Whistleblower Group

May 23, 2022

Registered investment advisor BNY Mellon Investment Adviser agreed to pay a $1.5 million penalty to resolve allegations that it misstated or omitted material facts with respect to investment decisions for certain mutual funds in managed.  Specifically, the SEC alleged that BNY Mellon represented or implied that all investments in the funds had undergone a review with respect to Environmental, Social, and Governance (“ESG”) considerations, even though that was not always the case.  SEC

May 20, 2022

Wells Fargo Advisors, which is a registered broker-dealer and investment advisor, agreed to pay $7 million to resolve allegations that it had an inadequate anti-money laundering system.  As a result, the SEC alleged, Wells Fargo did not file timely suspicious activity reports including with respect to foreign wire transfers to or from its customers’ brokerage accounts.  SEC

May 19, 2022

Retailer H&M will pay $36 million to New York State to resolve claims that the company violated a New York law which requires gift card issuers to turn over unused balances on gift cards to the state’s Abandoned Property Fund after five years of inactivity.  The retailer repeatedly lied to the state about its failure to transfer the unused gift card balances as required, and falsely told the state that an out-of-state company was handling its gift cards business. A whistleblower who filed a lawsuit under the New York False Claims Act will receive $7.74 million for bringing H&M’s misconduct to light.  NY

May 19, 2022

Healthcare testing company VirtuOx, Inc. agreed to pay $3.15 million to resolve claims brought in an action initiated by a whistleblower alleging that falsely billed Medicare for pulse oximetry testing.  VirtuOx allegedly reported San Francisco as the location for overnight pulse oximetry testing when, in fact, no services were performed at that location, but that location resulted in a higher Medicare reimbursement.  In addition, VirtuOx allegedly billed Medicare for both oxygen “spot checks” and overnight pulse oximetry testing, when only the overnight testing was performed.  The whistleblower, Amber Watt, will receive an award of $630,000.  USAO SD FL

May 19, 2022

Sohrab “Sam” Sharma, Robert Farkas, and Raymond Trapani will disgorge over $40 million for raising more than $32 million from investors in their unregistered ICO of “CTR tokens” through their controlled entity, Centra Tech Inc. The fraudsters made material misrepresentations in their marketing of the tokens, including claiming partnerships with Visa, MasterCard, and The Bancorp; created fake executive bios; misrepresented the company’s viability; and manipulated trading in the tokens to generate interest. The three defendants have been sentenced to imprisonment in addition to the financial penalties levied. SEC

May 18, 2022

Pat Truglia will spend 120 months in prison, forfeit over $9.4 million, and will pay restitution of $33.7 million for conspiring to defraud Medicare, TRICARE, and CHAMPVA, among others, of approximately $50 million through their fraudulent billing scheme. The scheme involved offering, paying, soliciting, and receiving kickback for durable medical equipment—in this case, braces. Truglia and his conspirators obtained DME orders for Medicare and other federal healthcare program beneficiaries by running multiple call centers, which paid kickbacks and bribes to telemedicine companies, who then paid doctors to write medically unnecessary orders. The orders were filled by Truglia’s companies, who then fraudulently billed the healthcare programs. USAO NJ

May 18, 2022

Seven companies in South Korea have agreed to a joint settlement of $3.1 million to resolve allegations that they conspired to suppress and eliminate competition in bidding on 15 contracts for construction and engineering work on U.S. military bases in South Korea awarded by the U.S. Army Corps of Engineers between 2016 and 2019.  The government alleged that as a result of the bid-rigging by the companies, Korea Engineering Consultants Corporation, Yul Lim Construction Co. Ltd., Shin Woo Construction & Industrial Co. Ltd., Seongbo Const. Ind. Co. Ltd., Wooseok Construction Co. Ltd., Yuil Engineering and Construction Co., and Seokwang Development Co. Ltd., the government paid substantially more for services performed under the contracts than it otherwise would have.  DOJ

May 18, 2022

Peter Bolos and Michael Palso, owners of Synergy Pharmacy, were sentenced to 14 years and 33 months in prison, respectively, and each will pay $24.6 million in restitution for defrauding pharmacy benefit managers into authorizing millions of dollars in claims paid to pharmacies controlled by the defendants. Bolos will forfeit an additional $2.5 million. The conspiracy involved cold-calling patients and deceiving them into accepting certain drugs (i.e., pain creams, scar creams, and vitamins) and providing their personal insurance information to receive them. The scheme impacted both private and public insurers, including Medicaid and TRICARE. DOJ, USAO EDTN

May 17, 2022

R360 LLC and its owner, Steven Doumar, were hit with a $3.8 million civil penalty judgment under the Opioid Addiction Recovery Fraud Prevention Act of 2018, for deceiving people seeking addiction treatment. The case, a first for the FTC under the Act, alleges that R360 made misrepresentations in its television ads for its “R360 Network,” comprised of supposed addiction treatment and recovery specialists. R360 and Doumar touted a rigorous evaluation process for its service providers, to meet the customers’ individualized needs. In fact, Doumar was the one responsible for assessing and selecting the treatment centers, even though he had no expertise or education in the field. The FTC also secured an order prohibiting Doumar from making similar misrepresentations going forward. FTC

May 17, 2022

Allianz Global Investors U.S. LLC pleaded guilty to securities fraud and agreed to pay a criminal fine of $2.3 billion, an SEC penalty of $675 million, and over $5 billion in disgorgement and restitution to victims.  Three former AGI senior portfolio managers, Gregoire Tournant, Trevor Taylor, and Stephen Bond-Nelson, also pleaded guilty to related charges and will be sentenced at a later date.  As part of its plea, AGI admitted that between 2014 and 2020, AGI and the individual defendants made false and misleading statements to current and prospective investors in AGI’s Structured Alpha Funds which understated downside risks and overstated the level of independent risk oversight over the funds.  While the funds promised risk management and hedging, the actual investment strategy prioritized returns over risk management, and the promised hedging positions were not purchased.  To conceal losses and understate the magnitude of the actual risks, defendants fraudulently altered numerous financial reports and other information provided to investors.  The scheme was exposed when the funds experienced billions in losses during the 2020 COVID-related market volatility. With its guilty plea, AGI US is disqualified from providing advisory services to U.S.-registered investment funds for the next ten years, and will exit the business of conducting these fund services.  SEC; DOJ; SDNY