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State Enforcement Actions

Each state enforces its laws and defends its interests, and states often work with the federal government in investigating and prosecuting corporate frauds.  Whistleblowers with knowledge of fraud or wrongful conduct that involves state or local funds or programs may be able to bring a claim under a state or local False Claims Act, and may be eligible to receive a monetary reward and protection against retaliation.

Below are summaries of recent settlements, successful prosecutions, and enforcement actions by states. If you believe you have information about fraud which could give rise to a claim under a State or Local False Claims Act or other whistleblower reward provision, please contact us to speak with one of our experienced whistleblower attorneys.

December 11, 2018

Target Corp. will pay $3 million to settle allegations that it improperly billed and received payments from the state’s Medicaid program (MassHealth). Between August 2009 and July 2015, at their Massachusetts locations, Target allowed auto-refills on prescriptions that were not clearly requested by a MassHealth patient or caregiver at the time of refill. The investigation arose from a qui tam action by an unnamed whistleblower in the United States District Court for the District of Minnesota. Mass AG   Tags: Medical Billing fraud, HealthCare Fraud, Pharma Fraud, Medicaid, FCA State, Whistleblower Case, Whistleblower reward  

November 27, 2018

In New York, Bottini Fuel pleaded guilty to unlawfully retaining overpayments made by fuel oil customers, including public entity customers.  Rather than inform customers that they had made overpayments, or refund those payments, Bottini admitted that it diverted the customers' credit balances to the personal accounts of company owners, employees, and other friends and family.  Bottini agreed to pay over $3.2 million in restitution and civil damages.  The investigation was initiated by the filing of a whistleblower complaint under the New York False Claims Act; the unnamed whistleblower will receive $491,358 of the settlement.  NY AG

November 16, 2018

The CFTC and State of Utah have charged Rust Rare Coin, Inc. (RRC) and owner Gaylen Dean Rust for their roles in a precious metals Ponzi scheme. According to the DOJ press release, beginning in 2008 until only just recently, Rust fraudulently obtained over $170 million for RRC by lying to at least 200 investors in at least 17 states to get them to invest money in a silver pool. Investors were told the company's silver holdings amounted to between $77 to $80 million, and they stood to gain between 20-40% profit each year as a result of RRC’s buying and selling strategy. In reality, however, the defendants did not have nearly as much silver and were using investor contributions to pay other investors, as well as personal expenses. CFTC, UT AG

November 13, 2018

Offshore art purchaser, Porsal Equities Ltd., will pay $10.75 million to settle claims for tax fraud and for violation of the New York False Claims Act. Between 2010 and 2015 Porsal Equities Ltd., a company based in the British Virgin Islands, finagled their way out of paying sales tax on over $50 million in artwork and other goods purchased in New York. They fraudulently claimed that they were exempt from paying sales tax because the art was purchased for resale. The truth is that the art was purchased for personal use and for display in the New York City apartments of the company’s sole director.  Furthermore, despite the notice which the director received from a tax authority, Porsal Equities failed to pay use tax on art they purchased outside of New York which was shipped into New York for personal use in the apartments belonging to the director. Porsal Equities did admit their violations in the settlement agreement. The company also agreed to report and file use tax returns for any artwork used in the state. NY AG

November 8, 2018

Renee Christine Borunda of Greensboro, North Carolina, was sentenced to prison and ordered to make restitution to the North Carolina Medicaid program for conduct that defrauded Medicaid.  Borunda, who worked for a behavioral health services provider, used a therapist's personal information to submit false bills for behavioral services, claiming that services were provided to over 200 different Medicaid recipients when no such services were rendered.  USAO EDNC; NC

November 6, 2018

An Indiana-based dental care practice and admin support company have agreed to pay a total of $5.139 million to settle allegations they violated the federal and Indiana state False Claims Acts. According to whistleblower and qui tam plaintiff Dr. Jihaad Abdul-Majid, between 2009 and 2013, ImmediaDent of Indiana, LLC and Samson Dental Partners, LLC allegedly billed Indiana's Medicaid program for procedures that were either upcoded (i.e. represented to be more serious and more expensive than they actually were), were not actually performed, or were not medically necessary. Samson Dental Partners is additionally accused of violating Indiana’s law prohibiting the corporate practice of dentistry. Because the companies refused oversight proposed during settlement, they have now been classified as "high risk" to federal healthcare programs. IN AG; USAO WDKY

October 24, 2018

The Attorney General of New York has filed a lawsuit against ExxonMobil for misleading investors about the risks it faces due to climate change, which has resulted in billions of dollars in losses to investors such as the New York State Common Retirement Fund and New York State Teachers Retirement System. For years, the oil and gas titan allegedly falsely represented to investors that it was accounting for the rising tide of climate change regulations to its business planning. In truth, it was accounting for far less than it should or not even accounting for it at all. AG NY

October 16, 2018

A Medicaid transportation provider, its president, and a driver have been sentenced to pay a $10,000 fine and serve 2-4 years in prison for stealing a total of $1.2 million from New York's Medicaid program. The driver who was sentenced, Haimid Thompson, was accused of paying a Medicaid recipient to enroll in services from his employer and submitting falsified logs showing daily trips on behalf of the recipient. He was ordered to pay $23,598. The company, 716 Transportation, Inc., was sentenced to a fine of $10,000, and the president, Wossen Ambaye was ordered to pay restitution of $900,497, for knowing the services billed were not actually provided. NY AG

October 12, 2018

Michael Martin, the owner of a New York-based general contractor called Eastern Building & Restoration, Inc. has plead guilty to a multitude of charges, including fraudulently obtaining public works contracts, withholding over $400,00 in wages from over 50 employees, and stealing over $150,000 each from a minority-owned business and an insurance company. According to the Attorney General, Martin and co-defendant Dr. Scott Henzel, also of Eastern Building and Restoration, took control of two minority-owned businesses in order to fraudulently obtain millions of dollars worth of contracts intended for minority-owned businesses. Furthermore, they underpaid laborers working on public works projects and created false documentation and certifications stating otherwise. Separately, Martin also embezzled over $150,000 from one of the businesses and caused a false insurance claim to be filed on its behalf. He will be sentenced in both Albany and Schenectady counties in early December.  NY AG

October 11, 2018

Tesla Energy Solutions (fka Solar City) and its accounting firm, Novogradac & Company LLP, have agreed to pay a combined $13 million to settle claims that it defrauded the Oregon Department of Energy (ODOE) in seeking to receive a higher tax credit for commercial solar projects built in the state. According to Oregon DOJ's press release, SolarCity submitted fraudulent applications to ODOE certifying that its solar projects had cost it $36.7 million. Novogradac then submitted fraudulent reports certifying the same, which allowed SolarCity to receive more than $10 million in tax credits, and which it then used to fund 14 other solar projects, including 6 with the Oregon University System. However, subsequent investigation revealed that the actual cost had been inflated by more than 100%. OR AG
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