Forensic News December 2014
Financial/Accounting Fraud
Companies Ignore Risks, Benefits of Whistle-Blowing
Multinational companies don’t do enough to encourage whistle-blowers who could help them uncover bad behavior, according to a law firm survey. Almost half of the 2,500 employees queried in the U.S., U.K., Hong Kong (http://topics.bloomberg.com/hong-kong/), Germany (http://topics.bloomberg.com/germany/) and France (http://topics.bloomberg.com/france/)said their companies don’t have or don’t publicize whistle-blower policies (http://www.freshfields.com/en/global/), Freshfields Bruckhaus Deringer LLP said in a report. Fewer than one in 10 said it’s an important issue at their work. Whistle-blowers have been key in uncovering wrongdoing in several high-profile cases resolved this year. In September, the U.S. Securities and Exchange Commission awarded more than $30 million (http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370543011290#.VL2UUC6iB0p) – the highest-ever such payout – to a person who provided key information in an unidentified fraud case. Bank of America Corp.’s (http://www.bloomberg.com/quote/BAC:US) Countrywide unit had to pay $1.3 billion in July for defective mortgage loans (http://topics.bloomberg.com/mortgage-loans/) after a source came forward. In June, France’s BNP Paribas SA (BNP) (http://www.bloomberg.com/quote/BNP:FP) was fined almost $9 billion for violating U.S. sanctions in a case that began when an informant approached the Manhattan District Attorney (http://topics.bloomberg.com/district-attorney/). Whistle-blowers can help companies address wrongdoing before outside investigators learn of it, as well as mitigate penalties when they are targeted in probes, according to Adam Siegel, Freshfields’s co-head of global investigations. “Robust whistle-blowing policies bolster a company’s argument that it has implemented adequate procedures to guard against bribery,” said Siegel, who is based in New York. “They also make it more likely that concerns will be raised internally.” The Freshfields survey found that about 12 percent of employees had blown the whistle before and almost half would consider it. Still, nearly 40 percent were concerned they’d face repercussions including losing their jobs if they did. ‘It’s surprising that employees continue to fear unfavorable treatment’ given the protections many countries have in their laws, said Caroline Stroud, an employment partner at Freshfields in London (http://topics.bloomberg.com/london/). “Boards need to create a culture in which employees are not only protected but genuinely encouraged to make disclosures to their superiors.” The survey was conducted between September and October and focused on middle and senior managers from industries including finance, telecommunications and law.
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Tesco’s troubles split funds seeking oversold stocks
A halving of Tesco’s share price is luring only the boldest active fund managers back into Britain’s top supermarket group, with many still unpersuaded it can recover from a year of disasters. While still Britain’s biggest grocer by far, Tesco’s days of achieving startling growth appear to be over. However, some fund managers tasked with hunting out cheap stocks ripe for a rebound are taking the plunge. Doubters, on the other hand, argue that Tesco has yet to become a value stock, attractive for its price as much as its business growth prospects. Tesco has issued a string of profit warnings as low-cost rivals eat into its business. Its problems deepened in September when it admitted to overstating earnings, prompting a series of investigations including by Britain’s Serious Fraud Office (SFO) and leading to a fourth lowering of profit forecasts. Many shareholders have bailed out during the 53 percent slide in Tesco stock since the start of the year, including legendary U.S. investor Warren Buffett. Concerns also remain about the company’s governance and strategy. Index tracker funds, which have no choice but to buy constituent stocks as investors give them money, remain among the biggest buyers of Tesco shares. However, some active “value” funds, which seek oversold stocks, have also bought in as Tesco has shuffled its management and prepares to announce a strategic plan in January. To them, Tesco already looks cheap. Its market value has lost 12.8 billion pounds ($20 billion) this year and the shares trade at 0.9 times the forecast value of its assets over the next 12 months, 53 percent below its 10-year median. On another measure, Tesco stock trades at 1.1 times its current book value compared with the 1.4 times average for leading European supermarket groups. Ian Kelly, a fund manager in the value investing team at Schroders, said the share price was justified only if the group were to suffer from a combination of three negative factors. “Its current valuation implies the present tough environment lasts forever, that most supermarkets will make no money and Tesco will never grow its revenues again,” he said. “To us, this seems like an unlikely triad of circumstances.” Kelly cited Tesco’s robust balance sheet and its size: it had a 28.9 percent share of the UK market at mid-year compared with 17.1 percent for second placed Asda. Schroders added 30 million shares to make it Tesco’s eighth-biggest shareholder. Keeping track of who owns a stock at any given moment is hard as funds typically disclose full holdings publicly only every three or six months, but data from tracker Morningstar shows the divergent opinions among all funds. Just over a quarter of the 151 British funds disclosing their bets on Tesco between September and November raised their exposure, Morningstar data showed. Slightly more than a fifth cut their exposure, while the rest made no changes. Norway’s oil fund, the top shareholder with nearly 7 percent, said in October that Tesco had weighed on its performance. However, it refused to say whether it had sold out, and is not expected to update the market until March 2015.
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Citigroup Expenses Bring Total to $13 Billion on Corbat’s Watch
Citigroup Inc.’s (http://www.bloomberg.com/quote/C:US) fourth-quarter legal expenses and costs for shrinking the business will bring the total for those items under Chief Executive Officer Michael Corbat (http://topics.bloomberg.com/michael-corbat/) to $13.3 billion, more than half of the bank’s earnings in his 26-month tenure. Corbat, 54, said the New York-based bank will report $2.7 billion in quarterly legal expenses, the most since he became CEO in October 2012, data from company reports show. An estimated $800 million in costs to dismiss workers and close branches and offices will be the most since the quarter when Corbat succeeded Vikram Pandit (http://topics.bloomberg.com/vikram-pandit/) in the CEO role. Wall Street firms including Citigroup have faced sliding revenue from fixed-income trading, once a key profit engine, and escalating legal costs. Corbat said the bank’s legal costs are tied to investigations into alleged manipulation of currency and interest-rate benchmarks as well as the bank’s controls against money laundering (http://topics.bloomberg.com/money-laundering/). “We’ve tried to put our best estimate on what those numbers should be like, and try and really shoot for a clean 2015,” Corbat said at an investor conference in New York, referring to the legal costs. The bank will be “marginally profitable” in the quarter, he added. Costs for cutting jobs and offices should “come down considerably” next year, Corbat added. Citigroup adjusted its third-quarter earnings lower on Oct. 30, two weeks after the numbers were initially reported. The company added a $600 million legal charge that it attributed to “rapidly evolving regulatory inquiries and investigations.” Last month the bank agreed to pay $1.02 billion to settle a probe into currency manipulation with three regulators in the U.S. and U.K., the biggest of six firms involved in the accord. The bank has said it’s cooperating with the U.S. Justice Department, which is pursuing criminal currency-rigging cases against multiple banks. In March, Citigroup said its Banamex USA business, part of the bank’s Mexican unit that disclosed a $400 million loan fraud this year, had received subpoenas related to compliance with the Bank Secrecy Act and federal anti-money-laundering rules. Citigroup slid 1.4 percent to $55.61 at 1:56 p.m. in New York (http://topics.bloomberg.com/new-york/), the worst performance in the 24-company KBW Bank Index. The shares have gained 6.7 percent this year. The fourth-quarter legal costs compare with the $1.55 billion reported by the bank for the third quarter when the $600 million charge is included. The bank set aside $1.29 billion in the fourth quarter of 2012. Corbat is seeking to trim expenses after years of acquisitions and mismanagement created a bloated infrastructure and inflated staffing levels. The company’s restructuring expenses have totaled $3.4 billion since he became CEO, including costs linked to a portfolio of assets the bank has tagged for sale. Corbat said the effort will lead to $3.4 billion in savings.
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Swiss contractor to pay $434 million for overcharging U.S. on food, water
Swiss firm Supreme Foodservice GmbH pleaded guilty to overcharging the United States for food and bottled water it provided to U.S. armed forces in Afghanistan and will pay $434 million to resolve a series of related cases, according to court documents. The company had contracts worth $8.8 billion between 2005 and 2013 with the U.S. military, through which it received $48 million in illegal profits, prosecutors said. The settlement includes $288 million paid in connection with the guilty plea and $146 million to resolve civil U.S. claims, some of which were originally brought by a whistleblower. The cases were investigated by federal prosecutors and Justice Department lawyers in Pennsylvania, Virginia, Illinois and Washington, D.C. The company, formerly known as Supreme Foodservice AG, engaged in the fraud by using a middleman to mark up prices on local produce and obscure inflated prices for bottled water, according to the plea agreement. Prosecutors said the inflated prices included a 125 percent mark-up on non-alcoholic beer. “The department will pursue contractors that knowingly seek taxpayer funds to which they are not entitled,” Joyce Branda, head of the Justice Department’s civil division, said in announcing the agreements. The company said in a statement it regretted and accepted responsibility for its past actions, and that it had implemented new compliance processes.
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Former Miami-area mayor found guilty in mortgage fraud scheme
A federal jury in Florida found a former Miami-area mayor guilty of six counts of wire fraud, part of a scheme that used straw buyers and false mortgage applications to collect millions from lenders. Marie Lucie Tondreau, 54, was taken into custody and will face up to 30 years in prison at sentencing in March. Prosecutors said Tondreau, a Haitian-American activist and radio host, used her notoriety in Miami’s Caribbean community to recruit people to provide their information for up to $10,000 to complete falsified mortgage applications. Between 2005 and 2008 Tondreau brought in 13 individuals whose identities were used to buy 20 Miami-area homes that were rented out for profit, according to prosecutors. The $11 million mortgage fraud scheme unraveled when one straw buyer was contacted by a lender about an overdue mortgage payment, according to Assistant U.S. Attorney Lois Foster-Steers. “When he went to her for help ... Ms. Tondreau said he had money in his pocket, and he shouldn’t complain,” Foster-Steers said during closing arguments. Defense attorneys laid blame on Tondreau’s onetime fiancée Karl Oreste, who they said led the scheme and misled Tondreau, using her reputation to bring in buyers. Oreste pleaded guilty to seven wire fraud charges in July and is due to be sentenced early next year. Neither Oreste, who was expected to take the stand as a government witness, nor Tondreau testified. She is one of about a half dozen Miami-area mayors to face charges of wrongdoing over the past two years. Former Miami Lakes Mayor Michael Pizzi, accused of accepting bribes from undercover FBI agents, was exonerated by a federal jury in August. Former Homestead Mayor Steven Bateman will be sentenced after being found guilty in September of two felony charges tied to holding a consulting job while in office.
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Top American Realty Capital executives leave; shares fall
American Realty Capital Properties Inc, the real estate investment trust that creates alternative investments sold to retail investors, said that Executive Chairman Nicholas Schorsch and two other senior officers have stepped down. David Kay, who had replaced Schorsch as chief executive officer in the fall, left, along with American Realty President and Chief Operating Officer Lisa Beeson, the company said. American Realty, which is being investigated by the Federal Bureau of Investigation after announcing a $23 million accounting error in late October that is forcing a restatement of its results for the first half of 2014, said it was unwinding relationships in other entities with which Schorsch is affiliated. RCS Capital Corp was down 10.4 percent to $10.58. Schorsch is executive chairman of the company, which owns eight independent broker-dealers. RCS Capital has not announced changes to its board or management, a spokesman said. Under an acquisition plan engineered by Schorsch, RCS Capital in the past two years became the second biggest independent broker-dealer with more than 9,000 affiliated brokers. Schorsch has relinquished 1 million restricted American Realty shares he was recently granted, the company said in a Securities and Exchange Commission filing, but retains 1 million shares granted in October 2013 that recently vested under an accelerated plan. American Realty said Schorsch will “promptly” return the shares if a court finds him guilty of breaching his fiduciary duty, fraud or misconduct. RCS Capital executives, who are paid through a management firm controlled by Schorsch, have asserted the company’s independence from American Realty and its management. It also has backed out of a plan to buy an asset management company from American Realty for $70 million since the announcement of the restatement. RCS Capital stock have fallen more than 35 percent since American Realty’s announcement of the restatement, leading RCS Capital to renegotiate an exchange of preferred shares with a major investor. Dozens of brokerage firms have suspended agreements to sell mutual funds, illiquid business development companies, nontraded REITs and other alternative investments that were distributed to them through a RCS Capital unit. William G. Stanley, American Realty’s lead director was named interim CEO and chairman, the company said. He owns a brokerage firm and an investment adviser serving wealthy retail clients.
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New York lawyer charged in $5 million fraud outlined in suicide note
A New York lawyer left a suicide note admitting that he had run a $5 million Ponzi scheme and called the investments “all an illusion,” prosecutors said. Charles Bennett, 56, who was rescued Nov. 3 after he jumped into the Hudson River, was arrested and charged with securities and wire fraud in Manhattan federal court. Police officers recovered a note Bennett signed called “A Sad Ending to My Life” in which he confessed he “managed to completely squander the hard-earned money” of his family and friends, according to court documents. “It was a Ponzi scheme pure and simple,” Bennett wrote, the criminal complaint said. The U.S. Securities and Exchange Commission also sued Bennett, saying he lured 30 investors with promises of 6 to 25 percent returns and misleading claims that a New York State governor and his then-wife were also investors. While not named in the complaint, Silda Wall Spitzer, Eliot Spitzer’s ex-wife, confirmed she once worked with Bennett at Skadden, Arps, Slate, Meagher & Flom. She called the case “astonishing and heartbreaking on all counts.” Eliot Spitzer, who was governor from 2007 to 2008, called it “a horrific act by someone who pretended to have a relationship that did not exist and who lured unwitting investors into a Ponzi scheme.” The FBI arrested Bennett at Mount Sinai Roosevelt Hospital, where he was being treated following the suicide attempt. During a court hearing, prosecutor Amy Lester argued Bennett should be detained, saying he demonstrated a “great risk – some might say the ultimate risk – to avoid prosecution.” A judge instead allowed him to remain free until his hospital release after Bennett’s lawyer argued he would not avoid facing the charges. “This is a person who’s suffering a great deal of regret and remorse,” said Julia Gatto, Bennett’s lawyer. According to the SEC, Bennett previously worked at several law and accounting firms, including the law firm where he met the governor’s ex-wife. In 2001, Bennett started his own law practice, which he had trouble keeping afloat, the SEC said. He began the Ponzi scheme in 2008, authorities said, telling investors he had a relationship with a fund manager and could arrange for investments in the fund. But Bennett never invested the money and instead used it for his own benefit and to repay investors, authorities said. The suicide attempt came after investors began demanding repayment, Lester said.
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Fraud from bots represents a loss of $6 billion in digital advertising
Almost one-fourth of video ads and 11 percent of display ads are viewed by fake consumers created by cyber crime networks seeking to take a chunk of the billions of dollars spent on digital advertising (http://bit.ly/1stXX3p), according to a new research report. The study, by digital security firm White Ops and the Association of National Advertisers, is one of the most comprehensive looks to date at the persistent criminal activity involving online advertising. Specifically, it addresses “bots,” automated entities that mimic the behavior of humans by clicking on ads and watching videos. These bots siphon money away from brands by setting up fake web sites or delivering fake audiences to web sites that make use of third-party traffic. The report estimates that advertisers will lose $6.3 billion to bots next year. “We have long suspected and have long known there was fraud in our industry,” said Bob Liodice, the president and chief executive of the ANA, an organization that represents thousands of brands. “We didn’t know the exact amount or the reasons why it was happening.” The study included 36 ANA member companies, including Anheuser-Busch InBev SA, Ford Motor Co Verizon Communications Inc and Pfizer Inc. White Ops monitored 181 online advertising campaigns by the brands from August to October to determine fraud activity. Bot fraud has long been part of the ecosystem of low-price ads that cost a few dollars or less. This study revealed, however, that many premium web sites and publishers, which charge roughly 10 times more for an ad, are just as vulnerable. “We found a lot of bots suddenly inflating the audience of web sites we recognize that are clearly not being run by international organized crime,” said Michael Tiffany, the CEO and co-founder of White Ops. In one instance, White Ops found that 98 percent of video ads at a premium lifestyle site were viewed by bots. The report does not name the web sites where the fraud was found. “The ad industry was treating the bots as a faceless swarm,” said Tiffany. “What no one was anticipating is that the bots are extremely effective of looking like a high value consumer.” Liodice said the report will help the industry develop an action plan to combat fraud.
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Foreign Corrupt Practices Act (FCPA)
Sanofi Whistle-Blower Claims Drugmaker Paid Kickbacks
A former Sanofi (SAN) (http://www.bloomberg.com/quote/SAN:FP) paralegal claimed in a lawsuit that she was fired after complaining the drugmaker illegally paid $34 million in kickbacks to induce physicians, hospitals and pharmacies to switch to its diabetes drugs. In a whistle-blower suit filed in state court in Newark, New Jersey, Diane Ponte said former Chief Executive Officer Chris Viehbacher was among those at the company who engaged in the scheme. Paris-based Sanofi fired Viehbacher on October 29, ending a six-year tenure marked by tension with board members and French politicians. Ponte, 53, claims she reviewed nine contracts to vendors Accenture Plc and Deloitte LLP that were intended to fund kickbacks. When Ponte balked at signing off on the agreements, a superior told her that Viehbacher was “‘extremely unhappy’ with the fact that she had not yet approved them,” according to the complaint. In December 2012, the Justice Department said (http://www.justice.gov/opa/pr/sanofi-us-agrees-pay-109-million-resolve-false-claims-act-allegations-free-product-kickbacks) two Sanofi subsidiaries in the U.S. paid $109 million to resolve allegations that they gave physicians free units of Hyalgan, a knee injection, to induce them to buy and prescribe the drug. Mary Kathryn Steel, a spokeswoman for Sanofi, said in an e-mail that the company doesn’t comment on litigation. Accenture (ACN) (http://www.bloomberg.com/quote/ACN:US) and Deloitte are not named as defendants in the complaint. Ponte, who worked in Bridgewater, New Jersey, said she reported the fraud to her superiors and was subjected to a “severe and pervasive pattern of workplace retaliation” before she was fired on Oct. 29. According to the complaint, one superior mocked her, calling her a “ditz,” “dingbat,” “lunatic” and “scatterbrain.” “The acts surrounding her termination from the company were blatantly related to her whistle-blowing activity,” Ponte attorney Rosemarie Arnold said in an interview. “She was a model employee before that.” Ponte claims Sanofi violated the New Jersey Conscientious Employee Protection Act. It seeks unspecified compensatory and punitive damages. Arnold said she also intends to file a federal False Claims Act lawsuit on Ponte’s behalf.
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Singapore court charges former ST Engineering execs with bribery, fraud
A Singapore court filed bribery and fraud charges against three former executives at Singapore Technologies Engineering Ltd, one of Asia’s largest defence and engineering groups. Singapore state investor Temasek Holdings Pte Ltd is the largest shareholder in ST Engineering. The charge sheets named the three former executives as Chang Cheow Teck, Mok Kim Whang and Ong Tek Liam, and said the alleged misconduct was committed far back as 2004 when the three executives worked at ST Engineering’s marine unit. All three have since left the company, ST Engineering said. According to the charge sheets, Chang and Mok allegedly paid bribes to agents of companies including Hyundai Engineering and Construction Ltd to win contracts. Ong was charged with falsifying ST Marine’s accounts. The three individuals could not immediately be reached for comment. Hyundai Engineering executives also could not immediately be reached for comment. Singapore has a reputation for being one of the world’s least corrupt nations, thanks to stringent enforcement of anti-graft laws. A number of high-profile corruption cases have emerged in recent years, including one involving the former chief of the civil defence force.
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Brazil targets Petrobras contractors as corruption probe expands
Brazil’s comptroller general opened cases against eight engineering conglomerates suspected of bribery and fraud in deals with Petrobras, holding them accountable for their role in a widening corruption scandal at the state-run oil company. If found responsible for the alleged graft scheme, some of Brazil’s biggest infrastructure and construction firms could be blocked for years from taking government contracts, complicating President Dilma Rousseff’s push to expand investments in roads, bridges, rail lines and energy projects. Executives at Camargo Correa, Engevix, Galvao Engenharia, Iesa, Mendes Junior, OAS, Queiroz Galvao and UTC-Constran were arrested last month as police investigated allegations of overcharging the oil company, known formally as Petroleo Brasileiro SA, in return for kickbacks to politicians and executives. The comptroller general’s office said that testimony from the police investigation, along with documents, e-mails, phone records and wire transfers had provided evidence to open proceedings against the companies. Lawyers for the companies have approached Brazil’s top prosecutor, Rodrigo Janot, to propose a plea deal. Janot said, however, that the implicated executives would have to admit involvement in the graft scheme as part of any settlement. The case is dominating Brazil’s political landscape and overshadowing Rousseff’s plans for a second term starting in January. She was chair of Petrobras’ board of directors from 2003 to 2010, when many of the alleged bribes and kickbacks happened, but has denied knowledge of or involvement in the corruption scheme. The scandal has also intensified scrutiny of corporate governance at Petrobras, where some minority shareholders have complained of lax oversight and outsized government influence. Securities watchdog CVM said that Petrobras CFO Almir Barbassa violated shareholders’ rights by letting state development bank BNDES and state-led pension funds vote on board members who should be elected solely by minority investors. Without admitting to any wrongdoing, Barbassa agreed to pay a fine of 250,000 reais ($98,000), CVM said, while BNDES and its subsidiary BNDESPAR each agreed to pay 500,000 reais. Petros, the pension fund for Petrobras workers, also faces a fine of 400,000 reais and the CVM said it warned two other pension funds for their conduct. At a Congressional hearing, a former executive who helped to uncover the bribery and kickbacks said political parties have dominated the appointment of senior management at Petrobras for years, highlighting the need for independent oversight.
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BSG Resources takes legal action against UK fraud office, home secretary
Mining company BSG Resources (BSGR) said it had started legal action against Britain’s Home Secretary and the UK anti-fraud agency, alleging they had helped an investigation by Guinean authorities into BSGR’s activities in the west African country. The mining arm of Israeli billionaire Beny Steinmetz’s business said it had sought a judicial review of decisions made by the UK Serious Fraud Office (SFO) and Home Secretary Theresa May relating to a “purported criminal investigation into BSGR and unnamed others”. The Guernsey-incorporated miner said this was unlawful because the Guinean request was politically motivated and there was no guarantee of a fair trial in Guinea. The Guinean government, which last December ran a review of mining contracts allocated by previous administrations, has alleged that BSGR bribed officials to win a 2008 licence to develop half of the Simandou deposit in Guinea, one of the world’s largest untapped iron ore resources. Global Witness, which campaigns for transparency in the resources industry, alleged in a report published on its web site that the SFO had ordered a company linked to Steinmetz and two leading law firms to hand over thousands of documents as part of the inquiry. BSGR, which denies any wrongdoing, said in its statement: “BSGR is the victim of multiple related parties acting independently and in concert to achieve various objectives at the expense of BSGR and the people of Guinea.”
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Alstom Nears Record $700 Million U.S. Bribe Accord
Alstom (ALO) (http://www.bloomberg.com/quote/ALO:FP) SA is close to settling a bribery case with the U.S. Justice Department (http://topics.bloomberg.com/justice-department/) for a record $700 million, allowing the French engineering company to wrap up a criminal investigation of its business in Indonesia (http://topics.bloomberg.com/indonesia/) and other countries before a sale to General Electric Co. (GE) (http://www.bloomberg.com/quote/GE:US) The fine would be the largest criminal penalty paid to the Justice Department under the Foreign Corrupt Practices Act, overshadowing the $450 million that Siemens AG paid in 2008. Siemens paid an additional $350 million to the U.S. Securities and Exchange Commission. Alstom isn’t subject to SEC scrutiny because its shares don’t trade in the U.S. The U.S. probe of Alstom has centered on a $118 million contract to provide boiler services at a power plant in Tarahan, on the southern coast of Sumatra. Alstom executives, together with Marubeni Corp., a Japanese commodity-trading company, used middlemen to funnel hundreds of thousands of dollars to a member of Indonesia’s parliament and officials at Perusahaan Listrik Negara PT, a state-controlled electricity company known as PLN, according to court papers filed by the Justice Department in related cases. The settlement removes a cloud over the company before its planned sale to GE. The Fairfield, Connecticut-based manufacturer reached an agreement in June to buy most of Alstom’s energy assets for 12.4 billion euros ($15.6 billion), GE’s biggest (http://www.bloomberg.com/quote/ALO:FP) acquisition ever. The FCPA, a 1977 law, bans individuals and companies from making payments to foreign government officials to win or retain business. The law lets the government assert jurisdiction over non-U.S.-based companies whose shares are traded in U.S. markets or if any of the alleged fraud occurred in the U.S. The alleged corruption at Alstom involved its Connecticut unit and bribe payments that were wired through a bank account in Maryland (http://topics.bloomberg.com/maryland/). GE said last month that it’s seeking approval from antitrust authorities in about 20 countries and that it’s on track to close the acquisition by mid-2015. The deal is a critical piece of Chief Executive Officer Jeffrey Immelt (http://topics.bloomberg.com/jeffrey-immelt/)’s plan to expand GE’s industrial units while shrinking its finance arm. The company has sold real estate and foreign-bank assets, and it held an initial public offering in July for its consumer-lending arm, known as Synchrony Financial. (SYF) (http://www.bloomberg.com/quote/SYF:US) Alstom, which is based in Levallois-Perret, France (http://topics.bloomberg.com/france/), outside Paris, has been investigated by multiple countries since 2004, when auditors for the Swiss Federal Banking Commission unearthed documents showing possible corrupt payments. Since then, the company has paid more than $53 million over claims its employees bribed officials in at least five countries. A settlement with the U.S. won’t resolve corruption investigations by the U.K. and Brazil (http://topics.bloomberg.com/brazil/). In the U.K., the Serious Fraud Office (http://topics.bloomberg.com/serious-fraud-office/) charged Alstom Network UK Ltd. in July with corruption in relation to transport projects in India (http://topics.bloomberg.com/india/), Poland and Tunisia. One executive has been charged and more individuals are expected to face prosecution alongside him, people with knowledge of the situation have said.
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Litigation Matters
U.S. sues Deutsche Bank for alleged tax fraud, seeks $190 mln
The U.S. government sued Deutsche Bank AG, seeking to recoup more than $190 million from the German bank over alleged tax fraud more than 14 years ago. According to a complaint filed in the U.S. District Court in Manhattan, Deutsche Bank used “insolvent” shell companies to conduct a series of fraudulent conveyances designed to hide taxable gains from the U.S. Internal Revenue Service. U.S. Attorney Preet Bharara said the case arose from Deutsche Bank’s late 1999 purchase of a corporation that was sitting on an unrealized $150 million gain in shares of drug maker Bristol-Myers Squibb Co. The government said that to avoid a potential $51 million of federal income taxes on the gain, Deutsche Bank in 2000 sold the stock for below fair value to the shell companies, which paid for them with short-term loans. These shell companies in turn sold the stock to a different Deutsche Bank entity, triggering the tax liability, only to then repay the loans, leaving them without funds to pay taxes. “Through fraudulent conveyances involving shell companies, Deutsche Bank tried to make its potential tax liabilities disappear,” Bharara said in a statement. “This was nothing more than a shell game.” The $190 million sought includes the alleged unpaid taxes, penalties and interest. In a statement, Deutsche Bank spokeswoman Renee Calabro said the bank “fully addressed” the matter in a 2009 agreement with the IRS, in which the government had “abandoned” the theory that the bank was liable for the taxes. “While it is not clear to us why we are being pursued again for the same taxes, we plan to again defend vigorously against these claims,” she said. Wells Fargo Bank NA, whose predecessor First Union National Bank was trustee for a trust set up for the transactions, was also named as a defendant in that capacity.
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Commerzbank settlement with U.S. likely to exceed $1 billion
Commerzbank AG’s expected settlement with authorities over alleged violations of U.S. sanctions and anti-money laundering laws is likely to exceed $1 billion in penalties. The settlement is still being negotiated, and a deal before the end of the year is unlikely, two sources said. Commerzbank was close to an agreement in September with U.S. prosecutors and regulators over its dealings with Iran and other countries subject to U.S. sanctions, Reuters has reported, citing sources. The sanctions settlement had been expected to cost the bank about $650 million, according to sources, and the bank had been expected to enter into deferred prosecution agreements that would have suspended criminal charges. But that accord was put on hold after the U.S. Attorney’s office in Manhattan looked into the bank’s records in connection with the massive accounting fraud at Japan’s Olympus Corp, Reuters has reported. If the Olympus-related probe of the bank’s allegedly poor anti-money laundering controls is included in the settlement, it was expected to raise the cost to Commerzbank above $650 million. A settlement of more than $1 billion would include penalties sought by the U.S. Department of Justice, the U.S. Attorney in Manhattan, New York state’s Department of Financial Services and the Manhattan District Attorney’s office, one source said. The U.S. Attorney’s office in Manhattan would not be alone in seeking a penalty related to the Olympus-related anti-money laundering probe, one source said. The fine sought by New York’s Department of Financial Services, which regulates Commerzbank in the state, could also be higher due to its alleged Olympus-related conduct, the source said. The state regulator was expected to get about half the bank’s anticipated $650 million penalty over the sanctions-related violations, Reuters has reported. The $1.7 billion Olympus fraud is considered one of the biggest corporate scandals in Japan’s history. In 2011, the camera and medical equipment maker admitted it used improper accounting to conceal massive investment losses over more than a decade and restated years of financial results. Commerzbank handled hundreds of millions of dollars of transactions connected to the fraud, according to court filings. The Financial Times first reported that the bank was in talks to pay more than $1 billion to U.S. authorities.
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Swiss charge ex-HSBC staffer with industrial espionage
Switzerland has charged a former computer analyst at HSBC’s private bank in Geneva with industrial espionage and breaching the country’s secrecy laws for passing confidential client data to foreign authorities. Herve Falciani gave prosecutors in France and Spain data on thousands of Swiss bank accounts. He has previously told Reuters that he is a whistleblower trying to help governments track down citizens who used accounts in Switzerland to evade paying tax. But Switzerland’s attorney general, which did not identify Falciani by name, said the former IT analyst had tried to profit from the data. It accused him of trying to sell the information to banks in Lebanon. “Sometimes celebrated as a hero abroad, the Franco-Italian national is now to answer for his alleged crimes before a Swiss court. The Swiss Criminal Procedure Code does not exclude the possibility of holding a court trial of the accused person in absentia,” the attorney general’s office said in a statement. The attorney general said HSBC and several bank customers were also taking part in the proceedings as private claimants. In an interview with French newspaper La Croix published, Falciani hinted at the justice probe. “The struggle against corruption has caused me a lot of trouble. I have also won the satisfaction of accomplishing, along with others, my duty as a citizen.” Whistleblowers in Switzerland, where breaking secrecy law is punishable by jail, have typically been pursued aggressively by Swiss prosecutors. HSBC has previously disputed various aspects of Falciani’s story, including his contention that he is a whistleblower – the bank contends he tried to sell the data he absconded with and only cooperated with prosecutors when he was arrested in Spain to face extradition charges. The list of HSBC clients supplied by Falciani has prompted investigations across the globe. Last month, Argentina charged HSBC with helping more than 4,000 clients evade taxes via secret Swiss bank accounts and a Belgian judge charged HSBC’s Swiss private bank with tax fraud and money laundering. French prosecutors are also probing whether HSBC offered illicit products to help French clients avoid tax.
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U.S. strikes deal with Chicago suburb of Harvey over bond fraud
The Chicago suburb of Harvey has settled civil charges in an unusual case where federal regulators had rushed to obtain an emergency restraining order against a planned bond sale, the Securities and Exchange Commission said. Under the settlement reached with the SEC, Harvey will be required to obtain an independent consultant and undergo an audit, and the city faces certain restrictions on selling new debt. In a complaint filed in June against the city and its comptroller, the SEC asked the U.S. District Court for the Northern District of Illinois to prevent Harvey from selling bonds and also demanded a jury trial. Both were unusual requests in the commission’s current crackdown on the $3.7 trillion municipal bond market. By law, municipal bond issuers do not have to involve federal regulators in planned debt sales. As part of the settlement, Harvey agreed to a final judgment forcing it to stop selling municipal bonds for three years unless it retains independent bond counsel. The litigation against the comptroller, Joseph Letke, is pending, the SEC said. “These measures are designed to prevent future securities fraud by Harvey and to enhance transparency into Harvey’s financial condition for future bond investors,” the agency said in announcing the deal. Starting in 2008, the city sold $14 million in bonds for the construction of a Holiday Inn that would be repaid from dedicated hotel-motel and sales tax revenues. It then diverted at least $1.7 million to fund its daily operations and also made $269,000 in undisclosed payments to Letke, the SEC alleged. The SEC has described the city of 30,197 people as “in a desperate financial condition” and the hotel project as a “fiasco.” Over the last two years, the SEC has tightened the vise on the municipal bond market, rapping cities, individuals and even states for not properly informing investors of the risks involved with certain municipal bonds.
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BBX, CEO liable for fraud in SEC financial crisis case, says U.S. jury
Florida lender BankAtlantic Bancorp Inc and its chief executive defrauded investors in 2007, early in the U.S. financial crisis. BBX Capital Corp, as BankAtlantic is known today, and Alan Levan, who remains as CEO, were found liable by a federal jury in Miami following a six-week trial in a lawsuit filed by the U.S. Securities and Exchange Commission. The verdict, while clearing the company and Levan on some claims, resulted in BBX Capital shares closing down 7.26 percent at $15.34 on the New York Stock Exchange. Andrew Ceresney, the SEC’s director of enforcement, said the agency was pleased with the verdict. A lawyer for BBX and Levan said they planned to appeal. The case, filed in 2012, arose from BankAtlantic loans made on large tracts of land intended for the development of single-family homes and condominiums. Florida was among the U.S. states hardest hit by the nation’s housing crisis. The SEC contended BankAtlantic and Levan made misleading statements to investors to hide the deteriorating state of its real estate portfolio in 2007. The SEC also contended the company and Levan committed accounting fraud by scheming to minimize BankAtlantic’s losses. Following the trial, a jury found that Levan’s statements during BankAtlantic’s 2007 second quarter earnings (http://bit.ly/1stXxdj) conference call misled investors about the bank’s financial health. “I provided a candid view of what I believed faced the company ... BBX was one of the first companies to recognize the severity of the housing market crash and accept the losses most others ignored for many months. If this part of the verdict is allowed to stand, no officer of any public company could ever again safely participate in earnings conference calls,” Levan said in a statement. The jury also found that BankAtlantic’s 2007 annual report fraudulently understated its losses for that year by $53 million. It also found that Levan and the company engaged in a business that “operated as a fraud” in 2007, the SEC said. Eugene Stearns, the lawyer for BBX and Levan, said he expected to appeal, particularly a ruling by the judge instructing jurors to find statements on the 2007 second-quarter conference call were objectively false. “I believe the instruction on falsity to be unprecedented in the history of securities litigation,” he said. The SEC is seeking financial penalties from the defendants and to ban Levan from serving as an officer or director of a public company. BankAtlantic assets were sold to BB&T Corp in 2012, and the holding company renamed itself BBX Capital. As a result of the time frames involved in the appeal of the verdict, BFC Financial Corp and BBX Capital have mutually agreed to terminate their proposed merger, BBX said.
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Madoff trustee loses appeal on clawbacks
Victims of Bernard Madoff’s Ponzi scheme may recover less money than they had hoped after a federal appeals court limited the ability of the trustee liquidating the swindler’s firm to recoup “fictitious profits” and other payments from customers. The 2nd U.S. Circuit Court of Appeals in New York said federal bankruptcy (http://bit.ly/1stY7aM) law did not let the trustee Irving Picard recoup a variety of payments that Bernard L. Madoff Investment Securities LLC made to some customers more than two years before the firm collapsed on Dec. 11, 2008. Picard has been seeking to recoup money from customers who withdrew more from their accounts than they invested. Circuit Judge Barrington Parker, however, said allowing the “clawbacks” sought risked the kind of “significant market disruption” that Congress sought to avoid by adopting protections for brokerage customers in the bankruptcy code. “The magnitude of BLMIS’s scheme, which included thousands of customers and billions of dollars under management, is unprecedented,” Parker wrote. “Permitting the clawback of millions, if not billions, of dollars from BLMIS clients – many of whom are institutional investors and feeder funds – would likely cause the very ‘displacement’ that Congress hoped to minimize.” Amanda Remus, a spokeswoman for Picard, said the trustee is reviewing the decision by a unanimous three-judge panel. The decision does not affect the $10.5 billion that Picard has recouped for former Madoff customers he calls victims, who lost about $17.5 billion of principal. But it could stop him from recouping at least $1.8 billion more from “innocent” customers he targeted in more than 600 lawsuits, according to Richard Levy, a Pryor Cashman partner representing some of those customers. “This is a huge victory for the ‘innocent customer’ defendants,” Levy said in a phone interview. “I am delighted.” Madoff, 76, pleaded guilty in March 2009 and is serving 150-year prison term. The decision was announced the same day that a federal judge sentenced Daniel Bonventre, a former back office director for Madoff, to a 10-year term. Four more former Madoff workers convicted with Bonventre will be sentenced over the next week. Picard had sought to claw back money sent to various customers in the six years before Madoff’s firm went bankrupt. Those customers countered that clawbacks were limited to the last two years, and only if payments were made with fraudulent intent. They claimed not to have known Madoff was a fraud, and that taking money from them would provide a windfall to others. While Madoff did not trade securities for many customers, U.S. District Judge Jed Rakoff in Manhattan ruled in a series of cases in 2011 and 2012 that transfers made more than two years before the bankruptcy could not be clawed back.
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China Market
How Wal-Mart Made Its Crumbling China Business Look So Good for So Long
After years of heralding China (http://topics.bloomberg.com/china/) as one of its best markets, Wal-Mart (WMT) (http://www.bloomberg.com/quote/WMT:US) in August said its performance there was among the worst in its major countries. A management shake-up and job cuts have followed. Although the reversals seem abrupt, cracks in the foundation of Wal-Mart’s retail business in China have been developing for years, hidden by questionable accounting (http://www.bloomberg.com/quote/WMT:US) and unauthorized sales practices, according to employees and internal documents reviewed by Bloomberg. The practices – including bulk sales to other retailers and some sales allegedly booked when no merchandise left the shelves – made business appear strong even as retail transactions slowed and unsold inventory piled up, these people and documents say. Wal-Mart said in August that it was unhappy with inventory growth internationally (http://www.bloomberg.com/quote/WMT:US). Stores in China continue to make bulk sales, sometimes unprofitably and without required management authorizations, according to employees who’ve left the company this past month. Concerns about bulk sales, raised as far back as 2011 in an internal report, have been the subject of inquiries in China by Wal-Mart’s legal (http://www.bloomberg.com/quote/WMT:US) team as recently as May, according to an internal company e-mail and an employee interviewed by lawyers. The report and interviews with current and former employees say Chinese Wal-Mart stores, under pressure to meet earnings targets, resorted to temporary markups of inventory as an accounting move that can burnish profits without any added sales of merchandise. After employees “recognized inventory pricing discrepancies” in 2011, the company’s senior leadership in the U.S. and China ordered an extensive investigation that led to “various leadership changes and disciplinary actions,” strengthened compliance measures, training, and regular audits, Wal-Mart Stores Inc. said in a statement. The bulk sales provided at least 1.6 billion yuan ($243 million) in sales, and the markups accounted for 4 percent of gross profits in 2010 alone at 98 hypermarket stores examined by Stanford Lin, who conducted the internal review. These stores accounted for about half of total hypermarket sales in China that year. The markups were part of a pattern of “unusual,” unauthorized, and “unsustainable,” accounting moves and deals with suppliers and rivals that made sales and profits look stronger than the underlying retail trends in the stores, according to Lin’s 32-page review, labeled “Highly Confidential.” The February 2011 review and interviews with current and former Wal-Mart employees raise questions about how the company has booked results in the world’s second-biggest economy. They also cast new light on Wal-Mart’s degree of success in China – which the company called a standout in the period Lin covered.
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Executive in Chinese reverse merger case avoids U.S. prison
A former executive at a Chinese oil and gas company has avoided prison in the only U.S. criminal case to emerge from a broad accounting probe of China-based companies listed on American stock exchanges. Chao Jiang, former vice president of China North East Petroleum Holdings, was sentenced to three years of probation and a $10,000 fine during a hearing before U.S. District Court Judge Richard Leon of the District of Columbia. The case against Jiang, 34, came amid a broad regulatory review by the U.S. Justice Department and the U.S. Securities and Exchange Commission of accounting scandals at Chinese companies trading on U.S. stock exchanges. The SEC has pursued dozens of cases against Chinese companies that entered the U.S. capital markets through backdoor mergers with U.S. shell companies. The Justice Department took Jiang to trial earlier this year on conspiracy, securities fraud, wire fraud and false statements charges. Leon dismissed two of the securities fraud counts and declared a mistrial in April after jurors deadlocked on the remaining counts. In September, Jiang agreed to plead guilty to a count of knowing failure to devise and maintain a system of internal accounting controls at the company. Jiang’s attorney, Michael Li-Ming Wong, said in a statement, “We are ecstatic that our client will never have to spend a single night in jail and can now move on with his career and his life.” In May 2013, the Justice Department announced the indictment of Jiang for his role in a fraud at China North East Petroleum Holdings. The company, which was delisted from the New York Stock Exchange in 2012, told investors it planned to use funds from a stock offering for general corporate purposes and to repay prior corporate debt, prosecutors said. But, prosecutors said, Jiang and the company’s chief executive wired $1.2 million of the proceeds to family members who used the money to buy a home, jewelry and a car. The government also accused Jiang of falsely testifying that no family members received more than $500 from the company, even though some $965,000 had been wired to his father. He faced up to 63 months in prison under federal sentencing guidelines, though prosecutors agreed to seek only probation. The government also unsuccessfully sought $966,412 in restitution.
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UK court reserves judgment in Citi, Mercuria’s Chinese metals dispute
A London court declined to make an immediate ruling in a case between U.S. bank Citigroup Inc and trade house Mercuria over who should face about $270 million of potential losses from metals financing deals in China, following a probe into suspected fraud. High Court judge Mr Justice Phillips reserved judgment in the case, one strand in a web of legal actions filed in the wake of the probe which was launched in May by Chinese authorities into suspected fraud at China’s Qingdao port, the world’s seventh busiest, and nearby Penglai. Citigroup and Mercuria Energy Trading Ltd had a close business relationship but turned on each other during a frantic several weeks after the suspected fraud was uncovered, seeking to shift financial responsibility onto each other. China has been investigating whether private metals trading firm Decheng Mining and its related companies used fake warehouse receipts to obtain multiple loans secured against a single cargo of metal, including metal owned by Mecuria. Mercuria held copper and aluminium in Chinese warehouses and agreed a series of deals that were effective loans from Citi using the metal as collateral. Under the repurchasing agreements, or repos, Citi agreed to purchase metal from Mercuria before selling it back at a slightly higher price to include interest on the effective loans. The two groups were in the midst of several repo deals when the potential fraud in China was uncovered in warehouses in both Qingdao and Penglai. Citi demanded early repayment of the repos and Mercuria refused. Meanwhile the Chinese authorities imposed a lockdown on parts of the two ports where the metal is held, preventing anyone, including Citi, Mercuria and the warehouse operators, from accessing the material, court documents said.
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Healthcare Industry
14 Indicted in Connection with New England Compounding Center and Nationwide Fungal Meningitis Outbreak
A 131-count criminal indictment was unsealed in Boston in connection with the 2012 nationwide fungal meningitis outbreak, the Justice Department announced. Barry J. Cadden, owner and head pharmacist of New England Compounding Center (NECC) and NECC’s supervisory pharmacist Glenn A. Chin were charged with 25 acts of second-degree murder in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia. The outbreak was caused by contaminated vials of preservative-free methylprednisolone acetate (MPA) manufactured by NECC, located in Framingham, Massachusetts. The U.S. Centers for Disease Control and Prevention (CDC) reported that 751 patients in 20 states were diagnosed with a fungal infection after receiving injections of NECC’s MPA. Of those 751 patients, the CDC reported that 64 patients in nine states died. Twelve other individuals, all associated with NECC, including six other pharmacists, the director of operations, the national sales director, an unlicensed pharmacy technician, two of NECC’s owners, and one other individual were charged with additional crimes including racketeering, mail fraud, conspiracy, contempt, structuring, and violations of the Food, Drug and Cosmetic Act. “As alleged in the indictment, these employees knew they were producing their medication in an unsafe manner and in insanitary conditions, and authorized it to be shipped out anyway, with fatal results,” said Attorney General Eric Holder. “With the indictment and these arrests, the Department of Justice is taking decisive action to hold these individuals accountable for their alleged participation in grievous wrongdoing. Actions like the ones alleged in this case display not only a reckless disregard for health and safety regulations, but also an extreme and appalling indifference to human life. American consumers have a right to know that their medications are safe to use, and this case proves that the Department of Justice will always stand resolute to ensure that right, to protect the American people, and to hold wrongdoers accountable to the fullest extent of the law.” “Every patient receiving treatment deserves the peace of mind and knowledge that the medicine they are receiving is safe,” said Acting Associate Attorney General Stuart Delery. “When people and companies violate that trust and break the law, the consequences to patients and their families can be catastrophic. That’s why it remains a priority of the Department to use every tool at our disposal to protect patients’ safety and hold bad actors accountable.” “Those who produce and sell the drugs that we take have a special responsibility to make sure that they prepare those drugs under suitable conditions, and that what leaves their facilities is safe,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The indictment charges that the defendants’ conduct in this case was corrupt and carried out with a complete disregard to the public’s health. The department’s Consumer Protection Branch along with our law enforcement partners is steadfast in our commitment to use every criminal and civil tool at our disposal to hold accountable those who are willing to put our lives at risk in the reckless pursuit of their profits.”
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Miami-Area Certified Nursing Assistant Sentenced to 150 Months in Prison for Role in $200 Million Medicare Fraud Scheme
A Miami licensed nursing assistant was sentenced to serve 150 months in prison for participating in a $200 million Medicare fraud scheme involving fraudulent billings by American Therapeutic Corporation (ATC), a mental health company headquartered in Miami. Rodolfo Santaya, 55, of Miami, was convicted on July 18, 2014, after a six-day jury trial, of conspiracy to commit health care fraud and wire fraud, conspiracy to pay and receive bribes and kickbacks, and two counts of receipt of bribes and kickbacks in connection with a federal health care benefit program. In addition to the prison sentence, U.S. District Judge Jose E. Martinez of the Southern District of Florida ordered Santaya to pay more than $18.2 million in restitution. Evidence at trial demonstrated that, between 2006 and 2010, Santaya was paid thousands of dollars a month in cash kickbacks in exchange for referring Medicare beneficiaries to ATC, which operated purported partial hospitalization programs (PHPs) in seven locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. Evidence at trial also demonstrated that the Medicare beneficiaries Santaya sent to ATC did not need, qualify for, nor receive PHP treatment. Nevertheless, ATC submitted false and fraudulent bills to Medicare for services purportedly provided to each of Santaya’s patients. In order to justify ATC’s fraudulent billings, medical professionals, including doctors, fabricated and signed fraudulent medical documentation and patient files. ATC, an associated management company, and more than 20 individuals, including ATC’s owners, have all previously pleaded guilty or been convicted at trial. Santaya has been in federal custody since his conviction. The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorneys Nicholas E. Surmacz and Kelly Graves of the Criminal Division’s Fraud Section.
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Rite Aid Corporation Pays $2.99 Million for Alleged Use of Gift Cards to Induce Medicare and Medicaid Business
Rite Aid Corporation, a Delaware corporation and national retail drugstore chain with its principal place of business in Camp Hill, Pennsylvania, has paid the United States $2.99 million to resolve allegations that it violated the False Claims Act by inappropriately using gift cards as inducements, the Department of Justice announced. The settlement resolves allegations that Rite Aid offered illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies. The government alleged that from 2008 to 2010, Rite Aid had knowingly and improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business. “This case demonstrates the government’s ongoing commitment to enforcing accountability, transparency and fairness in the retail pharmacy industry,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “The government will continue to advocate for the best interests of Medicare and Medicaid patients, and prevent pharmacies from improperly manipulating their healthcare choices.” The settlement resolves allegations filed by Jack Chin under the qui tam, or whistleblower provisions of the False Claims Act, which authorizes private parties to sue for fraud on behalf of the United States and share in the recovery. Chin will receive approximately $508,300 of the settlement. This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.
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Archived Forensic News
Archived Forensic News November 2014
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Archived Forensic News June 2014