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Government Enforcement Actions

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September 24, 2021

London-based advertising company WPP plc, which has ADRs registered in the US, will pay $19 million in disgorgement, interest, and penalties to resolve allegations that it violated the Foreign Corrupt Practices Act.  The SEC charged that WPP acquired advertising agencies in high-risk markets and failed to insure that these subsidiaries implemented appropriate internal controls or respond to repeated warning signs and internal complaints about activities including payments to government officials in India, China, Brazil, and Peru.  SEC

September 24, 2021

An anonymous whistleblower received an award of $36 million from the SEC.  The SEC found that the individual provided information that significantly contributed to a previously-opened SEC investigation and recoveries by the SEC and another agency.  The SEC found that the individual had unreasonably delayed in reporting the conduct, and had participated in the underlying scheme, although they did not direct, plan, or initiate it.  Two other claimants were denied any recoveries on the grounds that the information they provided did not significantly contribute to the recoveries in the covered action or related action.  SEC

September 23, 2021

Shipping company Diana Wilhelmsen Management Limited was ordered to pay $2 million following its admissions that it violated the Act to Prevent Pollution from Ships.  DWM admitted that its vessel, M/V Protefs, unlawfully discharged oily bilge water and knowingly kept a false oil record book.  DOJ; USAO ED LA

September 22, 2021

Jonathan Dean Davis, the owner of the Retail Ready Career Center, a for-profit trade school, was sentenced to nearly 20 years in prison following his conviction on fraud charges.  Davis marketed his school’s HVAC training course to veterans by falsely securing certification of his program by Texas state agencies in order qualify the program to charge veterans’ tuition and fees to the Veteran’s Administration under the Veteran’s Educational Assistance Act.  In fact, Retail Ready used up veteran’s GI Bill benefits and failed to prepare them for careers while collecting more than $72 million in GI Bill benefits from the VA.  Davis was also ordered to pay $65.2 million in restitution and forfeit $72.5 million.  USAO ND TX

September 15, 2021

Two unnamed whistleblowers received awards totaling $114 million for recoveries in an SEC enforcement action and two related actions.  The first whistleblower, who received an award of $110 million, provided independent analysis of publicly-available information about an unnamed company, as well as a witness list and substantial ongoing assistance during investigations by the SEC and another unidentified agency.  The second whistleblower, who received an award of $4 million, provided more limited information after the SEC had already undertaken significant investigative steps.    SEC

September 14, 2021

App Annie Inc. will pay $10 million to resolve claims of securities fraud arising from the company’s alleged misuse of mobile app “alternative data” shared by companies about the performance of their mobile apps with the promise that such data would be aggregated and anonymized.  In fact, App Annie used non-aggregated and non-anonymized data to develop models that it sold to customers to make investment decisions and trade ahead of upcoming earnings announcements.  The company’s co-founder and former CEO will also pay a fine of $300,000.  SEC

September 8, 2021

Bayada Home Health Care, Inc. and related entities agreed to pay $17 million to resolve allegations of paying unlawful kickbacks that were initiated by a whistleblower action under the False Claims Act.  The government alleged that Bayada purchased two home health care agencies from a company that owned retirement communities in order to induce referrals from the seller to Bayada.  The whistleblower, David Freedman, was the director of strategic growth for Bayada; he will receive more than $3 million as a whistleblower reward.  DOJ; USAO NJ

September 3, 2021

A number of South Carolina pain management clinics, drug testing laboratories and other entities associated with chiropractor Daniel McCollum have had default judgments entered against them ordering the payment of $140 million.  The defendant entities, Oaktree Medical Centre P.C., FirstChoice Healthcare P.C., Labsource LLC, Pain Management Associates entities, ProLab LLC, and ProCare Counseling Center LLC, were alleged to have provided illegal financial incentives to providers to induce their referrals of urine drug tests in violation of the Stark Law and the Anti-Kickback Statute, and to have submitted false claims to federal healthcare programs for medically unnecessary urine drug testing, steroid injections, opioid prescriptions, and lidocaine ointment prescriptions.  The settlement resolves claims against the entities brought in three separate qui tam actions Donna Rauch, Muriel Calhoun, Brandy Knight, Karen Mathewson and Tracy Hawkins, former employees of pain management clinics owned or operated by McCollum. The government continues to pursue claims against McCollum.  DOJ; USAO SC

September 3, 2021

The Kraft Heinz Company and two of its former executives will pay $62 million to resolve charges that between 2015 and 2018 the company falsely reported cost savings, including by recognizing unearned discounts from suppliers and maintaining false and misleading supplier contracts. In 2019, Kraft Heinz restated its financials, correcting a total of $208 million in improperly-recognized cost savings.  The SEC alleged that the company did not have effective internal accounting controls in its procurement division, and that former COO Eduardo Pelleissone and former Chief Procurement Officer Klaus Hoffman ignored red flags that expenses were not being accurately reported.  Pelleissone and Hoffman will pay civil penalties of $300,000 and $100,000, respectively.  SEC

September 2, 2021

Jonathan Dean Davis, the owner of for-profit trade school called Retail Ready Career Center, has agreed to forfeit over $72 million after being convicted of defrauding the U.S. Department of Veterans Affairs.  According to evidence presented at trial, Davis falsely certified that he was not personally facing any criminal or civil actions, and that his school was an established, financially-secure educational institution—neither of which were true.  The scheme unraveled after student veterans realized the HVAC training they received at the school was insufficient for entry-level jobs in the industry.  USAO NDTX
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