Archive

Centric Parts – Customs Fraud ($8 million)

In a customs fraud victory, the Constantine Cannon team represented whistleblower Steve Hughes in his successful False Claims Act action against his former employer, auto parts distributor CWD, LLC.  Hughes alleged that CWD, which does business as Centric Parts, misclassified brake pads imported from Asia as “unmounted” brake pads when they were, in fact, brake pads mounted to a metal backing plate, and therefor subject to a 2.5% tariff.  When Hughes learned of the misclassification, he immediately advised the CEO and CFO to disclose the issue to U.S. Customs and Border Protection.  Instead, the company concealed the misclassification and retaliated against Hughes.  As a result of Centric’s alleged omissions and false statements regarding its imported products, the company knowingly evaded millions of dollars of customs duties it owed to the United States.  The $8 million settlement resolved the Hughes lawsuit and one other qui tam action filed by a different whistleblower.  The whistleblowers shared a $1.48 million whistleblower award, representing 18.5% of the government’s recovery.  Whistleblower Insider; Press release

Pure Collection – Customs Fraud ($908,100)

Constantine Cannon represented whistleblower Andrew Patrick, who worked for Pure Collection from 2010 to 2014, first as a sales representative in its U.K. call center and then in its U.K. packaging department. Mr. Patrick’s qui tam, or whistleblower, lawsuit alleged that since 2007 the defendants fraudulently and systematically avoided paying U.S. customs duties on its goods shipped from the United Kingdom to customers in the United States. Pure Collection and the e-retailer’s acting CEO, Samantha Harrison, have collectively agreed to a settlement of $908,100 to the U.S. Government. This lawsuit was one of the first to be brought by a U.K. whistleblower in which the U.S. Government intervened and successfully resolved the whistleblower’s False Claims Act allegations. Mr. Patrick will be awarded 18 percent of the total settlement.

Education Management Corp. - For-profit college student recruitment violations ($80 million)

Education Management Corporation (EDMC), a Pittsburgh-based operator of for-profit educational institutions, agreed to pay more than $80 million to settle a False Claims Act lawsuit brought by a whistleblower represented by attorneys at Constantine Cannon.   The settlement was the largest settlement to date in an FCA suit involving the U.S. Department of Education.  The whistleblowers, Lynntoya Washington and Michael T. Mahoney, provided extensive evidence that EDMC had for years paid its recruiters incentive compensation based upon how many students they enrolled, regardless of whether the students were suitable candidates, while steadily concealing its illegal practices with repeated false statements to state and federal authorities. Read more here and from the DOJ.