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Proposed Changes to NY FCA Tax Provisions Rattle Potential Tax Fraudsters

Posted  10/16/20
Albany New York Capitol Complex buildings against blue sky
New York is one of several states that has provisions in its state False Claims Act (“NY FCA”) allowing whistleblower (or qui tam) suits for violations of the state’s tax laws. On August 3, 2020 (Senate) and October 7, 2020 (Assembly), the New York state legislature, introduced bills proposing revisions to the NY FCA’s tax provisions.

The Proposed Legislation

The Senate bill’s accompanying memorandum...

JPMorgan Chase Pays nearly $1 Billion in Fines for Market Manipulation of Precious Metals and U.S. Treasuries

Posted  10/16/20
By Carolina Gonzalez
investors on computers for market trading
JPMorgan Chase & Co. agreed to pay over $955 million to settle civil and criminal charges over a scheme involving fake trades in precious metals and U.S. treasuries designed to manipulate the market in an effort to enhance the bank’s profits and cut losses. The multi-agency enforcement action was brought by the Commodity Futures Trading Commission (CFTC), the Department of Justice (DOJ) and the Securities and...

Catch of the Week: Texas-Sized Indictment for $2 Billion Tax Fraud

Posted  10/16/20
texas longhorn bull standing in open grass field
Everything sure is bigger in Texas.  Bigger hair, bigger churches, bigger stadiums, bigger ranches, and bigger sky.  Oh, and as of this week, bigger billionaires committing bigger frauds! On Thursday, federal prosecutors in California charged Robert T. Brockman, a Houston tech executive, with hiding $2 billion in income from the Internal Revenue Service.  True to Texas form, David L. Anderson, the U.S. attorney...

October 15, 2020

Seventeen defendants who collectively received nearly $900,000 in improper crop insurance indemnity payments, have agreed repay the United States.  Defendants admitted that they submitted false claims for payments to federally-backed multi-peril crop insurance policies, including by falsely stating that the tobacco crops in question had been damaged, inflating crop loss amounts, and submitted falsified documentation about the quality of the tobacco crop.  USAO ED KY

October 15, 2020

Robert F. Smith, who formed and beneficially owned Belize entity the Excelsior Trust and Nevis entity Flash Holdings, has entered into a non-prosecution agreement, agreeing to pay $139 million, to resolve claims that between 2000 and 2015 he unlawfully used the offshore entities and their offshore bank accounts to conceal income earned by him on private equity investments and evade millions in taxes.  Using the offshore trust accounts, Smith willfully did not report to the IRS over $200 million of partnership income.  In addition, he unlawfully failed to report his ownership of foreign bank accounts in BVI and Switzerland.  The $139 million settlement consists of $56 million in taxes and penalties on unreported income and $82 million in penalties stemming from his failure to report his offshore bank accounts.  In addition, Smith agreed to abandon a $182 million refund claim based on alleged charitable contributions in 2018 and 2019.  DOJ; USAO ND Cal

October 15, 2020

The SEC will pay an unidentified whistleblower $800,000.  According to the SEC, the whistleblower provided information and detailed analysis that caused the agency to open an investigation that led to two successful SEC enforcement actions.  SEC

Cross-Border Investigations

Posted  10/15/20
CC Attorney Mary Inman
On Oct. 15, Mary Inman spoke on a panel on Cross-Border Investigations at the 2020 Double Exposure Investigative Film Festival & Summit (virtual).  Click here to read more.

October 14, 2020

Michael Allen Worley of Baton Rouge, Louisiana, was sentenced to 12 years in prison following his plea of guilty on charges including bank fraud.  Worley admitted that between 2014 and 2018 he fraudulently obtained more than $40 million in loans and investments from banks and private equity firms for himself and his businesses.  Worley’s fraud included false statements that inflated his assets, understated and omitted his liabilities, misrepresented his income, and misrepresented the intended use of loan proceeds. Worley was also ordered to pay $15.75 million in restitution to his victims.  USAO MD LA

October 14, 2020

Medical device maker Merit Medical Systems Inc. will pay $18 million to resolve claims first brought by a whistleblower under the False Claims Act that the company paid unlawful kickbacks to doctors and hospitals to induce them to use MMSI’s EmboSphere and QuadraSphere devices for embolization procedures.  MMSI was alleged to have offered hospitals and providers with millions of dollars in free advertising assistance, “educational” grants, and other services based on the providers’ past sales and to induce future sales.  The whistleblower, Charles J. Wolf, M.D., who will receive $2.65 million, was the Chief Compliance Officer for the company; according to DOJ, he repeatedly warned MMSI that its practices violated the Anti-Kickback Statue.  DOJ; USAO NJ

October 14, 2020

Brazilian investment company J&F Investimentos S.A. and is meat producer subsidiary, JBS S.A., along with their principles Joesley Batista and Wesley Batista have entered into a settlement agreement with the SEC and DOJ, agreeing to pay nearly $283 million in fines and disgorgement and plead guilty to resolve charges under the FCPA arising from a scheme to bribe government officials in Brazil in order to obtain financing and other benefits for the companies.  Defendants paid approximately $180 million in bribes to obtain hundreds of millions of dollars in financing from Brazilian state-owned and state-controlled banks BNDES and Caixa, as well as to facilitate JBS’s acquisition of U.S. company Pilgrim’s Pride Corporation.  The bribes were allegedly paid from U.S. assets, including JBS operating accounts that also contained Pilgrim’s funds.  The SEC further charged that the Batistas, who exerted significant control over Pilgrim’s, caused it have an inadequate system of internal controls and accurate books and records.  The criminal fine of $256 million will be discounted up to 50% to credit defendants for a settlement with Brazilian authorities valued at $1.9 billion; the SEC agreement provides for a payment of $27 million in disgorgement and interest. Defendants also agreed to cooperate any ongoing or further investigations and implement an enhanced compliance program. DOJ; SEC; USAO EDNY
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