Whistleblower Group

February 11, 2016

New York, in conjunction with members of a state and federal working group announced a $3.2 billion settlement with Morgan Stanley over the bank’s deceptive practices leading up to the financial crisis. The settlement includes $550 million – $400 million worth of consumer relief and $150 million in cash – that will be allocated to New York State. The resolution requires Morgan Stanley to provide significant community-level relief to New Yorkers, including loan reductions to help residents avoid foreclosure, and funds to spur the construction of more affordable housing. Additional resources will be dedicated to helping communities transform their code enforcement systems, invest in land banks, and purchase distressed properties to keep them out of the hands of predatory investors. NY

February 11, 2016

MoneyGram Payment Systems, Inc. a Dallas-based company, has agreed to pay the 49 participating states and the District of Columbia a total of $13 million to resolve an investigation that focused on complaints from persons who wired money to third parties engaged in fraud using MoneyGram’s wire transfer service. The settlement also calls for MoneyGram to maintain an anti-fraud program that is documented in writing. In addition to its required anti-fraud measures and monetary terms, the MoneyGram settlement provides for an independent third-party Settlement Administrator who will review MoneyGram records and send notices concerning restitution to all persons eligible to receive it under the settlement. NJ, MA

February 5, 2016

HSBC Bank USA agreed to pay $470 million settle charges of mortgage origination, servicing and foreclosure abuses.  According to the government, "the agreement is part of our ongoing effort to address root causes of the financial crisis."  The settlement parallels the $25 billion National Mortgage Settlement reached in February 2012 between the federal government, 49 state attorneys general and the District of Columbia’s attorney general and the five largest national mortgage servicers, as well as the $968 million settlement reached in June 2014 between those same federal and state partners and SunTrust Mortgage.  DOJ

February 4, 2016

Zurich-based Bank Julius Baer & Co. Ltd. agreed to pay $547 million to settle charges of conspiring with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide from the IRS billions of dollars in offshore accounts and evade U.S. taxes on the income earned in those accounts.  DOJ

February 3, 2016

Upstate New York construction company ING Civil, Inc. and three individuals -- ING owner Corey Ingerson; James Beaudoin, former president of Rexford Albany Municipal Supply Company, Inc. (RAMSCO); and former RAMSCO salesman John Leary -- agreed to pay $1,012,000 to resolve claims that they defrauded a government program designed to benefit women- and minority-owned contractors.  DOJ (NDNY)

February 2, 2016

Colorado-based construction management company MCC Construction Company agreed to pay $1,769,294 in criminal penalties and forfeiture for conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses.  According to court documents, MCC conspired with two companies that were eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that MCC would, illegally, perform all of the work.  In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011.  DOJ

February 2, 2016

New Jersey industrial pipe supply company American Pipe Bending and Fabrication Co. Inc. and its owner Andrew Martingano were sentenced to 32 months in prison and to pay a $150,000 criminal fine and $1.6 million in restitution for conspiring to commit fraud and pay bribes to a purchasing manager at Consolidated Edison of New York in return for the manager’s efforts to steer contracts to the company.  According to court documents, Martingano and others agreed to pay approximately $510,000 in cash bribes to James M. Woodason, a department manager of the Con Ed purchasing department.  In exchange, Woodason steered Con Ed industrial pipe supply contracts to American Pipe by secretly providing Martingano with confidential competitor bid information, thereby causing Con Ed to pay higher, non-competitive prices for materials.  DOJ

February 1, 2016

Florida-based military contractor Centerra Services International Inc. (formerly known as Wackenhut Services) agreed to pay $7.4 million to resolve allegations it violated the False Claims Act by double billing and inflating labor costs on its firefighting and fire protection services contract with the Army in Iraq.  According to the government, Wackenhut inflated its labor costs by billing the salaries of certain managers as direct costs when those salaries had already been charged as indirect costs.  The government further charged that Wackenhut artificially inflated its labor rate by counting its costs for holidays, vacation, sick leave, rest and recuperation and other variable labor costs twice in calculating the rate.  The allegations first arose in a whistleblower lawsuit filed by Gary W. Reno under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of $1,332,000 as his share from the government’s recovery.  Whistleblower Insider