Government Enforcement Actions

March 15, 2016

National retailer Lord & Taylor has agreed to settle FTC charges that it deceived consumers by paying for native advertisements, including a seemingly objective article in the online publication Nylon and a Nylon Instagram post, without disclosing that the posts actually were paid promotions for the company’s 2015 Design Lab clothing collection. FTC

March 14, 2016

The CFTC ordered Florida-based IBFX, Inc. to pay a $1 million penalty for failing to meet capital requirements, failing to report minimum net capital violations on time, supervisory failures, and violating a previous CFTC order.  CFTC

March 10, 2016

Two former derivatives traders at Rabobank Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) were sentenced to prison for manipulating the London Interbank Offered Rates (LIBOR) for the U.S. Dollar (USD) and Japanese Yen (JPY), benchmark interest rates to which trillions of dollars in interest rate contracts were tied.  Anthony Allen, the bank’s former global head of liquidity and finance in London, was sentenced to 24 months and Anthony Conti, a former senior trader on the bank’s money markets desk in London, was sentenced to 12 months.  DOJ

March 9, 2016

New York-based Bard College agreed to pay $4 million to resolve allegations it violated the False Claims Act by receiving funds under the Department of Education’s Teacher Quality Partnership Grant Program despite failing to comply with the conditions of the grant.  The settlement also resolves allegations that Bard awarded, disbursed, and received Title IV student loan funds at campus locations before such locations were accredited or before providing notice of such locations to the Department of Education in violation of applicable regulations and Bard’s Title IV Program Participation Agreements with the agency.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by two former students of Bard’s Master of Arts in Teaching Program at Paramount Bard Academy in Delano, California.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government's recovery.  DOJ (EDCA)

March 8, 2016

21st Century Oncology Inc., the nation’s largest physician led integrated cancer care provider, and its wholly owned subsidiary South Florida Radiation Oncology agreed to pay $34.7 million to settle charges they violated the False Claims Act by performing and billing for cancer care procedures that were not medically necessary or properly provided. According to the government, the companies improperly billed for Gamma function procedures — which measure radiation doses — under circumstances where there was no medically appropriate purpose for the treatment.  The allegations leading to the settlement originated in a whistleblower lawsuit filed by Joseph Ting, a former physicist at South Florida Radiation Oncology, under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of more than $7 million from the proceeds of the government’s recovery.  This settlement follows on the heels of the $19.75 million settlement 21st Century Oncology Inc. subsidiary 21st Century Oncology LLC agreed to pay in December to settle charges of billing for medically unnecessary laboratory urine tests and for paying kickbacks to encourage physicians to order the tests.  Whistleblower Insider

March 7, 2016

Ohio-based defense contractor ArmorSource, LLC agreed to pay $3 million to settle charges of violating the False Claims Act in connection with a contract to provide combat helmets to the U.S. Army.  According to the government, ArmorSource delivered helmets to the Army that were manufactured and tested using methods that did not conform to contract requirements, that failed to meet contract performance standards and that were eventually recalled after several lots failed ballistic safety tests.  ArmorSource had subcontracted the manufacturing of the helmets to Federal Prison Industries, Inc. (FPI), which operates under the trade name UNICOR.  The allegations originated in a whistleblower lawsuit filed by FPI employees Melessa Ponzio and Sharon Clubb under the qui tam provisions of the False Claims Act.  They will receive a whistleblower award of $450,000 from the proceeds of the government's recovery.  DOJ

March 7, 2016

Florida businessman David Brock Lovelace was sentenced to 174 months in prison and to pay $2,512,460 in restitution for his role in a multimillion-dollar health care fraud and money laundering scheme.  According to evidence presented at trial, Lovelace and co-conspirators used Cornerstone Health Specialists, Summit Health Specialists and Coastal Health Specialists, three purported medical clinics in Florida, to submit to Medicare more than $12 million in fraudulent claims for radiology, audiology, cardiology and neurology services not rendered by physicians, secured by kickbacks or the subject of forged or falsified documents.  DOJ

March 7, 2016

Philip Joseph Rivkin (aka Felipe Poitan Arriaga) was sentenced to 121 months in prison and to pay more than $87 million in restitution and forfeit $51 million for generating and selling fraudulent biodiesel credits in the federal renewable fuel program through his companies Green Diesel LLC, Fuel Streamers Inc. and Petro Constructors LLC.  DOJ

March 14, 2016

A New York tax return preparer pleaded guilty in the U.S. District Court for the Eastern District of New York in Central Islip, New York, to one count of aiding and assisting in the preparation of a false tax return. According to court documents, Thelma Rodriguez-Garden, 54, owned and operated a tax preparation business called Garden Insurance Agency Corporation, which was located in Bay Shore, New York. Rodriguez-Garden prepared false individual income tax returns for clients of Garden Insurance Agency for tax years 2008 through 2011. On the tax returns, Rodriguez-Garden included grossly inflated or wholly fictitious itemized deductions for unreimbursed employee expenses. The information to which Rodriguez-Garden pleaded guilty alleges that she filed 47 false tax returns that caused a loss to the government of more than $100,000. DOJ

March 11, 2016

Two Subway franchise managers and a gas station manager, all residents of Virginia, pleaded guilty to aiding and assisting in the filing of false tax returns. As part of their guilty pleas, the defendants admitted that they did not deposit all of the Subway franchises’ or the gas station’s gross receipts into the corporate or partnership bank accounts. Instead, they retained a portion of the gross receipts for their personal benefit. Additionally, two of the defendants admitted that they maintained detailed records of the Subway franchises’ and gas station’s total sales, the amounts deposited into the bank accounts and the amounts distributed to each of them for their personal benefit, and that they later destroyed those records. DOJ