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September 19, 2019

Following his conviction at trial in September 2018, Azam Doost, the owner of a marble mining company in Afghanistan, has been sentenced to 4.5 years in prison, and ordered to pay $8.9 million in forfeiture and restitution to the government.  Doost had been convicted for his role in fraudulently obtaining and failing to repay a $15.8 million loan from the Overseas Private Investment Corporation, a U.S. government agency, to Equity Capital Mining LLC, which Doost owned at the time.  DOJ

September 19, 2019

Following an earlier criminal plea, Hyundai Construction Equipment Americas Inc. and Hyundai Heavy Industries Co. Ltd have agreed to pay a $47 million civil penalty to resolve allegations that the company violated Title II of the Clean Air Act by marketing and selling heavy construction vehicles that did not comply with applicable emission standards.  Hyundai had stockpiled diesel engines that met outdated standards, including standards for nitrogen oxides (NOx) and particulate matter (PM), then illegally imported the non-compliant equipment to the U.S.  The EPA opened an investigation into Hyundai after receiving a whistleblower tip in 2015.  DOJ

September 18, 2019

Florida-based compounding pharmacy Diabetic Care Rx LLC, also known as Patient Care America, together with two of its executives, CEO Patrick Smith and VP of Operations Matthew Smith, and the private equity firm Riordan, Lewis & Haden Inc., will pay $21.36 million to resolve a case brought by two whistleblowers under the False Claims Act alleging that they paid unlawful kickbacks to secure referrals for patients covered by TRICARE, the federal healthcare program that covers military members and their families.  The pharmacy paid patient recruiters to target military members and their families for the prescription of compounded creams and vitamins formulated to ensure the highest possible reimbursement from TRICARE.  The marketers in turn paid doctors who issued the prescriptions, often without seeing or even speaking to the purported patients.  In addition, the pharmacy and marketing company often covered patient copayments through a sham charitable organization affiliated with the marketing company.  Private equity investor RLH was alleged to have known about and agreed to the kickback scheme.  Whistleblowers Marisela Medrano and Ada Lopez were, respectively, the former Director of Marketing and the Reimbursement Services Manager of PCA.  They will receive a yet-to-be-determined share of the U.S. recovery.  DOJ; SD FL

September 13, 2019

United Parcel Service will pay $8.4 million to resolve allegations that it overcharged federal agencies purchasing UPS ground delivery services under a General Services Administration Multiple Award Schedule contract by failing to adhere to the contract's Price Reductions Clause.  UPS was alleged to have offered lower prices to other customers without offering those same prices to the U.S., resulting in the government overpaying for package deliveries.  DOJ

September 13, 2019

Medical device manufacturer Avalign Technologies, Inc. and its subsidiary Instrumed International, Inc., will pay $9.5 million to resolve allegations that the companies unlawfully marketed devices not properly approved by the FDA for use in spinal surgeries, circumcisions, and other medical procedures, with knowledge that the devices did not have the required FDA approvals.  The allegations were originally made in False Claims Act action brought by a whistleblower.  USAO SDNY

September 12, 2019

Following his conviction earlier this year, Philip Esformes was sentenced to 20 years in prison for his role in orchestrating a Medicare and Medicaid fraud scheme through his network of assisted living and skilled nursing facilities.  Esformes bribed physicians to admit patients, then provided them with inadequate, inappropriate, or unnecessary services.  To ensure his facilities maintained state licenses, he bribed Florida state regulators.  DOJ; USAO SD FL

September 12, 2019

Performance Diesel Inc. will pay a civil penalty of $1.1 million and terminate its sale of aftermarket products meant to defeat the emissions control systems of heavy-duty diesel engines.  The settlement with DOJ and the EPA resolves allegations that the company violated the Clean Air Act in manufacturing, selling, and installing illegal defeat devices. DOJ

September 12, 2019

Futures commission merchant Phillip Capital Inc. will pay $1.5 million to settle CFTC charges that its email system was breached and customer information accessed, with cyber criminals withdrawing $1 million in PCI customer funds.  The CFTC found that PCI failed to disclose the breach to its customers in a timely manner, and failed to have adequate cybersecurity policies and employee supervision.  CFTC

September 12, 2019

Italian textile company Miroglio Textile S.R.L. and its U.S. affiliate Miroglio Textiles USA, Inc. will pay $650,000 to resolve charges brought in a whistleblower action alleging that the companies fraudulently reduced their obligation to pay customs duties on fabrics, decals, and other products sold by the Italian company to U.S. customers. Without any bona fide business justification, the companies reported the imports as sales from the Italian company to the U.S. affiliate at discounted prices, and used those discounted prices as the basis to calculate duties.  These sales were shams, and Miroglio misrepresented their nature, and the relationship between the entities, in certifications to Customs & Border Protection.  USAO SDNY

September 10, 2019

Merrill Lynch, Pierce, Fenner & Smith Inc. has been ordered to a pay the CFTC a $300,000 civil monetary penalty for failing to promptly produce records in response to routine regulatory requests and for failing to supervise its employees to ensure statutory and regulatory obligations were met.  Merrill’s delay substantially stalled a CFTC investigation.  CFTC
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