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Government Enforcement Actions

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Page 17 of 533

June 26, 2023

U.S.-based citizens Ronald Flynn and Richard Marchitto, their U.S.-based company Vuuzle Media Corp., and UAE-based company Vuuzle Media Corp Limited have been ordered to pay over $26 million in civil monetary penalties, and another $26 million in disgorgement and prejudgment interest, after they were found to have fraudulently raised over $25 million through high pressure sales tactics.  Using a boiler room of salespeople based largely in the Philippines, the defendants misled victims into believing Vuuzle was a legitimate and profitable company, when in fact, it was not, and investor funds were instead used on Flynn and Marchitto’s personal and business expenses.  SEC

Tagged in: Financial and Investment Fraud, Misrepresentations,

June 26, 2023

In the largest ever Post-9/11 GI Bill fraud case, co-conspirators Michael Bostock, Eric Bostock, and Philip Abod, through their VA-approved technical training school, California Technical Academy, defrauded the federal government out of nearly $105 million by making false and fraudulent representation to the VA. More specifically, from January 2012 through June 2022, the co-conspirators submitted falsified course completion records for enrolled veterans, including approved courses of study, class attendance, and grades. To conceal their fraud, they falsified veterans’ contact information so that when regulators called veteran-students to verify information, one of the three co-conspirators answered the line instead. DOJ

Tagged in: Education Fraud, Government Programs Fraud,

June 21, 2023

Audit firm Marcum LLP has agreed to pay $10 million after an SEC investigation and order found systemic quality control failures in the company’s audit work.  Following an explosion of SPAC clients in the past couple years, Marcum tripled its number of clients, but the rapidly increased workload revealed the company’s failures to design, implement, and monitor a quality control system.  As a result, about 25-50% of audits reviewed in connection with the investigation were found to violate auditing standards.  SEC

Tagged in: Accounting Fraud,

June 21, 2023

Skilled nursing facility Alta Vista Healthcare & Wellness Centre and its management company Rockport Healthcare Services have agreed to pay $3.8 million to resolve allegations that it paid kickbacks to physicians to induce referrals of Medicare and Medicaid beneficiaries to its center.  The violations of the federal Anti-Kickback Statute, federal False Claims Act, and California False Claims Act were uncovered during a government investigation, and showed illegal kickbacks in the form of cash, gifts, and salaries paid from 2009 through 2019.  CA AG; DOJ

Tagged in: Anti-Kickback and Stark, FCA Federal, FCA State, Healthcare Fraud, Medicaid, Medicare, SNF,

June 20, 2023

Insight Venture Management LLC has agreed to pay $1.5 million in penalties and over $800,000 in disgorgement and prejudgment interest to the SEC to settle charges that it charged excess management fees and failed to disclose a conflict of interest to investors.  As a result of these failures, investors were unaware that Insight was able to manipulate the calculation of its management fees.  SEC

Tagged in: Financial and Investment Fraud,

June 16, 2023

Pacific Investment Management Company LLC (PIMCO) has agreed to pay $9 million to settle two SEC enforcement actions.  In the first action, PIMCO was found to have failed to disclose material information to investors concerning the use of interest rate swaps by one of its funds, and the impact those swaps had on the funds’ dividend.  In the second action, PIMCO was found to have failed to comply with a fund’s agreement to waive approximately $27 million in advisory fees between 2011 and 2017, and maintain adequate policies and procedures concerning advisory fee calculations and waivers until 2018.  SEC

Tagged in: Financial and Investment Fraud,

June 16, 2023

Convertible note dealer, BHP Capital NY, Inc., and its managing member, Bryan Pantofel, have agreed to pay more than $2.5 million and surrender unregistered securities for cancellation in order to settle charges of failing to register with the SEC as securities dealers.  The defendants allegedly operated as an unregistered dealer—including purchasing notes from microcap issuers, converting the notes into four billion shares of stock, and selling the stocks—from 2017 to 2022.  SEC

Tagged in: Financial and Investment Fraud,

June 15, 2023

Two compounding pharmacies, Smart Pharmacy, Inc. and SP2, LLC, and their owner, Gregory Balotin, have agreed to pay at least $7.4 million to resolve two qui tam lawsuits by whistleblowers Amy Sanchez and Ashok Kohli, both former employees of Smart Pharmacy.  According to the suits, in order to increase orders for expensive compounded pain creams, the pharmacy routinely waived mandatory patient co-payments for them, and in order to boost reimbursements from Medicare and TRICARE, it added the antipsychotic drug aripiprazole to the topical creams.  DOJ

Tagged in: Compounding Pharmacy Fraud, FCA Federal, Healthcare Fraud, Medicare, Other Government Health Programs, Whistleblower Case,

June 15, 2023

Wisconsin woman Kay Yang and her companies AK Equity Group LLC and Xapphire LLC have agreed to pay almost $13.7 million in restitution and over $10.4 million in civil monetary penalty in connection with a fraudulent scheme targeting the Hmong community.  Yang’s husband, Chao Yang, was also ordered to pay $1.42 million in disgorgement.  From 2017 until the pandemic hit in March 2020, the defendants solicited and received at least $15.7 million from 67 victim individuals or entities, many from the Hmong community.  The funds were intended for retail forex transactions, but the defendants misappropriated at least $4.8 million.  Under the settlement order, there is a permanent injunction against Kay Yang and her companies from participating in commodity exchange.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets,

June 15, 2023

Online intimate apparel retailer AdoreMe, Inc. has agreed to pay $2.35 million to settle allegations by 31 states and the District of Columbia that it deceptively marketed a discount membership program and made it difficult for consumers who bought it to cancel it.  Consumers were charged about $40 a month to be in the program, but Adore Me failed to properly disclose the amount of the monthly charge, that discounts were limited time only, and that the accrued value would be eliminated upon cancellation of the membership.  NC AG; PA AG

Tagged in: Misrepresentations,

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