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Archive for March, 2012

Pfizer Pays $3.3M to Settle False Claims Allegations in Oregon

Wednesday, March 21st, 2012

Pfizer Inc. has agreed to pay Oregon more than $3.3 million to settle claims that the company used misleading statements and studies to market Zyvox.  The settlement comes after a two-year state investigation into the marketing of the company’s drug, which is used to treat pneumonia and bacterial skin infections.

Oregon Attorney General John Kroger announced the settlement on Tuesday.  The settlement follows a 2009 multistate settlement concerning Zyvox, as well as other drugs, which included $2.3 billion in fines against the company.

“Our investigation was aggressive, detailed, went placed that the federal settlement didn’t and provided additional settlement to the state of Oregon,” said David Hart, a senior AG who headed the investigation.

The complaint, filed in Marion County Circuit Court, alleged that Pfizer used “unreliable and unsubstantiated claims” in marketing Zyvox as a better alternative than its generic competitors.

Pfizer denied the allegations, yet released a statement saying it was “pleased to resolve this investigation and avoid the further time and cost of litigation.”

For more information on the settlement, see the full article in the Washington Post at http://www.washingtonpost.com/business/industries/pfizer-agrees-to-pay-oregon-33m-in-antibiotic-marketing-case/2012/03/21/gIQAfGx1QS_story.html.

If you have knowledge of Healthcare 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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SEC Praises Whistleblower Tips

Wednesday, March 21st, 2012

The SEC’s new whistleblower award program is already making an impact, as many insiders are coming forward with investigative leads, hoping to cash in on the program.

The SEC whistleblower program allows individuals who present original information that leads an enforcement action resulting in monetary sanctions of over $1 million to collect an award.  The award may range from 10-30%, depending on factors such as the significance of the information.  Whistleblowers range from current insiders, former employees, and outside observers.

The SEC vets the tips through its market intelligence unit, which is comprised of nearly fifty attorneys.  Potentially good leads are then funneled to enforcement attorneys.

SEC officials have recently commented that the quality of the tips received is surprisingly high, and some have resulted in “huge cases.”

According to the Financial Times, some insiders are taking on the role of detective.  Recently, due to concerns with a deal on which he had worked, a company insider submitted a tip to the SEC.  That tip resulted in an internal investigation and an SEC inquiry, which uncovered other problematic deals by the targeted company.

“In the stock market we’ve had good intel simply because of the surveillance by self-regulatory organizations and the firms themselves,” says Thomas Sporkin, head of the SEC’s market intelligence unit.  “This program similarly provides a set of eyes and ears on the corporate side,” he said.

To read more about the SEC turning whistleblower tips into cases, see the full Financial Times article at http://www.ft.com/intl/cms/s/0/15e5a89c-6a27-11e1-b54f-00144feabdc0.html?ftcamp=published_links/rss/companies_us/feed//product#axzz1pl9KTUK8.

If you have knowledge of Securities Fraud or Corporate 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, 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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Another BofA Mortgage Whistleblower

Tuesday, March 13th, 2012

Another whistleblower lawsuit with ties to the $1 Billion False Claims Act Bank of America settlement announced on February 9, 2012 by the United States Attorney’s Office for the Eastern District of New York has been unsealed. The suit charges the bank with fraud violations under the Home Affordable Modification Program (“HAMP”).

Gregory Mackler, a former contractor with the servicing outsourcerUrban Lending Solutions, filed the lawsuit in July. The lawsuit charges BofA with developing procedures that kept trainees like Mackler from researching or resolving any HAMP inquiries or complaints in order to avoid millions of dollars in losses while benefitting from the financial incentives of the program. The Treasury Department paid $1.8 billion in HAMP servicer incentives through December, according to the special inspector general of the Troubled Asset Relief Program.

In February, a whistleblower complaint was unsealed from Kyle Lagow, a former employee in a Countrywide appraisal unit which detailed allegations of Countrywide’s “corrupt underwriting and appraisal process. Final settlement documents have yet to be filed in the BoA settlement, which the U.S. Attorney’s Office said was the largest ever False Claims Act payout related to mortgage fraud.

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.

The Department of Justice has until March 16 to decide whether to intervene in the Mackler and Lagow cases.

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

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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Attorney General Warns: More Corporate Crime Charges Coming

Tuesday, March 13th, 2012

Those individuals involved in corporate fraud may soon find themselves in the crosshairs of the Department of Justice.  According to Attorney General Eric Holder, the DOJ plans to take action against individuals responsible for corporate fraud, adding that fines against corporations are not a deterrent.

“It can’t simply be that you make billions of dollars and then you pay hundreds of millions of dollars in penalties. That’s not a disincentive,” Holder said.  According to the Attorney General, “there have been far too many repeat offenders.”

Recently, the DOJ has been the target of strong criticism over its failure to bring actions against individual employees responsible for corporate fraud.  In the past, the DOJ has generally brought cases against corporations.

With this new approach, the DOJ hopes to counter its critics.

“We’re gonna make some news with regard to holding individuals responsible for things we tend to think of as corporate crimes,” Holder said at a meeting of state attorneys general in Washington.

If you have knowledge of Corporate 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

Mortgage Fraud: The New FCA Arena

Friday, March 2nd, 2012

This week the United States Attorney’s Office for the Southern District of New York (Manhattan) announced that it had settled another major mortgage fraud case against a lending institution. Under the terms of the settlement agreement, Flagstar Bank FSB has agreed to pay $132.8 million in damages and penalties under the False Claims Act for improperly approving residential home mortgage loans for government insurance.

Manhattan U.S. Attorney Preet Bharara stated, “[This] is another stark example of how certain lenders put profit ahead of responsibility by recklessly churning out mortgage loans without regard to the risk that those loans would default or the significant consequences for the individual homeowners who would inevitably default on their loans, the housing market, and in the aggregate, our nation’s economy.”

On February 15, 2012, Bharra announced that Citicorp Inc.’s Citimortgage unit had agreed to pay $158.3 million to settle claims tied to mortgage fraud related to the federal home-loan insurance program. That false claims action filed by a whistleblower alleged more than six years of misconduct in connection with the Federal Housing Administration Direct Endorsement Program.

Both these cases come on the heels of a $1 billion settlement with the government announced by the Bank of America that relates at least in part to a False Claims Act case filed by a whistleblower alleging mortgage fraud. That case was unsealed last Friday in the Eastern District of New York (Brooklyn).

These cases are part of an overarching investigations by the United States Attorney’s Offices for the Southern (Manhattan) and Eastern (Brooklyn) Districts of New York into the fraudulent banking practices that occurred over the past decade.

Mortgage fraud will continue to be a focus of these investigations because of the billions of dollars in losses suffered by HUD, FHA, Fannie Mae and Freddie Mac as a result of the rampant mortgage fraud that was orchestrated by national banks during that time. This is a target rich environment for the government with many potential whistleblowers who will no doubt continue to come forward exposing the environment that led to these frauds over the last decade.

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