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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 24, 2016

				 New York announced a groundbreaking $3.1 million agreement with Focused Technologies Imaging Services, LLC (“FTIS”), its sole owner Charles “Chuck” Tobin, and its former co-owner Julie Benware, for unlawfully outsourcing government-funded work to a subcontractor based in Mumbai, India in 2008 and 2009. The outsourcing was illegal because even though FTIS was required to perform the work at a warehouse in Albany, New York, FTIS unlawfully sent personal information of over 16 million people to a foreign business that was unauthorized to receive this information. The outsourcing also resulted in the failure of FTIS to adhere to a requirement that over 50% of the labor hours of the contract be performed by individuals with disabilities. NY				 					 

						
Tagged in:
													  Contract Non-Compliance, 
													  Government Procurement Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 23, 2016

				 California obtained a $1.1 billion judgment against defunct Corinthian Colleges, Inc. (CCI) for their predatory and unlawful practices. While CCI filed for bankruptcy in May 2015, this judgment can help secure further relief for struggling students. In October 2013, Attorney General Kamala D. Harris led the charge against CCI and its subsidiaries that operate Everest, Heald, and Wyotech colleges, filing suit seeking to put an end to abusive practices that left tens of thousands of students under a mountain of debt and useless degrees. CCI filed for bankruptcy in May 2015. In granting the default judgment, the Court ordered restitution on behalf of students in the amount of $820,000,000 and civil penalties totaling $350,025,000, for a total of $1,170,025,000 in monetary relief. CA				 					 

						
Tagged in:
													  Education Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 23, 2016

				 New York announced a settlement with Carolina Furniture, Inc., a business that sells furniture and home furnishings.  An investigation of a “store closing sale” by the attorney general showed that Carolina Furniture made deceptive representations in its advertisements and failed to obtain a proper license before the sale.  Carolina Furniture advertised its store closing extensively and made many representations about the sale that the NYAG found deceptive. For example, Carolina Furniture sent out a letter to 40,000 consumers inviting them to a “PRIVATE SALE HELD 4 DAYS ONLY!”  This claim was not true as all three retail locations were open to the public during the “private sale.” NY				 			
	
		
		
	


 			




	
		
		

			

				
				
March 22, 2016

				 New York announced a $1.1 million dollar settlement of a whistleblower case alleging that real estate developer Asher Roshanzamir wrongfully deferred payment of New York state and New York City income taxes. Federal law allows a seller of real property to defer paying income taxes on certain capital gains when he exchanges it for ‘like-kind’ real property, under certain conditions. An investigation by the Attorney General’s Office found that Mr. Roshanzamir wrongfully deferred payment of New York State and local income taxes by disguising withdraws of approximately $3.5 million from the like-kind exchange and by disguising approximately $5 million in equity contributions as loans. NY				 					 

						
Tagged in:
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 18, 2016

				 New York announced the guilty pleas of Sergio Raymundo, 28, and his New Paltz-based construction company Lalo Drywall, Inc. Raymundo and Lalo Drywall, Inc. cheated eight workers at a Harlem housing project out of approximately $800,000 in wages during a 17-month period, and attempted to conceal the underpayments by signing false checks drawn on the company’s account indicating that employees on the job were paid properly under the law. However, those checks were never actually given to the workers. NY				 			
	
		
		
	


 			




	
		
		

			

				
				
March 18, 2016

				 Illinois announced that a former Illinois Department of Human Services (IDHS) caseworker was arraigned on charges of theft, aggravated ID theft and official misconduct for allegedly stealing a reissued LINK card from a DHS client. Gwendolyn Ross, 63, of Rockford, surrendered herself to the Winnebago County Sheriff’s Office on March 11. Illinois Attorney General Lisa Madigan alleged that Ross, a former IDHS caseworker at the Winnebago County Family Community Resource Centre (FCRC), stole a reissued LINK card from a DHS client while it was being processed by the Rockford DHS office. Within hours of obtaining the card, she was observed on store security footage using the card to make purchases. IL				 			
	
		
		
	


 			




	
		
		

			

				
				
March 16, 2016

				 A Thurston County judge ordered a California company that scammed new Washington property owners into buying overpriced deeds to pay more than $3.6 million, after granting summary judgment in a lawsuit brought by Attorney General’s office. The court found the Bellflower, Calif.-based LA Investors, LLC, which conducts business as “Local Records Office.” violated the state Consumer Protection Act at least 256,998 times by sending deceptive mailers. The company sent official-looking notices implying that consumers must buy a dramatically overpriced $89 copy of their deeds. Deeds typically cost only a few dollars from a local county office, and many property owners can obtain a copy of their deed for free online. WA				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 16, 2016

				 New Jersey announced that four individuals have been charged in connection with two separate schemes in which investors allegedly were defrauded of a total of $350,000 that they invested in purported medical ventures. In the first scheme, Joseph Denti Jr., Joseph Giardina and Heidi Francavilla allegedly stole $250,000 from a doctor by convincing him to advance that amount for a bogus investment involving a surgical center. They allegedly diverted his funds for their personal benefit. In the second scheme, Ralph Perricelli Jr. and Joseph Denti Jr. allegedly convinced a married couple to invest $100,000 in a blood-testing laboratory by falsely claiming to be joint owners of the lab. NJ				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 16, 2016

				 A Seattle-based man and his three companies will pay back as much as $7,750,000 to approximately 165,000 consumers nationwide. Benjamin Rogovy used systematic deception in the running of his for-profit company, Christian Prayer Center, including the creation of fake religious leaders and posting false testimonials to entice consumers to pay for prayers. In a separate business, Rogovy used deceptive and unfair business practices to run the Consumer Complaint Agency, a for-profit business that promised consumers it would advocate on their behalf regarding their complaints against businesses. Instead, the company charged consumers up to $25 for doing little more than passively forwarding complaints. Rogovy’s actions violate Washington’s Consumer Protection Act, which forbids businesses from making false claims, and the Charitable Solicitations Act, which prohibits churches and charities from using misleading or deceptive statements in any charitable solicitation. WA				 			
	
		
		
	


 			




	
		
		

			

				
				
March 15, 2016

				 Florida announced an Assurance of Voluntary Compliance with You Fit, LLC, relating to the company’s advertising and business practices. You Fit is a Broward-based company that operates health clubs across Florida and in several states. According to consumer complaints, the company advertised month-to-month memberships as requiring no commitment or no obligation and did not disclose certain additional required commitments and fees until after members signed their contracts. Complainants also alleged that, in some cases, the company failed to acknowledge some membership cancellations and continued to charge monthly fees even after consumers attempted to cancel. FL				 			
	
		
		
	


 			


											

						

								

									
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