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Other Federal Enforcement Actions

Numerous federal agencies have authority to institute enforcement proceedings against wrongdoers.  These agencies include:

  • The Department of the Treasury and its divisions including the Financial Crimes Enforcement Network (FINCEN), which is responsible for safeguarding the U.S. financial system from illicit use and money laundering including through enforcement of the Bank Secrecy Act, and the Office of Foreign Assets Control (OFAC), which enforces economic and trade sanctions. Whistleblowers with knowledge of violations of the Bank Secrecy Act can submit a claim under the Anti-Money Laundering Whistleblower Program.  Violations of other laws enforced by the Department of Treasury may give rise to claims under different whistleblower reward programs.
  • The Federal Trade Commission (FTC), which is charged with preventing anticompetitive, deceptive, and unfair business practices. The FTC can bring enforcement actions under U.S. antitrust laws and to stop unfair, deceptive and fraudulent business practices. The FTC does not have any authority to pay financial rewards to whistleblowers; however, conduct that is regulated by the FTC may also give rise to a claim under a different whistleblower reward program.
  • The Consumer Financial Protection Bureau (CFPB), created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which regulates the offering and provision of consumer financial products or services under the federal consumer financial laws, and has the authority to bring enforcement actions against financial service providers. While the CFPB accepts tips from whistleblowers, and applicable laws offer whistleblowers protection from retaliation, there is currently no provision for CFPB whistleblowers to receive financial rewards. However, conduct that is regulated by the CFPB may also give rise to a claim under a different whistleblower reward program.
  • The Environmental Protection Agency, which enforces federal environmental laws and regulations. The EPA does not currently have any authority to pay financial rewards to whistleblowers; however, conduct that is regulated by the EPA may also give rise to a claim under a different whistleblower reward program, and a number of federal environmental laws protect government or private employees reporting environmental violations under the statutes from retaliation.

Below are summaries of recent settlements and successful enforcement actions involving these agencies. If you believe you have information about fraud which could give rise to a claim under a whistleblower reward program, please contact us to speak with one of our experienced whistleblower attorneys.

August 12, 2021

United Behavioral Health and United Healthcare Insurance Co. will pay $2 million in penalties to resolve claims that the insurer unlawfully denied coverage for mental health and substance use disorder treatment in violation of laws that require health insurance plans to cover mental health and substance use disorder treatment the same way they cover physical health treatment. New York and the federal Department of Labor alleged that United reduced allowed amounts for mental health and substance abuse services provided by non-physicians, but not for medical treatments provided by non-physicians, and conducting utilization reviews for psychotherapy that were not conducted at the same rate for medical/surgical services.  In addition the penalty, United agreed to pay $13.6 million to affected participants and beneficiaries.  DOL; NY

August 10, 2021

Five companies that operate the BitMEX cryptocurrency platform will pay a total of $100 million to resolve claims that the platform operated a facility to trade or process swaps without being approved as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF), operated as an unregistered futures commission merchant (FCM), and failed to implement anti-money laundering procedures.  HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited jointly operated BitMEX, which offered leveraged trading of cryptocurrency derivatives, including to customers in the U.S.  BitMEX acted as a counterparty in certain transactions, and accepted bitcoin to margin digital asset derivative transactions.  BitMEX allowed customers to access its platform and conduct derivative trading without verifying customer identity beyond the collection of an email address, and failed to report suspicious activity as required. As part of the settlement, BitMEX certified that it terminated its U.S. business operations, barred access to the platform by U.S. customers, and had undertaken verification procedures for existing customers.  $50 million of the $100 million penalty will be paid to the CFTC, with $30 million of the remainder paid immediately to FinCEN, and an additional $20 million to FinCEN suspended pending defendants’ undertaking of specific compliance procedures.  CFTC; FinCEN

August 5, 2021

Pipeline company Summit Midstream Partners LLC, Meadowlark Midstream Company LLC, and Summit Operating Services Company LLC, have agreed to pay $35 million in fines and penalties to settle criminal and civil cases arising from the discharge of 29 million gallons of “produced water” – a waste product of hydraulic fracturing – from Summit’s pipeline near Williston, North Dakota, over the course of nearly five months in 2014-2015.  As part of the settlement, Summit admitted that it operated the pipeline without a reliable leak detection system and made incomplete and misleading reports to federal and state authorities about the spill.  DOJ; EPA

May 3, 2021

Vivint Smart Home Inc., which sells “smart” home security and monitoring systems through a door-to-door sales force, has agreed to settle for $20 million in the largest civil penalty ever paid to resolve violations of the Fair Credit Reporting Act (FCRA).  According to the DOJ, Vivint’s lack of an Identity Theft Prevention Program allowed its sales force to fraudulently obtain credit reports of unsuspecting consumers in order to complete sales to potential Vivint customers who failed required credit checks.  Vivint then allegedly sold debt from Vivint customers who defaulted to debt collectors who attempted to collect from the unsuspecting victims.  Vivint recently paid $3.2 million to settle charges involving a different scheme.  DOJ; FTC

April 29, 2021

Following a self-disclosure, software company SAP SE will pay penalties totaling over $8 million and disgorge over $5 million to resolve claims that it violated Export Administration Regulations and the Iranian Transactions and Sanctions Regulations. Between 2010 and 2017, SAP and its partners and subsidiaries released U.S-origin software to users located in Iran and permitted Iranian users to access U.S.-based cloud services from Iran.  In both cases, SAP executives were aware of the issues but did not take steps to remedy or stop them.  SAP also entered into a non-prosecution agreement setting forth specific compliance procedures.  DOJ; USAO Mass; OFAC; Commerce

April 13, 2021

ExxonMobil Oil Corporation agreed to pay penalties of $1.5 million to the federal government and State of Illinois and undertake $10 million in specified physical and operational changes at its petroleum refinery in Joliet to reduce air emissions and resolve claims that the company violated the Clean Air Act and a 2005 Consent Decree applicable to the facility.  EPA

March 9, 2021

Aftermarket automotive parts seller Premier Performance, together with related companies JB Automotive, RallySportDirect, and Stage 3 Motorsports, will pay a $3 million penalty under the Clean Air Act to resolve allegations that they illegally sold emissions-control defeat devices to businesses and individuals throughout the U.S. EPA

February 9, 2021

American Zinc Recycling Corp. agreed to pay penalties of $3.3 million to the federal government and State of Pennsylvania and undertake $4.3 million in specified physical and operational changes at its Palmerton recycling facility to reduce lead dust exposure and resolve claims that the company violated a 1995 Consent Decree applicable to the facility, as well as its operating permit and environmental laws including the Clean Air Act, Clean Water Act, Resource Conservation and Recovery Act, and the Emergency Preparedness and Community Right-to-Know Act. EPA

January 19, 2021

U.S. Magnesium will pay a civil penalty of $250,000 and undertake at least $37 million in modifications and upgrades to its Rowley, Utah facility to reduce the volume and toxicity of waste generated at the facility, treat all wastewater, and prevent leaks from the facility to the Great Salt Lake.  EPA

January 15, 2021

Capital One, N.A. will pay a $390 million civil penalty following its admission that it violated the Bank Secrecy Act including by failing to implement and maintain an effective anti-money laundering program, and failing to file thousands of suspicious activity reports (SARs) and currency transaction reports (CTRs) including transactions in its high-risk Check Cashing Group.  As a result, from at least 2008 to 2014, millions of dollars of transactions were unreported, allowing funds connected with organized crime, tax evasion, and other financial crimes to be laundered through the U.S. financial system.  FINCEN
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