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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.

July 25, 2019

Douglas MacKinnon of Buffalo, New York, and associated individuals and entities in the debt collection business, including Northern Resolution Group, LLC, Enhanced Acquisitions LLC, Delray Capital, LLC, and Mark Gray, will pay more than $66 million in restitution and penalties in a settlement reached with New York state and the Consumer Financial Protection Bureau.  The companies routinely engaged in unlawful and predatory debt collection practices, including: misrepresenting to consumers that they owed sums they did not owe or were not obligated to pay, or that the companies did not have a legal right to collect; falsely threatening consumers with legal action that the collectors had no intention of taking; and, impersonating law enforcement and other government officials.  The settlement permanently bans MacKinnon and Gray and their defendant companies from the debt collection industry. CFPB, NY

July 22, 2019

Credit reporting company Equifax has agreed to pay up to $700 million to resolve claims related to its 2017 data breach in a global settlement with the FTC, the CFPB, and 50 U.S. states and territories.  The settlement will be entered as a stipulated judgment in civil action pending against Equifax, alleging that Equifax failed to take adequate steps to secure its network and consumer data, despite being warned of network vulnerabilities, resulting in a hack that exposed the private information of almost 150 million people.  The settlement provides that defendant will pay between $300 million and $425 million to compensate affected consumers, in addition to a $100 million penalty to the CFPB and $175 million to the states.  Equifax also agreed to take specified steps to improve information security, subject to review by an independent third party.  FTC; CFPB; AG CA; AG NY; AG PA

July 11, 2019

Reckitt Benckiser Group plc, which marketed and sold the opioid addiction treatment drug Suboxone until 2014 through its then-subsidiary Indivior Inc., will pay a total of $1.4 billion in a global settlement resolving criminal, civil, and administrative claims.  In marketing Suboxone Film, Indivior allegedly made unsupported claims that the drug was less-divertable and less-abusable than other buprenorphine drugs, and steered patients to doctors known to have a history of over-prescribing Suboxone and other opioids.  In addition, Indivior was alleged to have discontinued its tablet Suboxone for pretextual reasons, claiming a concern for pediatric exposure when, in fact, the company was seeking to delay FDA approval of a generic form of tablet Suboxone.  In a non-prosecution agreement, RB Group will forfeit $647 million in proceeds it received from Indivior, will cooperate with ongoing investigations, and will not manufacture or market controlled substances in the U.S. for three years.  In resolution of civil claims with the U.S. and states, including six lawsuits filed by whistleblowers under the False Claims Act, RB Group will pay $700 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to federal- and state-funded government healthcare programs.  Finally, RB Group has agreed to pay $50 million in a settlement with the Federal Trade Commission to resolve claims that it engaged in unfair competition in seeking to impede generic equivalents of Suboxone.  DOJ; USAO W.D.Va.; FTC; VA; NY; PA

July 1, 2019

Hylan Asset Management, LLC, and its owners, Andrew Shaevel and Joe Purizhansky have been banned from the debt collection industry and ordered to pay $6.75 million.  According to the FTC and the New York Attorney General’s Office, Hylan and its owners knew the debt portfolios they bought and sold contained fake debts, but continued to distribute these portfolios to collection agencies.  FTC; NY AG

May 31, 2019

The FTC has settled with the operators of a worldwide negative option scam that falsely advertised "risk free" products trials, but then charged consumers full price and enrolled them in costly, ongoing plans without their consent.  California-based defendants Triangle Media Corps., Jasper Rain Marketing LLC, and Brian Phillips, had been charged with violating the FTC Act, the Restore Online Shoppers' Confidence Act (ROSCA), and the Electronic Fund Transfer Act (EFTA) through their trickery over the course of five years.  Co-defendants Hardwire Interactive Inc., Global Northern Trading Ltd., and Devin Keer, who helped spread the scheme worldwide, faced the same charges. As part of the settlement, the defendants have been ordered to pay judgments ranging from $48.1 million to $123.1 million, which will be partially suspended upon payment of $400,000 and $3 million, respectively.  FTC

May 6, 2019

The FTC has filed a complaint against a Texas man who raised more than $800,000 through four deceptive crowdfunding campaigns launched between 2015 and 2016. Douglas Monahan allegedly told consumers that contributions to Indiegogo and Kickstarter campaigns benefiting his company, iBackPack of Texas, LLC, would go toward developing, producing, and distributing various tech-enhanced products, including a power bank-equipped backpack and shoulder bag and a magnetic USB cable system. Instead, Monahan improperly spent the money on personal expenses and marketing efforts. Monahan’s fraudulent behavior was eventually reported by hundreds of disgruntled consumers. FTC

April 3, 2019

Srinubabu Gedela and his publishing companies have been ordered to pay over $50.1 million to settle Federal Trade Commission charges for violation of the FTC Act for making false claims about their scientific conferences and academic journals. The government’s complaint alleged that Gedela and his companies advertised that well known researchers would be presenting at the conferences when many of the researchers had never agreed to speak. The defendants also allegedly lied to academics and researchers by claiming that their journals would provide extensive peer review and that they had editorial boards made up of distinguished academics. In addition to paying $50.1 million, the final order restricts the defendants from making misrepresentations in regard to their academic journals and conferences. FTC

March 27, 2019

Office Depot and its affiliated software tech support provider, Support.com, Inc. have agreed to pay $35 million to settle FTC charges of deceiving customers for over a decade in order to sell unnecessary computer repair services. The companies allegedly used a free software called PC Health Check to scan computers for security threats and maintenance needed. However, PC Health Check was programed to display a recommendation for service if the customer had answered yes to one of four questions regarding perceived computer issues. FTC

March 7, 2019

In the largest forfeiture ever obtained in a sweepstakes scam, the FTC and State of Missouri have settled with three men and corporations under their control for a record $30 million, with a suspended monetary judgment of $114 million. Kevin Brandes, William Graham, Charles Floyd Anderson were charged with sending millions of deceptive mailers primarily to elderly recipients. The mailers falsely informed recipients that they were eligible to win as much as $2 million, but failed to disclose the total fees recipients would have to pay to play. In addition to relinquishing $30 million, the three men have also been permanently banned from the business, and a court appointed receiver has been tasked with dissolving the companies. FTC

February 27, 2019

In the largest civil penalty ever obtained by the FTC in a privacy case for children under the age of 13, lip-synch video sharing app Musical.ly, now known as TikTok, has agreed to pay $5.7 million for violating the Children's Online Privacy Protection Act (COPPA). According to the FTC, during the registration process, the app collected personal information from its largely underage users—including full name, contact information, and location—without parental approval. It further refused to delete personal information requested by parents, even though its privacy setting defaulted to public, which allowed unscrupulous adults to view personal information, follow, and send direct messages to underage users within a 50-mile radius of their location. As part of the settlement, Musical.ly must remove all videos made by children under the age of 13. FTC

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