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Government Enforcement Actions

Please also see our Recent Government Enforcement Actions page.

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June 28, 2022

In response to SEC charges, audit firm Ernst & Young LLP admitted that its employees cheated on CPA exams and in continuing professional education courses, and that the firm withheld evidence of this misconduct during the SEC’s investigation.  EY agreed to pay a $100 million penalty and undertake extensive remedial measures.  The cheating took place on the ethics component of CPA exams and in courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statements comply with Generally Accepted Accounting Principles.  SEC

June 13, 2022

Charles Schwab & Co., Inc., Charles Schwab Investment Advisory, Inc., and Schwab Wealth Investment Advisory, Inc. will pay $187 million for violating the antifraud provisions of the Investment Advisers Act of 1940. Mandated disclosures for Schwab Intelligent Portfolios—Schwab’s robo-adviser product—stated that the amount of cash in the robo-adviser portfolios utilized a “disciplined portfolio construction methodology,” and would seek “optimal return[s].” Instead, Schwab swept cash from the robo-adviser portfolios to its affiliate bank, loaned it out, and kept the difference between the interest it earned on the loans and the interest it paid to the robo-adviser clients. This resulted in customers making less money while taking on the same amount of risk. SEC

June 3, 2022

Rodney L. Yentzer will pay $900,000 for violating the False Claims Act. Through Pain Medicine of York, a group of clinics he controlled, Yentzer caused the submission of false claims for payment to Medicare for urine drug tests that were not medically reasonable or necessary and were not used to aid in the diagnosis and treatment of patients. He is excluded from participation in all federal health care programs for 22 years. In March of 2022, Yentzer pleaded guilty to Health Care Fraud, Money Laundering, and Theft of Public Money for defrauding Medicare, Medicaid, and the U.S. Department of Health and Human Services between 2016 and 2020. USAO MDPA

June 2, 2022

Luxembourg-based steel pipe manufacturer Tenaris will pay more than $78 million to resolve claims that between 2008 and 2013 its Brazilian subsidiary paid bribes to obtain and retain business from the Brazil state-owned entity Petrobras.  The SEC alleged that Tenaris violated the anti-bribery, books and records, and internal accounting controls provisions of the Foreign Corrupt Practices Act.  SEC

June 2, 2022

Aerospace company Numet Machining Techniques, LLC and related entities have agreed to pay $5.2 million after voluntarily disclosing to the government that Numet, which had certified itself as a small business concern, had affiliations with other businesses that, the government alleged, made it ineligible for 22 small business set-aside contracts that it had been awarded during the relevant time period.  USAO CT

June 1, 2022

Behavioral health provider Healthkeeperz, Inc. has agreed to pay $2.1 million to resolve allegations that it falsely billed North Carolina’s Medicaid program for services that were not covered.  The allegations arose from a lawsuit filed by Ginger Hill under the qui tam provisions of the federal False Claims Act and the North Carolina False Claims Act.  USAO WD NC; NC

June 1, 2022

Caris Life Sciences, Inc. will pay $2.9 million to resolve claims that it falsely billed Medicare for laboratory tests to detect the activity of certain genes within a tumor that predicted the risk of recurrence by fraudulently circumventing Medicare’s 14-day rule, which, during the relevant time period, prohibited laboratories from separately billing Medicare for tests performed on specimens if a physician ordered the test within 14 days of the patient’s discharge from a hospital stay.  By submitting separate claims for the laboratory tests, Medicare paid twice for the same service, first to the hospital as part of the hospital’s lump-sum DRG payment, and in a direct payment to Caris.  Caris allegedly discouraged providers from ordering testing within 14 days of discharge, or canceled and re-submitted orders to avoid the 14 day window.  The settlement covers two separate whistleblower actions.  USAO EDNY

May 31, 2022

Healthcare company SCWorx Corp. has agreed to resolve SEC charges that it made false and misleading statements in an April, 2020 press release, claiming in a press release that it had received a purchase order for millions of COVID-19 rapid test kits.  The announcement caused the company’s stock price to surge, but the SEC alleged that the company had neither a legitimate supplier of COVID-19 test kits nor an executed purchase agreement with a buyer.  When the true facts became public, investors lost at least $116 million.  The company has agreed to pay a civil penalty of $125,000 and contribute stock valued at $600,000 as disgorgement and prejudgment interest to harmed investors in a private class action.  The company’s former CEO, Marc Schessel, has been indicted for securities fraud with respect to the scheme.  SEC; USAO NJ

May 25, 2022

RiverSource Distributors Inc. will pay a $5 million civil penalty for violating Section 11 of the Investment Company Act by employing sales practices wherein variable-annuities-holding customers were unknowingly switched from one variable annuity to another, increasing sales commissions for employees and boosting RiverSource’s revenues. These trades were effectuated through Ameriprise Financial Services, LLC, an affiliated broker-dealer/investment adviser. RiverSource’s compliance department caused the sales practice to stop in 2018, but only after these types of transactions saw a significant increase from 2016 until then. RiverSource was also hit with a cease-and-desist order and a censure, in addition to the civil penalty. This is the SEC’s first-ever enforcement proceeding under Section 11. SEC

May 25, 2022

Twitter will pay $150 million in civil penalties and implement new compliance measures to settle allegations of FTC Act violations by misrepresenting how it would deploy users’ nonpublic contact information, affecting more than 140 million Twitter users. From 2013 to 2019, Twitter collected users’ telephone numbers and email addresses under the guise of account security protocols, while concealing their secondary use of this information to help companies send targeted ads to consumers, which thereby increased Twitter’s primary source of revenue. In addition to the monetary penalty, Twitter is required to implement a new privacy and information security program and comply with numerous other reporting and record-keeping requirements. DOJ, USAO NDCA
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