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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.

				

			

			
						
					
			

	
		
		

			

				
				
March 19, 2021

				 Following an earlier federal settlement, construction management company V.J. Associates, Inc., and its affiliates, will pay a total of $1.875 million to resolve claims brought in a whistleblower complaint on behalf of Massachusetts, New Jersey, and New York.  Defendants provided cost estimating and scheduling services on public works projects, and admitted to submitting false bills to prime contractors by inflating employee hours on contracts on which they were paid on a time-and-expense basis.  Employees internally referred to this overbilling as “juicing” and “tagging” hours.  NY; MA				 					 

						
Tagged in:
													  Falsifying Invoices, 
													  FCA State, 
													  Government Procurement Fraud, 
													  Whistleblower Case, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 2, 2021

				 Hedge fund manager Thomas E. Sandell has paid $105 million to resolve claims first brought by a whistleblower under the New York False Claims Act alleging that Sandell evaded tens of millions in state and local taxes by falsely claiming that $450 million in management and performance fees he recognized in 2017 were not earned for services performed in New York, despite the fact that his fund, Sandell Asset Management Corporation, operated in New York and represented to the SEC that New York City was its principal place of business.  In his effort to evade NY taxes, Sandell moved to London for a period of time, opened an office in Florida, and managed SAMC expenses through a shell company that he also owned and controlled, all while continuing to perform the investment services that generated the fee income in New York.  When Sandell’s accountant informed him that he would have to pay NY state taxes, he terminated them and retained a firm that took his preferred position.  The whistleblower will receive an award of $22.05 million, which is 21% of the government’s recovery. NY				 					 

						
Tagged in:
													  FCA State, 
													  Tax Fraud, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 23, 2021

				 Cryptocurrency trading platform Bitfinex, operated by iFinex, and Tether were ordered to end all trading activity for NY customers and agreed to pay $18.5 million in penalties following an investigation into their handling of customer deposits and withdrawals that resulted in the loss of hundreds of millions of customer assets.  Tether was found to have falsely represented that each of its stablecoins was backed one-to-one by U.S. dollars in reserve when, in fact, they were not.  NY				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 12, 2021

				 General Motors (GM) has agreed to a $5.75 million settlement with the State of California to resolve allegations of making false and misleading statements to investors, including the state’s largest pension system, California Public Employees’ Retirement System (CalPERS).  According to Attorney General Xavier Becerra, GM cheated California twice—first by failing to disclose a faulty ignition-switch issue to the National Highway and Traffic Safety Administration (NHTSA) that it had been aware of for almost ten years, and which ultimately led to 124 fatalities and 274 injuries, and second by concealing the problem from investors and failing to build reserves for losses it knew was coming.  The company’s actions artificially inflated its stock price, causing CalPERS to lose millions of dollars.  CA AG				 					 

						
Tagged in:
													  Auto Safety, 
													  Financial and Investment Fraud, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 5, 2021

				 Private equity fund ACP X, LP, its manager Laurence Allen, and other corporate entities owned and controlled by Allen including NYPPEX Holdings, LLC, have been ordered to pay nearly $7 million.  Allen allegedly used investor funds to pay himself and others exorbitant salaries and cover the expenses of Allen’s affiliated entities, contrary to representations to investors.  A receiver was appointed to wind down the fund.  NY				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Misrepresentations, 
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 3, 2021

				 In a settlement valued at $4.1 million, Schnitzer Steel Industries will pay penalties and costs, undertake supplemental environmental projects, and make significant improvements to its processes to resolve claims that it violated environmental laws at its Oakland, California metal shredding and recycling facility, including through the release of particulate matter contaminated with hazardous metals such as lead, cadmium, and zinc.  CA				 					 

						
Tagged in:
													  Environmental Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
January 15, 2021

				 The Colonial Automotive Group, Inc., a chain of automobile dealerships, will pay $1 million to resolve allegations that they defrauded the Massachusetts state Department of Unemployment Assistance.  The dealership allegedly encouraged employees who were furloughed as a result of the state’s COVID-19 in-person business closures to sign up for unemployment benefits. and then requested those workers continue to perform dealership work, without pay, while they were collecting state benefits.  MA				 					 

						
Tagged in:
													  COVID-19, 
													  FCA State, 
													  Government Programs Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2020

				 DME provider Apria Healthcare Group, Inc. and Apria Healthcare LLC will pay $40.5 million to settle allegations brought in a qui tam action filed by three former Apria employees that they improperly billed government healthcare programs for beneficiary rentals of non-invasive ventilators (“NIVs”) that were not medically necessary or which were provided with improper waivers of patient co-payments.  Medicare pays as much as $1,400 a month for NIVs, and providers are required to monitor patient usage of NIVs and stop billing when the NIVs are no longer being used.  Apria respiratory therapists failed to monitor patient NIV usage and even when Apria knew that patients were no longer using the NIVs, Apria often did not take steps to stop seeking payment.  In addition, Apria sales staff steered doctors and beneficiaries to use NIVs when less-expensive alternatives were available, and routinely waived co-payments for NIV patients without making an assessment of the patient’s financial need.  USAO SDNY; CA AG; FL AG				 					 

						
Tagged in:
													  FCA Federal, 
													  Healthcare Fraud, 
													  Lack of Medical Necessity, 
													  Medicaid, 
													  Medical Billing Fraud, 
													  Medical Devices and DME, 
													  Whistleblower Case, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2020

				 Substance abuse treatment provider A.R.E.B.A.-CASRIEL, Inc. d/b/a Addiction Care Interventions Chemical Dependency Treatment Centers (“ACI”) and its owner, Steven Yohay, agreed to pay a total of $6 million to resolve federal and New York state claims that they defrauded Medicaid including through the payment of kickbacks and other fraudulent conduct in connection with the enrollment of Medicaid beneficiaries into ACI’s inpatient treatment program.  Defendants allegedly employed drivers who were compensated in part based on the number of patients they recruited, to target homeless individuals to enroll in ACI’s inpatient treatment program by offering food, cash, and money to purchase drugs, and/or alcohol. In addition, ACI unlawfully paid a patient recruiter, and enrolled Medicaid patients who had not been evaluated by a qualified healthcare professional, including by copying a physician’s signature.  The government’s investigation was initiated by a whistleblower complaint filed by a former employee, who will receive an undisclosed amount of the settlement.  USAO SDNY; NY				 					 

						
Tagged in:
													  Anti-Kickback and Stark, 
													  FCA Federal, 
													  FCA State, 
													  Healthcare Fraud, 
													  Lack of Medical Necessity, 
													  Medicaid, 
													  Provider Fraud, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			


 			


											

						

								

									
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