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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.

				

			

			
						
					
			

	
		
		

			

				
				
April 4, 2016

				 New Jersey announced that a former Morris County investment advisor was sentenced to seven years in prison for fabricating and mailing more than 100 financial account statements that inflated 14 of her clients’ accounts by a combined $818,000. In December, Janet Fooshee, also known as Janet Gurley and Janet Katz, pleaded guilty to defrauding more than two dozen retirees and others over a 10-year period beginning in 2003. In addition to fabricating account statements, she admitted stealing approximately $151,000 from four clients, receiving more than $191,539 in unlawful investment advisor fees, defrauding another client out of almost $81,000, and stealing the identities of at least eight corporations. NJ				 			
	
		
		
	


 			




	
		
		

			

				
				
April 1, 2016

				 Florida announced more than $170,000 in fraudulent taxpayer dollars reclaimed from multiple bank accounts owned by Christina Benson, owner of Tranquility Health Care Solutions in Orlando. Benson used Tranquility to recruit homeless men and women to pose as patients and billed Medicaid for services not provided and not warranted. Additionally, Benson allegedly used untrained personnel, some with criminal arrest records, in her scheme. On March 9, 2016, Benson plead guilty to one count of Medicaid provider fraud, a first-degree felony. FL				 			
	
		
		
	


 			




	
		
		

			

				
				
March 31, 2016

				 Pennsylvania announced the arrest of a Crawford County couple accused of stealing approximately $132,000 from the local moose lodge where they served in administrative roles.  According to criminal complaints filed in the case, the money was allegedly stolen between May 2011 and October 2014 from Moose Lodge No. 2505, located in East Fairfield Township, Crawford County. Investigators allege the couple stole the money during a time when they incurred significant gambling losses. PA				 			
	
		
		
	


 			




	
		
		

			

				
				
March 30, 2016

				 California announced a preliminary approval of settlements resolving allegations that LG, Hitachi, Panasonic, Toshiba, and Samsung, companies all based in Japan or Korea, fixed prices on critical components of televisions and computer monitors from 1995 to 2007.  Those critical components, known as Cathode Ray Tubes or CRTs, were used to display images on computer monitors and televisions screens before they were replaced by flat screens. The settlements, which were filed in San Francisco Superior Court, require all five companies to pay a total of $4.95 million to settle claims of overcharges paid by California government entities, general damages suffered by the State’s economy, and civil penalties. CA				 			
	
		
		
	


 			




	
		
		

			

				
				
March 30, 2016

				  New York joined the Federal Trade Commission (FTC), the other 49 states, and the District of Columbia in announcing the successful conclusion of the largest multistate charity fraud action to date. Two nationwide sham cancer charities are being dissolved and their president is banned from profiting from any charity fundraising in the future, pursuant to a settlement agreed to by the FTC, all 50 states, and the District of Columbia. Cancer Fund of America Inc. (CFA) and Cancer Support Services Inc. (CSS) and their leader, James Reynolds, Sr., agreed to settle charges that CFA and CSS claimed to help cancer patients, but instead, the overwhelming majority of donations benefitted the sham charity operators, their families and friends, and fundraisers. Under the settlement order, CFA and CSS will be permanently closed and their assets liquidated.  The order imposes a judgment against CFA, CSS, and Reynolds, jointly and severally, of $75,825,653, the amount consumers donated to CFA and CSS between 2008 and 2012. NY, PA, FL				 			
	
		
		
	


 			




	
		
		

			

				
				
March 29, 2016

				 New York announced the guilty pleas of licensed pharmacist Glenn Schabel, 55, of Melville, and his company, Glenn Schabel, Inc. in connection with a nation-wide scheme to sell diverted HIV medication to unsuspecting New Yorkers. Schabel pled guilty to Criminal Diversion of Prescription Medications and Prescriptions in the First Degree, and Commercial Bribe Receiving in the First Degree. Schabel will be sentenced to up to two and one-third to seven years state prison and forfeit $5,456,267 to the New York State Medicaid Program. Glenn Schabel Inc., pled guilty to Money Laundering in the First Degree. In April 2012, MFCU investigators arrested Schabel and three other individuals and charged ten companies, for using a network of bogus prescription medication wholesalers in Alabama, Mississippi, North Carolina, and California to launder money and to sell over $274 million in diverted prescription medications. NY				 					 

						
Tagged in:
													  Medicaid, 
													  Pharma Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 28, 2016

				 California announced a $8,500,000 settlement with Wells Fargo Bank over privacy violations that included recording consumers’ phone calls without timely telling consumers they were being recorded, as required by California law. As part of the settlement, which is in the form of a stipulated judgment, Wells Fargo will pay civil penalties totaling $7,616,000 and will reimburse the prosecutors’ investigative costs of $384,000. In addition, Wells Fargo will contribute $500,000 to two statewide organizations dedicated to advancing consumer protection and privacy rights. CA				 					 

						
Tagged in:
													  Financial Institution Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 28, 2016

				 A company that purchased income streams from veterans and other pensioners has agreed to provide more than $2 million in debt relief to resolve allegations that it made predatory and illegal loans to Massachusetts consumers. Under the terms of the assurance of discontinuance, Future Income Payments, LLC (FIP), which was formerly known as Pensions, Annuities and Settlements, LLC, has agreed to convert its current contracts with consumers into interest-free loans. Through this alleged scheme, the 85 affected Massachusetts consumers who entered into contracts with FIP received upfront payments ranging from $1,800 to more than $40,000. In exchange, FIP accessed the consumers’ bank accounts each month to deduct a portion of their pension payments. The AG’s investigation revealed that FIP was charging consumers interest rates that far exceeded the statutory limit, many exceeding 100 percent. Under the terms of the settlement, any consumer who has already paid in excess of the principal balance borrowed will receive a refund for any overpayments. MA				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 28, 2016

				 Pennsylvania announced its Bureau of Consumer Protection secured default court orders against: Daniel Fry, who did business as Fry Asphalt, and Peter Thomas Lazrovitch, William Lazrovitch, and Kelly Waters Lazrovitch, who did business as All County Asphalt, Seal Coating, and Lazro and Sons General Construction. The contractors were ordered to pay approximately $186,998 combined in consumer restitution, civil penalties and legal costs. The lawsuits aimed to address the contractors’ failures to meet the following requirements: maintain current registration, use HICPA-compliant contracts, perform contracted services in a workmanlike manner, complete contracted services, provide consumers with a three-day cancellation notice and restrict initial deposits to one-third of the total sales price. PA				 			
	
		
		
	


 			




	
		
		

			

				
				
March 28, 2016

				 New York announced that Style Management Corp. (Style) and its owner Andrew Rosenberg have agreed to pay a total of $845,000 in restitution and fines to drivers who were illegally charged by the company.  Style is located in Manhattan, and manages or owns approximately 142 medallions. The New York City Taxi and Limousine Commission (“TLC”) lease cap rules limit the dollar amount drivers may be charged for leasing medallions and taxicabs, in order to ensure a baseline level of take-home earnings for drivers.  The rules also strictly limit add-on charges that can be imposed upon drivers and limit the purposes for which charges may be assessed. The Attorney General’s investigation of Style revealed that the company violated the TLC’s lease cap rules by charging amounts in excess of the amounts allowed under law, and by rounding drivers’ credit card fare earnings to even dollar amounts, almost always rounding in Style’s favor. NY				 			
	
		
		
	


 			


											

						

								

									
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