Archive

April 27, 2016

Los Angeles-based upscale furniture seller Z Gallerie LLC agreed to pay $15 million to resolve allegations it violated the False Claims Act through a scheme to evade customs duties on imports of wooden bedroom furniture from China.  According to the government, Z Gallerie evaded antidumping duties by misclassifying, or conspiring with others to misclassify, the imported furniture as pieces intended for non-bedroom use.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Kelly Wells, an e-commerce retailer of furniture.  She will receive a whistleblower award of $2.4 million from the proceeds of the government's recovery.  DOJ

April 18, 2016

California-based sportswear importer Winds Enterprises, Inc. agreed to pay $1.5 million to resolve allegations it violated the False Claims Act by underpaying on import duties on shipments from 2010 to 2014.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a former Winds Enterprises employee, who will receive whistleblower award of $300,000 from the proceeds of the government's recovery.  DOJ (WDWA)

April 7, 2016

Washington announced favorable resolutions for consumers with six student loan debt adjustors that overcharged Washington state students and collected unlawful fees. The six loan adjustors will pay a total of $162,000 to refund Washington students for illegal charges and an additional $56,000 for the Attorney General’s costs and attorney’s fees, as well as monitoring and future enforcement of the Consumer Protection Act. Student loan debt adjustment firms offer to help students fill out and submit paperwork to the U.S. Department of Education to consolidate their federal student loans. But information about repayment options and help consolidating federal student loans is available — for free — directly from the U.S. Department of Education. All 346 Washington student victims will receive full refunds of the money they paid to the various companies. The Attorney General’s Office will notify eligible consumers and distribute the refunds directly to them in July 2016. WA

March 28, 2016

Tennessee-based defense contractor Kilgore Flares Company and one of its subcontractors, New York-based ESM Group Inc., agreed to pay $8 million to resolve charges they violated the False Claims Act by selling defective and illegally imported infrared countermeasure flares to the U.S. Army and, for ESM, knowingly evading U.S. customs duties.  The allegations first arose in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by Reade Manufacturing Company, a domestic manufacturer of magnesium powder which is used in the flares.  The company will receive a whistleblower award of $400,000 from the proceeds of the government’s recovery from ESM.  Whistleblower Insider  

March 23, 2016

California obtained a $1.1 billion judgment against defunct Corinthian Colleges, Inc. (CCI) for their predatory and unlawful practices. While CCI filed for bankruptcy in May 2015, this judgment can help secure further relief for struggling students. In October 2013, Attorney General Kamala D. Harris led the charge against CCI and its subsidiaries that operate Everest, Heald, and Wyotech colleges, filing suit seeking to put an end to abusive practices that left tens of thousands of students under a mountain of debt and useless degrees. CCI filed for bankruptcy in May 2015. In granting the default judgment, the Court ordered restitution on behalf of students in the amount of $820,000,000 and civil penalties totaling $350,025,000, for a total of $1,170,025,000 in monetary relief. CA

March 9, 2016

New York-based Bard College agreed to pay $4 million to resolve allegations it violated the False Claims Act by receiving funds under the Department of Education’s Teacher Quality Partnership Grant Program despite failing to comply with the conditions of the grant.  The settlement also resolves allegations that Bard awarded, disbursed, and received Title IV student loan funds at campus locations before such locations were accredited or before providing notice of such locations to the Department of Education in violation of applicable regulations and Bard’s Title IV Program Participation Agreements with the agency.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by two former students of Bard’s Master of Arts in Teaching Program at Paramount Bard Academy in Delano, California.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government's recovery.  DOJ (EDCA)

February 22, 2016

Pennsylvania-based importers Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., their owners, Ajay Goel and Thomas Diener, and the related importer, SMC Machining LLC agreed to pay $3 million to resolve charges they violated the False Claims Act by engaging in a scheme to evade customs duties on imports of small-diameter graphite electrodes from China.  According to the government, Ameri-Source evaded antidumping duties on 15 shipments of the electrodes by misclassifying the size of the electrodes to avoid paying the duties, which do not apply to larger diameter graphite electrodes.  The allegations originated in a whistleblower lawsuit filed by Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act.  The company will receive a whistleblower award of approximately $480,000 from the proceeds of the government’s recovery.  Whistleblower Insider

February 17, 2016

The U.S. District Court of South Carolina awarded a $9,283,123.00 default judgment against Lacy School of Cosmetology and its president Earnest “Jay” Lacy, for presenting false claims to the U.S. Department of Education for federal student loans and grants.  According to the government, the school failed to comply with numerous federal program regulatory requirements, making unauthorized disbursements of federal student aid funds, failing to refund student credit balances, and concealing its actions by submitting false statements of compliance.  The default judgment is based on a whistleblower lawsuit filed under the qui tam provision of the False Claims Act.  DOJ (SC)

February 19, 2016

The FTC has charged online distance education school Stratford Career Institute with misleading consumers about its high school equivalency program that the agency alleges failed to meet the basic requirements set by most states. In its complaint, the FTC alleges that Stratford’s extensive advertising for its high school program included multiple references to a “high school diploma” leading to an increase in earning potential, access to better jobs and promotions, and the ability to apply for higher education. The FTC’s complaint alleges that Stratford’s high school program fell short of its promises, meaning thousands of students nationwide paid as much as $989 for a diploma that could not meet their educational or career needs. FTC

January 27, 2016

Milton Russ Barnhill was sentenced to 11 years in prison for conspiring with others to defraud the Federal Crop Insurance Corporation and the Farm Service Agency, both agencies of the United States, in connection with federal crop insurance claims and other federal taxpayer subsidies.  As charged, Barnhill produced crops which he sold in the names of others which he then reported on insurance claims that the crops were lost due to natural disasters.  He also placed crops and insurance policies into the names of conspirators to boost the amount of money he could collect on the insurance claims.  DOJ (EDNC)