Government Enforcement Actions

November 1, 2023

XTO Energy Inc. has agreed to pay $16 million to resolve allegations of violating the False Claims Act.  In exchange for producing natural gas on federal and Native American lands, XTO was supposed to put the gas in marketable condition and pay royalties on the value of the gas produced.  However, over an 8 year period, XTO improperly deducted the costs of transporting carbon dioxide.  With this settlement, the Department of Interior has now recovered $25 million from energy companies who similarly withheld required royalties from the government.  DOJ

October 30, 2023

Nostrum Laboratories Inc. and its founder, Nirmal Mulye, Ph.D., have agreed to pay up to $50 million, with a minimum of $3.8 million, to resolve allegations of defrauding Medicaid in connection with one of their drugs.  As part of the settlement, Nostrum and Mulye admitted that they knowingly failed to pay required drug rebates to Medicaid, in violation of the False Claims Act, despite being notified by CMS that they should do so.  DOJ

October 24, 2023

AECOM, an architecture and engineering firm in Texas, has agreed to pay $11.8 million to resolve allegations of defrauding FEMA and violating the False Claims Act in connection with efforts to rebuild educational facilities damaged by Hurricane Katrina.  While serving as a technical assistance contractor for FEMA, AECOM allegedly helped applicants submit fraudulent requests for disaster assistance funds, resulting in some applicants receiving funds in excess of what was permitted.  The misconduct was revealed by whistleblower Robert Romero, who will receive a relator’s share of $2.4 million as part of the settlement.  DOJ

October 23, 2023

Ceres Global Ag Corp. has been ordered to pay $3 million to settle charges of attempting to manipulate the price of oats futures contracts in 2016 and 2017.  According to the CFTC, a former senior official directed employees to manipulate its short position in order to affect the futures price.  CFTC

October 18, 2023

For-profit Sollers College, its parent company, Sollers Inc., and its founder and president Siba Padhi have been ordered to cancel $3.4 million in student debt and pay $1.2 million in civil penalties for misrepresenting its job placements rates and relationships with prominent companies in order to lure students to the school.  Since 2018, Sollers claimed that 90% of its graduates were placed in jobs within 3 months of graduation, when in reality the number was as low as 52%.  Sollers also encouraged students into paying tuition with illegal income-sharing agreements, wherein students would pay the school a fixed percentage of their future income for about two years.  Nearly 400 students nationwide were affected by this misconduct, with more than 60 of them being residents of New Jersey.  NJ AG; FTC

October 18, 2023

The president of a California-based medical technology company has been sentenced to 8 years in prison and ordered to pay $24 million in restitution in the first COVID-related criminal securities fraud case charged by DOJ and the first COVID-related criminal healthcare fraud case brought to trial.  Among many things, Mark Schena of Arrayit Corporation was found to have taken advantage of the pandemic by claiming he and his company had developed a technology to test for just about any disease, including COVID, using a single drop of blood.  In doing so, Schena and Arrayit lied to investors to give them a false sense of credibility, paid illegal kickbacks to marketers to run deceptive plans about the accuracy of its tests, and submitted false claims to Medicare and private insurers for medically unnecessary allergy testing.  DOJ

October 17, 2023

Fintech company Chime Inc., d/b/a Sendwave, has been ordered to pay $1.5 million in fees and a $1.5 million penalty to the CFPB’s victim relief fund for violations of the CFPB’s Remittance Transfer Rule and the Electronic Fund Transfer Act.  According to the agency, Chime deceived consumers about the speed and cost of remittance transfers on its mobile app, forced consumers to waive their legal rights, failed to provide consumers with required disclosures or timely receipts, and failed to properly track, investigate, and resolve consumer disputes and errors.  CFPB

October 17, 2023

Healthcare clearinghouse Inmediata, which facilitates transactions between healthcare providers and insurers, has agreed to pay $1.4 million to 33 states in connection with a data breach that affected approximately 1.5 million consumers for nearly three years.  Despite being alerted to the data breach in 2019, Inmediata failed to notify consumers for over three months.  When it finally did send notice, the notices were misaddressed or unclear, leaving many consumers to believe the notices were fraudulent.  DE AG; NC AG

October 17, 2023

ACI Worldwide, a third-party payment processor for clients such as mortgage service provider Nationstar Mortgage (a/k/a Mr. Cooper), has agreed to pay $10 million to all 50 states for its role in a 2021 testing error that impacted 477,000 Mr. Cooper clients nationwide.  While testing out a platform being offered to Mr. Cooper clients, ACI accidentally submitted live consumer data into the ACH system, which caused ACI to erroneously withdraw $2.3 billion from consumer accounts through 1.4 million transactions, and consequently caused consumers to incur overdraft or insufficient funds fees.  A government investigation ultimately attributed this to ACI’s defective privacy and data security procedures and technical infrastructure.  CA AG; DE AG; PA AG; OR AG; VA AG

October 13, 2023

Avtar S. Dhillon, who chaired the boards of directors of four public companies, has been ordered to pay $10 million in connection with fraud schemes that defrauded investors worldwide of hundreds of millions of dollars.  Dhillon was allegedly complicit in schemes orchestrated by Frederick Sharp and seven other defendants that involved control persons of microcap companies illegally dumping their stock in U.S. markets.  SEC