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DID YOU SIGN AN EMPLOYMENT RELEASE WAIVING YOUR WHISTLEBLOWER CLAIM? EVEN IF YOU SIGNED A RELEASE, YOU MAY NOT HAVE LEGALLY RELEASED YOUR CLAIM.

Wednesday, May 30th, 2012

In order to provide an employee with a severance or layoff payment, employers now commonly require their employees to sign a Release which releases or waives all possible claims against their employer for wrongful termination, age discrimination or any other type of lawsuit that employees commonly file against employers. These releases are typically very broad and make clear that employees are releasing all claims during the entire period of employment that has anything to do with their employment.

Employers that do business with the federal and state governments or are involved in Wall Street-type finance are also now sometimes including references to whistleblower claims or even in some cases specific references to the False Claims Act (a federal law pertaining to government contractor fraud) or the Dodd-Frank law (a federal law pertaining to Wall Street-type fraud) in these employment releases.

For employees losing their jobs and concerned that they may not be able to find other employment quickly, it is natural and understandable for that employee to go ahead and sign the Release to receive their severance pay, even if they believe that they might have had a good whistleblower claim.

If you did sign such a Release and believe that you do have a good and current whistleblower claim, you may not be out of luck. Under specific circumstances that are too detailed to get into here, you may be able to pursue a whistleblower claim even if you have already signed an employment Release and even if you have already received your severance pay!

If you believe you have a good whistleblower claim, but are concerned that you may have recently signed an employment Release (or are about to sign such a Release) waiving your claim, call the attorneys at Kenney & McCafferty Law Firm and find out whether you can still pursue a whistleblower claim. The attorneys at Kenney & McCafferty are experienced in dealing with this specific issue and will help you figure out whether you can still pursue your whistleblower claim.

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Mortgage Fraud And Whistleblowers

Wednesday, May 23rd, 2012

Last week the Manhattan U.S. Attorney’s Office announced a $202.3 million settlement with Deutsche Bank’s AG mortgage unit for reckless mortgage lending practices. This is the third major bank settlement related to mortgage fraud by the Manhattan U.S. Attorney’s office in 2012, having announced a $158.3 million settlement with Citibank in February and a $132.8 million settlement with Flagstar Bank FSB in March.

Both the Citibank and Flagstar settlements were the result of whistleblower claims filed under the False Claims Act.

In February, the Brooklyn U. S. Attorney’s Office announced a $1 billion settlement with Bank of America related to improper mortgage practices. Part of that settlement included a settlement of two whistleblower actions that had been filed against Bank of America for mortgage fraud.

These cases highlight the importance of whistleblowers and the False Claims Act in continuing to combat financial improprieties at the banking institutions. It also suggests that more mortgage fraud cases brought by whistleblowers will be forthcoming given the success that both the Manhattan and Brooklyn U.S. Attorney’s Offices have experienced working with whistleblowers in this arena.

If you have knowledge of Securities Fraud and would like to discuss the possibility of a whistleblower award under the SEC whistleblower program, please contact our whistleblower attorneys today.  Kenney & McCafferty will consult with you about your case, including your ability to remain anonymous in filing for an award, without obligation.  All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.

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Posted in Bank Fraud, bank whistleblower, corporate fraud, False Claims Act, FHA fraud, HUD fraud, mortgage fraud, Uncategorized | Comments Off

CFTC Accuses Royal Bank of Canada of Massive Trading Scheme

Tuesday, April 3rd, 2012

On Monday, the Commodity Futures Trading Commission (“CFTC”) filed civil charges against Royal Bank of Canada (“RBC”), accusing the bank of engaging in hundreds of millions of dollars in illegal stock future trades to gain Canadian tax credits.

“Today’s action should make clear that the CFTC will not hesitate to bring charges against even the most sophisticated market participants who unlawfully exploit the futures markets for their own gain,” said David Meister, Director of the CFTC’s Division of Enforcement.

The complaint, filed in the Southern District of New York, alleges that from at least June 2007 to May 2010, RBC conducted a massive wash sale scheme in connection with exchange-traded stock futures contracts.  According to the CFTC, a small group of senior RBC employees allegedly created and managed a trading strategy whereby they improperly coordinated trades to allow subsidiaries of the bank to buy and sell stock futures without taking a position in the market, thereby eliminating, or washing, the risk of a loss.

Wash trades, the simultaneous and offsetting purchase and sale of futures contracts, are banned under U.S. futures law.

The lawsuit claims that the bank bought and sold stocks in U.S. and Canadian companies, and then took opposing positions on futures written on those same stocks.  Specifically, RBC “allegedly non-competitively traded hundreds of millions of dollars’ worth of narrow based stock index future and single stock futures contracts with two of its subsidiaries,” and then executed block trades on OneChicago LLC, an electronic futures exchange.

According to the complaint, those trades were not negotiated at arm’s length, as required by law.  Federal regulations allow futures trades between companies and subsidiaries only if they are conducted on an arm’s length basis.  In its complaint, the CFTC alleges that the trades were designed and controlled by senior RBC personnel acting on behalf of RBC’s behalf.

The goal of the scheme was to “realize lucrative Canadian tax benefits from holding certain public companies’ securities in its Canadian and offshore trading accounts,” while limiting market exposure.

The complaint also accuses the bank of concealing and making false statements about its scheme from OneChicago and CME Group, Inc., the entity that exercised regulatory compliance for OneChicago.  When asked to describe the trades to CME Group, the bank allegedly falsely stated that its trading activity was conducted at arm’s length, and concealed the fact that the strategy was created and managed by a group of RBC personnel.

“A fundamental purpose of the futures markets is to provide an arm’s-length mechanism for market participants to discover prices and shift risks associated with products traded in those markets,” added David Meister.  “RBC not only designed and executed a wash sale scheme that undermined that purpose, it went a step further and misled the exchange into believing that its conduct was lawful.”

The CFTC is seeking monetary sanctions and a permanent injunction against further violations of the Commodity Exchange Act and the CFTC’s regulations.

RBC has called the allegations “absurd,” and has promised to defend itself against “such baseless allegations,” said Elisa Barsotti, a spokeswoman for the bank.

To read more about the charges filed by the CFTC, see the Commission’s full press release at http://www.cftc.gov/PressRoom/PressReleases/pr6223-12.

If you have knowledge of Securities Fraud and would like to discuss the possibility of a whistleblower award under the CFTC whistleblower program, please contact our whistleblower attorneys today.  Kenney & McCafferty will consult with you about your case, without obligation.  All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.

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Tax Court Agrees with K&M Regarding Anonymity of Whistleblowers

Wednesday, March 14th, 2012

PHILADELPHIA—On December 8, 2011 the United States Tax Court handed down an important ruling favorable to maintaining the anonymity of whistleblowers during the appeals process following the issuance of a final award determination. See Whistleblower 14106-10W v. Commissioner, 137 T.C. No. 15 (2011).

Pursuant to the Court’s decision in Cooper v. Commissioner, 135 T.C. 70, 73 (2010), under § 7623 (b)(4) of the Internal Revenue Code, a letter from the Whistleblower Office denying a claim on the grounds that no award determination could be made under § 7623 (b) constitutes a determination conferring jurisdiction on the Tax Court.  As a result, when the Petitioner received such a letter, P’s counsel, K&M, timely filed an appeal of the determination along with a motion to for a protective order.

Of chief concern in this, and other cases pending under the IRS Whistleblower program, is that while the cases are filed with the understanding that the whistleblower will remain anonymous, such anonymity is lost once the individual elects to exercise his or her right to an appeal of a final award determination.  In rendering its lengthy opinion, the Court took into account the nature and severity of the asserted harm from revealing the petitioner’s identity, namely “‘economic and professional ostracism, harm, and job related harassment if my identity is revealed because my new employer and other potential employers will not want to hire or employ a known tax whistleblower.’” and compared that with the relatively weak public interest in knowing the petitioner’s identity.  Specifically, the Court held that “granting petitioner’s request for anonymity strikes a reasonable balance between petitioner’s privacy interests as a confidential informant and the relevant social interests, taking into account the nature and severity of the asserted harm from revealing petitioner’s identity and the relatively weak public interest in knowing petitioner’s identity. Consequently, pursuant to section 7461(b)(1) and Rule 103(a) we shall permit petitioner to proceed, effectively anonymously, as a “whistleblower”.  Whistleblower 14106-10W v. C.I.R., 14106-10W, 2011 WL 6110061 (T.C. Dec. 8, 2011).  Further, the Court ordered that all parties were to redact from the record both P’s and X’s names as well as any identifying information.

Simply, the Court’s opinion reinforces Congress’ intent to protect whistleblowers when it enacted the IRS program in 2006.  Although it is too soon to tell, the impact of this case may well be that more whistleblowers who, until now, shied away from appealing final determination (denial) letters for fear of being “outed”, will be inclined to step forward and push the IRS to reward informants who are valuable sources for detecting significant tax frauds.

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Whistleblowers Awarded $11.7 Million in Connection with JP Morgan Chase & Co’s $45 Million Settlement of Mortgage Fraud Qui Tam Suit Alleging the Lender Defrauded Veterans by Charging Hidden Fees

Tuesday, March 13th, 2012

Yet another mortgage fraud settlement has been finalized, and this time the culprit is JPMorgan Chase & Co.  JPMorgan has agreed to pay the federal government $45 million to settle in part a whistleblower lawsuit brought under the False Claims Act that alleged the company defrauded taxpayers and veterans by charging veterans hidden fees in mortgage refinancing.

The whistleblower suit was filed in 2006 by two mortgage brokers.  In the same lawsuit, the whistleblowers brought claims on behalf of the United States government against additional lenders, including Bank of America Corp, Wells Fargo & Co and Citigroup Inc.  The whistleblowers’ suit against the remaining defendant-lenders is still pending.

The two whistleblowers who brought the suit will share about 26 percent of the JPMorgan settlement, or $11.7 million.  They will receive additional relator share awards should they be successful in the litigation against the remaining defendant-lenders.

If you have knowledge of Corporate Fraud, including Mortgage Fraud, and would like to discuss the possibility of a whistleblower award under the False Claims Act, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege

 

 

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DOJ and SEC Mortgage Investigations Overlap

Tuesday, March 6th, 2012

Reuters has reported that the eleven bank subpoenas issued in January by DOJ expand upon previous document requests by the SEC in its ongoing investigations into improprieties relating to the packaging of residential mortgage securities.

According to the Reuters report, people who have reviewed the subpoenas state that the civil subpoenas ask for documents related to every residential securities offering between 2006 and 2008, including Fannie Mae and Freddie Mac bonds.

The SEC investigation that has been ongoing appears to have been limited to private offerings and did not include Fannie Mae or Freddie Mac bonds. The DOJ subpoenas have also apparently broadened the time period beyond the initial period being investigated by the SEC.

The investigations by the DOJ and the SEC appear to be a part of an inter-agency task force the government has organized to coordinate parallel efforts on current and future investigations.  In January,  SEC enforcement director Robert Khuzami said that his agency had already reviewed 25 million pages of documents as part of ongoing investigations into residential mortgage-backed securities.

Three firms, JPMorgan Chase & Co, Goldman Sachs Group Inc, and Wells Fargo & Co, have now disclosed that they have already received Wells notices from the SEC related to the SEC residential mortgage backed securities investigations. A Wells notice alerts putative defendants that the SEC is considering bringing charges and gives them a chance to rebut the allegations.

The Wells notice indicate that the SEC’s investigation against these three banks has matured to point that SEC  charges should be forthcoming. However, the new round of broader DOJ subpoenas indicates that the government  investigations will continue and possibly expand.

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Posted in Bank Fraud, bank whistleblower, corporate fraud, FHA fraud, government fraud, mortgage fraud, SEC Whistleblower Program, Uncategorized | Comments Off

Blowing the Whistle on Foreign Corrupt Practices Act Violations

Tuesday, July 26th, 2011

The Securities and Exchange Commission (SEC) whistleblower program provides for rewards for individuals who provide the government with information about violations of the Foreign Corrupt Practices Act (FCPA) of 1977.

The FCPA was enacted in 1977 in an effort to end the practice of multinational corporations obtaining business abroad by bribing foreign officials.  The Act covers any U.S. company or citizen doing business abroad.  It covers foreign companies — and their directors, officers, stockholders, employees and agents — with reporting and registration requirements under the Securities and Exchange Acts as well as any foreign person or company acting within the United States.

The FCPA makes it unlawful to bribe a foreign government official to obtain or retain business.  The Act prohibits U.S. companies and individuals from paying money or any other sort of inducement, including an offer or promise to pay money or anything of value, to a foreign official with the intent to influence a decision or action affecting that company’s business.

A foreign official is defined as “any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.”

The Department of Justice (DOJ) is the chief enforcement agency, with a coordinate role played by the SEC. The DOJ is responsible for all criminal enforcement and for civil enforcement of the anti-bribery provisions with respect to domestic concerns and foreign companies and nationals. The SEC, on the other hand, is responsible for civil enforcement of the anti-bribery provisions with respect to issuers.

The FCPA provides for criminal and civil penalties. The criminal penalties include fines on officers, directors, stockholders, employees and agents of up to $250,000 and up to five (5) years in prison. Meanwhile, corporations and other business entities can face criminal fines of up to $2 million, or alternatively twice the amount of ill-gotten profits. The civil fines under the FCPA include $10,000 against any violating company and individual. Moreover, the SEC may also require a disgorgement of profits.

In the past few years, prosecutions under the FCPA have dramatically increased. The SEC has established an enforcement unit, targeting violations of the FCPA by U.S. issuers. The DOJ has similarly assigned prosecutors and FBI agents exclusively to the FCPA. The federal authorities have also instituted more aggressive investigative tactics in their pursuit of FCPA violations.

The DOJ and the SEC recently settled with Johnson & Johnson (J&J) for $71 million. J&J agreed to pay $21.4 million in criminal penalties as part of a deferred prosecution agreement. J&J additionally settled a related matter filed by the SEC agreeing to more than $48.6 million in disgorgement of profits and pre-judgment interest. The $71 million aggregate settlement by J&J registers as just the 10th largest FCPA-related settlement since 2008.

The top nine FCPA related settlements are as follows: (1) Siemens for $800 million in 2008; (2) KBR/ Halliburton for $579 million in 2009; (3) BAE for $400 million in 2010; (4) Snamprogetti Netherlands B.V. for $365 million in 2010; (5) Technip S.A. for $338 million in 2010; (6) JGC Corp. for $218.8 million in 2011; (7) Daimler AG for $185 million in 2010; (8) Alcatel-Lucent for $137 million in 2010; and (9) Panalpina for $81.8 million in 2010.

If you have knowledge of an FCPA violation or other securities law violations and would like to discuss the possibility of a whistleblower award under the SEC or CFTC whistleblower programs, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.

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KM Case Results in $82.6 Million Judgment Against Renal Care Group

Tuesday, May 31st, 2011

Following the 6th Circuit’s dismissal of an appeal by Defendants Renal Care Group and Fresenius Medical Care for lack of jurisdiction, on May 26, 2011, U.S. District Judge William J. Haynes entered an order awarding $82.6 million to the United States in a Medicare fraud case against the two companies.  While replacing an earlier $19.3 million judgment issued last year against the same defendants, the Court upholds its prior determinations against RCG.

In his written opinion, Judge Haynes stated that RCG and its parent company, Fresenius Medical Care Holdings, Inc. “exhibited reckless disregard of legal mandates” in their billing practices and remarked that management officials failed to heed the advice of company lawyers.  Applying the full force and effect of the False Claims Act’s provisions, in rendering the judgment, Judge Haynes trebled the calculated damages for a total of $38,873,592 and imposed maximum civil penalties in the amount of $43,769,000 for a total of $82,642,592.  Pending any appeal by the defendants, this judgment represents a tremendous success for the Government in the fight against fraud and reinforces the harsh penalties for violative practices by corporations.

Filed in 2005 under the False Claims Act on behalf of former RCG employee Julie Williams, and nephrologists, Dr. John Martinez by Philadelphia based firms Kenney & McCafferty, P.C. and Egan Young, the case alleges that Renal Care Group (“RCG”) submitted false claims for equipment provided to End-Stage Renal Disease (“ESRD”) home dialysis patients from January 1999 through December 2005.  Additionally, the lawsuit claims that RCG set up a sham billing company, RCG Supply Co., thereby interfering with patients’ right of choice for supply options.

Transferred to the Middle District of Tennessee in 2009, the federal case was led by the U.S. Attorney’s Office for the Eastern District of Missouri under the direction of Assistant U.S. Attorney Andrew Lay with the assistance of the U.S. Attorney’s Office for the Middle District of Tennessee, under the direction of Assistant U.S. Attorney Lisa Rivera, and Laurie Oberembt and John Henebery from the Department of Justice.

To read Judge Haynes Memorandum Opinion, please click here.

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SEC Whistleblower Program Rules Available

Thursday, May 26th, 2011

Look for this link on the SEC's home page.

Since the Commission’s 3-2 vote  adopting the final rules yesterday, the SEC has made the document available on its website at ttp://www.sec.gov/news/press/2011/2011-116.htm

Kenney & McCafferty is carefully reviewing the document and determing how the new rules can benefit those reporting securities violations. For a free consultation about a potential claim of your own, please call K&M today.

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Posted in corporate fraud, Corporate Tax Fraud, False Claims Act, government fraud, Money Laundering Tax Fraud, SEC Whistleblower Program, Uncategorized, Whistleblower Protection | Comments Off

SEC Adopts Final Whistleblower Program Rules

Wednesday, May 25th, 2011

Mary Schapiro presided over the vote approving the SEC whistleblower rules.

In a split vote, the SEC adopted final rules to implement the whistleblower program provisions enacted under Dodd Frank in July 2010. Chairman Mary Schapiro presided over the discussion, with Sean McKessy and Stephen Cohen of the SEC’s staff answering questions by the commissioners on the proposal.

Cohen said that the SEC had strengthened its Office of Market Intelligence to handle the incoming tips and would be adding a special Whistleblower page to a new Tips, Complaints, and Referrals section of the SEC’s webpage. McKessy said that they have not seen a significant increase in the number of tips to the SEC since the passage of Dodd Frank, but staff has seen an improvement in the number of high quality tips received.

Commissioners Walter and Aguilar praised the SEC staff for implementing a “robust public process” leading to the development of today’s rules. Commissioner Paredes dissented and said that he thought the rules did not adequately preserve the role of internal corporate compliance programs and the process for reporting of tips would be a deterrent to whistleblowers. Paredes also said he voted against the proposal because the rules as proposed would create an “undue risk of encouraging low quality submissions.” Paredes said the issue was not the merit of whistleblower programs, but anticipated problems created by this particular set of rules.

Schapiro called for the vote, and the final rules were passed 3 to 2.

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