution. The attempted inspection happened in December 2015 and was chronicled in an FDA warning letter to the company, issued last month. The inspection was prompted by customer complaints that Nippon’s drugs contained glass, metal, cardboard, hair, and at least one spider. Nippon primarily produces drugs for cancer patients including anti-cancer agents and pain management drugs.

As if deploying a human chain weren’t incriminating enough, Nippon’s quality assurance manager also prevented the FDA inspector from taking pictures of the equipment used to make drugs for US distribution. The FDA has since declared Nippon products altered and issued an import alert that allows for Nippon products to be detained upon import.

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October 21, 2016

In Their Own Words — Payden

— “From that point, I began drinking the hand sanitizer.”

Angie Payden, Wells Fargo banker in Hudson, Wis., 2011 to 2014, discussing the toll working at Wells Fargo had on her personal health.  Click here for more.

October 21, 2016

Whistleblower News From The Inside — October 21, 2016

By the C|C Whistleblower Lawyer Team

Voices from Wells Fargo: ‘I thought I was having a heart attack’ — The scandal at Wells Fargo over the creation of unauthorized accounts shook its customers’ faith in the bank, but it took an even sharper toll on the company’s workers. A number of them say they faced a stark choice: create new accounts by any means possible, or risk being fired for falling short of their sales goals.  NYT

Eric Havian discusses whistleblower programs and building a whistleblower practice – Eric Havian, of Constantine Cannon, discusses the strengths and weaknesses of various whistleblower awards programs, and says that an across the board whistleblower program for corporate violations of law “would be an instant success…the presumption should be that the model we see working so well in government contracting, in securities violations and even with the IRS, it could work in any industry.”  Corporate Crime Reporter

Food fraud hurts your wallet, makes you sick — From olive oil that has been cut with cheaper oil to honey infused with banned antibiotics and ground coffee contaminated with corn and sawdust, the food you eat is ripe for fraud, and in some cases, can make you sick.  According to Michigan State University’s Food Fraud Initiative, food fraud costs consumers $30 billion to $40 billion a year worldwide, from dining out to items purchased at the grocery store.   CNBC

‘Diva of Distressed’ Tilton to face SEC fraud trial — Financier Lynn Tilton, the founder of New York-based Patriarch Partners who is known as the “Diva of Distressed” for taking over troubled companies, is set to go on trial next week on charges she defrauded investors by hiding the poor performance of assets underlying three $2.5 billion debt funds.  The SEC is seeking to force Tilton and Patriarch to pay the agency at least $200 million for defrauding investors.  Reuters

NY announces $4.3m settlement with special education school — Attorney General Eric T. Schneiderman, Acting Tax Commissioner Nonie Manion and Comptroller Thomas P. DiNapoli announced a settlement with K3 Learning, Inc. and its president and owner Michael C. Koffler, together with his sons, Brian and Daniel Koffler, and his special education preschool, Sunshine Development School, for overcharging the State of New York for services rendered by SDS and for failing to pay millions in personal and corporate income tax.  NYAG

Denmark’s Data Protection Agency publishes Whistleblower Notification Form – The form is meant for use by accounting firms subject to new employee whistleblowing rules, including requiring accounting firms to introduce mandatory whistleblowing programs and create a mechanism to allow employees to report actual and potential violations of the law through channels separate from the traditional management structure.  BNA

October 20, 2016

Whistleblowers are Natural Allies in HHS OIG’s Effort to Crackdown on Improper Payments to Chiropractors

By the C|C Whistleblower Lawyer Team

According to a new report by the Department of Health and Human Services’ Office of Inspector General (OIG), more than 80% of all Medicare payments for chiropractic services in 2013 went towards medically unnecessary procedures. As a result, the government spent nearly $359 million on unnecessary care. Although Medicare covers chiropractic services for active and corrective treatment of spinal subluxation, it does cover not “maintenance therapy,” where no further clinical improvement can reasonably be expected. To conduct the report, OIG randomly sampled 105 claims for chiropractic services. Of these, it concluded that 93 were for maintenance therapy, treatments inappropriate for the patient’s condition, or both.

And this is not the first time that OIG exposed questionable billing practices by chiropractors. An earlier OIG report found $285 million in improper payments for chiropractic services in 2001, 67% of all Medicare payments to chiropractors that year. In addition, four recent OIG reviews of individual chiropractors revealed payments for medically unnecessary or undocumented services.

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October 20, 2016

Whistleblower News From The Inside — October 20, 2016

By the C|C Whistleblower Lawyer Team

Eighth Circuit revives FCA suit against for-profit college – The Eighth Circuit overturned a lower court ruling and revived for the second time a whistleblower’s FCA suit alleging Heritage College falsified student records to maintain eligibility for federal aid money. The court, citing Escobar, concluded the health care training school’s falsifications were material to the government’s payment. Inside Higher Ed

California whistleblower’s actions lead to $2.24M Omnicare settlement – Omnicare, the long-term care pharmacy acquired by CVS that recently agreed to pay $28M to settle kickback charges, will pay another $2.24M to resolve a whistleblower’s allegations that, between 2006 and 2014, Omnicare employees manually altered prescription information on claims resubmitted to Medicare, Medicaid, and TRICARE, to overcome prior rejection of these claims for payment. Central Valley Business Times

Australian litigation finance firm looks to invest in US whistleblower case – Australian litigation financing firm Bentham IMF’s identically named US subsidiary announced it is unrolling a program to finance whistleblower lawsuits. The minimum investment Bentham IMF will make is $1M. Bloomberg

FCA suit against South Carolina hospital unsealed – A former compensation coordinator of Spartanburg Regional Healthcare System alleges the system filed false claims with Medicare and Medicaid and paid physicians above market value. The suit was filed in September 2015 and unsealed last week. Becker’s Hospital Review

California attorney general investigating Wells Fargo on allegations of criminal identity theft – The California Department of Justice is investigating Wells Fargo on criminal identify theft allegations stemming from bank employees’ creation of millions of unauthorized accounts. Los Angeles Times

October 19, 2016

In Their Own Words — Guitron

— “Now I know that nothing happened with my complaint. It just sat on someone’s desk.  At the time, I didn’t know. But I was certainly trusting that everyone was doing what they were supposed to do. And they didn’t.”

Former Wells Fargo employee Yesenia Guitron commenting on how the government treated her whistleblower complaint revealing the bank’s phony bank account scheme.