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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.

				

			

			
						
					
			

	
		
		

			

				
				
February 11, 2016

				 New York, in conjunction with members of a state and federal working group announced a $3.2 billion settlement with Morgan Stanley over the bank’s deceptive practices leading up to the financial crisis. The settlement includes $550 million – $400 million worth of consumer relief and $150 million in cash – that will be allocated to New York State. The resolution requires Morgan Stanley to provide significant community-level relief to New Yorkers, including loan reductions to help residents avoid foreclosure, and funds to spur the construction of more affordable housing. Additional resources will be dedicated to helping communities transform their code enforcement systems, invest in land banks, and purchase distressed properties to keep them out of the hands of predatory investors. NY				 					 

						
Tagged in:
													  Damages and Penalties, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Housing and Mortgage Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 11, 2016

				 MoneyGram Payment Systems, Inc. a Dallas-based company, has agreed to pay the 49 participating states and the District of Columbia a total of $13 million to resolve an investigation that focused on complaints from persons who wired money to third parties engaged in fraud using MoneyGram’s wire transfer service. The settlement also calls for MoneyGram to maintain an anti-fraud program that is documented in writing. In addition to its required anti-fraud measures and monetary terms, the MoneyGram settlement provides for an independent third-party Settlement Administrator who will review MoneyGram records and send notices concerning restitution to all persons eligible to receive it under the settlement. NJ, MA				 			
	
		
		
	


 			




	
		
		

			

				
				
February 10, 2016

				 New York announced that in 2015, more than $2 million was refunded to 53 New York consumers who claimed their new cars were lemons, and nearly $500,000 was awarded to 15 consumers who had problems with used cars. Lemon laws provide a legal remedy for consumers who are buyers or lessees of new cars and certain used cars that do not conform to the terms of its written warranty, and the manufacturer or its authorized agent is unable to repair defects with the car after a reasonable number of attempts. Since 2011, New York consumers have recovered $12,391,367 through the Attorney General’s Lemon Law Arbitration Program. NY				 			
	
		
		
	


 			




	
		
		

			

				
				
February 10, 2016

				 Authorities announced the arrest of Mohammad Shahid Zaman, of Staten Island, NY, who allegedly was a central figure in an elaborate fraud scheme in which the participants used fictitious identities to obtain credit cards and open bank accounts which they used to steal approximately $3 million from various banks. The scheme included a group of “merchants” who in many cases allegedly ran shell businesses set up solely for the purpose of participating in this fraud. The merchants allegedly swiped the fraudulent credit cards using point of sale terminals and received reimbursement from credit card processing companies via wire transfer, while never actually providing any merchandise or services. Twelve other defendants were charged by the New Jersey Attorney General’s Office in December as a result of a joint state and federal investigation. NJ				 			
	
		
		
	


 			




	
		
		

			

				
				
February 8, 2016

				 NJ Announced that Sondra Steen, pleaded guilty to participating in a scheme with her sister and a lawyer to steal millions of dollars from elderly clients of an in-home senior care company in Atlantic County. Steen was indicted along with her sister Jan Van Holt, owner of A Better Choice, a company that offered elderly clients in-home care and legal financial planning; Susan Hamlett, who worked as an aide for company clients; and William Price, who has since pleaded guilty to taking part in the scheme and stealing $125,000 from an elderly couple he met as a caseworker for Atlantic County Adult Protective Services. Van Holt and Steen were charged with conspiring with Barbara Lieberman, a lawyer who specialized in elder law, to steal over $2.7 million from 12 elderly clients from January 2003 through December 2012. NJ				 			
	
		
		
	


 			




	
		
		

			

				
				
February 5, 2016

				 The Department of Justice, the Department of Housing and Urban Development, the Consumer Financial Protection Bureau, along with 49 states, and the District of Columbia announced that HSBC will pay $470 million to address mortgage origination, servicing, and foreclosure abuses. The settlement also requires HSBC to substantially change how it services mortgage loans, handles foreclosures and ensures the accuracy of information provided in bankruptcy court. These terms are meant to prevent abuses such as robo-signing, improper documentation and the loss of paperwork. NY, CA, PA, TX, IL, MA				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Housing and Mortgage Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 2, 2016

				 New Jersey announced that two South Jersey corporations and five of their officials have been indicted in an alleged workers compensation fraud scheme that bilked nearly $600,000 from an insurance carrier.  Supreme Asset Management Recovery (SAMR), an electronic recycling company in Lakewood, and The Amato Agency, LLC, an insurance agency in Neptune, along with the five officials, were indicted on second-degree charges of conspiracy, fraud and theft by deception for allegedly providing false and misleading information to obtain lower premiums on workers’ compensation insurance.  According to the state grand jury indictment, the two companies and the five officials – misclassified SAMR’s warehouse workers as office staff on insurance applications to obtain much lower workers compensation premiums.  NJ				 			
	
		
		
	


 			




	
		
		

			

				
				
February 1, 2016

				 Barclays Capital Inc.  and Credit Suisse Securities (USA) LLC will pay a combined $154.3 million to the State of New York and the SEC to settle investigations into false statements and omissions made in connection with the marketing of their respective dark pools and other high-speed electronic equities trading services. Dark pools are private exchanges for trading securities that are not viewable by the general public and are completed outside of public stock exchanges. Barclays admitted to core facts set forth in the Attorney General’s Complaint from June 2014 alleging misrepresentations about how it operated its dark pool, “Barclays LX,” including that it misled investors and violated securities laws. NY				 					 

						
Tagged in:
													  Dark Pools, 
													  Market Manipulation and Trading Violations, 
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
January 29, 2016

				 Florida arrested three individuals for allegedly defrauding Medicaid out of more than half a million dollars. Two more defendants are being sought by authorities for arrest. According to the investigation, Matthew, Micah and Jimmie Harrell, along with Kenneith Durden and Keith Daly, billed Medicaid for services not provided and fraudulently used a licensed mental health provider’s information without that provider’s knowledge or consent to become accepted as a Medicaid provider. Matthew Harrell and Kenneith Durden allegedly set up parallel, fraudulent business operations in Florida, Georgia and Louisiana that all engaged in similar criminal activities. The businesses operated under the names Revive Athletics Florida, Divine Consulting Services, and Durden Consulting Services of Florida. FL				 					 

						
Tagged in:
													  Healthcare Fraud, 
													  Medicaid, 
													  Medical Billing Fraud, 
													  Provider Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
January 27, 2016

				 New York announced that it reached an agreement with a Capital Region transportation company, Advantage Transit Group, Inc., for repayment of Medicaid funds totaling over $1 million dollars that the company was not entitled to receive. Advantage Transit Group provides, among other services, transportation for Medicaid recipients to and from appointments and submits claims for reimbursement to Medicaid. Under the settlement agreement, Advantage Transit Group acknowledged that it submitted claims for reimbursement to Medicaid for transportation services and received payment for services that were not rendered. NY				 					 

						
Tagged in:
													  FCA State, 
													  Healthcare Fraud, 
													  Medicaid, 
													  Medical Billing Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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