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Misrepresentations

This archive displays posts tagged as relevant to fraudulent misrepresentations in financial transactions and financial markets. You may also be interested in the following pages:

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October 17, 2019

Johnson & Johnson and its subsidiary, Ethicon, Inc., have agreed to pay $116.9 million to 41 states and the District of Columbia for endangering the health of women nationwide by deceptively marketing transvaginal surgical mesh devices and failing to adequately disclose possible serious complications.  A multistate investigation found that both Johnson & Johnson and Ethicon knew of the risks—including chronic pain and inflammation, fistula formation, incontinence, and mesh extrusion and erosion into the body—yet failed to warn consumers or their physicians.  As part of the settlement, the companies must refrain from falsely describing the mesh as “FDA approved,” as well as provide full disclosure of the device’s risks.  DE AG; PA AG; MI AG; NY AG; SC AG; TX AG

October 16, 2019

The FTC has settled with the marketers and sellers of two aloe vera-based supplements and imposed an $18.7 million judgment against them.  Defendants NatureCity, LLC and Carl and Beth Pradelli had been charged with making unsubstantiated claims to consumers about their products, TrueAloe and AloeCran, including that the products could improve cholesterol and triglyceride levels, reduce chronic pain, and treat various diseases.  FTC

October 10, 2019

A Maryland-based man has been sentenced to 22 years in prison for his role in a $396 million Ponzi scheme, the largest ever charged in Maryland.  Unbeknownst to hundreds of victim investors, the consumer debt portfolios they invested in through Kevin Merrill and co-conspirators Jay Ledford and Cameron Jezierski were fake, with Merrill, Ledford, and Jezierski going to great lengths to keep up the illusion.  The trio created imposter companies and bank accounts, fake documents, and invited would-be investors to tours of their Texas “office.”  By the time they were arrested  in 2018, the scheme had raked in over $396 million, with another $260 million pending.  As part of his sentence, Merrill has also been ordered to pay restitution of at least $189 millionUSAO MD; SEC

October 10, 2019

A billboard licensing company that manages licenses in New York, Texas, Minnesota, and Missouri has agreed to pay $2.85 million to resolve fraud allegations.  In 2009 and 2011, All Vision LLC entered into contracts with USPS to manage licenses and collect payments on land that USPS leases out to billboard companies.  As part of the contract, All Vision had agreed to forward lease payments, less fees, to USPS in a timely manner, but allegedly withheld at least $8 million in payments while misrepresenting the actual amounts collected.  All Vision has since repaid over $5.2 million; the $2.85 million settlement will resolve all remaining claims.  USAO CO

September 30, 2019

Longfin Corporation has been ordered to pay $6.8 million in a default judgment entered in a federal court case alleging that Longfin filed fraudulent papers to qualify for a public offering under Regulation A+, misrepresenting the business as being based in the U.S.  In addition, Longfin reported fictitious revenue from sham commodities transactions and unlawfully distributed Longfin shares, including in unregistered transactions and to insiders and affiliates.  SEC

September 27, 2019

Pharmaceutical manufacturer Mylan N.V. has agreed to pay $30 million to resolve SEC charges that the company failed to disclose or adequately accrue for possible losses arising from a DOJ investigation into Mylan's classification, pricing, and rebate practices regarding its EpiPen product.  In 2017, Mylan agreed to pay $465 million to resolve that DOJ investigation.  SEC

September 27, 2019

Fiat Chrysler Automobiles N.V. and its U.S. subsidiary FCA US LLC will pay $40 million to resolve SEC allegations that the automaker provided false and misleading information in press releases and regulatory filings about its monthly new vehicle sales and vehicle sales growth rate.  The SEC found that FCA US inflated new vehicle sales by paying dealers to report fake vehicle sales, but then failing to report those sales at the time.  Instead, Fiat Chrysler kept these sales in a separate database referred to internally as the "cookie jar," which the company would then dip into to report as current sales in a slow month.  SEC

September 27, 2019

Herbalife Nutrition Ltd. will pay $20 million to settle charges that it made misstatements in regulatory filings about its business in China.  While Herbalife, which has a direct sales model, claimed in filings that it did not use its customary multilevel marketing compensation model in China in order to comply with Chinese law, in fact, its compensation model in China was materially identical to its compensation model in every other country.  By failing to disclose this information, Herbalife was found to have deprived investors of valuable information regarding the risks faced by the company.  SEC

September 26, 2019

A military contractor who previously plead guilty to accepting illegal kickbacks and committing wire fraud has been sentenced to over 2 years in prison and ordered to pay $1.4 million in restitution.  Despite being the true owner of Walsh Construction Services, LLC, James Conway concealed his ownership by signing contracts under Keith Walsh, a fictitious name.  He then used Walsh Construction to bill for $1.4 million of work the contractor purportedly performed at Picatinny Arsenal and Joint Base McGuire-Dix-Lakehurst, as well as collect on $180,345 of kickbacks from four subcontractors.  In addition to the prison term and restitution order, Conway was sentenced to three years of supervised release.  USAO NJ

September 24, 2019

The SEC has simultaneously charged and settled with a global information and media analytics firm, Comscore, Inc., and its former CEO, Serge Matta, for $5 million and $700,000, respectively.  Comscore had been accused of manipulating the accounting of non-monetary transactions in order to present the illusion of smooth and steady growth to investors.  Matta also agreed to reimburse Comscore $2.1 million representing profits from the sale of Comscore stock and incentive-based compensation pursuant to Section 304(a) of the Sarbanes-Oxley Act and to the entry of an order barring him from serving as an officer or director of a public company for 10 years.  SEC
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