Government Enforcement Actions

May 31, 2023

For compromising its customers’ privacy, Ring will pay $5.8 million in customer refunds and implement a mandated privacy and security program under a proposed order secured by the FTC. Rather than providing the security promised to its customers, Ring deceived customers by failing to restrict access to its customers’ videos, without consent, using them to train algorithms, and failing to implement security safeguards. Ring’s extensive failures enabled hacking, harassment, spying, and, in at least one case, a Ring employee viewed thousands of video recordings belonging to female users of Ring cameras that surveilled intimate spaces in their home. Ring took no steps until January 2018 to adequately notify customers of its security failures. FTC

May 30, 2023

The former head of Wells Fargo’s Community Bank, Carrie Tolstedt, has agreed to pay a $3 million penalty to settle charges of misleading investors about its financial success.  Over a two-year period, Tolstedt publicly and repeatedly touted a metric used by Wells Fargo to measure financial success, even though she knew it did not accurately track accounts or products used or needed by customers.  In addition to the penalty, Tolstedt will pay almost $1.5 million in disgorgement and over $400,000 in pre-judgment interest.  The funds will be combined with prior payments of $500 million by Wells Fargo and $2.5 million by its former CEO and Chairman, John Stumpf, and will be distributed to harmed investors.  SEC

May 30, 2023

Former Coinbase manager, Ishan Wahi, and his brother, Nikhil Wahi, have been sentenced to 2 years and 10 months in prison respectively and ordered to forfeit cryptocurrency and cash in order to resolve civil and criminal charges of insider trading.  As part of his position at Coinbase, Ishan helped coordinate public listing announcements for crypto assets, at least nine of which were crypto securities.  In violation of Coinbase’s rules as well as federal law, Ishan tipped his brother Nikhil and friend Sameer Ramani off to the assets’ release, allowing them to purchase them and sell them for a profit.  SEC

May 25, 2023

Vascular surgeon Vasso Godiali of Michigan has been ordered to pay $19.5 million in restitution and serve over 6 years in prison to resolve criminal allegations of defrauding Medicare, Medicaid, and Blue Cross/Blue Shield of Michigan. Godiali also agreed to pay up to $43.4 million to resolve civil allegations of violating the False Claims Act.  Although Godiali allegedly began submitting false claims in 2009, his misconduct did not come to light until a 2015 qui tam suit by Innovative Solutions Consulting LLC, which alleged Godiali billed government programs for arterial thrombectomies and stent placements that were not medically necessary and not actually performed.  Additionally, Godiali allegedly falsified medical records to justify the procedures, and improperly used a modifier code to increase his reimbursements. DOJ

May 23, 2023

Rhode Island-based Citizens Bank, one of the 15 largest banks in the country, has agreed to pay a $9 million fine to the CFPB’s victim relief fund in order to resolve allegations of violating consumer financial protection laws.  Citizens Bank allegedly failed to inform consumers of the status of disputed credit card charges, failed to investigate claims of unauthorized charges, and failed to issue refunds for fees arising from the charges.  CFPB

May 18, 2023

Google has agreed to pay almost $40 million to the State of Washington for misleading consumers about its location tracking practices.  The company had led consumers to believe they had control over their location data, but in reality, regardless of consumers’ stated preferences, the company collected, stored, and profited from consumer location data.  AG WA

May 17, 2023

BP Products North America Inc. entered a record-setting Clean Air Act Settlement with the DOJ and EPA, agreeing to reduce benzene, other hazardous air pollutants (HAP), and other volatile organic compounds emitted from their Whiting Refinery in Indiana. In addition to spending an estimated $197 million in capital investments to improve air quality surrounding the refinery, BPP will pay civil and stipulated penalties of $40 million, invest another $5 million in a supplemental environmental project to reduce diesel emissions in the surrounding communities, and install 10 air pollutant monitoring stations outside the refinery’s fencing. This is the largest stationary source settlement ever secured under the Clean Air Act. DOJ

May 17, 2023

EyeMed Vision Center has entered into a settlement agreement with the states of Florida, New Jersey, Oregon, and Pennsylvania to resolve allegations of compromising the personal and medical information of about 2.1 million people in a data breach in June 2020.  In addition to paying $2.5 million, Eyemed has agreed to implement additional security measures to protect the privacy of its customers, including reporting all data breaches immediately.  NJ AG; OR AG

May 16, 2023

Randall Judge Phelan, a former Tribal government official, will spend 5 years in prison for soliciting bribes and kickbacks from a contractor providing construction services on the Fort Berthold Indian Reservation in North Dakota, the home of the Mandan, Hidatsa, and Arikara Nation. For approximately 8 years, from 2013 to 2020, Phelan solicited and accepted bribes and kickbacks totaling more than $645,000. In exchange, Phelan helped the contractor’s business by awarding millions of dollars in contracts, fabricating bids, advocating for the contractor with other Tribal officials, and facilitating the submission and payment of fraudulent invoices. DOJ, USAO ND

May 12, 2023

HSBC Bank USA, N.A. has been ordered to pay $45 million to settle charges involving a number of violations of the Commodity Exchange Act.  Over an eight-year period beginning in 2012, HSBC traders systematically structured their trading to move the market prices of issuer swaps in a direction that was favorable to HSBC and unfavorable to its counterparties.  Over several months beginning in 2015, HSBC’s supervisor for its U.S. dollar swap desk repeatedly engaged in spoofing.  Lastly, over a couple months beginning in 2020, HSBC failed to make or keep recordings of mobile phone calls involving swap transactions.  CFTC