Stem Cell Maker Invitrx Is in Trouble Again. Are Its Products Safe? You Be the Judge!

We are one of the few law firms still handling stem cell lawsuits. The industry has become the wild west. It seems like there are more bad products out there than good. And some of the claims being tossed around would make a 19^th century snake oil salesman blanche. In this post we look at Invitrx, the FDA and William Shatner.

As I write, William Shatner (we all remember him as Captain James T. Kirk of the Starship Enterprise) is hawking a cleaning device for his “sleep equipment.” Since retiring from the film industry, Shatner has become a parody of himself. (Apologies to any Trekkies that feel offended.)

As recently as last year Shatner was hawking stem cell therapy from a company called Invitrx. And that is the topic of today’s post. We will examine Shatner’s claims versus what the FDA found. You decide who is to be believed.

Last year Shatner announced to his 2.5 million Twitter followers that he was undergoing stem cell therapy. The then 88 year old said he was undergoing restorative therapy with stem cells provided by Invitrx.

According to a tweet, “Today I received restorative stem cells from my good friend Greg DiRienzo @ProGenaCell,” Shatner recently tweeted. “The stem cells were manufactured by Invitrx here in So Cal (Southern California). My friend Dr Mathi Senapathi gave the cells to me intravenously. Is it possible to turn back the clock? I will let you know.”

Since that tweet, the FDA stepped in and issued a stern warning to Invitrx.

According to the FDA, Invitrx was not FDA approved to sell stem cell products and its facility exhibited serious safety issues.

The FDA warning letter said:

“During an inspection of your firm Invitrx Therapeutics, Inc., located at 20503 Crescent Bay Drive, Lake Forest, CA 92630, conducted between March 25, 2019 and April 3, 2019, the Food and Drug Administration (FDA) documented that your firm processes products for allogeneic use, including the following products (referred to collectively in this letter as “your products”): human umbilical cord blood, or umbilical cord derived products, Invitra CBSC^TM and Invitra WJ^TM (Cellular and Acellular); amniotic fluid derived product Invitra AF^TM; and amniotic membrane derived product Invitra AT^TM…

“Please be advised that to lawfully market a drug that is a biological product, a valid biologics license must be in effect. Such licenses are issued only after showing that the product is safe, pure, and potent. While in the development stage, such products may be distributed for clinical use in humans only if the sponsor has an investigational new drug application in effect as specified by FDA regulations. None of your products are the subject of an approved biologics license application, nor is there an investigational new drug application in effect for any of them. Based on this information, we have determined that your actions have violated the federal Food, Drug & Cosmetic Act and the Public Health Service Act.

“Additionally, during the inspection, FDA investigators documented evidence of significant deviations from current good manufacturing practice (CGMP) and current good tissue practice. The deviations in manufacturing processes observed as well as those noted in documents collected during the inspection indicate that the use of your products raises potential significant safety concerns. For example, Invitrix’s deficient donor eligibility practices, unvalidated manufacturing processes, deficient environmental monitoring, and inadequate aseptic practices, as described below, pose a significant risk that your products may be contaminated with viruses or microorganisms or have other serious product quality defects.” [emphasis added]

The list of specific violations is enough to make anyone sick. The FDA claims that Invitrx wasn’t properly screening donors to ensure they were free from communicable diseases, didn’t have control systems to prevent contamination and didn’t have a validated cleaning process for its facility. (There were many other violations noted.)

According to the FDA, Invitrx released 33 vials of Invitra CBSC even though the donor tested positive for hepatitis C. The product was later recalled but we are unsure whether any of the contaminated stem cell product was given to patients.

Before posting this story on Invitrx, I first visited their website. Before you can even access their site, you have to click on the following disclaimer:

“Invitrx Therapeutics, Inc. (Invitrx) is NOT liable for the intended use of any of its products. Invitrx does not intend to define, suggest, alter or approve of any kind of “practice of medicine” performed by the administering physician(s) instead relying on the IND and/or Clinical Trial IRB to determine safe practices of use of the Cord Blood Stem Cell Product(s)(CBSC), Amniotic Fluid, Amniotic Tissue, Human Umbilical Cord Blood Plasma (hUCBP), Wharton’s Jelly, and Wharton’s Jelly (MSC). These products are for Research Use Only.”

In other words, Invitrx is telling the world that it is not responsible for its own products. Neither the FDA’s stern warning nor the company’s ham fisted attempt to absolve itself of all liability engender a warm, fuzzy feeling for the safety of its products.

Invitrx is not alone. Use “stem cell” on our blog’s search engine and you find many other horror stories involving other similar products. Several stem cell companies and clinics have been caught using unsafe manufacturing conditions to save on costs. The result is dangerous stem cell contamination and deadly patient infections.

We spoke to one insider who said his company shipped products even though lot samples tested positive for e. coli!

Can I Sue Invitrx for Injuries Related to Contaminated Stem Cell Products?

Invitrx and other stem cell manufacturers and distributors that produce dangerous, defective, or contaminated stem cell products can be sued for damages including past and future medical expenses, lost wages, pain and suffering, and other damages.

Like any other medical treatment, stem cell therapy comes with a number of risks and side effects. There are “indirect risks,” associated with other procedures like radiation or chemotherapy. There are also “direct risks” that come with receiving the cells themselves.

Direct risks associated with stem cell therapies are relatively minor and temporary, typically lasting until the treatment “takes” and the cells become established in the body. The main risk is developing GVHD, when the body’s immune system tries to reject the cells, attacking healthy cells in the process. Symptoms include rash, jaundice, fever, diarrhea, cramping and nausea.

Other side effects of stem cell therapies may include fatigue (from temporary anemia), bruising (from temporarily low platelet counts), infection (from a temporarily weakened immune system).

When stem cells are not prepared or marketed correctly, however, serious, and life-threatening illness can result. Poor stem cell manufacturing practices can easily lead to contaminated cells. If contaminated cells are injected, the patient may develop sepsis, leading to loss of limbs, organ failure or death.

Invitrx Stem Cell Lawsuit Claims – The Process Starts Here

Injured by Invitra stem cell products by Invitrx or some other company? Start by visiting our stem cell lawsuit information page.

Ready to see if you have a claim? Seeking reimbursement for your pain and suffering and medical bills? We are ready to help.

Although most states give injured parties several years to file claims for defective products, we worry that many of these companies have little insurance. Some of these companies are literally set up in a garage.  All is not lost, however. The physicians, clinics and chiropractors that inject these products are better insured but many states require claims against doctors be filed within just 1 or 2 years from the date of injury.

To see if you have a claim for your injuries (or if you are an insider with information that can help patients) contact us by email at brian@mahanylaw.com, by phone at 202-800-9791, or online.

Patient Sues Invitrx after Life Threatening Injury

Brown paper bags, storing stem cell products in one’s home refrigerator and doctors from Beverely Hills to Mexico, this story has it all. everything but a happy ending. Our story begins in 2009. One would think that ten years was more than enough time for Invitrx to have learned its lesson but the FDA’s recent warning letter suggests otherwise.

Courthouse News reports that a mixed martial arts coach, Robert Anderson, sued after suffering from a life threatening Stenotrophomonas matlophilia infection he blames on bad stem cells.

Anderson claims he first consulted with Nicholas Delgado, PhD. His lawsuit claims Delgado was a “self styled psychologist” and hypnotherapist. Why such a doctor, assuming he has any type of degree, is pushing stem cell therapy is a mystery to us.

Since Delgado isn’t a medical doctor, arrangements were made to harvest Anderson’s own tissue. Those arrangements were made with Nathan Newman, a Beverly Hills physician.

Newman than gave the harvested tissue to Anderson who was to bring it to Invitrix. After Invitrix allegedly processed the tissue into stem cells, those cells were delivered to Delgado who in turn transported them in a grocery sack to a physician across the border in Mexico.

Although the stem cells looked bad to the Mexican doctors, Delgado claimed they were processed to the highest standards by Invitrx.

You can probably finish the story… “within one to two hours of the procedure,” Anderson claims he was excruciating pain with ‘range of motion and joint tenderness on palpation, at the stem cell injected areas.” He went to the Kaiser Permanente South Bay Medical Center, in California where he was admitted and treated for Stenotrophomonas matlophilia infection from the stem cell injections.

Anderson sued everyone involved.

There are so many problems with this story that literally anyone could be responsible for the infection. Anderson himself kept the harvested tissue in his refrigerator, although he claims Dr. Newman said it was okay.

While we can’t prove that Invitrx was responsible for the contamination we question why any legitimate company would even participate in such a crazy scheme.

Again, if you were injured by defective stem cell products, contact us by email at brian@mahanylaw.com, by phone at 202-800-9791, or online. All inquiries are kept strictly confidential.

The post Invitrx Stem Cell Patients Beware – FDA Issues Stern Warning Letter appeared first on Mahany Law.

Learn How to Avoid Being a Victim of Stem Cell Malpractice and What to Do if You Are Hurt by Bad Stem Cell Products

Stem cell therapy is one of the most promising developments in medicine. Over 1000 trials are currently underway. While we are big supporters of stem cell research, few products have received FDA approval and of those that have, they are only approved for use in very particular situations.

Look at the Internet, however, and stem cell therapy can grow hair, restore hearing, regenerate damaged heart muscle, cure arthritis and cure just about anything else wrong with you. At best, these unapproved products are composed of freeze dried cells and will do nothing for you. In other words, you are out some serious money but the product won’t kill you.

That is the best case. The worst case is that the product was made with live stem cells and those cells are either contaminated with a communicable disease from an untested donor or have been contaminated with dangerous bacteria because of poor manufacturing practices. Despite the slick marketing brochures and videos clips showing state of the art cleanrooms, many stem cell production facilities are literally garage operations.

The industry is still in the Wild West phase and that means it is difficult to get accurate information.  So what can you do to protect yourself? Here are some helpful tips.

Tips to Avoid Stem Cell Malpractice

Avoid Any Therapy or Product that Claims It Is No Risk. Every medical procedure involves some level of risk. There are many risks including improper donor testing and screening, unsanitary harvesting and processing practices, and Graft-Versus-Host disease (GVHD).

Check FDA Approvals. Simply because a clinic says its products are FDA approved (or that FDA approval is not needed) doesn’t mean its true.

Currently, the FDA has approved the following stem cell-based products for use in the United States. All come from cord blood and function to produce various blood cell types.

• ALLOCORD – SSM Cardinal Glennon Children’s Medical Center
• LAVIV (Azficel-T) – Fibrocell Technologies
• MACI – Vericel Corp.
• CLEVECORD – Cleveland Cord Blood Center
• GINTUIT – Organogenesis Incorporated
• HEMACORD – New York Blood Center
• Ducord – Duke University School of Medicine
• HPC Cord Blood – Clinimmune Labs, University of Colorado Cord Blood Bank
• HPC Cord Blood – MD Anderson Cord Blood Bank
• HPC Cord Blood – LifeSouth Community Blood Centers, Inc.
• HPC Cord Blood – Bloodworks
• IMLYGIC (talimogene laherparepvec) – BioVex, Inc. (Amgen Inc. subsidiary)
• KYMRIAH (tisagenlecleucel) – Novartis Pharmaceuticals Corporation
• LUXTURNA – Spark Therapeutics, Inc
• PROVENGE (sipuleucel-T) – Dendreon Corp.
• YESCARTA (axicabtagene ciloleucel) – Kite Pharma, Incorporated
• ZOLGENSMA (onasemnogene abeparvovec-xioi) AveXis, Inc.

Is the product you are considering not on the list? The link above has the most up-to-date FDA information.

As part of the 21st Century Cures Act (Dec. 2016), the FDA gives several unapproved stem cell therapies “Regenerative Medicine Advanced Therapy” (RMAT) designation. RMAT designated products, though not FDA-approved, have some preliminary clinical evidence of effectiveness against serious or life-threatening diseases for which no alternative treatment is available.

As of April 2020 (the date of the most recent FDA list) there were no RMAT products on the FDA’s approval list. Once again, check the FDA’s list online.

Don’t Trust Testimonials. Look at a cardiologist or neurologist’s website and most don’t have patient testimonials. We are aware that many stem cell clinics are filled with them. There is no way of telling if these testimonials are real.

Who Is Running the Clinic? We have found many stem cell clinics run by chiropractors, nurses and PhDs. Where are the medical doctors or osteopaths? Although licensing rules vary from state to state, we always prefer a licensed physician for treatment.

This advice is especially true if receiving stem cells for anything serious. If you have macular degeneration, see an eye specialist. Even if chiropractors are licensed in your state to administer stem cells, would you otherwise go to a chiropractor to treat blindness?

Beware the High Pressure Sales Pitch. Cardiologists don’t advertise “buy one get one” heart surgery sales. You don’t get three stents for the price of two. Once again, stem cell therapy is often the Wild West. If you are solicited at a free chicken dinner / seminar, think twice.

Beware Miracle Claims. We all want to feel and look younger. Snake oil salesmen were common in the middle 1800’s going door to door selling an elixir that was a guaranteed cure all for all your ailments. It rarely worked.

Fast forward to the 21 t century and poor quality stem cells are not only ineffective, they can kill you.

Remember, look for FDA approval of both the product and the cure.

Know the Source of the Stem Cells. Unless you are using your own tissue to generate stem cells, knowing the source of the stem cells is important. How do they test donors? How do they test them? Everything should be in writing.

Just like many seek a second opinion before major surgery, we recommend speaking with your own physician before receiving stem cells.

I Suffered Serious Complications from Stem Cell Therapy, How Do I Get Compensation?

We have seen far too many people seriously injured by contaminated stem cell products. If you are a victim of stem cell malpractice, you have the right to compensation.

How Do I File a Stem Cell Malpractice Lawsuit?

Patients injured by contaminated products have the right to file a stem cell lawsuit for financial compensation, including money to pay for past and future medical expenses, lost wages, pain and suffering, and other damages. (If a patient receives dead cells or if the company selling the cell products makes inaccurate claims about the effectiveness of its products, you may also have a claim for the cost of therapy.)

We have an entire post about stem cell lawsuits. That is a good place to start. (That page also has valuable links to specific stem cell company lawsuits and investigations.)

Ready to see if you have a stem cell malpractice case? Contact us by email at brian@mahanylaw.com, by phone at 202-800-9791, or online. All inquiries are protected by the attorney – client privilege and kept confidential.

The post Stem Cell Malpractice 101 – How to Keep from Being a Victim appeared first on Mahany Law.

QuantaDyn Corporation Pays $37 Million to Resolve False Claims Act Charges

Whistleblower lawyers have long known that bribing foreign public officials can lead to cash rewards under the Foreign Corrupt Practices Act. That law gives the SEC the right to pay whistleblower rewards in certain circumstances. But what about companies that bribe American officials in order to obtain a competitive business advantage? Can whistleblowers receive cash rewards for turning in these companies? A case in San Antonio, Texas finally answers that question.

Justice Department officials this week announced that QuantaDyn corporation and its president, William Dunn, settled charges them of bribing a U.S. Air Force official to help win contracts for simulation systems. QuantaDyn agreed to pay $37,757,713.91 to settle both criminal and False Claims Act charges. Dunn will pay $500,000 for his role in the scheme.Court records suggest the misconduct began as early as 2007. In that year QuantaDyn was awarded a $4 million contract to deliver simulators to help train pilots with air refueling operations. QuantaDyn continued to get contracts thereafter either as a direct contractor or sometimes as a sub.

Federal law makes it a crime for public employees to use their office for their own personal gain. It is also a crime “for anyone to corruptly offer, promise, or give a thing of value to a government employee with intent to influence an official act; to influence the public official to commit or facilitate in any way a fraud on the United States; or to induce the public official to violate his lawful duties.”

Although Ward was not charged criminally, several other individuals including government contracting officials and QuantaDyn itself were charged with criminal conspiracy to defraud the United States government.

Prosecutors say that the defendants conspired to commit bribery and defraud the United States by “corrupting, impeding, and defeating” the Air Force and GSA in the procurement of simulator training technology and by “eliminating competition and fixing contract awards and prices” on Air Force and GSA contracts for simulator technology and service.

QuantaDyn allegedly paid Keith Seguin, a civilian contracting officer working for the Air Force, $2.3 million in bribes and kickbacks in order to obtain confidential information useful in bidding on simulator contracts. Sequin also helped eliminate competition for the contracts.

To hide their crimes, prosecutors say that the defendants created phony companies to disguise the bribes being paid by QuantaDyn. Anyone auditing the company’s books would see checks to various engineering companies.

Like most criminals, it appears the players got sloppy. The indictment says at one point a senior Quantadyn official sent an email to Seguin regarding an upcoming simulator contract. In the email he said the contract was “our last chance to make money. Let’s go out with a bang.”

If QuantaDyn wanted to go out with a bang, their wish was granted. The company, Keith Seguin and two others were indicted by a federal Grand Jury last October. When the indictments were announced, an IRS official said,

“Government contracts are designed to support the missions of the United States armed forces and are vital to our people. It is not a slush fund for thieves and fraudsters. Those who illegally target our nation’s tax dollars for personal financial gain, as in this case, will be prosecuted and face the consequences of their actions.”

The company pled guilty on September 15, 2020 and also agreed to satisfy civil claims made under the False Claims Act. William Dunn, the president and CEO who was not criminally charged, is paying $500,000 to satisfy civil claims.

*Seguin and the other individuals have not been convicted and are presumed innocent until proven otherwise.

Bribes of Government Officials and Whistleblower Rewards

The primary whistleblower reward law traditionally used in bribery cases is the Foreign Corrupt Practices Act (FCPA) and not the False Claims Act. The Act is administered jointly by the Securities and Exchange Commission and the Department of Justice. For whistleblower reward purposes, the FCPA only pays rewards in non-criminal cases involving the bribery of foreign government officials and only then if the company involved is registered with the SEC. The latter provision excludes most privately held businesses.

The prosecution of QuantaDyn as both a criminal and False Claims Act prosecution opens a new door for whistleblowers. Payment of bribes to a U.S. official may be the basis of a whistleblower reward if the purpose of the bribe is to secure a government contract or defraud a government program. It doesn’t matter if the company is a private company or public.

When a company like QuantaDyn pays bribes or kickbacks in order to secure a contract, both taxpayers and innocent businesses suffer. Taxpayers suffer because invariably the government winds up paying higher prices. And that means taxpayers who foot the bill. Innocent businesses (and their employees) suffer because they can’t compete on an unlevel playing field.

Passed in the 1860’s during the U.S. Civil War, the False Claims Act pays whistleblowers between 15% and 30% of whatever the government collects from wrongdoers. In the QuantaDyn case there was no whistleblower so there is no one to receive a reward. Had there been a whistleblower, however, a reward of at least $6 million would have been likely plus an additional $75,000 reward from Ward.

To qualify for a reward, one must have inside information about a fraud involving government funds or programs. The False Claims Act requires you have a lawyer and file a sealed complaint in federal court. While your complaint is being investigated it remains under seal meaning it remains secret.

Ultimately the government must intervene and take over the case, ask the court for it to be dismissed or allow your own attorney to prosecute in the name of the government. The rewards are higher (25% to 30%) if your own lawyer prosecutes. Each year the government collects billions of dollars from actions brought by whistleblowers.

Retaliation against whistleblowers is illegal and can result in double lost wages, future wages and legal fees. Often if you are discovered to be the whistleblower, the company will place you on paid administrative leave while the fraud case is being litigated and afterwards negotiate a separate settlement on the employment claims.

Many whistleblowers simply leave after finding new employment while the case is still a secret and their identity is not known.

Do You Have Information About Bribes Paid to Government Employees?

Obviously, bribery is illegal. As this case points out, whistleblower rewards are available assuming the bribe was made in connection with a government program or project.

Right now, the allegations against Keith Seguin are just that, allegations. We don’t think he is the first government official to ever to be accused of taking a bribe, however. If you have information about officials taking bribes or the companies that pay them, you may be eligible for a large cash reward. By doing so, you are taking a stand against greed and corruption.

This story dealt with bribery of a U.S. Air Force official. The False Claims Act is a federal law that pays rewards when the U.S. government is ripped off. Several states such as California, New York and Illinois also have similar laws. Do you think there has ever been a Chicago or New York City official who accepted bribes? There are countless whistleblower opportunities out there.

Bribery doesn’t have to be the norm. We believe that most government officials are hard- working, honest public servants. There are a few bad apples, however, that act as a stain on all the others. Ditto for the companies that pay these bribes.

To learn more, visit our whistleblower reward FAQ and FCPA information pages. Ready to see if you qualify for a reward? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791.  All inquiries are protected by the attorney – client privilege and kept completely confidential.

The post Bribery of Government Officials and Whistleblower Rewards appeared first on Mahany Law.

JP Morgan Securities – Big Doesn’t Mean Better

JP Morgan Securities – Bigger Doesn’t Mean Better

JPMorgan Chase is the largest bank in the United States and the 7th largest in the world. With assets of $2.86 trillion, it certainly is big. It also claims to be one of the oldest financial institutions in the country. But that doesn’t mean its brokerage arm is without problems.

We first wrote about problems in its brokerage business back in 2011. According to its website, JP Morgan is a leader in financial services for consumers. In the year we first wrote about the company, the Financial Industry Regulatory Authority (FINRA), JPChase Morgan accused it of selling junk bonds to its conservative investors.

JPMorgan was sanctioned for making unsuitable recommendations to its customers.  According to a news release, the investment banking giant recommended high yield bonds (i.e. junk bonds) to customers seeking conservative investment strategies. High yield bonds are both risky and illiquid making them unsuitable for most investors. FINRA said that some of the company’s financial advisers were recommending floating rate loan funds which are often illiquid meaning they are difficult to sell if you need your money quickly.

FINRA says that Chase failed to properly supervise and train its stockbrokers. Brokers have a duty to understand their customers’ needs including how quickly they need access to their money and their tolerance to risk. Stockbrokers can only recommend investments suitable for their clients’ needs. Selling junk bonds to those wanting low risk or selling illiquid floating rate loan funds to customers who need access to their money in the near term are cler violations.

For its part, JPMorgan Chase neither admitted nor denied the allegations. It will be reimbursing affected customers for their losses, however.

That was in 2011. With hundreds of people in its compliance department, one would think that the company could stay out of trouble. It hasn’t.

Fast forward to last week when FINRA when a JP Morgan Securities rep in Illinois was caught moving $700,000 from 112 customer accounts and moving the funds into a money market account. It wasn’t that the customers lost money or that the broker pocketed the money. instead, FINRA reminded brokers that unless they have been given discretionary authority over a customer’s account, they simply can’t move around a customer’s money because they feel like it.

JP Morgan terminated a rep thought to be behind the illegal transfers. A lawyer familiar withe case, however, believes the young female associate broker took the fall for someone higher up in the company.

Earlier this year a JP Morgan broker was permanently barred from the securities industry after regulators found he attempted to open accounts for an 87 year old woman with dementia. In opening accounts, the broker Steven Jun Lu made. himself beneficiary of 75% of her account. Lu was allowed to accept the ban without admitting guilt.

In 2019, JP Morgan Securities was fined $1.1 million for failing to report 89 allegations of misconduct. When a brokerage firm finds misconduct by one of its representatives or fires someone for misconduct, self reporting regulations require the action immediately be reported to FINRA.

We view the failure to report sanction as extremely serious. FINRA and the SEC rely on voluntary reporting. If a broker is caught stealing, churning customer accounts or engaging in elder financial abuse, regulators need to know in order to protect the public. Not every violation is reported directly to authorities. In fact, in most cases aggrieved investors contact the brokerage firm first.

When a brokerage firm sweeps misconduct under the rug, regulators can’t protect the public or prevent the bad broker from simply moving to another firm.

Did You Lose Money at JP Morgan Securities?

If you lost money to a stockbroker or investment advisor, we may be able to help you get back your money. While no broker can guarantee your investment, brokers are responsible for following “know your customer,” suitability and other special rules. Both they and their employer can be held responsible for your losses if those rules are broken.

For a no obligation review of your case, contact attorney Brian Mahany at (202) 800-9791 or by email at brian@mahanylaw.com. All calls are confidential. We also invite you to visit or stockbroker malpractice and fraud recovery information page.

Mahany Law – America’s Fraud Lawyers.  Stockbroker fraud recovery services available nationwide.

The post JPMorgan Securities Fined for Unsuitable Investments, Misconduct appeared first on Mahany Law.

Nonprofit agrees to pay $1.9M fine after whistleblower suit over products it claimed were made by visually impaired Americans

(107K)

A West Allis nonprofit that operates nationwide has agreed to pay $1.9 million to the federal government after a whistleblower exposed it for repackaging Chinese products and claiming they had been made by visually impaired Americans.

Such claims helped Industries for the Blind and Visually Impaired earn the agency Ability One certification, a major advantage in winning contracts with government agencies like the U.S. Navy and Air Force.

Paul Inzeo, the company’s former marketing manager, filed a False Claims Act action against it in 2015, saying Industries for the Blind had lost its way and become a multimillion-dollar enterprise “designed to enrich its officers at the expense of the very people it was created to help.”

Inzeo’s attorney, Brian Mahany of Milwaukee, said, “Exploiting the blind to perpetrate a scheme to defraud the government is among the most outrageous conduct I have seen in a decade of whistleblower cases.”

Industries for the Blind, Inc., started in 1953 and changed its name in 2018 to Industries for the Blind and Visually Impaired. According to its website, it has manufacturing operations in West Allis, Menomonee Falls and Janesville, and 75% of its workforce is legally blind. Inzeo’s suit suggested the figure is far lower.

In a statement Tuesday, president and CEO C.J. Lange said IBVI worked with the Justice Department and found that none of the initial claims raised by Inzeo were valid, but that it discovered two employees who were “engaged in inappropriate activity” and were fired.

“These settlement negotiations have provided an opportunity for us to strengthen our relationship and trust with the United States government, while also ensuring that our staff is working towards our mission of blind employment.”

Lange was paid about $526,000 in 2017, according to the company’s tax report. He is the son of former president Charles Lange, who retired around 2013.

Inzeo, of Waukesha, said that while he was at Industries for the Blind, it imported about $40 million worth of goods from China, Taiwan and South Korea annually, which it resold as products made in the U.S.

“The sales brochures pictured blind employees but I witnessed sighted part-time workers handling the repackaging, relabeling and assembly,” Inzeo said.

“When I asked the warehouse manager why, he replied it was easier to hire sighted workers because it took too long to teach the blind how to do the work.”

Inzeo worked for the company from 2007 to 2013, when he said he was laid off. But he’d long before begun gathering information, records, photos and videos of operations at the nonprofit.

The Civil War-era False Claims Act allows people with inside information about fraud against the federal government to bring the actions under seal while the Justice Department investigates, and allocates such whistleblowers a portion of any recoveries.

I’m thrilled that the government stopped and fined these people,” Inzeo said of the DOJ action.

According to federal court records, the U.S. government only intervened in the action against IBVI, not against the five officers of the company Inzeo had also named in his original court case.

The federal Ability One Commission had certified IBVI as providing blind-made products, which gave the company special access to government procurement contracts.

Inzeo said Industries for the Blind sold office and cleaning products, promotional items, furniture and clothing and other goods for prisons. In 2009, he said, it won a $30 million contract from U.S. Census Bureau to supply shoulder bags for census workers. The bags came from China, he said, and people in West Allis merely clipped on the shoulder straps.

He said he saw other products, like mops, come from China, be removed from their packaging and put in new packaging to be sold as something made by blind workers.

“You can’t claim assembly just because you put it in a box,” he said.

Inzeo said he has an autistic son, and it bothered him to see how people with a disability were being used.

“I walked into the job thinking, ‘I’m gong to do wonderful things for people that really need it,'” he said. “But it was all exploitation.”

The post Journal Sentinel September 29, 2020 appeared first on Mahany Law.

(Photo of Ft. Knox)

What is the lure of gold? For thousands of years people have used gold and silver as a measure of wealth. It’s durable and is frequently held as a hedge against inflation. Americans love gold and unfortunately, scammers love it too. Two precious metal dealers have been charged by the CFTC and thirty states with defrauding elderly investors out of $185 million by getting them to invest in overpriced gold and silver.

TMTE Inc. (doing business as Metals.com), Barrick Capital, Lucas Asher and Simon Batashvili were all named in the complaints. Regulators say that since 2017 the defendants have ripped off over 1,600 people, most of them elderly investors.

According to the complaint, “Defendants’ scam is particularly egregious because they preyed on persons between 60 and 90 years of age and swindled them out of their retirement funds by charging them fraudulent prices to purchase precious metals bullion.”

The CFTC says,

“Through their fraudulent solicitation, the defendants deceived customers into purchasing precious metals bullion at grossly inflated prices that bore no relationship to the prevailing market price. The overcharges averaged from 100 percent to more than 300 percent over the prevailing market price. In the end, nearly every customer lost the vast majority of their funds deposited with the defendants.

“As the complaint alleges, to perpetuate their fraud, when questioned by customers about the value of the precious metals bullion they purchased, the defendants falsely claimed that the precious metals bullion were rare and carried a premium far above the base melt value. In fact, the precious metals bullion were significantly less valuable than the defendants claimed.”

InvestmentNews quotes Metals.com as denying the charges. “We look forward to defending our right to fully ship physical retail products in under 28 days in both the physical industrial metals and precious metals markets.”

A jury will ultimately determine whether or not the companies and their principals are guilty. Looking behind the headlines, there are many red flags in this case that should be discussed.

Beware of Affinity Frauds

The complaint suggests that the scam targeted Christians and people with conservative beliefs. These so-called affinity scams are often effective because they prey on a victim’s membership in a particular group. The fraudsters involved in affinity scams often are – or pretend to be – members of the group. Sometimes they are successful in  enlisting unsuspecting leaders from the group to spread the word about the scheme, further adding to its legitimacy.

Simply because a company advertises in a religious publication or claims to adhere to a particular philosophy doesn’t make their claims true. Affinity scams often work, however, because victims let their guard down if they believe the person soliciting them is the member of the same religion, group or organization.

We believe the scam was particularly effective because most of the people solicited were elderly. The promoters allegedly claimed that their retirement was at risk and that immediate action was necessary to protect their nest egg. Regulators say that many folks cashed in legitimate retirement assets to invest in these volatile and over priced metals.

Brokerage Firms Were Unlicensed

What most frustrates us is that this scam was easily preventable. According to regulators, none of these companies or principals were licensed to sell commodities. Buy a box of cookies from a girl scout and you probably don’t check to see if they are legit. The worst that can happen is that you lose $10 or so.

What amazes us is how many people will cash in their life savings and send it to someone they met on the telephone. It is so easy and fast to see if a broker is legit and licensed. That doesn’t prevent every fraud but some simple due diligence could have prevented tens of millions of losses to folks who can least afford it.

Don’t know how to check on a broker? If they are selling commodities like gold or silver, start with the Commodity Futures Trading Commission. Being asked to buy securities? Start with FINRA’s Broker Check system. A few mouse clicks will tell you everything you need to know.

Still think its too difficult or confusing? Ask a family member who is good with Internet or a trusted banker for help. A few seconds can keep you from years of poverty.

If someone tells you they don’t have to be licensed? Run.

Beware Gold Investments

Obviously not every precious metal investment is a scam. There have been enough gold scams in recent years, however, that both the CFTC and state securities regulators have published their own precious metals advisories. Do some research before you invest.

What Is In a Name? Everything

If you do invest, make sure the firm getting your hard earned money is legitimate.

Prosecutors say the company changed names frequently and often used names very similar to legitimate companies. For Example, Barrick Capital sounds similar to Barrick Gold, a large well known Canadian gold miner.

When one name would become too toxic because of negative reviews, the promoters would change the name. For a while, regulators even say the company was using the name USA Mint. Obviously, that could cause confusion with the U.S. Mint, the latter being a government agency.

What Will Happen to Metals.com / Barrick Capital Investors in this Case?

The CFTC and states are working jointly to get back investors’ money. Sadly, in our experience much if not most of the money is gone by the time regulators close in. Insurance is usually not available for fraud claims either.

The investment fraud recovery lawyers at Mahany Law accept cases with losses of $100,000 or more but only if there is a legitimate brokerage firm or third party involved. We occasionally consider class action cases if we can find an outside third party such a bank that facilitated the fraud.

To learn more, visit our stockbroker fraud recovery and precious metals fraud information pages. Ready to see if you have a case? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. We accept cases anywhere in the United States.

The post Gold Dealers Steal from Investors (Precious Metals Fraud) appeared first on Mahany Law.

Hurt While Driving for Uber? Hurt While a Passenger? This Story Will Shock You

Pedro Fontes is a long time driver for Uber. His life changed forever on July 6, 2017 when he was shot in the head while driving for Uber. Three years later and Uber still refuses to pay him for his injuries.

Pedro began his evening on July 5^th like any other night. A Wednesday night, Pedro was driving for Uber in the Boston area. Shortly after midnight (now July 6^th) he accepted a fare from an Uber rider on Cushing Avenue, Boston. Uber did not provide him with any warning as to any dangers in the area of Cushing Avenue, nor did it offer any system, procedure, or other safety measures to alert or otherwise protect his safety in a high-crime neighborhood.

As most Uber drivers know, if you decline or cancel too many times you can be “deactivated” meaning you will no longer be able to make any money on the Uber platform.

At 12:22 am while waiting for his rider, Pedro was shot in the head by an unknown assailant. We don’t know if the shooting was random or if the rider was in on it. What we do know is that bullets and bullet fragments penetrated his skull and multiple regions of his brain, nearly killing him, and inflicting severe neurological damage.

Pedro was rushed to the Boston Medical Center where doctors were able to save his life. He remained hospitalized for weeks. It took months of rehab before he was able to eat, walk or even speak. Although he has made significant progress, his injuries are permanent. Doctors say he suffers from permanent nerve damage in his left leg and left arm, constant pain, permanent partial loss of vision in both eyes, impairment of cognitive function, physical disfigurement, post traumatic stress disorder and other debilities. He will need care for the rest of his life.

Prior to the shooting, Pedro was able to care for his two kids. He can no longer care for them or even fully enjoy their company. He also can’t work. His life has been shattered and torn apart.

What was Uber’s response?

Nothing. Uber did nothing to help Pedro and didn’t even cooperate with the police.

The only reason Pedro Fuentes was at 105 Cushing Street on July 6^th is because Ubr sent him there. Yet Uber refuses to take any responsibility for Pedro’s care. Had Uber acknowledged that Pedro was its employee, he would have been covered by the Massachusetts Workers Compensation Act. That means he would have been entitled to receive extensive benefits, including payment of his medical expenses, rehabilitation, injured employee compensation, and permanent impairment benefits. Even though he isn’t able to go back to work, he would have received money to help support his kids.

After getting nowhere with Uber, Pedro sued the company in July 2020. Even after being sued, however, Uber still refuses to pay. According to them, by agreeing to the terms of the online driver’s agreement, Pedro waived his rights to sue. Uber says that despite our constitutional right to seek redress of disputes in the courts, his case must be submitted to arbitration. Not only don’t they want to pay, Uber doesn’t want Pedro to even get his day in court.

What is Uber afraid of? Juries. We think that a jury would be more sympathetic to Uber drivers than a professional arbitrator who is dependent on Uber for work.

Unfortunately, most courts have sided with Uber. They say that a driver can waive his or her rights to a jury trial simply by clicking on a button in an app. A few courts in California and Massachusetts have shown a willingness to push back on the rider share giant.

How will the court in Massachusetts rule? We are closely monitoring.

Uber and Lawsuit Waivers

We have previously gone after Uber on behalf of thousands of Uber drivers in Wisconsin, Indiana and Illinois. Unfortunately, Uber was able to beat our lawsuits and many others in court or spend millions of dollars in lobbying expenses to get the states to classify drivers as independent contractors.

As a contractor, Uber doesn’t need to provide worker’s compensation, overtime, or even minimum wages.

Uber (and Lyft too) not only claims that drivers have no rights because they are independent contractors, they don’t even want the drivers to be able to sue and challenge those claims. At the heart of the dispute is the driver’s agreement.

To drive for Uber or Lyft, the driver must click on an app indicating that he or she has read all the terms of the agreement. Buried in the fine print is language that says,

“Any disputes, actions, claims, or causes of action arising out of or in connection with this Agreement or the Uber Services shall be subject to arbitration… this Arbitration Provision also applies, without limitation, to all disputes between You and the Company or Uber, as well as all disputes between You and the Company’s or Uber’s fiduciaries, administrators, affiliates, subsidiaries, parents, and all successors and assigns of any of them, including but not limited to any disputes arising out of or related to this Agreement and disputes arising out of or related to your relationship with the Company …”

Periodically Uber changes the wording but the effect is the same. Unless you timely opt out you are stuck submitting any claims to arbitration. To better ensure that no lawyers take a case, Uber also requires drivers to waive the right to participate in a class action.

Why Are We Sharing This Story?

We no longer accept cases on behalf of Uber drivers. Until Congress and the states fix the problem, there are very few places where Uber can be sued. Unfortunately the media never covered Pedro’s story. In fact, it was only a legal publication, Law360, that wrote about it.

We still care about our former driver clients and are happy to share stories so that the public understands just how horrible a company Uber is.

*Although 99.9% of Uber drivers are great folks, there are a few bad apples. We do accept cases from members of the public who were assaulted by Uber or Lyft drivers or non driver employees of Uber and Lyft who were sexually harassed. To learn more, contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. Cases accepted nationwide.

The post Uber Refuses to Compensate Driver Shot in Head appeared first on Mahany Law.

Industries for the Blind Settles Chinese Import Fraud Suit

Industries for the Blind Inc. will pay $1.9 million to settle a whistleblower’s claims that it violated the False Claims Act by providing the federal government with goods from China and Taiwan despite promising to provide goods produced by disadvantaged workers in the United States, according to a Tuesday news release.

IBI allegedly engaged in a scheme to purchase cheaper goods from those countries and pass them off as products eligible for sale to federal agencies under the AbilityOne program, the press release said.

Magistrate Judge William E. Duff of the U.S. District Court for the Eastern District of Wisconsin signed an order Tuesday granting the government’s request to intervene in the whistleblower’s suit for settlement purposes, and to partially lift a seal.

The Javits-Wagner-O’Day Act requires federal agencies to purchase suitable commodities from nonprofi agencies that employ a certain percentage of blind or severely disabled individuals. The Act is administered by the AbilityOne Commission which establishes a list of supplies and services nonprofi agencies can provide.

According to whistleblower Paul lnzeo’s complaint, the U.S. Census Bureau placed orders with IBI for census bags which accounted for about $30 million in gross sales. The goods were contracted to a company in China without consent from AbilityOne.

IBI employees removed indicia showing the goods were made in China, lnzeo said in the complaint.

lnzeo also alleged that IBI provided the government with clothing, pens, brooms, and other goods that were made by foreign workers.

“They imported approximately $40 million dollars of goods a year from China and sold them as American blind-made products to the U.S. government. The sales brochures pictured blind employees but I witnessed sighted part-time workers handling the repackaging, relabeling, and assembly,” lnzeo said.

“When I asked the warehouse manager why, he replied it was easier to hire sighted workers because it took too long to teach the blind how to do the work,” he said.

lnzeo, a former marketing manager for 181, fied his suit under seal in 2015.

Mahany Law represented the whistleblower.

The case is United States ex rel. lnzeo v. Indus. for the Blind Inc., E.D. Wis., No. 15-cv-996, 9/29/20.

The post Bloomberg Law September 29, 2020 appeared first on Mahany Law.

Lawyers Get $3M From $9.5M Settlement Over Unwelcome Sales Calls

(79K)

The risk of establishing liability and damages favors settlement because of the defendant’s argument that it did not use an automated telephone dialing system, the court said, noting that the U.S. Supreme Court is slated to consider this term what constitutes such a system, resolving a split among the circuits.

Lawyers for the class were awarded $3 million, and class members get $75.30 each, in a $9.5 million settlement of a Telephone Consumer Protection Act suit against Freedom Mortgage of Mount Laurel.

The suit claimed that Freedom Mortgage made unsolicited sales calls to the plaintiffs’ residential and cellular phones without their consent, even after customers asked them to stop, and that the company deleted “do not call” requests from its records. The settlement is “fair, reasonable and adequate,” U.S. Magistrate Judge Joel Schneider said in approving the terms.

The settlement is a victory for Berger Montague of Philadelphia, Lakewood, New Jersey, attorney Stefan Coleman and the Mahany Law Firm of Milwaukee, Wisconsin, representing plaintiffs and the class. The $3 million fee and $61,198 in costs awarded to the class counsel are warranted because the case was “prosecuted with skill, perseverance, and diligence” and “involved complex factual and legal issues that were skillfully researched and developed by Plaintiffs’ Counsel, and vigorously disputed by defendant Freedom Mortgage Corp.,” Schneider said.

Schneider said the risk of establishing liability and damages favors settlement because of the defendant’s argument that it did not use an automated telephone dialing system. He noted that the U.S. Supreme Court is slated to consider this term what constitutes such a system, resolving a split among the circuits.

“In this regard, nobody knows how the Supreme Court will rule when it addresses the definition of an ATDS. It is possible the decision may bar plaintiffs’ claim in its entirety,” Schneider said.

The size of the estimated payment to each class member, at $75.30, is “on the high side” of settlements in recent TCPA settlements, further supporting the reasonableness of the settlement, and he cited three other cases of the same type in which settlements to class members ranged from $33 to $40.

Schneider also cited measures included in the settlement to reduce the incidence of such violations in the future as “substantial benefits to the class.” They include designation of a senior manager at Freedom Mortgage to assure compliance with the TCPA, reporting to the company’s CEO; additional training about the company’s do-not-call lists; and establishing and implementing procedures to facilitate compliance with do-not-call policies.

The suit, filed in 2017, said Freedom Mortgage had six call centers employing 300 loan officers engaged in telemarketing of refinance opportunities to individuals with home loans originated or serviced by the company. To induce individuals to answer their calls, Freedom often disguised the origin of the phone calls by using “spoofing” methods that make the phone call appear as if it is coming from a local phone number, the suit claimed.

Meredith Slawe and Michael McTigue Jr. of Cozen O’Connor in Philadelphia, who represented Freedom Mortgage, did not return calls about the settlement.

The post New Jersey Law Journal, October 21, 2020 appeared first on Mahany Law.

Dr. Javaid Perwaiz Faces 465 Years in Prison after Jury Convicts Him in Case Involving Medically Unnecessary Hysterectomies (Booking Photo)

We get a chill up our spine when people say Medicare fraud is a victimless crime. It’s not just taxpayers that get ripped off. Very often patients are harmed by the very doctors they trust with their care. In this post we examine a 70 year old obstetrician-gynecologist now facing 465 years in prison after performing dozens of medically unnecessary surgeries… surgeries that are also irreversible.

Dr. Javaid Perwaiz is a long time physician in the Hampton Roads area of Virginia. Countless babies have been delivered by him but he also endangered and ruined the lives of many women.

On November 9^th, a federal jury convicted Perwaiz of 52 counts of fraud. He faces 465 years in prison when sentenced next year. No matter what his sentence, he will likely die in prison.

According to court records and evidence presented at trial, Dr. Perwaiz scheme began in 2010 and continued until his arrest last year. During that period, he billed both private insurance companies and Medicaid millions of dollars for irreversible hysterectomies and other surgeries and procedures that were not medically necessary for his patients.

Often Pervaiz told his patients they needed surgery to avoid cancer. He was lying. His interests were not the medical wellbeing of his clients, instead he was focused on the insurance money.

Sadly, several of his former patients testified they suffer pain or other complications because of the unneeded surgeries. The hysterectomies they received can’t be reversed they can never have children.

To keep his staff from speaking out, he reportedly provided them lavish gifts. One nurse testified the value of the gifts she received was several hundred thousand dollars.

Although over 50 witnesses testified for the prosecution, Perwaiz only had one witness for his defense. He also took the stand.

Perwaiz’ lawyers argued that  he was  hard-working, dedicated, and highly skilled doctor who only acted in the best interest of his patients. The jury wasn’t convinced.

The district’s top federal prosecutor says, “Dr. Perwaiz preyed upon his trusting patients and committed horrible crimes to feed his greed. Dr. Perwaiz has a history of fraud including having his medical license and hospital privileges revoked. Nothing was going to stop him but the brave victims who testified against him and law enforcement. My thanks to the trial team for their outstanding work in what was a very complex case, and to our investigative partners for their efforts…”

The number of agencies and the number of press releases show an alphabet soup of state and federal agencies were involved in the investigation. This speaks volumes about how concerned authorities were once the investigation began. Doctors take an oath to do no harm. A 12 person jury found that Perwaiz had instead put patients before profits.

Whistleblower Rewards and Healthcare Fraud

What isn’t in the media is how Perwaiz was caught. Although some of his patients may have had a suspicion, most believed him as he was their trusted OB-GYN. A hospital worker where Perwaiz performed the surgeries blew the whistle. And that brave action probably saved many other women from a similar fate.

Under the federal False Claims Act, whistleblowers with inside information about fraud involving government healthcare programs can receive a reward for reporting healthcare fraud. The rewards range between 15% and 30% of whatever the government collects from the wrongdoer.

In this case absent a “Hail Mary”, Dr. Javaid Perwaiz is headed to prison when sentenced in March. The government can still forfeit any assets that are the result of the millions of dollars he received in overpayments.

To learn more about how you can obtain a cash whistleblower reward, visit our healthcare fraud whistleblower page. 29 states also have rewards for state funded Medicaid fraud information. (Two states, California and Illinois have reward programs for fraud involving private health insurance.)

Whistleblowers are the new American heroes. Our mission is to help brave healthcare workers stamp out fraud and collect the maximum rewards possible.

Medical Necessity and Accepted Standard of Medical Practice

Of all the types of healthcare fraud, medical necessity is one of the most difficult to prove.

Let’s take a doctor who bills for a one hour office visit but only spends 5 minutes with the patient. That same doctor then bills for 37 one hour visits during a 24 hour period. That is an easy fraud to prove.

But medical necessity requires a more subjective determination. Two doctors can legitimately disagree on whether a procedure is necessary or not. Afterall, that is why so many patients get second opinions. Simply because one doctor disagrees doesn’t mean the other is committing fraud.

Medicare, Medicaid and most private health insurance plans will only pay for services that are medically necessary. Specifically, for government funded programs, the services must be “reasonable and medically necessary.”

Looking to the Centers for Medicare and Medicaid Services, (CMS) they define the term “medically necessary” as follows:

“Services or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice.”

So, what does the phrase “accepted standard of medical practice” mean? CMS also defines that. The definitions, however, are not black and white.

Courts have been struggling with medical necessity cases for years. The accepted standard can’t be completely subjective. Instead courts look for help from experts and the current generally accepted standards of medical practice in a particular specialty.

As this case show, ultimately a jury may have to decide if a doctor went too far.

To learn more or to see if you are eligible for a reward, contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. All inquiries are protected by the attorney client privilege and kept strictly confidential. We accept cases nationwide.

The post Doc Performed Unnecessary Hysterectomies – Medicaid Fraud Post appeared first on Mahany Law.

How to Stop Nuisance Calls in Texas

How to Stop Those Annoying Telemarketers and Get an Award of Monetary Damages Too (Texas Robocall Lawyer Post)

Americans received 58.9 billion robocalls  last year. And that total is up 22% from the year before!  President Trump signed into law the TRACED  Act in late December 2019 that gives greater enforcement power to the FCC but thus far, we haven’t seen a big decrease in illegal telemarketing calls. And the state that receives the most spam and unsolicited calls? Texas (actually California has the dubious honor of being tied for first).

Those calls have long been illegal under federal law. The Telephone Consumer Protection Act (TCPA) allows people who receive illegal telemarketing calls to sue. Each call can result in damages of between $500 and $1500. Receive a couple dozen unwanted calls and you could receive tens of thousands of dollars in damages.

Telephone Consumer Protection Act and National Do Not Call Registry

Federal law says that telemarketers and debt collectors can’t contact you without your consent. Calls are also illegal if you placed your name on the FTC’s Do Not Call Registry.

The law applies to:

• Mobile phones and cell phones
• Text messages
• Fax machines (“junk faxes”)
• Home Phones
• Calls made by autodialers (robo calls)

You may have a case for damages and penalties if:

1. A debt collector calls you between 9 pm and 8 am
2. Debt collectors contact your workplace after you tell them to stop
3. A debt collector fails to properly identify him or herself (more on that below)
4. Telemarketers call you using an artificial voice or recorded message
5. Telemarketers use auto dialing equipment to call you (virtually everyone uses this technology)
6. Telemarketers make robocalls to you
7. Telemarketers contact you if you are on the national do not call registry or if you asked to be placed on the company’s do not call list
8. You receive unsolicited text messages
9. A telemarketer calls your cell phone without your prior consent

To learn more, visit our Do Not Call and Nuisance Telemarketing Call information page.

Texas State Telemarketing Rules

There are a handful of states with their own laws about abusive telemarketing calls. One of the states is Texas. Residents on the Lone Star state received an estimated 6 billion calls last year.

The Texas law is very consumer friendly in that it has a broad definition of “telephone call.” Under the state’s law, telephone call includes junk faxes, text messages, and graphic images sent to mobile phones. The law also has a more restricted time window for telemarketers to call.

Under federal law, legal telemarketing calls are only permitted between 8:00 and 9:00 pm. The Texas law allows consumers an extra hour of sleep (8:00 am to 9:00 am) and no call until noon on Sundays.

Violations of the Texas telemarketing law can be criminally prosecuted by the local district or county attorney. Unfortunately, most prosecutors have more important crimes to investigate and prosecute. That means few telemarketers ever see the inside of a jail cell. (We bet it would certainly cut back on the number of illegal robocalls!)

Fortunately, the Texas Legislature anticipated that victims of robocalls when also need a civil remedy.  Texas residents receiving unsolicited or otherwise illegal marketing calls can sue for their actual damages or a fixed $500 per call. If the calls were made knowingly, the civil penalty jumps to triple actual damages or $1,500 per call.

How Do I Sue a Telemarketer?

We handle handling lawsuits on behalf of consumers who received unwanted calls from telemarketers, debt collectors, and other companies on their cell phones. As noted previously, under the TCPA, individuals must provide express consent to receive certain types of calls. They also have the right to tell telemarketers (including debt collectors) to stop calling.

In Texas, consumers may be able to collect between $500 and $1,500 under either Texas or federal law.

If you received unwanted telemarketing call, contact for us a free consultation. We can be reached online by email brian@mahanylaw.com or by phone 202-800-9791.  Cases accepted nationwide.

A word about Consent (TCPA and Written Consent)

Both the TCPA and Texas own telemarketing call rules require consent. But what constitutes consent?

Prior to placing robocalls or using automated dialers, telemarketers must receive the consumers’ consent. Calling or messaging a mobile number in Texas also requires consent.

Not only must there be consent but the TCPA says consent must be in writing (e signatures or clicking a box online qualify).

Companies are also not allowed to require consent as a condition to purchasing goods or service.

Who Are the Big Culprits in the Telemarketing World?

Consumers may be able to file lawsuits against the following types of institutions for placing robocalls:

• Ocwen
• Freedom Mortgage (We settled with Freedom in 2020 $9.5 million!)
• Loan Depot (LoanDepot.com)
• The Money Source
• Wells Fargo
• Edward Jones
• GC Services
• collection agencies
• marijuana dispensaries (mostly spam text messages)
• gyms and health clubs
• security and alarm companies (ADT)
• medical supply companies (Heritage Diabetic Supply)

Need more information? Visit these resources:

TCPA Robocall Information page

Illegal Call Recording – TCPA and CIPA (California Invasion of Privacy Act)

Junk Faxes

Mortgage Company Telemarketing Calls

If you received unwanted telemarketing call, contact for us a free consultation. We can be reached online by email brian@mahanylaw.com or by phone 202-800-9791.  Cases accepted nationwide

Text of the Texas Telemarketing Practices Law

PROHIBITED COMMUNICATIONS MADE FOR PURPOSE OF SOLICITATION

Sec. 305.001.  PROHIBITED TELEPHONE CALLS.  A person may not make a telephone call or use an automatic dial announcing device to make a telephone call for the purpose of making a sale if:

(1)  the person making the call or using the device knows or should have known that the called number is a mobile telephone for which the called person will be charged for that specific call;  and

(2)  the called person has not consented to the making of such a call to the person calling or using the device or to the business enterprise for which the person is calling or using the device.

Added by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 2.01, eff. April 1, 2009.

Sec. 305.002.  PROHIBITED FACSIMILE TRANSMISSIONS:  CHARGE TO RECIPIENT.  A person may not make or cause to be made a transmission for the purpose of a solicitation or sale to a facsimile recording device or other telecopier for which the person receiving the transmission will be charged for the transmission, unless the person receiving the transmission has, before the transmission, consented to the making of the transmission.

Added by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 2.01, eff. April 1, 2009.

Sec. 305.003.  PROHIBITED FACSIMILE TRANSMISSIONS:  HOURS OF TRANSMISSION.  A person may not make or cause to be made a transmission for the purpose of a solicitation or sale to a facsimile recording device after 11 p.m. and before 7 a.m.

Added by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 2.01, eff. April 1, 2009.

SUBCHAPTER B.  ENFORCEMENT

Sec. 305.051.  INVESTIGATION.  (a)  On complaint of a called person that a person has violated Section 305.001, 305.002, or 305.003, the county or district attorney of the county in which the called person resides shall investigate the complaint and file charges if appropriate.

(b)  A telephone company serving the caller or called person is not responsible for investigating a complaint or keeping records relating to this chapter.

Added by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 2.01, eff. April 1, 2009.

Sec. 305.052.  CRIMINAL PENALTY.  (a)  A person who violates Section 305.001, 305.002, or 305.003 commits an offense.

(b)  An offense under this section is a Class C misdemeanor.

Added by Acts 2007, 80th Leg., R.S., Ch. 885 (H.B. 2278), Sec. 2.01, eff. April 1, 2009.

Sec. 305.053.  CIVIL ACTION.  (a)  A person who receives a communication that violates 47 U.S.C. Section 227, a regulation adopted under that provision, or Subchapter A may bring an action in this state against the person who originates the communication for:

(1)  an injunction;

(2)  damages in the amount provided by this section; or

(3)  both an injunction and damages.

(b)  A plaintiff who prevails in an action for damages under this section is entitled to the greater of:

(1)  $500 for each violation; or

(2)  the plaintiff’s actual damages.

(c)  If the court finds that the defendant committed the violation knowingly or intentionally, the court may increase the amount of the award of damages under Subsection (b) to not more than the greater of:

(1)  $1,500 for each violation; or

(2)  three times the plaintiff’s actual damages.

The post Texas Robocall Lawyer appeared first on Mahany Law.

How to Stop Unwanted Insurance Company Calls and Text Messages

The insurance world is quickly becoming online. While most towns still have a local State Farm agent, you are more likely to see dozens of insurance apps and Internet advertisements. Many of these sites and apps advertise they can find you the best price on a wide variety of insurance products including life, car and home insurance policies.

According to J.D. Power, about 75% of people seeking insurance now shop online.

How many people have heard the radio commercials for Big Lou or social media ads for price comparison apps like Gabi and the Zebra? While on some apps and in some states,  you can truly buy insurance online, many times you simply get quotes. Often these sites and apps are a trap run by lead generating firms. The result is unwanted telemarketing calls.

Although many of these apps and ads are not operated by insurance companies, insurers contract with them for leads. That is important because if the marketing company violates the law, both the marketing company and its insurance company clients can be liable for damages.

Because these services often result in unwanted phone calls and text messages, consumers can fight back against these calls through a law called the Telephone Consumer Protection Act (TCPA). Under the act, you may be entitled to damages of between $500 and $1,500 per call.

The TCPA prohibits telemarketers from:

• Using automated, robocalls to target potential customers;
• Contacting consumers without prior express consent;
• Sending internet to telephone text messages;
• Calling repeatedly or between certain hours (generally from 9:00 pm to 8:00 am).

What to Do if You Receive an Unwanted Insurance Company Call or Text

When you used the app or called in response to an ad, you may have or may not have consented to receiving telemarketing calls. To comply with the law, text messages are required to have an easy method of opting out. If you get a phone call, tell the caller to place you on their Do Not Call list.

Assuming those measures do not work, begin a diary or keep notes of every time a person called, the date and time of the call, the number showing up in your caller ID and any other information that may later help us prosecute the offenders.

If the calls are in the form of junk faxes or text messages, save or screenshot the messages.

Do I Have a Case? – How Do I Sue an Insurance Company for Unwanted Calls

There are a wide variety of ways that business and marketing companies violate the TCPA and the National Do Not Call list.  Violators certainly aren’t limited to insurance agents and companies.

You may have a case if:

1. An insurance company or telemarketer calls you between 9 pm and 8 am
2. Telemarketers continue to call after you tell them to stop
3. A telemarketer fails to properly identify him or herself (more on that below)
4. Telemarketers call you using an artificial voice or recorded message
5. Telemarketers use auto dialing equipment to call you (virtually everyone uses this technology)
6. Telemarketers make robocalls to you
7. Telemarketers contact you if you are on the national do not call registry or if you asked to be placed on the company’s do not call list
8. You receive unsolicited text messages
9. A telemarketer calls your cell phone without your prior consent
10. You Receive Ringless Voicemails

What Are the Penalties for Violating the Law? (How Much is my Case Worth?)

The company making the calls must pay you between $500 and $1500 for each illegal call or text. We have seen cases where mortgage companies have called prospects over 100 times. The awards in these cases can mount quickly so you should maintain a diary or at least screenshot the calls or texts to prove how many times you were contacted.

Take Action Today – How Do I Sue a Telemarketer?

If you have received unwanted calls or text messages from an insurance company or other telemarketers, you may be entitled to substantial financial compensation. In our experience, illegal telemarketers don’t just call once. Chances are that if they are illegally making calls, they won’t just stop with a single call. With violations of between $500 and $1500 per call, even a dozen unwanted calls could mean almost $20,000 in damages.

Ready to learn more? Contact us online by email brian@mahanylaw.com or by phone 202-800-9791 for a free case evaluation. Our goal is to help you stop the harassment, end the calls and secure you a high damage award. We do this through individual and national class actions.

United American Insurance Sued for Unsolicited Calls

Kyle Miholich is a resident of San Diego. He is not a customer of United American nor had he contacted them seeking insurance. In April, he received a call on his mobile phone. It was a prerecorded voice call.

Because he had never consented to the call and was also on the national do not call list, the call was illegal. Typically, we do not consider cases where a caller just receives one unsolicited call. Often people switch numbers and someone that may have consented to calls two years ago has since moved and doesn’t port his or her number.

Miholich sued and brought his complaint as a class action. As noted above, we typically shy away from single call cases but the presence of a prerecorded voice serves as a giant red flag. Companies that use artificial voices or prerecorded messages typically are engaged in high volume robocalling.

Pre-recorded messages, artificial voices, ringless voice mails, a click and long pause before an operator gets on the line… all are red flags of a large scale telemarketing scheme that violates the Telephone Consumer Protection Act.

Once again, to learn more visit our  telemarketing lawsuit information page or one of the specialized pages [links above]. Ready to see if you have a case? Contact us online by email brian@mahanylaw.com or by phone 202-800-9791 for a free case evaluation. Our goal is to help you stop the harassment, end the calls and secure you a high damage award. We do this through individual and national class actions.

The post Unwanted Insurance Company Calls and Texts appeared first on Mahany Law.

Countries with the Highest Rates of Bribery of Government Officials

Have Info on Foreign Bribery? Uncle Sam Is Interested and Pays Huge Rewards for Information

Congress passed the Foreign Corrupt Practices Act (FCPA) in 1977. That law prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business.

The FCPA applies to prohibited conduct anywhere in the world and extends to publicly traded companies and their officers, directors, employees, stockholders, and agents. Agents can include third parties such as consultants.

Another feature of the law requires companies to maintain accurate books and records and have a system of internal controls sufficient to, among other things, provide reasonable assurances that transactions are being executed legally.

There are two agencies that enforce the Foreign Corrupt Practices Act, the Department of Justice and the Securities and Exchange Commission (SEC). If the SEC prosecutes the case, sizeable cash whistleblower rewards are available. When the Justice Department prosecutes a case, it does so criminally and does not pay rewards. Often in whistleblower cases, both agencies will prosecute meaning there will be a reward.

As noted above, the illegal conduct (bribery of government officials) can take place anywhere in the world. Even if the bribery takes place out of the United States or the company paying the bribes isn’t even a U.S. company, rewards may still be available.

There are several simple rules to evaluate when determining if you may be eligible for a whistleblower reward.

First, is the company covered by the law? The company must be registered with the SEC. If the company is a public company that sells stock on a US market, the company is probably within the jurisdiction of the SEC.

Even if the company is a foreign company who shares are sold on a foreign exchange, it is still within the SEC’s jurisdiction if its shares or equivalent (e.g. ADRs) are available on a U.S. exchange.

Once the company is subject to the SEC’s jurisdiction, it becomes responsible for the actions of its officers, agents, etc. even if they are otherwise beyond the jurisdiction of the United States.

Second, there must be illegal conduct. For purposes of the FCPA, that means phony books and records or bribery / attempted bribery involving foreign government officials.

Let’s take a second and talk about bribes and the people that receive them. Congress and the SEC want to ensure that honest businesses are on an equal playing field. That can’t happen if a crooked company is paying bribes to get contracts, favorable tax treatment or permits.

What we think of government officials in the U.S. may be quite different in other countries.  For example, in many countries hospitals and utility companies are run by the government. Bribe anyone who is a government official and there is probably an FCPA violation.

As to bribes, they aren’t always bags full of money or checks.

Companies and the C-suite crooks that pay these bribes are smart. They don’t write a check to a government minister or port official and label the memo portion of the check “bribe.” In fact, the bribes are often not checks or wads of cash.

As the SEC and Justice Department continue to crack down on FCPA violations, companies have become  creative in how they try to disguise their illegal bribery schemes.

Gift cards, prepaid credit cards, “commissions”, bogus “speaking fees”, lavish travel and honoraria and “consulting fees” have all been unsuccessfully tried.

When bribes are paid in bags of cash, finding proof is difficult. That is why the books and records provision of the law becomes so important. Somewhere in the company’s books someone had to account for the large sum of cash. And calling it “petty cash” or a consulting fee when it really was a bribe would be a false record.

So far, so good. So where is bribery prevalent?

There is an organization called TRACE that follows this issue closely. Each year they issue a report and rank countries from lowest bribery risk to the highest.

You might think the U.S. is the lowest but you would be wrong. We actually fell 8 places last year to 23^rd place. That is one of the largest drops of any countries. Lest you think that our country has certainly become a hotbed of corruption, much of that drop is probably public perception. People don’t have confidence in either party, the administration or the courts.

So who are the best countries from an anti-bribery standpoint? In order, Denmark, Norway, Finland, Sweden and New Zealand. We are currently investigating a prominent Scandinavian country for paying bribes. That means while government officials in Denmark, Norway and Sweden aren’t very likely to accept bribes, big companies in those countries might be paying them to officials in other countries.

Who are the worst countries? The absolute worst at number 194 is North Korea. Going up the list is Turkmenistan, South Sudan Venezuela, Eritrea, Yemen, Equatorial Guinea, .Somalia, Cambodia and Syria. We haven’t investigated any company paying bribes in these countries except Venezuela. That is probably because most large publicly traded companies steer far away from these places.

That leaves every other country somewhere in between.

Countries with autocratic regimes often have higher (worse) bribery rates. China at 126 and Venezuela at 191 are two good examples. Countries with large oil or mineral deposits such as Russia, Nigeria and South Sudan often have more incidents of official bribery too.

Lest anyone feel slighted, there are of course exceptions. Canada is a big mining and oil producer but low on the bribery scale (11).

Another way of looking at the matrix is by examining US prosecutions. In 2019, the Justice Department and Securities and Exchange Commission prosecuted the most companies for bribery of Chinese officials. Followed by Iraq, Brazil, Nigeria and India. Getting a reward often means knowing what is currently hot with regulators.

Looking at industries, the number one industry associated with U.S. foreign corruption prosecutions is Mining and Oil. The next eight are Engineering and Construction, Defense, Manufacturing, Transportation, Communications Financial Services, Health Care Technology, and Pharmaceutical. Will that change under the new administration? Time will tell.

Proving a FCPA foreign bribery case is tough. That is why the government needs whistleblowers. Frequently companies use third party consultants to do their dirty work. And that dirty work may be occurring in some steamy jungle far from the shores of the United States.

It becomes almost impossible for outside auditors or government officials to prove bribery allegations without an insider. That is why whistleblowers are so important in these cases.

Whistleblower Rewards for Foreign Bribery Information

Congress authorized the SEC to pay whistleblowers between 10% and 30% of any monetary penalties collected by the SEC for violations of the FCPA. Penalties of 8 and 9 figures are not uncommon meaning the potential for million dollar awards is high.

There is a formal process that must be followed in order to get a reward. That is where an experienced foreign bribery SEC whistleblower lawyer can help.

Foreign Whistleblower? No Problem

We often hear from foreign citizens working for U.S companies wanting to know if they are eligible to receive an award. The answer is yes and in fact, the SEC has already awarded millions to non U.S. residents and citizens.

Unless you authorized or received the bribes or ordered the illegal accounting entries, you are probably eligible for an award even if you don’t live, work or vote in the United States.

Ready to Collect a Reward?

The SEC generally pays awards on a first to file basis, i.e. the first person to blow the whistle gets the award. That means if you are interested in collecting a reward, don’t delay. New SEC rules implemented in 2020 make it even more critical that you file immediately.

To learn more, visit our Foreign Bribery Whistleblower Reward page.

Ready to see if you qualify for a reward? Our FCPA Whistleblower Attorneys are standing by! Contact us for a no obligation, no fee consultation.

If you know of foreign bribery, phony books and records or other violations of U.S. securities law, give us a call. Working together, we can determine how best to stop the illegal practices, protect you from retaliation and get you the maximum award possible.

In the last several years we have helped our whistleblower clients recover over $100 million in awards. You could be next.

For immediate help, Contact attorney Brian Mahany directly at brian@mahanylaw.com or by telephone at 202-800-9791.*

*Never email or call from a work phone, work computer or use an employer’s email address. We accept cases anywhere in the world. All inquiries are kept strictly confidential and protected by the attorney – client privilege.

The post Whistleblower Rewards for Foreign Bribery – Best & Worst Countries for Bribes appeared first on Mahany Law.

Mahany Law Announces Addus HomeCare Wage Theft and Employment Investigation

Are or Were You an Employee of Addus Home Care and Aware of Fraud (Including Wage Theft)? We Want to Speak with You – Confidentiality Assured

Addus HomeCare promotes itself as one of the largest home healthcare providers in the United States. With 189 locations and 33,000 employees, they are certainly big. According to their website, “Patient-focused and innovative, we are always looking for top talent – in direct care, skilled care and leadership. Great opportunities await!”

From what we hear, their employment opportunities are anything but great. Our employment law and wage theft team is currently investigating claims that workers are not being properly paid.

Their most recent review on Glassdoor? “Company is full of terrible management, low pay, little to no investment in training.” Another said, “absolutely criminal wages for home care workers.”

We understand that reviews can be easily manipulated. That is one of the reasons we are conducting our own investigation.

According to our source – someone who works or worked at the company – Addus HomeCare has knowingly underpaid workers. Under federal and most state laws, workers are entitled to be paid for every hour worked and should collect premium pay for every hour worked in excess of 40 hours within a calendar 7 day period.

How Is Addus Committing Fraud and Cheating Employees?

Our source says by not paying for travel time between job locations. Not paying travel time if client was not home. And shortchanging workers on mileage reimbursement.

Before filing a class action lawsuit, we always try to verify the information we have been told.

We are seeking to speak with current or former employees who have believe their pay isn’t being properly calculated. That includes overtime pay as well as not being paid for all hours worked. We would also like to discuss mileage and expense reimbursement issues you may have encountered.

We also want to review your employment agreement and determine if it contains a class action waiver and if so, how that waiver is worded.

Class Action or Individual Claim?

Addus HomeCare has somewhere between 189 and 215 offices. They do business all over the United States.

Normally wage theft claims are handled in court through a class action. It is much easier to find a lawyer to take 1000 cases with the same facts than it is to one willing to take a single case.

Employers know this and have made much more difficult for workers to get properly paid.

Greedy employers get away without not paying workers by placing “class action waivers” and arbitration clauses in their employment agreements. In other words, not only do they lie to workers and claim that they are not employees, they also forbid them from filing lawsuits or participating in a class action lawsuit. At present we have not determined if any Addus workers are covered by such an agreement.

What can you do if you were not properly paid? Plenty! The first step is contacting us. We are actively looking for active and recently separated Addus Home Care workers who believe they did not receive proper overtime, pay for hours worked or mileage reimbursement.

We never charge for our services unless we win. If you don’t win and recover money, you owe us nothing.

You work hard at your job. Don’t let a greedy employer cheat you from your pay.

Looking for more information? Visit our FLSA wage theft page. Even if you do not think you have a case, however, we are still interested in learning more about Addus and any fraud of which you are aware. Contact us online, by email brian@mahanylaw.com or by phone at 202-800-9791.

All inquiries protected by the attorney client privilege and kept strictly confidential.

The post Addus HomeCare Fraud Investigation – Were You Denied Proper Pay? appeared first on Mahany Law.

Do I have to pay tax on my whistleblower reward?

Are Whistleblower Rewards? Keep Reading to Find the Answer

That is a question we almost always hear after one of our clients is successful in a whistleblower action. And because we are fraud lawyers –  not tax lawyers – we always help our clients find a good tax lawyer in case they don’t already have a CPA.

The IRS says rewards are taxable but a few courts take a different opinion (and that is why we always help our clients find someone qualified to answer.) The answer should be the same anywhere in the United States but it’s not.

We could stop right here but that doesn’t really help answer your question.  Our general advice is to follow the direction of the IRS, include whatever reward payment as income on your return and then if you and your accountant believe it shouldn’t be taxable, seek a refund.

Why should I pay if I don’t owe?

The answer is simple. The IRS says qui tam rewards are taxable. If you don’t pay tax and later lose, the IRS will tack on a whole bunch of interest and penalties. Enough to ruin anyone’s day. Our thought is pay it while you have it, stop the clock on interest and penalties and seek a refund. Either way, assuming the IRS doesn’t agree with you, the matter is headed to court. At least if you already paid there won’t be an unhappy surprise several years down the road.

Let’s look at a recent case from the Northern District of Texas. A case where the court sided with the IRS.

Sharon Barnes filed a whistleblower lawsuit (qui tam) under the False Claims Act (FCA) in 2012. She claimed that a business unit of UFC Aerospace misrepresented itself as a woman’s owned business in order to obtain lucrative defense contracts.

The government intervened in her case in 2015 and settled with the company and its president for a combined total of $20,015,956.92. Under the False Claims Act, whistleblowers can receive between 15% and 30% of whatever the government collects based on the whistleblower’s information.

In Sharon’s case, the United States awarded her 18% or $3.6 million. Knowing that the IRS considers whistleblower rewards to be taxable income, Sharon listed the $3.6 million reward on her 2015 income tax return. She then paid $914,000 and sought a refund. The IRS denied her refund claim and the matter went to court. (She did get a $67,000 refund from the self-employment taxes she paid on that amount.)

Barnes’ lawyer trotted out the tried and true arguments plus a few new ones. Her most novel claim was that under the “origin of the claim doctrine”,  the taxability of her rests on the origin and nature of the claim to which the recovery relates. Because she received a percentage of the government’s reward and the government doesn’t pay taxes, nor should she.

Although the Fifth Circuit of Appeals (governing courts in Louisiana, Texas and Mississippi) never ruled on the issue, at least four other federal appeals courts had determined qui tam rewards are taxable.

Not every court agrees with the IRS and the above decision.

On December 18, 2020, the Pennsylvania Supreme Court took the opposite view. Unfortunately, because it is a state court ruling, only Pennsylvania state income taxes are affected. If you live in the Keystone State, the IRS says you still must still pay federal taxes on the money you received.

The Pennsylvania case involves Edward O’Donnell, one of the three whistleblowers in the historic 2014 whistleblower case against Bank of America. That case settled for $16.7 billion. [Mahany Law represented 2 of the 3 whistleblowers in that case, not Mr. O’Donnell.]

After legal fees, O’Donnell walked away with a net reward of $34,560,000.00. The IRS was paid its due but Allegheny County, the Borough of Fox Chapel and the Fox Chapel School District wanted their share. When the parties couldn’t agree, the case headed to court* and ultimately the Pennsylvania Supreme Court.

Like big brother IRS, the local tax authority claimed that whistleblower rewards were simply miscellaneous income and still taxable.

In a well-reasoned opinion, the court dissected the many components of income. O’Donnell’s qui tam reward didn’t fit any of them. A unanimous Pennsylvania Supreme Court refused to impose any tax liability on O’Donnell’s whistleblower reward. In the words of the court, “It seems incongruous that, on the one hand, we would encourage individuals to ferret out government waste, and, on the other hand, we would punish them by taxing the proceeds for doing so.”

So, are qui tam rewards taxable? The government will almost always say yes. Unfortunately, many courts agree. That is why we say let’s get you your reward first. Then we can help you find the right answers based on where you live.

*Like Sharon Barnes, O’Donnell reported the income and then filed an amended return to get back the money.

Taxes on Whistleblower Retaliation Claims

Thus far our discussion has centered on whether qui tam rewards are taxable. Often whistleblowers suffer from retaliation and have a separate retaliation claim. Once again, it pays to have a good CPA or tax lawyer when settling retaliation claims. (If you hire us to be your whistleblower lawyer, we will help find the right tax advisers.)

To the extent a settlement is made for lost wages, that settlement would likely be taxable. Afterall, if the reward is a substitute for wages and wages are taxable income, so is the retaliation settlement.

If the retaliation claim is structured as pain and suffering or emotional distress, it may not be taxable. Once again, although fairly consistent, courts are not in universal agreement.

The bottom line? Our mission and job is to get you the maximum reward possible. Just like you wouldn’t let your eye doctor also replace your hip, we try to steer clear of taxes. That doesn’t mean we will leave you in a lurch. If you don’t have a tax professional with qui tam experience (VERY few do), we know where to look.

For more information, contact attorney Brian Mahany online, by email brian@mahanylaw.com or by phone at 202-800-9791. Qui tam cases accepted nationwide.

The post Are Qui Tam Rewards Taxable? (Whistleblower 101 Post) appeared first on Mahany Law.

Exploding Takata airbags are old news. There is evidence that Takata knew that certain of their airbags were 6 times more likely to fail. In 2004, the company ran secret tests after an airbag exploded spewing deadly shrapnel into a driver’s face.

We can give the automakers a pass until this point. There is evidence that a Takata engineer, wrote an internal email that says, “Happy Manipulating!!!” The email references airbag safety test results. In another email he talks about methods of “dressing” up bad test data. But maybe the car companies didn’t yet know back then.

But the free pass given to auto makers ends on November 4, 2008. That is when Honda announced the recall of 4000 cars after finding the actuator in certain Takata airbag assemblies can act like a grenade and explode. Shortly after the recall a young teen died just days after her high school graduation when the air bag in her recalled Honda Accord exploded.

Detroit was on notice that Takata airbags were like ticking bombs.

So why is it in November 2020, twelve years after the first recall, that GM is finally recalling 7 million big pickup trucks and SUVs? In our opinion, there is no excuse. By now, too many have died. Or suffered needless horrific injuries.

The National Highway Traffic Safety Administration (NHTSA) has been demanding GM recall millions of trucks and SUVs since 2016. Four times GM delayed the inevitable by filing petitions to avoid the recalls. Finally, on November 23^rd, NHTSA said enough and ordered the recall.

Starting with the 4000 vehicles recalled by Honda in 2008, today the number of vehicles recalled in the U.S. stands at about 70,000,000.00. Prior to last month’s announcement, NHTSA said there were about 11.1 vehicles still on the road that hadn’t been fixed.

What Are the Vehicles Subject to the New Airbag Recall?

• 2007 – 2014 Chevrolet Silverado
• 2007 – 2014 Chevrolet Suburban
• 2007 – 2014 Chevrolet Avalanche
• 2007 – 2014 Tahoe
• 2007 – 2014 Cadillac Escalade
• 2007 – 2014 GMC Yukon
• 2007 – 2014 GMC Sierra

The Silverado is GM’s number one selling vehicle.

We are shocked that GM continued to purchase airbags from Takata for all these years. While other companies were busy replacing Takata airbags, GM kept installing them in new trucks by the millions.

The company claims that its research showed they were safe but we have a different view. Takata airbags were cheap. GM took the cheap way out. Profits before people.

To learn more, we have many pages of information about the history of the recalls, deaths and lawsuits. We invite you to our  airbag injury page. For a brief explanation, keep reading.

Why Are Takata Airbags so Dangerous?

The airbags subject to recall used ammonium nitrate as a propellant. In theory, a controlled miniature explosion causes the airbag to rapidly inflate and deploy before passengers in the vehicle are thrown into the windshield. Takata saved money by using ammonium nitrate as its propellant of choice. Not coincidentally, ammonium nitrate is also the explosive of choice by bomb makers.

Ammonium nitrate is not stable and can break down over time. Heat and humidity are big factors in accelerating the breakdown. That is why so many of the airbag injuries involving death, blindness and disfigurement took place in southern states.

What Happens if You Are Injured by an Exploding Airbag?

With 11.1 million vehicles still on the road, it’s only a matter of time before the next horrific injury or death. Add in 7 million more vehicles from GM and that makes a lot of dangerous cars and trucks still on the road.

GM said it will obey the recall (as if it had a choice) but has no idea how long it will take to find replacement airbags and fix all vehicles. If they follow the lead of several other car companies, they won’t offer loaner cars while you wait. While some manufacturers paid for loaners, we don’t think GM is serious about the recall nor does it have that many vehicles to loan.

Many drivers we have represented in the VW and Audi cases told us they were too afraid once they learned of the recall. If they did continue to use their car, they wouldn’t let their kids in the car. What good is a car if it remains parked in your driveway?

Automobile owners shouldn’t have to play Russian roulette each time they get behind the wheel. Depending on how GM handles the recall – and the claims for the diminished resale value for those owners who don’t want to wait for repairs – we may bring yet another class action.

As for Takata, they went under long ago. They simply didn’t have the assets or nearly enough insurance to pay all the claims. That leaves the automakers holding the bag.

Do we feel sorry for GM or the other automakers? We don’t (especially with GM). Although the car companies may not have known about the dangers of Takata ammonium nitrate airbags at first, once they knew, many car companies continued to buy them even while other companies were recalling them.

Our immediate concern is the safety of those riding in GM trucks.

Injured Because of a Defective Airbag? Call an Airbag Injury Lawyer Today

To learn more, visit our airbag injury lawsuit information page. If you were injured or a loved one dies because of a malfunctioning airbag, contact us right away.

The time to sue may be limited depending on where the accident occurred.

Second, secure the vehicle, It is almost impossible to hold the auto maker responsible for your injuries if we can’t prove the airbag was at fault. And that is hard to do if the defective parts are thrown out of the car is scrapped.

Airbag Injury Lawyers Claim Center

If you or a loved one has died or was disfigured or seriously injured in an accident involving a vehicle containing a defective airbag or recalled Takata and TRW airbag and you believe that those injuries were caused by the airbag, you have legal rights. Contact the airbag injury lawyers at MahanyLaw today. We can be reached online, by email (brian@mahanylaw.com) or by phone (414) 704-6731. 

The post Despite the Risk of Death or Horrific Injuries, GM Delayed Takata Airbag Recall appeared first on Mahany Law.

How Shell Companies Are Used to Conceal Fraud

Most whistleblower rewards are paid to those reporting frauds against the government. Unless that fraud involves a pharmaceutical giant (Medicare fraud) or big defense contractor, the typical reward is modest. By modest we mean under $1 million. We still love those cases and have dedicated our careers to chasing down fraudsters of all sizes.

Like a winery with a special reserve cellar, we have a second tier of whistleblower cases, the cases that typically pay rewards in excess of $1 million. Foreign Corrupt Practices Act (foreign bribery), FIRREA (bank fraud) and SEC Whistleblower cases (corporate reporting / phony books and records). Although the federal False Claims Act is responsible for billions of dollars collected each year and hundreds of millions of dollars in total annual rewards, the two largest whistleblower rewards have been from the IRS ($104,000,000.00) and the SEC ($114,000,000.00 paid in 2020).

In a series of posts, we will explore the rare world of ultra large rewards and how to find them. Each post will be cross referenced so as we add more posts to the series, each will be updated to have links to the entire series.

In this first of the series post, we look at the role of shell companies in complex and large fraud schemes.

What Is a Shell Company?

Wikipedia defines shell company as a company or corporation that exists only on paper and has no office and no employees but may have a bank account or may hold passive investments or be the registered owner of assets, such as intellectual property, or ships.

Investopedia has a better definition; a shell corporation is a corporation without active business operations or significant assets. These types of corporations are not all necessarily illegal, but they are sometimes used illegitimately, such as to disguise business ownership from law enforcement or the public.

You might be thinking that shell companies are illegal. They aren’t but as noted above, are often used for illegal purposes.

The FBI says that shell companies that have no legitimate purpose or operations are typically used conceal nefarious activities and the true identities of their beneficial owners. The strategic use of these entities makes investigations exponentially more difficult and laborious. The burden of uncovering true beneficial owners can often handicap or delay investigations. They frequently require duplicative, slow-moving legal process in several jurisdictions to gain the necessary information.

While many of these shell companies are formed offshore, many are also U.S. companies. Corporate formation is a matter of state law. In most states you can pay a small fee online and create a corporation in about 5 minutes. Depending on the state, you may be asked to name a manager or board of directors but that is about it. No U.S. state requires the company’s beneficial owners to be named.

While U.S. corporations and limited liability companies (LLCs) offer a great deal of anonymity, they are still disfavored by criminals and fraudsters. Instead, sophisticated fraudsters today will create an offshore LLC that is owned by a second offshore LLC that is in turn owned by a third shell company.

Let’s use an example, a Singapore LLC that is owned by company in the Isle of Man which is in turn owned by an LLC in Mauritania. It could take years and court proceeding on multiple continents to figure out who owns or controls the Singapore LLC.

Whistleblower Rewards and Shell Companies

When corporate criminals want to commit crimes, they frequently create shell companies to hide their nefarious activities. Let’s use several examples.

In October 2020, the government fined Goldman Sachs $2.9 billion. (We told you these were often big cases.) Their crime? The SEC says Goldman Sachs employees were bribing high ranking government officials in Abu Dhabi and Malaysia.

Did Goldman get out its checkbook and write a $10 million check to a foreign leader and enter into QuickBooks as a bribe? Of course not. The Commission says the money was funneled through shell companies.

Of the $2.9 billion in fines, $1 billion is attributable to the SEC for its enforcement of the Foreign Corrupt Practices Act (FCPA). That law allows the SEC to prosecute people who bribe or offer to bribe foreign government officials in return for some type of economic advantage.

The whistleblower rewards under the FCPA? Between 10% and 30% of whatever the government collects from the wrongdoer. Even a minimum reward would be $100,000,000.00.

We believe that Goldman Sachs knew exactly what it was doing. As one of the largest investment banks in the world, Goldman has a formal anti-corruption program in house. It’s “Anti-Bribery Policy” is applicable to all employees that “expressly prohibits improper payments to government officials intended to obtain or retain business for the company.”

Goldman Sachs’s Anti-Bribery Policy is overseen and enforced by both its Compliance Group and its Business Intelligence Group. The very business dealings that ultimately occurred were initially rejected by both these groups. Three times the compliance personnel said no. The fourth time senior Goldman managers figured out how to end run the compliance folks in their own company.

Let’s look at another example.

In the spring of 2019, dialysis and pharmaceutical company Fresenius agreed to pay over $231 million to settle FCPA charges. The Commission says the company was paying government officials in Saudi Arabia, Angola, and eight countries in the West African region. They also say that the Fresenius had inadequate books and records.

How did these bribes get paid? According to the SEC’s cease and desist order, by “funneling bribes through a system of third party intermediaries.”

Almost every Foreign Corrupt Practices Act case involves shell companies. And unless they have a very legitimate business purpose, most are used simply to hide bribes from regulators.  We say that shell companies are getaway cars for corporate “bank robbers”.

When companies use multiple layers of offshore shell companies, it becomes almost impossible to prosecute the company. As noted by the FBI, it could take years of litigation; litigation in a foreign land and with unsympathetic courts.

Aged Shell Companies

Even though it could take years of litigation, a smart regulator or special agent knows that the existence of an offshore company with no legitimate business purpose is probably a scam. If you see a bunch of shell companies all created recently and all being used by the same suspected wrongdoer, your hunch that fraud is afoot is probably correct.

U.S. states and foreign countries won’t tell you the beneficial owners of the entities but they will tell you the date of incorporation. For that reason, sophisticated crooks use aged shells. An aged shell company is one that has been in existence for a long period of time. Because they are older, they tend to appear more legit.

Whereas it only costs a few hundred bucks to create a shell company in most offshore privacy jurisdictions, the real criminals will often use a broker or service to find an aged shell. That is nothing more than a company that was created years ago and preferably once had a legitimate business purpose but is now just an empty shell.

The lawyers, brokers and offshore service companies that create these shell companies are frequent players in the world of money laundering and the bribery of foreign government officials. The chances of an auditor, regulator or law enforcement being able to discover a foreign bribery scheme or money laundering operation using  an aged shell company is quite low. That is why whistleblowers  play such an important role in anti-fraud and anti-money laundering efforts.

Insiders almost always find these schemes before Uncle Sam. And in many instances, large cash rewards are available.

Whistleblowers, Shell Companies and Whistleblower Rewards

It could take investigators years to unravel a scheme using offshore shell companies. Many times, these schemes go unnoticed. Whistleblowers, however, are the government’s leading tool in the fight against greed and corruption.

Ideal whistleblowers in FCPA and money laundering cases include:

• Internal auditors
• Compliance professionals
• Employees of offshore service companies
• Employees of lawyers who work specialize in offshore constructs (Panama Papers)
• Employees who work in the controller’s office or for the CFO of companies paying bribes
• Government officials of foreign governments
• “Consultants” who assist American and public companies in the payment of bribes

Under the Foreign Corrupt Practices Act, whistleblowers can receive between 10% and 30% of whatever the SEC recovers from wrongdoers. Full details of the FCPA program can be found here.

If a shell company or US company is laundering money and U.S. bank is involved, there are also potential cash rewards pursuant to the FIRREA statute (Financial Institutions Reform Recovery and Enforcement Act of 1989). Those rewards cap at $1.6 million.

Much of the money laundering going on today is facilitated by foreign banks. Those banks may still be subject to FIRREA, however, if they have a U.S. affiliate (most do). That is what allowed the feds to extract a $1.9 billion fine from HSBC for its role in laundering money for Mexican drug cartels.

Although FCPA and SEC cases increased under the Trump administration, FIRREA rewards were nonexistent. We expect all will increase once the new administration takes office.

Call for Whistleblowers

If you know of foreign bribery, money laundering involving banks, phony books and records or other violations of U.S. securities law and banking laws, give us a call. Working together, we can determine how best to stop the illegal practices, protect you from retaliation and get you the maximum award possible.

In the last several years we have helped our whistleblower clients recover over $100 million in awards. You could be next. 

For general information, visit our FCPA whistleblower reward page and our FIRREA rewards page. Ready to see if you qualify for a reward? Contact attorney Brian Mahany online, by email at brian@mahanylaw.com or by telephone at 202-800-9791.

Cases accepted worldwide. All inquiries protected by the attorney client privilege.

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Getting SPAM Text Messages? Learn How to Fight Back (and Get Paid)

The late physicist Stephen Hawking, one of the smartest people in the world, openly worried that robots could “spell the end of the human race.” Yet despite those fears, our society continues to march towards more automation.

Self driving cars are here. Amazon is already testing pilotless drones to deliver packages. Passenger planes without pilots are already possible (yet not in production for fear that few would board one.) What’s next? A robot lawyer!

A robot lawyer? Yup, it’s here and now it’s being sued for not obeying the law. You can’t make this up.

DoNotPay Inc offers the “world’s first robot lawyer.” For a monthly subscription fee, your robolawyer will “fight corporations, beat bureaucracy and sue anyone at the press of a button.” When COVID-19 began shutting down our economy, DoNotPay was there claiming its robot lawyer could file unemployment claims in any state of the union.

The company’s 23 year old founder says, “We plan to be the Costco of consumer rights, making money only on our subscription.” While this may sound great, the new robot lawyer apparently doesn’t know when to quit.

Illinois resident Mathew Hufnus says that DoNotPay Inc., bombarded his phone with unwanted text messages attempting to get him to subscribe to the company’s service. Unless you consent to such texts, unwanted text and cell phone calls violate the Telephone Consumer Protection Act. That law allows consumers to collect between $500 and $1500 per unsolicited call.

We think it quite ironic that robo lawyer is engaged in illegal spam text messages! While Matt could probably retain robo lawyer to sue itself, we are much happier that he chose human lawyers to do so.

The story (and irony) gets better!

According to his complaint, on September 26, 2020, Matt received a text message on his cell. The message said,

“Hey there it’s Jen from DoNotPay – we know it’s a lot to ask for your payment details upfront, we really do. But here’s a statistic – DoNotPay users save an average of $450 in cold, hard cash per year. Sue robocallers, cancel free trials and never have to deal with customer service again. If you aren’t satisfied, we’ll go ahead and delete your details and refund you in full. Finish signing up in the…”

It now appears that Matt wasn’t the only one receiving spam text messages from “Jen.”

We all know how annoying unwanted text messages are. They are also illegal unless you consented. Matt (and many others who received the identical message from Jen) say they didn’t consent.

Was Matt harmed? Certainly there is the annoyance factor. But there is more. Constant text messages can also use up your phone’s memory, drain the phone’s battery and cause distractions. They are also an invasion of privacy.

So, what happens next?

What Are the Penalties for Sending SPAM Text Messages (How Much is my Case Worth?)

The parent company of the “world’s first robot lawyer” might have to pay Matt between $500 and $1500 for each illegal call or text. And since his case was filed as a class action, it could potentially owe millions depending on how many other people received texts or calls that were sent by an autodialer or sent without consent. (No matter how quick some kids can text, we really don’t think there is a Jen sending out thousands of identical text messages manually.)

We have seen cases where mortgage companies have called prospects over 100 times. The awards in these cases can mount quickly. But to maximize your case, save or screenshot the texts and maintain a diary of the dates and times of the calls and the phone number from where the texts originated.

At any given time, we have several open robo call and robo text investigations. As soon as one company gets prosecuted, another pops up. Here are some of the industries where we see the most activity:

• Mortgage companies (We settled with Freedom Mortgage in 2020 for $9.5 million!)
• Wells Fargo (Need we say more, this is the bank that just can’t seem to get it right)
• Collection agencies
• Marijuana dispensaries (mostly spam text messages)
• Gyms and health clubs
• Security and alarm companies
• Medical supply companies

Receiving Unwanted Texts?

Assuming you can identify the company, the first step is to document the call or text. There should be a way to opt out. Often one must simply text STOP if an unwanted text message or press a certain key to opt out of unsolicited call. Although even one call is a violation, many courts recognize that people switch phone numbers. That means the person that had your phone number a year ago might have consented.

In the same vein, even if you once consented, the law makes it clear that you can revoke that consent at any time. And opting out is supposed to be easy. You don’t need to give reasons, fill out lengthy forms or speak to a customer service representative during normal business hours.Ditto if you get a call from a third party collection agency. Once you tell them to stop calling, they must stop.

If the calls continue, contact us and keep a diary. Chances if you get two calls you will get 2 dozen.

Are You the Victim of Spam Text Messages?

We prosecute violations of the Telephone Consumer Protection Act anywhere in the United States. To learn more about the TCPA or SPAM text messages, visit our cornerstone page, Robocalls – Can I Sue a Telemarketer.

Ready to see if you have a case? Contact us online or by email brian@mahanylaw.com for a free case evaluation. While we can’t stop every robocaller, we can help put some cash in your pocket.

Editor’s note: Are we threatened by Robo Lawyer? Absolutely not. While we would never recommend that someone use a robot to fight a child custody case, it could be a quite a time saver if trying to fight a parking ticket or apply for unemployment. In fact, we actually like that it can apparently scan a document full of fine print and point out questionable terms of service.

As noted above, however, Jen and Robo Lawyer still have much to learn. One is to respect our privacy.

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LPL Financial In Trouble… Again. If You Lost Money Because of the Misconduct of an LPL Advisor, We Can Help You Recover Your Hard Earned Money

[Updated through 2021] LPL Financial is certainly not a bucket shop or “boiler room” in the tradition of the Wolf of Wall Street and Stratton Oakmont Securities but lately, its beginning to behave like one. An industry leader with over 16,000 representatives,  LPL is a big brokerage firm with offices throughout the United States. Recent enforcement actions targeting the company suggest that it may growing too big to properly manage and supervise.

Brokerage firms are responsible for the behavior and conduct of their employees. Stockbrokers are held to very high ethical standards. Among their responsibilities are obligations to not mislead customers, to fully understand their customers’ needs and to only make suitable recommendations.

In this post we will examine some of the many recent problems involving LPL Financial or its brokers. [Use the search box on our blog to search our many LPL stockbroker misconduct posts.]

Ex- LPL Financial Charged with Churning

Churning is a practice where a stockbroker engages in excessive trading in a customer’s account for the purpose of racking up commissions. The broker makes money at the expense of the customer. Churning is illegal and violates both SEC and FINRA (Financial Industry Regulatory Authority) rules. Former LPL broker Paul Lebel was fined $56,000 for excessive trading (churning).

Brokerage firms such as LPL Financial have a duty to supervise their employees. Even if the broker is broke, the employer is still responsible for any losses.

While certainly not the largest fine ever levied against a stockbroker, the real “crime” was committed by LPL by hiring Lebel. According to FINRA, Lebel had nine reportable events on his securities’ record. That’s huge and we seriously wonder how he was able to stay in the industry and land a job with LPL. (Seven of his reportable events occurred while he was at LPL.)  A disclosable event is a customer claim, bankruptcy, tax lien, regulatory action, judgment or criminal conviction. Most brokers have nothing on their record

After this post was first written, the SEC barred Lebel from the securities industry. According to the SEC,

“Paul T. Lebel. Lebel defrauded four customers by churning several of their accounts. In particular, Lebel exercised de facto control over these customers’ accounts and excessively traded mutual fund shares which carry large front-end load fees (A shares). Lebel’s excessive trading was inconsistent with the customers’ investment objectives, and willfully disregarded the customers’ interest. Mutual fund A shares are designed for long-term, buy-and-hold investing and are unsuited for any known strategy involving frequent trading. From August 2008 through August 2014, Lebel executed numerous mutual fund A share trades that, in light of Lebel’s customers’ investment objectives, were fraudulent, made to the detriment of Lebel’s customers, and without justification other than the generation of commissions for Lebel.”

LPL Broker Barred after “Borrowing” Money from Customers

Technically, it isn’t against the law for a broker to borrow money from a client. We can’t imagine a legitimate brokerage firm permitting the practice, however. The potential for problems is extreme. That is what happened with former LPL Financial broker Raymond Schmidt.

FINRA claimed Schmidt borrowed $2.25 million from his customers. As noted above, borrowing money isn’t illegal. Schmidt ran afoul of the law, however, when he borrowed money without telling his employer. He also broke the law when he lied on compliance questionnaires asking about private transactions with customers. FINRA say the money was used to construct a luxury home in Hawaii. They also say he failed to cooperate in their investigation. The net result was an order barring Schmidt from the securities industry.

Ultimately, LPL Financial settled with the two customers that filed complaints saying they were cheated by Schmidt. The branch manager who was supposed to be supervising Schmidt was fined $15,000 and suspended from the industry for 6 months.

LPL Broker Accused of Selling Away

Selling away is another common stockbroker scam. Selling away occurs  when a stockbroker or investment advisor sells or solicits securities not offered by the brokerage firm with which he is associated.

James “Jeb” Bashaw is a legendary stockbroker. A few years ago Barron’s magazine ranked Bashaw as the top financial adviser in Texas with a client portfolio of $3.8 billion. That’s when he was at LPL Financial. When we first checked with FINRA , there was little public information as to why he was terminated. Now InvestmentNews says he was let go for selling away.

InvestmentNews reported that Bradshaw participated in private securities transactions without “providing written disclosure to and obtaining written approval from LPL Financial. The report also says he borrowed money from a client and was involved in a business transaction that created a conflict of interest.

In September 2019 he was suspended for 4 months. He consented to the suspension without any admission of wrongdoing.

[We also have cornerstone content on selling away stockbroker fraud.]

Elder Financial Abuse Charge Against Former Ex LPL Rep

In 2014, the SEC obtained a $1.8 million judgement against Blake Richards of Buford, Georgia. Buford was accused of elder financial abuse. The SEC said he stole almost $2 million from his clients, some of whom were elderly.

At the time of the offense, Richards was working for LPL Financial. In addition to stealing, he was also accused of “selling away. According to FINRA’s records, “customer alleges that he [customer] wrote checks to an entity that [Richard] told him would be for an LPL investment.” The money was returned by LPL.

Once again, brokerage firms are responsible for most misconduct of their representatives and agents. As of October 2019, there is still a complaint pending by a customer seeking $1,698,645.21.

Massachusetts Fined LPL Financial $250,000

The Massachusetts Securities Division fined LPL for using misleading designations on business cards. Massachusetts law prohibits stockbrokers from falsely using titles that suggest the holder has some enhanced level of expertise or training in senior issues. Although there is no indication that anyone lost any money, regulators believe that seniors are especially vulnerable to deceptive or high pressure marketing campaigns.

In announcing the settlement, Secretary of State William Galvin said, “In these days when workers are increasingly having to assume responsibility for their retirement savings, it is vital that the financial services industry not employ titles that suggest an expertise in advising senior citizens when none exists.”

LPL Financial is no stranger to enforcement actions by Massachusetts’ Secretary of State Bill Galvin. Previously the company agreed to reimburse seniors over $500,000 after Galvin said the company failed to examine the fees charged to senior citizens when switching variable annuities. (LPL had to pay almost $3 million to settle similar charges by Illinois authorities.)

The announcement from Massachusetts regulators does not name any of the individual brokers allegedly using improper designations nor does it indicate that any seniors were actually harmed. LPL told an industry publication that it is reviewing its compliance procedures.

As American baby boomers reach retirement age, we expect more instances of financial elder abuse. If you lost money because of the misdeeds of a stockbroker or other financial professional, we may be able to get back your hard earned money.

FINRA Issues $2.75 Million Fine for Money Laundering and Customer Complaint Procedures

The complaints just keep rolling in. In November 2018, FINRA fined LPL Financial supervisory failures related to the firm’s anti-money laundering (“AML”) program and customer complaint reporting practices.

We are most concerned about FINRA’s failure to disclose customer complaints. We have long suggested customers check out FINRA’s BrokerCheck system. It is a free and instant way of checking the records of both brokerage firms and individual brokers. The system only works, however, if brokerage firms input reportable events. Current regulations say that brokers and brokerage firms must self report within 30 days.

Since we wrote the above, LPL Financial was fined $1.1 million byMassachusetts for not properly reporting disclosable events.

Perhaps the biggest recent LPL Financial fraud finding stems from a multi-state investigation brought by the North American Securities Administrators Association. The company agreed to pay each participating state $499,000 for failing to supervise their representatives and selling unregistered, non exempt securities. The total settlement was estimated to be $26 million.

Although regulators found no evidence of “willful, reckless, or fraudulent conduct by LPL,” the company is still responsible for the conduct of its agents and brokers.

Separately in July 2019, the SEC charged an individual former LPL Financial broker, Kerry L. Hoffman, with selling $3.3 million in unregistered securities. He was assisted by a childhood friend who had been previously convicted of stealing money from customers.

And to begin 2021, LPL Financial was fined again, this time by FINRA for a wide variety or wrongdoing. The total fines are $6.5 million. The latest fine reads like a horror movie… that is a horror for customers.  According to FINRA,

“WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT IT FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM, INCLUDING WRITTEN PROCEDURES, REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH REGULATORY OBLIGATIONS INCLUDING RECORD RETENTION, FINGERPRINTING AND SCREENING OF ASSOCIATED PERSONS, AND SUPERVISION OF CONSOLIDATED REPORTS.

THE FINDINGS STATED THAT, AMONG OTHER THINGS, THE FIRM FAILED TO RETAIN ELECTRONIC RECORDS IN THE REQUIRED FORMAT, PRESERVE CERTAIN ELECTRONIC RECORDS, AND NOTIFY FINRA PRIOR TO EMPLOYING ELECTRONIC STORAGE MEDIA…  THE FIRM’S FAILURE AFFECTED AT LEAST 87 MILLION RECORDS AND LED TO THE PERMANENT DELETION OF OVER 1.5 MILLION CUSTOMER COMMUNICATIONS MAINTAINED BY A THIRD-PARTY DATA VENDOR.

FURTHER, THE FIRM FAILED TO SEND ACCOUNT NOTICES THAT ARE REQUIRED TO BE SENT TO CUSTOMERS AT 36-MONTH INTERVALS FOR EACH ACCOUNT IN WHICH A SUITABILITY DETERMINATION HAD BEEN MADE.

THE FINDINGS ALSO STATED THAT THE FIRM FAILED TO FINGERPRINT NON-REGISTERED ASSOCIATED PERSONS AND THUS FAILED TO SCREEN THESE PERSONS FOR STATUTORY DISQUALIFICATION BASED ON CRIMINAL CONVICTIONS… “

So why do these things matter?

First, without an adequate supervisory system, customers are like sitting ducks for predatory stockbrokers. A good analogy is Fort Knox deciding to layoff its guard force. Bad things happen when a brokerage firm has inadequate security.

Second, brokerage firms are required to keep customers records. There are very specific rules. According to FINRA, LPL poor record keeping “affected at least 87 million records.” We aren’t sure what that means but it doesn’t sound good. Even more ominous, FINRA said over 1.5 customer records were improperly and “permanently deleted.”

Brokerage firms are required to do background checks on who they hire. Part of that process includes finger print checks. You can’t do a complete background check, however, without those fingerprints. According to FINRA, at least one disqualified person was able to get a job because of the lack of fingerprinting.”

Anyone of these violations wouldn’t be terrible but with LPL, they aren’t isolated incidents and keep happening over and over again. (LPL paid the fine but without any admission of wrongdoing. In a statement the company said, “We take our compliance obligations seriously, and have been proactive in identifying, reporting and remediating these issues.”

Were You the Victim of Fraud at LPL Financial?

Brokerage firms like LPL Financial are generally responsible for the misconduct or their employees and agents. If you lost money because of churning, unsuitable investment recommendations, or fraud, we can help.

For more information, visit our stockbroker fraud claims page. Ready to see if you have a case? Contact the LPL financial fraud lawyers at Mahany Law online, by email brian@mahanylaw.com or by telephone at (202) 800-9791. All inquiries are kept strictly confidential. Cases handled nationwide and on a contingent fee basis. We handle cases with a minimum loss of $100,000 or more (however for smaller cases, call us – we still may be able to help).

MahanyLaw – America’s  LPL Financial Fraud Lawyers

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This Is a Scene No One Wants to See Yet a Doctor in Florida Pleaded Guilty to Performing Medically Unnecessary Heart Procedures in a Multi-Million Dollar Medicare Fraud Scam

It’s Christmas Day and here I am writing about one of the most twisted Medicare fraud scams to date. A doctor in Tallahassee, Florida pled guilty on December 18^th to performing unnecessary heart procedures.

When I was a prosecutor, we didn’t like proceeding with major felony cases between Thanksgiving and Christmas. It’s not that folks received a pass during those weeks, we just waited until after the holidays. That isn’t the case with Moses deGraft-Johnson MD, however. We are glad this sick thief  is behind bars and no longer able to harm patients.

Moses deGraft-Johnson admitted to performing medically unnecessary, invasive angioplasty procedures. Hundreds of them. Prosecutors say he billed Medicare and private insurance companies over $29 million. As part of his plea bargain, he pled to 56 charges including healthcare fraud, conspiracy to commit fraud, and aggravated identity theft.

According to court records, deGraft-Johnson operated Heart and Vascular Institute of North Florida.

To get paid for angioplasties and other procedures, a physician must certify that “that the service had actually been provided for a legitimate, medically necessary purpose.” Medicare [and most private insurance] only reimburses services that were medically necessary and actually rendered. Those rules  make sense. We need doctors who operate solely to run up their bills.

Each false bill is a separate crime.

Many of the angioplasty procedures done by deGraft-Johnson were medically unnecessary while at other times they weren’t even performed at all. Prosecutors said at times he would bill for procedures when he wasn’t even present. In fact, at times he was billing for procedures even though he was in Madrid, Spain; London, England; Accra, Ghana; and Shanghai, China.

After his arrest in February, deGraft-Johnson was ordered held without bail. The government demonstrated that he was a dual national in both the U.S. and Ghana, had plans to run for the presidency there and had three driver’s licenses. Fearful that he would flee, he was detained.

After losing an appeal of his detention order, deGraft-Johnson pled guilty on December 18^th, one week before Christmas. He remains in custody until his sentencing in April of 2021. He faces over a 100 years in prison although under federal sentencing guidelines will probably get considerably less.

As part of his plea agreement he has agreed to cooperate in identifying his victims and paying restitution.

Medically necessity cases can be difficult to prove. That deGraft-Johnson was billing for procedures when he wasn’t even in the country made this case much easier for prosecutors.

deGraft-Johnson’s operation was so successful that he began running into difficulty finding new victims. Authorities say that he recruited new patients through local churches, nursing homes, a hospital, and an outreach organization. Many of his patients were from “underserved communities”.

Now authorities must contact all those patients who had surgeries so that they can find new doctors and learn what their true condition is.

In a prepared statement, the U.S. Attorney for northern Florida said, “the United States will continue to work to recover the ill-gotten gains of de-Graft-Johnson’s criminal behavior, to identify information that will help his victims correct their important medical records, and to identify how he gained access to his victims so we can make sure nothing like it ever happens again”

And where did the money go? Prosecutors think that some of the money went to deGraft-Johnson’s home country of Ghana. Although he denies it, prosecutors have a secretly taped conversation in which deGraft-Johnson and his brother discuss a high rise building in Ghana’s capital. They also believe it was spent on luxury vehicles; jewelry; and homes in Manhattan, Southampton, New York, Miami, and the Houston area.

Healthcare Fraud is Not a Victimless Crime

Angioplasty procedures are invasive procedures. Anytime you stick something into a person’s heart there are risks. Those risks include:

• bleeding, clotting, or bruising at the point of insertion.
• scar tissue or blood clots forming in the stent.
• an irregular heartbeat, or arrhythmia.
• damage to a blood vessel, heart valve, or artery.
• a heart attack
• kidney damage, especially in people who have preexisting kidney problems
• an infection
• slight risk of stroke

Even in those instances where no surgery was performed, his billing scam still isn’t victimless. The millions of dollars he raked in from Medicare? That money comes from taxpayers. You and I paid that money.

Whistleblower Rewards for Medicaid Fraud

We don’t know how deGraft Johnson was caught. Healthcare fraud is usually brought to light by whistleblowers; insiders who have first hand knowledge of the scheme or scam. We know in this case the whistleblower wasn’t his office manager. She too was charged.

Typical Medicare fraud whistleblowers include billing clerks, office managers, other doctors and nurses. No one likes seeing Medicare fraud and hurting patients is despicable.

Under the False Claims Act, whistleblowers with inside knowledge of billing fraud can earn a reward of between 15% and 30% of whatever the government collects from the wrongdoer. Six and seven figure awards are not uncommon.

Worried about retaliation? We understand and so does Congress. The False Claims Act contains powerful anti-retaliation provisions that can pay you double damages and attorneys fees. This is in addition to any reward you may receive.

If this isn’t incentive to blow the whistle, almost 30 states including Florida have their own whistleblower reward laws. Typically, these pay rewards if there was a loss to the state funded Medicaid program.

Finally, cases are filed under seal and remain secret while being investigated. In most cases that means you have at least 6 months if not a year to find another job (assuming you want to leave – most whistleblower do).

To learn more, visit our healthcare fraud whistleblower page. You can also visit the Report Medicaid Fraud website to learn more about Medical Necessity fraud. (To earn a reward, you must file a sealed complaint in federal court and have an attorney. Calling hotlines won’t get you paid.)

Ready to see if you qualify for a reward? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. Cases accepted anywhere in the United States. All inquiries protected by the attorney – client privilege.

[Photo courtesy of the National Cancer Institute]

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