Whistleblower Insider

Whistleblower Insider is written by the Constantine Cannon law firm team of experienced qui tam and whistleblower lawyers. It is updated daily to provide the latest whistleblower and fraud news and developments.
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February 23, 2018

Fraudster of the Week — BitFunder Founder Jon E. Montroll

By the C|C Whistleblower Lawyer Team

On Wednesday, the Securities and Exchange Commission filed a lawsuit against Jon E. Montroll and his former company, BitFunder, alleging violations of the anti-fraud and registration provisions of the federal securities laws. In parallel criminal proceedings, the U.S. Attorney’s Office for the Southern District of New York charged Montroll with perjury and obstruction of justice in connection with the SEC’s investigation into his company’s activities. BitFunder, which operated from 2012 to 2013, was an online platform that permitted users to buy and sell virtual “shares” of digital currency-related businesses in exchange for Bitcoin.  click here for more »

February 23, 2018

Dodd-Frank’s Anti-Retaliation Protections Apply Only to Whistleblowers Who Report to the SEC

By the C|C Whistleblower Lawyer Team

In Digital Realty Trust, Inc. v. Somers, a 9-0 opinion by Justice Ginsburg, the Supreme Court held that the anti-retaliation provisions of the 2010 Dodd-Frank Act do not extend to employees who have reported internally but extend only to employees who have reported suspected securities law violations to the SEC. The Supreme Court’s decision reversed the Ninth Circuit, and resolved a longtime circuit split. The Fifth Circuit has held that employees must provide information to the SEC while the Ninth and Second Circuits held that reporting internally is enough for employees to qualify for Dodd-Frank Act’s anti-retaliation protections.  click here for more »

February 23, 2018

Whistleblower News From The Inside — February 23, 2018

By the C|C Whistleblower Lawyer Team

Former employee accuses Tesla of selling defective cars – A recently-filed lawsuit claims Tesla intentionally sold defective cars to customers as “used” or “demo/loaner” vehicles. The plaintiff, Adam Williams, is a former regional manager for Tesla in New Jersey who started working at the company in 2011, and claims he was demoted and fired after reporting the practice to his superiors. The lawsuit alleges that, during Williams’ time with the company, he became aware of “high-dollar, pre-delivery damage repairs” to vehicles that were not revealed to the customers who bought them. Williams claims he told his supervisor and a vice president at the company about the practice in late 2016 or early 2017 and was demoted in early 2017 while the company allegedly continued to hide significant repairs made to vehicles before they were sold. Business Insider

Medical device company must face shareholder lawsuit  A federal appeals court revived a shareholder lawsuit alleging medical device company Trans1 Inc. hid from investors the fact that it was engaged in a fraudulent scheme to obtain reimbursements from government healthcare programs. The ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, came in a lawsuit that was prompted by a federal investigation that resulted in the company paying $6 million as part of a settlement with the U.S. Justice Department in 2013 over alleged violations of the False Claims Act. Reuters

Miami-area man Sentenced to prison for role in $63M health care fraud scheme  A Miami-area man was sentenced to 60 months in prison for his role in a $63 million health care fraud scheme involving a now-defunct community mental health center located in Miami that purported to provide partial hospitalization program services to individuals suffering from mental illness. As part of his guilty plea, the man admitted that from approximately January 2006 through June 2012, he received kickbacks and/or bribes in return for referring Medicare beneficiaries from the Miami-Dade state court system to Greater Miami Behavioral Healthcare Center Inc. to serve as patients. He further admitted that he did so knowing that certain of those individuals were not mentally ill or otherwise did not meet the criteria for PHP treatment. DOJ

February 22, 2018

Greek Parliament Opens Investigation into Pharmaceutical Bribery

By the C|C Whistleblower Lawyer Team

After twenty hours of debate, the Greek Parliament has approved the creation of a committee to investigate accusations that Novartis, a Swiss pharmaceutical company, bribed at least ten high-level politicians. The investigation will now hold separate and secret votes on whether each of the ten involved politicians should be investigated. The list of politicians includes two former Prime Ministers, as well as the current central bank governor. The parliamentary commission follows a report in which Greek prosecutors found evidence that Novartis paid politicians and doctors to increase their access to the Greek market, and fix prices at artificially high levels. click here for more »

February 22, 2018

Whistleblower News From The Inside — February 22, 2018

By the C|C Whistleblower Lawyer Team

Massachusetts lab settles FCA suit for over $650k  Precision Testing Laboratories have settled allegations that it marketed and conducted expensive, complex, and medically unnecessary drug tests on residents of Medicaid-funded sober homes in Connecticut. As part of the settlement, Precision Testing is banned from participation in Connecticut’s Medicaid program for 10 years. Connecticut AG

Long Island man convicted of larceny for stealing from Medicaid-funded charity  John Cornachio was convicted of larceny for holding a “no-show” job in order to steal from Narco Freedom, a Bronx non-profit that was founded to provide substance abuse services. As part of this investigation, the State also filed a civil suit under the New York FCA against Narco Freedom, which resulted in a $118M settlement (in bankruptcy) with New York and Federal authorities in January 2016. Cornachio received over $800k in salary and benefits from his fake job. New York AG

Maryland man convicted of food stamp fraud  Mahmood Hussain Shah was convicted on charges of wire fraud in connection with a scheme to redeem food stamp benefits for cash. Shah, who owned a grocery store in Baltimore, received over $1.6M in payments for food sales that never occurred. USAO Maryland

February 21, 2018

Question of the Week — Do you agree Louisville must vacate its 2013 Championship?

By the C|C Whistleblower Lawyer Team

This week, the NCAA announced that University of Louisville must vacate its 2013 college basketball championship after finding Louisville coaches acted unethically by arranging prostitutes for prospective players and student athletes. Louisville had appealed the NCAA’s decision, but this appeal was denied.

This announcement comes as college basketball continues to be rocked by an FBI probe into the corrupt practices of many top basketball programs across the country, which led to the indictment of ten men in September 2017 for illegal recruitment practices. It is widely expected that this initial indictment is only the beginning, and that additional criminal charges will follow. There is thus the real possibility that more programs than just Louisville will be losing their right to call themselves champions. click here for more »

February 21, 2018

JP Morgan Whistleblower to Receive $30 Million Award

By the C|C Whistleblower Lawyer Team

An unnamed whistleblower is set to receive a $30 million award from the Commodities Future Trading Commission (CFTC), according to Bloomberg, for reporting JPMorgan Chase & Co.’s failure to properly disclose that it was directing certain wealthy clients into investments that would be profitable for the bank. The conduct led to JPMorgan’s 2015 agreement to pay $367 million in sanctions, including $100 million to the CFTC and $267 million to the SEC. click here for more »

February 21, 2018

Whistleblower News From The Inside — February 21, 2018

By the C|C Whistleblower Lawyer Team

IRS increases Caterpillar tax penalty to $2.3 billion – In the company’s annual financial reports, Caterpillar Inc. disclosed that the Internal Revenue Service’s determination of back taxes and penalties Caterpillar owes the United States government has grown by about $300 million. The sanctions, imposed for Caterpillar’s offshore tax strategy, have increased as the IRS completes audits of the company’s tax filings. Peoria Journal Star

Armored vehicle company CEO sentenced for role in scheme to defraud the United States – The owner and CEO of Armet Armored Vehicles was sentenced to more than five years for his role in a scheme to defraud the United States by providing the Department of Defense with armored gun trucks that did not meet ballistic and blast protection requirements set out in the company’s contracts with the government. DOJ

CFTC warns customers to avoid virtual currency pump-and-dump schemes – The Commodity Futures Trading Commission issued a Customer Protection Advisory warning customers to beware of pump-and-dump schemes that can occur in thinly traded or new “alternative” virtual currencies, digital coins or tokens. CFTC

February 20, 2018

National Whistleblower Reward Day

By the C|C Whistleblower Lawyer Team

February 20th is National Whistleblower Reward Day. The day was created by former Department of Justice Attorney Joel Hesch to bring attention to the importance of whistleblower reward programs. The False Claims Act is the foundation of the U.S. whistleblower system, and by far the most widely used statute by whistleblowers to report corporate fraud and misconduct. Since 1986, the Department of Justice has recovered over $40B in False Claims Act cases brought by whistleblowers. click here for more »

February 20, 2018

Whistleblower News From The Inside — February 20, 2018

By the C|C Whistleblower Lawyer Team

Parliamentary group launches inquiry into young financial crime victims — The All-Party Parliamentary Group on Financial Crime and Scamming has launched a review into how young people can be protected from financial crime after research found that they are at an increased risk of falling victim to online fraud. Financial Reporter

More arrests in $1.8bn Punjab National Bank scam — Indian federal police said on Monday the latest arrests included two managers of the bank’s foreign exchange department. Last week three people, including two bank staff, were arrested as part of an investigation into the bank scam. A billionaire jeweler, Nirav Modi, and others are accused of colluding with employees at Punjab National Bank. BBC

Sentencing set in military vehicle contract fraud case — Attorneys for a Canadian man convicted of defrauding the U.S. military after being contracted to supply armored vehicles for use in Iraq are asking a federal judge for leniency. WTOP