Ali Razak, Kenan Saban

UberBlack Drivers Win Big Victory in Federal Appeals Court

i and Khaldoun Cherdoud are all UberBlack drivers in Pennsylvania. In 2016 they filed suit claiming that they were misclassified as independent contractors. (We brought similar suits in 2016 in Illinois, Indiana and Wisconsin on behalf of Uber drivers.)

Whether or not a driver is classified as an employee or independent contractor is important. If you are an employee, you are entitled to a statutory minimum wage, overtime, workers compensation if you are hurt and other benefits. Uber has long claimed that its drivers are not employees.

Whether or not a worker is an employee or contractor requires a detailed factual investigation. Simply because your boss or Uber says you aren’t an employee carries almost no weight. In Pennsylvania, the factors courts consider are:

• (1) the degree of the alleged employer’s right to control the manner in which the work is to be performed;
• (2) the alleged employee’s opportunity for profit or loss depending upon his managerial skill;
• (3) the alleged employee’s investment in equipment or materials required for his task, or his employment of helpers;
• (4) whether the service rendered requires a special skill;
• (5) the degree of permanence of the working relationship; and
• (6) whether the service rendered is an integral part of the alleged employer’s business.

To date, Uber drivers have lost most of these lawsuits. Sadly, we lost the three class actions that we filed.  Uber has spent millions of dollars on lobbyists and has been successful changing the law in many states to say that ride share drivers are independent contractors as a matter of law.

The pendulum has begun to swing the other way. Some states such as California and New York are now pursuing legislation to say drivers are employees and thus entitled to wide range of legal protections. Courts are beginning to rule in favor of drivers too.

Pennsylvania hasn’t passed legislation to protect drivers yet but drivers have recently won a big battle in court.

After the three Uber Black drivers filed their class action lawsuit in Pennsylvania, a federal judge ruled in favor of the company. Without even having a trial, Senior District Court Judge Michael Baylson said that weighing all the factors, Uber was entitled to win as a matter of law.

The three drivers appealed. In March 2020, a federal appeals court reversed the trial judge’s order and said the case could proceed.

Looking at all the factors, the court focused on three and said there was enough issues of fact that the case should go to a jury.

Much of the dispute centered on the amount of control Uber exercises over its drivers. Uber says they have little control. They say they merely provide software to connect riders with drivers. Uber also contends that drivers can drive for other services.

The three drivers say that Uber sets the fees and prices and that while “online” for Uber, they cannot also accept rides through other platforms. Uber’s Driver Deactivation Policy says “soliciting payment of fares outside the Uber system leads to deactivation” and “activities conducted outside of Uber’s system—like anonymous pickups—are prohibited.”

Uber also argued that it does not control the “schedule start or stop times” for drivers or “require them to work for a set number of hours.”. Again, the three drivers disputed this, stating that the Uber Owner/Operator Agreement states, “[the] frequency with which [Uber] offers Requests to [the driver] under this Agreement shall be in the sole discretion of the Company” and “the number of trip requests available to Plaintiffs is largely driven by Uber.”

The appeals court reversed the trial judge’s decision and said the drivers are entitled to their day in court. Uber, however, this week appealed to the U.S. Supreme Court. Unlike lower appeals courts, the U.S. Supreme Court is not obligated to hear the appeal. In fact, each year the Supreme Court only accepts a small percentage of the cases it receives.

For now, that’s good news for drivers. UberBlack drivers in Pennsylvania will get their day in court.

Mahany Law and Uber Cases

As many Uber drivers know, we were one of the first law firms to take up the fight on behalf of drivers. In those early cases, most lawsuits failed. Our cases were no exception. We lost our shirt on those cases but were proud to fight the good fight on behalf of drivers. Today, the tide is beginning to turn. Both courts and state legislatures are often siding with drivers and against Uber.

To this day, we continue to get calls from Uber drivers. We are honored but no longer take these cases. It’s been five years since we got out of the Uber business. We no longer know of the players in the legal cases and who is winning and where. If you know of good lawyers taking these cases, let us know so we can post that information for other drivers.

Today, the only Uber cases we take are cases where a member of the public has been assaulted by an Uber driver. 99.9% of the drivers are great, hardworking people. We want to weed out that small percentage of drivers who give ride share a bad name.

If you are a member of the public and have been assaulted or sexually harassed by an Uber driver, please see our Uber and Lyft sexual assault information page. Ready to see if you have a case? 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 confidential.

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It took less than a month before the national legal media began focusing on our landmark class action lawsuit against Maine papermills for the contamination of drinking water in rural Maine. Potentially many thousands of Maine households are drinking water contaminated with per-and poly-fluoroalkyl substances (PFAS).

According to an article in the National Law Journal,

“The Skowhegan paper mill, owned by Sappi and referred to as the Somerset Mill, is a pulping and papermaking facility that manufactures various paper products, including coated paper, grease-proof packaging paper, and bleached chemical pulp. The paper mill has an annual production of 970,000 metrics tons of coated paper and 525,000 metric tons of bleached chemical pulp. The paper mill also consists of a wood mill, where incoming lumber is prepared for the manufacturing process.

“The Somerset Mill, like many other paper mills across the globe, produce biosolid waste as a result of cleaning and chemically preparing materials for use in the mill’s finished product. The biosolid waste is a sludge material that must be disposed of in some fashion by the mill. Studies have shown that on average, 35% of the material entering pulp and paper mills becomes waste residue. The waste includes a variety of materials, including wastewater sludge, woodyard waste, trash, demolition debris, and ash from boilers. While some of the waste residue can be reused for energy production, the rest must be discarded. Paper mills typically dispose of residue waste by discharging it into the air, water in the form of treated effluent, or into the soil in the form of solid waste or sludge.

“In the PFAS paper mill lawsuit, the allegations are that the paper mill obtained licenses from the state of Maine to spread the sludge material on nearby farms, as it also has fertilizing properties that are beneficial to farmers. However, the paper mill is alleged to have known that the PFAS-containing waste that they spread on farms was hazardous, or based on the existing knowledge about PFAS, they should have known of those hazards.”

The lawyers who wrote the article correctly note that our lawsuit should concern many businesses and not just in Maine.

For years the federal Environmental Protection Agency (EPA) struggled to figure out how to best regulate PFAS. Until recently there were few studies on the health effects of these chemicals although we believe that the makers of these chemicals and paper mills long knew of their dangers.

Complicating the EPA’s task is the fact that PFAS is really a family of chemicals – there are between 7,000 and 9,400 variants. The studies mostly examine the health effects of a handful of the more common variants such as PFOA and PFOS. In reality, there are thousands of variants, most of which have not been studied and for which there are no testing standards.

In recent years the EPA has set an advisory guideline of 70 parts per trillion for drinking water but most health experts that the exposure limits should be set much lower.

Today the EPA’s guidelines are just that. They are guidelines and not hard limits. We expect, however, that the agency will establish hard limits in 2021. Some states have already done so and more will surely follow.

As states and private labs begin widespread testing, we expect to see many more lawsuits. And this time, it won’t just be papermills and landfills that are targets. Lawsuits will seek remediation costs and property devaluation. In some tragic cases, claims for wrongful death, cancer and other personal injuries.

Is Your Well or Water Supply Contaminated with PFAS?

The shocking truth about the PFAS contamination cases is that most of those suffering from contaminated drinking water don’t live next door to a papermill, factory or landfill. As we learned in the Maine case, contaminated biosolids from the mill were spread on nearby farms as fertilizer. As the ground becomes contaminated, manure from cows and other livestock living on those farms may then be spread on other farms.

You could be miles from a factory that uses PFAS yet still have dangerously toxic levels of toxic PFAS in your water. One unlucky family in our case lives miles from the Somerset mill yet still has almost 200 times the federal EPA guidelines for PFAS in their well water.

The first step is to have your water tested, especially if your well comes from a well. (If you have water from a municipality or water district, ask them whether they test for PFAS and what those tests show. Merely having below 70 parts per trillion of PFAS doesn’t mean your water is safe to drink.)

In many locales, the state will offer testing, especially if you live near a source of contamination. Private testing is available but is usually quite expensive, often between $300 and $600.  (We have seen tests as low as $79 if you send in your own sample.) If you do get testing – we think it is well worth the cost, particularly if someone in the household has cancer, kidney problems or serious health problems.

If you can’t find a lab, check with amazon.com or with your state water quality agency.

There are no standard testing protocols and no one we know of tests for all 7,000 to 9,000+ variants of PFAS. At a minimum, make sure your test includes PFOA and PFOS.  Many tests now include a multitude of known bad PFAS compounds including PFOA, PFOS, PFHxS, PFHpA and PFNA.

If you have a positive test, speak with your state safe drinking water program or state environmental protection agency. They are useful in tracking down the source of the contamination.

You should also contact an experienced PFAS contamination lawyer. You may be entitled to damages for future medical monitoring, costs of remediation and the decrease in your home’s value. If some in the home has thyroid cancer, kidney cancer, testicular cancer or birth defects, you may have a claim for those injuries. No lawsuit can restore your health but courts can award damages to help defray medical expenses and pain and suffering.

To learn more, contact a PFAS contamination lawyer at Mahany Law online, by phone 202-800-9791 or by email pfas@mahanylaw.com. There is never a charge for a consultation and all inquiries are kept confidential. We also invite you to visit our PFAS lawsuit information page and our video.

The post Maine PFAS Lawsuit – What Others Are Saying appeared first on Mahany Law.

South Carolina’s Largest Urgent Care Provider is Paying $22.5 Million to Settle Claims Billed for Doctors and Nurses with False Credentials. Learn How You Can Stop This Fraud and Earn a Large Cash Whistleblower Reward.

In order to get paid by Medicare, Medicaid or Tricare, healthcare professionals must be properly credentialed. When you go to see the an orthopedic surgeon, you assume she is a fully licensed and credentialed physician. Unfortunately, some shady healthcare providers cut corners and illegally use healthcare workers without proper credentials. That hurts both taxpayers and endangers patient health. (Since Medicare and the other two programs are funded with tax dollars, false credentials hurt all taxpayers.)

We see these cases frequently. As soon as the feds catch one, false credentialing scheme, another takes its place. In this post we discuss a recent whistleblower case and how you can earn a cash reward for reporting false billing credentials.

This month South Carolina’s largest urgent care provider, Doctors Care, P.A. (“Doctors Care”) and its management company, UCI Medical Affiliates of South Carolina, Inc. (“UCI”), agreed to pay $22,500,000.00 to settle claims brought by a whistleblower.  According to the Justice Department, Doctors Care and UCI falsely certified that certain urgent care visits were performed by providers who were properly credentialed to perform these services. Instead the services were actually performed by non-credentialed providers.

According to a statement released by South Carolina’s United States Attorney,

“As early as 2013 and continuing to 2018, it is alleged that UCI was unable to secure and maintain necessary billing credentials for most Doctors Care providers.  UCI knew that federal insurance programs would deny claims submitted with the billing number of a provider who had not yet received their billing credentials.  But instead of solving its credentialing problem – or holding claims while a temporary solution could be found – UCI allegedly submitted the claims falsely, ‘linking’ the uncredentialed rendering providers to credentialed billing providers in order to get the claims paid.

“With each ‘linked’ bill, it is alleged that UCI knowingly submitted a false claim for payment.  Evidence obtained in support of the allegations includes emails memorializing UCI’s ‘linking’ scheme and well-organized ‘cheat sheets,’ as employees called them, which UCI used to keep track of properly-credentialed billing providers whose names could be substituted on uncredentialed providers’ bills.”

Unlike other credentialing scams we have seen, there is no evidence of patient harm. The people performing the medical services were in fact qualified to do so.

According to a complaint filed in federal court, some of the providers at Doctors Care were billing the services of non-credentialed providers under the name and signature of various credentialed providers (who took no part in providing the care that was billed for). In other instances, Defendants violated the “incident to” billing guidelines of the federal healthcare programs by billing new patient visits provided by midlevels under the signature of physicians who took no part in the treatment. A “midlevel” is a nurse practitioner or physician’s assistant.

The complaint lists many examples of billing fraud. For example according to one allegation,

“On October 1, 2016, Jane Doe 1 was treated by Nurse Practitioner Joanne Keefe-Tomasello at Doctors Care – Moncks Corner. Upon information and belief, no physician was on site at Doctors Care – Moncks Corner on October 1, 2016. Despite the lack of an on-site physician, Defendants submitted a claim to Medicare and certified that Dr. Curtis Franke was Jane Doe 1’s physician-provider. Medicare processed the claim and remitted $96.46 to Defendants, including payment for the 99214 code.”

Cash Whistleblower Rewards for False Credentialing Information

This case came to light because of the heroic action of two whistleblowers. Dana Dove was employed by UCI as a medical coder. Dove was also qualified as an auditor and compliance professional. The other whistleblower, Debbie Rathbun, was employed as UCI’s credentialing supervisor.

Dove and Rathbun claim that UCI didn’t bother credentialing all of Doctors Care’s physicians, nurse practitioners and physician assistants because they wanted “to avoid the time and expense of completing the credentialing process.” They also claim that some of those folks may not have been eligible for credentialing. (The settlement agreement says patient care was not compromised but does not say whether any of the providers were ineligible to be credentialed. We believe that UCI’s former CFO went to prison for embezzling $3 million.)

False credentials cases come up in a variety of contexts. In this case, the two whistleblowers say that the people billing for the services were often not the ones providing the care. More importantly, they claim that some of the providers who were providing the care were not eligible to be credentialed.

We frequently see misrepresentation of credentials cases that involve teaching hospitals. There, a teaching physician falsely claims to be present for procedures provided by an intern when he or she is not actually present or supervising. We have also seen cases where one physician claims to have been performing one on one supervision to multiple interns all at the same time. A variation is the anesthesiologist who claims to be simultaneously supervising too many CRNAs.

False credential cases frequently risk poor patient care. Medicare fraud is never a victimless crime.

Of special note in this case is UCI’s majority shareholder is BlueCross BlueShield of South Carolina. If anyone should have known better it is certainly Blue Cross.

The defendants were allowed to settle without any admission of wrongdoing. The government says that both defendants were cooperative.

Do You Have Knowledge of False Credential Schemes?

The federal False Claims Act pays whistleblower rewards to anyone having inside information about Medicare, Tricare or Medicaid fraud. Included are cases involving false or misrepresented credentials. Rewards are typically between 15% and 30% of whatever the government collects from the wrongdoers. In this case, Dana Dove and Debbie Rathbun should receive between $3,375,000 and $5,625,000. (Whistleblower rewards are capped at 25% if the government intervenes which it did in this case. Higher rewards are reserved for cases in which the whistleblower’s own attorneys prosecute in the government’s name.)

To learn more, visit our Medicare Fraud whistleblower page. Ready to see if you qualify for a reward? Call now for a no-cost conversation with an experienced MahanyLaw False Claims Act lawyer: 202.800.9791 or Report Online.

All inquiries protected by the attorney – client privilege and kept strictly confidential. Cases accepted nationwide. Our whistleblower clients have already earned more than $100,000,000.00 in rewards. You could be next.

*This case involved providers with false credentials. For information about unlicensed doctors, visit our whistleblower rewards for unlicensed doctors page.

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Ex M&T, Suntrust Broker Indicted

When Bankers and Stockbrokers Steal – You Can Fight Back and Win

We hate these stories. Financial professionals that steal from the vulnerable and the elderly.

Earlier this month a federal grand jury charged former stockbroker Eddy Blizzard with wire fraud and aggravated identity theft. The charges don’t reflect the depravity of Blizzard’s alleged actions. Prosecutors say that he took an elderly man’s life savings, left him penniless, his home in foreclosure and with a huge tax bill to boot. Unfortunately, the victim died before he saw justice.

In announcing the charges, Maryland’s acting United States Attorney said,

“This defendant is charged with perpetrating a heartless scheme that preyed on a vulnerable elderly victim, allegedly stealing more than a million dollars.  As a result of the fraud the victim’s house went into foreclosure and he owed the IRS at least $63,000.  We will continue to work with our law enforcement partners to bring to justice those who perpetrate these despicable schemes targeting elderly victims.”

The victim was 75.

The victim – we will call him “Robert” – went to work for an air conditioning company in 1963. After 40 years of service he retired in 2003.

Not knowing where to turn for financial advice, Robert went to M&T Bank where he had been banking for years. There he was introduced to Eddy Blizzard who became his financial adviser.

According to our investigation, Blizzard has been licensed as a stockbroker since 2001. When he first met Robert he was at M&T Securities, an affiliate of M&T Bank. In June 2014 he went to work for Suntrust.

Prosecutors say that in 2010,

“at Blizzard’s request, [Robert] gave Blizzard 15-20 signed blank checks, which Blizzard used… During the years of investment with Blizzard, [Robert] stated that he believed his retirement funds were protected, meaning they would not lose value – a fact that was allegedly told to [Robert] numerous times by Blizzard and Blizzard’s wife.  [Robert] also believed that his mortgage was being paid by Blizzard.”

Robert had no idea what was really happening.

In August 2019, Robert tried to cash a check to take his family on vacation. The check didn’t clear. Puzzled, Robert called Blizzard. When he got no answer he went to Blizzard’s home and began banging on the door.

Robert told investigators that Blizzard later called him and admitted his life savings had been drained. Blizzard also claimed he was in the hospital after an unsuccessful suicide attempt

Federal agents don’t believe the suicide attempt was real.

Blizzard then allegedly emailed Robert son’s and blamed the loss of funds on bad investments.

The feds believe that Blizzard made over one hundred unauthorized withdrawals from Robert’s accounts. About $1 million dollars was transferred into Blizzard’s own bank account.

Where did the money go? Prosecutors say the money was used for payments on Blizzard’s new home, a boat and his personal taxes. Blizzard paid his own taxes with Robert’s money while those transactions caused Robert to owe taxes to the IRS on money he never got to enjoy.

Why did Robert never realize what was happening? Robert has limited ability to read. His reading problems made it difficult for him to understand his statements. That disability made it possible for Blizzard to embezzle money for almost a decade.

Only after his account was drained did Robert discover he was the victim of a crime. About the same time he learned that he also owed the IRS $63,000 (the IRS was taxing the withdrawals from his retirement accounts) and that his home mortgage had not been paid and was in foreclosure.

Robert died a short time later.

If Blizzard is convicted, he faces up to 20 years in prison for wire charge and a minimum of two years for the aggravated identity theft charge.

What does Suntrust say? They say that Blizzard was terminated for violating firm policies. The Financial Industry Regulatory Authority (FINRA) has suspended Blizzard’s securities licenses.

Who Is Responsible for Customer Losses When a Broker Steals?

Eddy Blizzard is facing a lengthy prison sentence if convicted. Although innocent until proven guilty, we believe a jury will have no problem convicting him.

Trying to get money from a guy in prison is next to impossible. It’s tragically too late for Robert. He died in March 2020. His estate, however, still has a claim.

When a stockbroker steals or embezzles money from a client, the brokerage firm that employed the bad broker can be held liable for any losses suffered by the client. That rule applies even if the brokerage firm had no clue their broker was stealing.

Under U.S. law and FINRA rules, brokerage firms have a duty to properly supervise their employees and agents. While liability isn’t automatic, a good stockbroker fraud lawyer can usually show that the firm should have known about the improprieties of their agent. When that happens, the firm becomes liable.

When brokers steal, it is often the FBI or local law enforcement who prosecute the theft. That doesn’t make victims whole, however. If you lost money because of a dishonest stockbroker or investment advisor, you need the services of an experienced fraud recovery lawyer. We can help you hold the firm where the dishonest broker worked responsible.

Claims against brokerage firms are typically handled by arbitration. These arbitrations take place before a FINRA panel of between 1 and 3 arbitrators. Unlike traditional lawsuits, arbitrations are typically handled in about one year and there are no appeals.

To learn more, visit our stockbroker fraud page. Ready to see if you have a claim? Contact us online, by email brian@mahanylaw.com or by phone 202.800.9791. We handle cases on a contingent or success fee basis meaning you owe us nothing unless we recover money on your behalf. Cases handled nationwide. Minimum loss amount $100,000.

*An indictment is not a finding of guilt. Blizzard is presumed innocent until and unless proven guilty by a judge or jury.

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PFAS – Is This Deadly Killer in your Water? Don’t Trust Corporate America to Tell the Truth

There is an interesting drama unfolding in sleepy Burlington, Vermont. It hasn’t attracted much media attention but it should. A company’s own in house lawyer says a plastic manufacturer is lying about dangerous PFAS contamination in rural Vermont and other locations throughout the country.

This story begins in in the 1970’s but we will pick up in May 2016. That month James Sullivan and Leslie Addison and several other residents of Bennington, Vermont filed a lawsuit against Saint-Gobain Performance Plastics Corporation (“Saint-Gobain”). Headquartered in Akron, Ohio, the company claims to be one of the world’s leading plastic manufacturers. Its products can be found everywhere.

James and Leslie filed their lawsuit after tests by the Vermont Department of Environmental Conservation found elevated levels of PFAS in their drinking water. The state has set a recommended limit on PFAS in water at 20 parts per trillion. Their well tested almost 15 times higher at 293 parts per trillion.

Some of their neighbors, who also sued, had PFAS levels in their water measuring as high as 338 parts per trillion. (The environmental law team at Mahany Law is presently suing several paper companies in Maine where drinking water samples have detected PFAS in excess of 20,000 parts per trillion!)

What Is PFAS and Should I Worry?

Before we go on, a brief discussion of the dangers of PFAS is necessary. PFAS is a deadly killer. Because you can’t see it or taste it, many people don’t even know the water they are drinking could kill them or cause other horrible health outcomes. PFAS has been linked to kidney failure and cancer, testicular cancer, birth defects, heart disease and many other health problems.

PFAS (pronounced Pee fas) is short for Per-fluoroalkyl and poly-fluoroalkyl substances. These are manmade chemicals that have been manufactured since the 1960’s.

PFAS compounds are widely associated with firefighting foam but they are also commonly found in nonstick pots and pans, grease resistant paper, paper plates, stain resistant fabrics and cleaning products.

PFAS is not a single chemical. Rather it is a family of chemicals. Some are more toxic than others. One of the most dangerous variants is perfluorooctanoic acid (PFOA), the chemical at issue in the lawsuit against Saint-Gobain.

Although now banned, PFOA is known as a  “forever” chemicals because they don’t easily breakdown in the environment nor are these easily passed by the human body. Even microscopic amounts ingested by the body can build up over time and cause severe health effects.

PFOA is often found in the environment and drinking water. Although no longer produced, PFOA can stay in the soil and drinking water aquifers for decades. Just ask the folks in Bennington, Vermont.

How Many People Have Been Exposed to PFAS?

The lawsuit filed by James and Leslie and their neighbors is a class action lawsuit. They are bringing their case on behalf of everyone in the area who may have suffered because of PFAS contamination from the Saint-Gobain plant. Lest you think this problem is isolated to a small town in Vermont, the Environmental Working group concluded in October 2020, that more than 200,000,000 Americans have at least 1 part per trillion of PFAS in their drinking water. Unlike some compounds that appear naturally in our environment, PFAS compounds are entirely man made.

Vermont set the safe level of PFAS at 20 parts per trillion but many experts say it should be much lower (and some say any amount of PFAS could cause cancer.)

Saint-Gobain and Corporate Lies?

Residents of Bennington and North Bennington say that the dangerous levels of PFAS came from the plant today owned by Saint-Gobain. They have a big ally; the Vermont Department of Environmental Conservation identifies the facility as the probably source of contamination. (The company denies the allegations in the lawsuit.)

Until its closure in 2001, the company manufactured Teflon coated fabric. Teflon is a known source of PFAS including the specific compound at issue, PFOA.

To make these fabrics, the coatings are heated to 650 degrees and baked into the fabric. Records show that there were frequent complaints from residents about noxious odors and visible emissions into the air. Records also show that the company disposed of solid wastes and solvents into Bennington’s municipal landfill. That landfill was subsequently closed and designated a Superfund hazardous waste site by the federal government.We believe many chemicals were simply allowed to run into floor drains and ultimately into a nearby creek.

In fairness to Saint-Gobain, they didn’t operate the facility when these complaints were being made but they ultimately bought the company and thus inherited its obligations. To get too much sympathy for Saint-Gobain, there is more on their direct involvement below.

After the lawsuit was filed, Saint-Gobain sought to dismiss the complaint. Their primary attack wasn’t so much as the facts as it was procedural. They claim that Vermont’s rules are unfair and that there were no regulations at the time the contamination occurred.

Their arguments are hollow and the court agreed.  Simply because there is no rule or regulation on a specific chemical doesn’t mean that anyone can dump that chemical or allow it to contaminate ground water. We believe that big chemical companies and manufacturers such as Saint – Gobain clearly knew (and ignored) the risks of PFOA.

They also knew what they were buying when they purchased the plant.

Fast forward to 2021 and we thought the case was going to settle. In all lawsuits there is something called discovery. Each side gets an opportunity to take testimony from witnesses (depositions), ask questions (interrogatories) and request documents. Parties to a lawsuit have a duty to be honest in their answers and to tell the truth.

Based on the discovery, parties can often mediate and resolve cases short of a trial. The company had said that just 61 pounds of PFOA rich substance is at issue. (Saint-Gobain appears to be making the “it’s not us” argument by saying there were only a few pounds of toxic material that may have come from the plant.)

Based on the discovery, the parties were headed towards a settlement in which each homeowner would get a fixed sum of money for the diminution of value of their property and homeowners with contaminated wells would get a larger payment to offset water treatment costs. There would also be monies available for medical monitoring of residents.

That was all upended earlier this month.

Saint Gobain Lawyer Claims Company Lied About PFAS Contamination

On April 6, 2021, Amiel Gross, former in-house lawyer to Saint-Gobain, filed a bombshell whistleblower retaliation complaint with the U.S. Department of Labor. Gross says he was fired for expressing concern over the company’s response to PFAS contamination.

According to his complaint,

“This case involves a large multinational corporation, Saint-Gobain, that processed a toxic chemical, PFOA, responsible for polluting the environment, contaminating human drinking water supplies and persisting in the blood streams of thousands of adults and children living near at least three of its factories. The national spotlight focused on Saint-Gobain and its legacy of toxic PFOA pollution only because a brave resident, whose father worked at the one of the Company’s factories and died of cancer, decided to test the local tap water. Massive media attention, governmental agency scrutiny and class action litigation ensued.   Several years later, an internal lawyer for the Company, Complainant, discovered there were in fact other Company factories where the toxic chemical was also processed for decades under similar, pollution- generating conditions.   The lawyer immediately sounded an internal alarm and escalated the issue to the highest levels; principally, he warned others that the company had a duty to fully investigate, rule out contamination of nearby drinking water sources and ensure other communities were not unknowingly consuming the same toxic chemical. In response, senior leadership of Saint-Gobain instructed him to look the other way, punished him with termination and continued to retaliate against him to this day. This case seeks to remedy Saint-Gobain’s egregious, ongoing corporate misconduct.”

Gross suggests that the company turned a blind eye on PFAS contamination and may have underreported usage of the dangerous PFAS chemicals at several plants.

The Bennington residents have brought an emergency motion to reopen discovery. They want to question Gross and see what information he has. According to Law360, this week a representative of the company said, “[W] we do not believe the deposition of Mr. Gross is warranted.

Thankfully U.S. District Judge Geoffrey Crawford ruled in favor of the residents. He wisely ruled that he wouldn’t be doing his job unless he heard what Gross had to say.

It is unknown how this will affect the settlement. If the company is found to have lied, the damages in the case could be higher and the company could be subject to sanctions. We certainly appreciate the bravery shown by Amiel Gross in stepping forward.

Many More PFAS Contaminated Sites Exist

We urge homeowners to have their wells tested for PFAS. Even if there is no way to prove where the contamination originated, at least know whether your water is safe to drink. As noted earlier, PFAS is odorless and tasteless. Simply because your water tastes okay doesn’t mean it isn’t laced with deadly poison chemicals.

Based on our experience, we often find PFAS near chemical plants, paper mills, landfills and airports (PFAS is used in firefighting foam).  In many states such as Maine, biosolids from municipal wastewater plants and paper mills is or was given to farmers to use as fertilizer. That means anyone within a mile of agricultural land could be at risk.

Because PFAS is a forever chemical, there is also a danger that PFAS could be in soil or groundwater years after a plant closed or farm stopped spreading PFAS contaminated sludge. That old factory down the road that was knocked down 40 years ago? It could still be a major source of contamination.

The Vermont case came to light after regulators in Vermont learned that another Saint-Gobain facility in New York was suspected to have contaminated ground water. They decided to test wells in Bennington and found widespread pollution. Former company attorney Amiel Gross says there are several contaminated sites.

A good corporate citizen would alert residents and environmental officials. Saint-Gobain’s corporate slogan is “We are improving daily life.” The exact opposite is true. In our opinion, Saint-Gobain acts like a hit and run driver. They flee the scene of the crime and hope they don’t get caught.

PFAS testing is still in its infancy. Amazon has several low cost test options. If you get a positive result, more extensive testing may be warranted. (Shoot us an email too, we are trying to map all the areas with PFAS contamination.)

Have You Been Hurt or Damaged by PFAS Contamination?

Our PFAS contamination lawyers help families and communities with PFAS contamination issues. We bring class actions for medical monitoring, remediation costs and diminution in property values. We also bring individual actions on behalf of people with kidney and testicular cancer and certain birth defects.*

*We believe that PFAS is associated with many other serious health problems including lymphoma. Unfortunately, we can only bring cases where there is sufficient medical evidence to support the link between PFAS and other health problems. As this knowledge increases, we will seek to expand our individual representation.

If you or a loved one was exposed to PFAS contamination and were subsequently diagnosed with a serious disease or injury, you may be entitled to compensation for your injuries and other losses. Homeowners and farmers with contaminated soil or wells may also be entitled to compensation. Even if you have yet to suffer health complications, you may be eligible for lifetime medical monitoring if you have suffered exposure. To learn more visit our PFAS lawsuit information page. Ready to see if you have a case? Contact a PFAS contamination lawyer at Mahany Law online, by phone 202-800-9791 or by email pfas@mahanylaw.com.

Do tou work for one of these companies that is polluting our water and air? Saint Gobain and other companies like DuPont are public companies. Amiel Gross came forward because it was the right thing to do. He did so after suffering retaliation. There is a way for company insiders to report misconduct, get protection from retaliation, remain anonymous and collect a cash reward from the SEC. Contact us confidentially to learn more.

There is never a charge for a consultation and all inquiries are kept confidential.

The post PFAS – Are Businesses Lying to Us? appeared first on Mahany Law.

Finally a Reverse Mortgage Mogul Heading to Prison for Fraud?

We get a lot of angry calls from family members of elderly homeowners who feel tricked by false advertisements from reverse mortgage lenders. We still remember those TV commercials by Tom Selleck touting all the benefits of reverse mortgages without disclosing the risks. Finally, we have some good news to report. The government is pushing back.

A Manhattan federal jury convicted the millionaire owner of a reverse mortgage company with fraud and criminal conspiracy. The charges were related to a scheme to “jack up” the company’s bond valuation. Prosecutors say that Live Well Financial founder Michael Hild took $24 million from the company before it went under.

Live Well Financial was founded by Michael Hild in 2005. Within a decade it was a leader in the reverse mortgage industry (also known as Home Equity Conversion Mortgages). A reverse mortgage allows elderly homeowners to borrow against the equity in their home. If done right and in the right circumstances, it allows seniors to increase their spending power. Often the only amounts that need to be paid are taxes and insurances. There are no payments on the loan until you permanently leave the home.

As Live Well increased its loan portfolios, it relied on financing from banks including an FDIC insured lender in Michigan. (The feds did not publish the name of the lenders who provided financing to the company – we believe the bank is Flagstar Bank.)

To obtain bank funding, Live Well was required to provide audited financial statements. Prosecutors say that Hild signed documents representing the fair value of the company’s assets. Those statements were provided to both lenders and HUD. The values were inflated and not accurate.

When the company needed more cash, Hild directed employees to inflate values even more.

The scheme came to a screeching halt when one of the lenders decided to secure their own independent valuation. That occurred in September 2018 and almost immediately creditors realized they had been duped. On May 4^th, 2019 the company closed its doors.

Hild was indicted in August on bank and wire fraud charges. In April 2021 the case went to trial. Hild blamed others in the company and the economy. Despite taking $24 million out of the company and transferring $17 million to his wife, Hild said he was simply “along for the ride.”

A jury of 12 men and women didn’t buy his story. He was convicted on several counts and faces sentencing later this year. He faces 115 years in prison but typically sentences for first time offenders are much lower.

After the conviction was announced, Manhattan U.S. Attorney Audrey Strauss said,

“As a unanimous jury found, Michael Hild obtained millions of dollars in secured loans for Live Well Financial by grossly inflating the value of bonds used as collateral.  Hild deceived a third-party pricing service by providing it with inflated marks, resulting in the pricing service publishing valuations for the bonds far in excess of market value.  Lenders were hoodwinked into lending far more than they otherwise would have.  The house of cards came crashing down with the unwinding of Live Well and the revelation to lenders that the bond portfolio had been overvalued by $200 million.  Now, Michael Hild awaits sentencing for his crimes.”

Whistleblower Rewards for Reverse Mortgage Company Fraud

The whistleblower lawyers at Mahany Law have long championed efforts to curb fraud against seniors and particularly, fraud involving reverse mortgages. Those efforts were mostly sidelined after Dr. Ben Carson became secretary of the Department of Housing and Urban Development. Unfortunately for consumers and whistleblowers,

As of March 10, 2021, Marcia Fudge became the newest HUD secretary. We anticipate that the department will once again welcome whistleblower reports and crackdown on lenders who prey on the elderly.

Typically, bad mortgage lenders are prosecuted under the federal False Claims Act. That law allows whistleblowers with inside information about fraud involving federal funds or programs to collect large cash rewards. Because HECM’s are insured by HUD, rewards are available.

Rewards range between 15% and 30% of whatever the government collects from the wrongdoer. The typical reward is approximately 20%.

To learn more about reverse mortgages and whistleblower rewards, visit our special HECM reverse mortgage whistleblower page.

The case against Michael Hild was an outlier. Although a top 10 reverse mortgage lender, most of Live Well Financial’s customers were not irreparably harmed. They may have been inconvenienced but Hild’s fraud was felt by banks, its lenders.

If the Justice Department is correct, Hild is guilty of a $200 million bond fraud. That doesn’t trigger a False Claims Act reward but rewards are still available.

Information about public companies that cook their books may trigger an SEC whistleblower reward. The SEC routinely pays rewards to those who report information about companies that artificially inflating asset values. And unlike other whistleblower programs, it is very easy to remain anonymous under the SEC whistleblower program.

Do you remember when we said that one of the banks hurt by Living Well’s inflated asset values was an FDIC insured bank from Michigan? That little fact is important. Anyone that defrauds a federally insured bank or credit union may be guilty of violating the Financial Institutions Reform, Recovery and Enforcement Act. FIRREA for short.

Congress passed FIRREA after the savings and loan crisis in the 80’s. Inside information about companies or individuals jeopardizing the safety of banks could make you eligible for a FIRREA bank fraud reward of $1.6 million.

Ready to see if you qualify for a reward? Contact the Mahany Law whistleblower lawyers online, email brian@mahanylaw.com or by phone 202-800-9791. Cases accepted nationwide and are accepted on a contingency fee basis meaning we only get paid if you get paid.

The post Reverse Mortgage Mogul Facing Prison appeared first on Mahany Law.

Dentist Accused of Breaking Healthy Teeth to Bill for Expensive Repairs

One of the primary tenets of the Hippocratic Oath is the promise to “do no harm.” Evidently a dentist outside of Milwaukee never got that memo. Recently a Wisconsin federal grand jury indicted Dr. Scott Charmoli and charged him with chipping healthy teeth of his patients simply so he could apply expensive crowns.

According to the indictment,

“Scott Charmoli knowingly and willfully executed and attempted to execute a scheme to defraud health care benefit programs… and to obtain, by means of false and fraudulent pretenses,… money and property owned by, and under the custody and control of such programs, in connection with the delivery of and payment for health care benefits, items, and services.

“Charmoli falsely advised patients they needed crowns for teeth that had four intact cusps or were, in other words, not broken. To deceive patients into believing they needed a crown, Charmoli would frequently take an x-ray of the tooth and show the patient a line or spot that he would tell the patient was a fracture or decay that necessitated the crown.

“Patients, who believed that Charmoli was the expert, accepted his false representations and agreed to the crown procedure. Upon beginning the procedure, Charmoli used his dental piece (known as a “drill”) to break off a portion… of the patient’s tooth.

“By breaking the patient’s tooth, Charmoli caused permanent disfigurement and serious bodily injury.

“After intentionally damaging the tooth… Charmoli took, or instructed his dental assistant to take, an intraoral photograph or x-ray… of the broken tooth. After documenting the damaged tooth, Charmoli completed the crown procedure and submitted… a claim for coverage to the insurance company.”

In just a year and a half, Charmoli submitted $2,076,039.00 in claims for crowns to various insurance companies. Depending on the insurance company and plan, often the full cost of the crown was not covered by insurance.

Who paid the balance? Local media sources say his patients.

If convicted, Charmoli faces 20 years in prison. Because he is 60 years old, Charmoli could die in prison if he receives the maximum sentence.

After his indictment, a Justice Department spokesperson in Milwaukee said, “The Justice Department focuses on prosecuting health care fraud not only to protect health care funds but also to protect patients who entrust their well being to providers.”

Whistleblower Rewards for Healthcare Fraud

We don’t know how Charmoli was caught (or even if he is guilty). A federal magistrate has signed a protective order in this case designed to protect the privacy of Charmoli’s patients. Unfortunately, however, unless this case goes to trial, we may never know how he was caught.

Most healthcare fraud cases come to light because of the brave actions of whistleblowers. Often those folks are other healthcare workers. In this case we wouldn’t be surprised to learn that it was one of Charmoli’s dental assistants or billing clerks.

Many people wrongly believe that healthcare fraud is a victimless crime. As this case shows, however, it is often the patients that suffer.

Under the federal False Claims Act, whistleblowers who report healthcare fraud involving state or federal healthcare funds are entitled to cash rewards. Rewards range from 15% to 30% of whatever the government collects from the wrongdoers. The typical reward is 20%.

Because the law also provides for high fines and triple damages, big rewards are common.

To learn more, visit our healthcare fraud whistleblower reward page. Whistleblowers can remain anonymous while the case is being investigated and are entitled to powerful anti-retaliation remedies.

If you are 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 confidential. We accept cases nationwide.

Mahany Law – Wisconsin Whistleblower Lawyers

(offices nationwide including Milwaukee Wisconsin)

The post Doctor, Do No Harm – Dentist Charged with Breaking Teeth appeared first on Mahany Law.

Quick Look at All the Popular Cryptocurrency Scams and How to Fight Back

As I rewrite this post (April 2021), most of the major cryptocurrencies are at record highs. But the volatility in these investments also remains at record levels. That means you could see a huge gain in just 24 hours or see your retirement savings wiped out within a day.

We have nothing against folks investing in cryptocurrencies. While none of us have a crystal ball, there are certainly thousands of newly minted millionaires courtesy of crypto investments. And that is what makes these investments so attractive to investors and scam artists alike.

Cryptocurrencies, often called virtual currencies or tokens, are not issued and backed by a government or central bank. Instead they are digital assets. Their validity stems from decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. Theoretically they are immune from government manipulation which has made them even more attractive since many governments are seemingly printing trillions in new money without any sort of backing.

According to InvestmentNews, financial advisers report that 81% of their clients expressed interest in crypto within the last 12 months. To date, most brokerage firms have steered clear of recommending these investments.

With so much client interest, the pressure is on stockbrokers and investment advisers to fill the need. If they don’t, their clients could go elsewhere.

Suitability and Cryptocurrency Investments

Stockbrokers and investment advisors have a duty to make recommendations that are “suitable” for their clients. Not surprisingly, these so-called suitability and know your customer rules dictate what your advisor can recommend to you.

Are you a young millionaire with a high tolerance for risk and no immediate need to access your money? Maybe crypto is right for you. But what about the 67 year old retiree with no financial experience and who needs her savings to maintain her through retirement?

Until now, stockbrokers and investment advisors couldn’t do much in the crypto space. Many still are forbidden to do so by the firms they work for. Has that stopped some brokers from recommending crypto to their customers? The answer is no.

Selling Away

If a broker is permitted to sell certain crypto investments or cryptocurrency ETFs, they are bound by the suitability rules described above. But what if the broker isn’t authorized to offer these investments but does so anyway? This is called “selling away.”

Selling away takes place when a broker sells an investment not authorized by his or her firm. Rather than lose a customer (and a commission), bad brokers will recommend investments not authorized by their company. If the broker is pushing an initial coin offering (ICO), crypto related stock or virtual currency investment without the knowledge and approval of their employer, they are guilty of selling away.

As long as the cryptocurrency market continues its meteoric rise, they probably don’t get caught. But if the investment tanks and the broker is guilty of selling away, both he and his employer may be responsible for your losses. It doesn’t matter that the brokerage firm had no knowledge of your broker’s activities. They have a duty to supervise their agents.

Brokers and brokerage firms also have an obligation to perform due diligence on the investments they are recommending. We are shocked how many brokers can’t even explain blockchain. If they don’t understand what they are selling, they shouldn’t sell it.

Ditto for the brokers who base their recommendations on the size of the commissions paid instead of the underlying merits of the investments. ICO scams and crypto fraud is an everyday occurrence. If stockbrokers and investment advisors want to put clients into virtual currency investments, they have to be able to weed out the scams first.

Before we move on, an important caveat. Neither a stockbroker nor the brokerage firm is responsible if the crypto investment is your idea. We can’t protect people from themselves but the law will protect them if they relied on the recommendation of a broker and the investment wasn’t suitable for their risk tolerance or financial situation or if the broker failed to perform adequate due diligence on the investment.

Cryptocurrency Scams

Assume that you invested in a cryptocurrency investment that turned out to be a scam. Or let’s say you have information about one of these scams. Now what?

First, let’s look at popular forms of cryptocurrency fraud.

• Financial Crimes: Crypto’s instant transactions and lack of a traditional paper trail make them the preferred method of tax evasion, criminal activity and money laundering.  If you have inside information about these schemes you may be eligible for a large cash whistleblower reward. See our cornerstone content on IRS whistleblowing, AML whistleblower rewards and rewards for information about bribery of foreign government officials.
• Scam Initial Coin Offerings (ICO Fraud): Unfortunately ICO fraud is rampant. Many of these offerings are phony. Even the address of the offeror’s offices is fake. And because these scam artists want to get paid in crypto themselves, tracking down your lost funds is difficult. If you have inside information about one ICO fraud you may be entitled to a CFTC or SEC whistleblower reward. If you purchased your ICO through a stockbroker, we may be able to recover your investment.
• Pump and Dump Schemes: Fraudsters have long hyped stocks simply to drive up their price. While they are pumping up the price of the stock, they are also dumping their shares and making massive profits. Cryptos are no different. There isn’t much we can do unless you purchased from a registered stockbroker or investment advisor. If you have inside information on crypto pump and dumps, you may be eligible for an  SEC whistleblower reward (see link above).
• Theft: Crypto also provides criminals new opportunities for theft. We have seen cases where fraudsters have hacked into investors’ digital wallets or engaged in SIM card hacking to access investor’s crypto investments. The schemes and tricks used by cryptocurrency fraudsters are endless.
• Stockbroker Fraud: Earlier we talked about selling away and stockbrokers that fail to make suitable recommendations.
• Scam Promotors: In 2019 we wrote about boxing legend Floyd Mayweather and DJ Khaled. Both were busted for promoting a phony crypto Visa card. Once again, if you have inside information about ICO or cryptocurrency fraud, you may be entitled to a cash whistleblower reward.

Are You the Victim of a Cryptocurrency Fraud?

Do You Have Inside Information about a Cryptocurrency Scams?

If you lost $100,000 or more in an ICO, a cryptocurrency fraud or unsuitable cryptocurrency investment and the investment involved a licensed financial professional, we may be able to help. For more information about cryptocurrency frauds, visit our cryptocurrency and ICO fraud page. Similarly, if you have inside (original source) information about a cryptocurrency fraud, visit our SEC, IRS or AML whistleblower rewards pages at the links above.

Want to know if you have a case? Contact us online, by email at brian@mahanylaw.com or by phone at (202) 800-9791. All inquiries are kept in strict confidence.

The post Cryptocurrency Scams and Cryptocurrency Investment Losses appeared first on Mahany Law.

Lawyer for Billionaire Hedge Fund Manager Indicted! Learn How to Obtain an IRS Whistleblower Reward for Exposing Tax Cheats and Those Who Help Them

Last month a prominent Houston lawyer was indicted for facilitating a multi-million dollar tax fraud. Federal prosecutors say that Carlos Kepke conspired with a billionaire hedge fund manager and defrauded the IRS of taxes on $225,000,000.00 in capital gains.

According to the indictment, from 1999 to 2014, Kepke helped hedge fund owner Robert Smith “create and maintain a structure of offshore entities and foreign bank accounts that were used to conceal from the IRS approximately $225 million of capital gains income that Smith had earned.  In approximately March 2000, Kepke allegedly created a Nevisian limited liability company (Flash Holdings) and a Belizean trust (Excelsior Trust) to serve as the tax evasion vehicles. When Smith earned capital gains income from his private equity funds, a portion was allegedly deposited into Flash’s bank accounts in the British Virgin Islands and Switzerland.”

The Justice Department also says that Kepke allegedly assisted in the preparation of Smith’s false 2012 to 2014 returns.  If convicted he faces 5 years in prison on the conspiracy charge and 3 years on each count of assisting in the preparation of a false tax return.

Wealthy Americans trying to evade taxes is nothing new. What makes this case somewhat unique is that a lawyer was allegedly behind the plot. When billions of dollars need to be hidden, we often see lawyers, accountants, banks or offshore “service” companies that step in to help. (And always for a fee.)

Assuming the allegations of the indictment are correct, attorney Carlos Kepke helped his client create offshore shell companies, prepare fraudulent returns and engineer a complex system of moving money from one offshore jurisdiction to another to avoid detection by the IRS.

Kepke’s indictment follows an announcement by the IRS last October that Kepke’s client, Robert Smith, admitted to evading to taxes for 15 years. Smith avoided jail by paying $139 million in back taxes.

We believe Smith avoided also prosecution by turning in another billionaire, Robert Brockman. The IRS says that Brockman “is responsible for carrying out an approximately two-billion-dollar tax evasion scheme.” In October Brockman was indicted.

Like the indictment in Kepke’s case, the IRS says that Brockman also used a complex network of offshore entities to hide money from the IRS. According to a Justice Department spokesperson, “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.”

The smartest guy in the room may have been Kepke although none of them are feeling very smart right now. (Bloomberg reports that Kepke had also been Brockman’s lawyer.)

Kepke, who is in his 80’s, and Brockman are both facing lengthy prison sentences. Smith wisely cut a deal to avoid prison and is apparently cooperating.

Whistleblower Rewards for Offshore Tax Evasion

Smith is lucky he wasn’t indicted. The smartest thing he may have done is to cooperate with the IRS.

It is very difficult for the IRS to catch tax cheats that use offshore accounts and shell companies. Often these folks are caught because of whistleblowers.

Under the IRS whistleblower program, anyone with inside information about tax evasion or other tax code violations is eligible to receive a cash reward from the IRS. Rewards can range between 15% and 30% of whatever the IRS collects from the wrongdoer including penalties and interest.

Smith may have turned Brockman in (and perhaps Kepke too), but how did Smith get caught? That’s a question we probably will never be able to answer. Based on our experience, often people get caught because of whistleblowers. In this case it could have been an employee of Smith or Kepke.

We say we may never know because the IRS keep whistleblower information confidential. Unless there is a trial and the whistleblower is needed to testify (which is very rare), the identity of the whistleblower is protected.

Worried that you can’t be a whistleblower because you may have done something illegal yourself? In certain cases, whistleblowers can still collect a reward even if they were involved in the illegal activity. While that sounds counterintuitive, the IRS understands that some of the best whistleblowers (and those that know the most) are often involved in the fraudulent conduct. The IRS depends on voluntary compliance and that means if you come to the IRS first, you can almost always avoid criminal prosecution.

Would you rather look over your shoulder the rest of your life or make a deal with the IRS and possible even earn a reward for doing the right thing?

The size of the reward is dependent on several factors, including the type of information you provide, its value in prosecuting the case, any participation you may have had in the fraud and how much the IRS is able to collect.

If the case is worth at least $2 million, including the interest and penalties, you may then get a reward that is worth between 15 percent and 30 percent of the amount the IRS collects. Discretionary rewards are available in smaller cases.

The cases against Brockman and Kepke involve false returns and unreported offshore income. Other types of tax fraud that are eligible for cash rewards include:

• Income deferral or misrepresentation
• Misrepresented or overstated deductions
• Employee leasing schemes or paying employees in cash
• Misrepresentation of transfer pricing data
• Accounting fraud
• Improper tax credit usage (including foreign tax credits)
• Abusive advance fee or royalty payments
• Money laundering
• Abusive tax shelters or illegal tax shelters
• Evading motor fuel excise taxes
• Improper or fraudulent property valuations
• Unreported foreign income or offshore accounts
• Unfiled FBAR forms (Report of Foreign Bank and Financial Accounts)

Ready to learn more? Visit our IRS whistleblower rewards page. (The link for evasion schemes using offshore accounts is above.) Ready to see if you have a case? Contact attorney Brian Mahany online, by email brian@mahanylaw.com or by phone at 202-800-9791. All inquiries protected by the attorney client privilege and kept confidential. We accept IRS whistleblower cases worldwide.

*An indictment is not an indication of guilt. Brockman and Kepke are presumed innocent until proven guilty.

The post Houston Lawyer Indicted for Tax Fraud – IRS Whistleblower Opportunity appeared first on Mahany Law.

Learn the Difference Between Unqualified and Falsely Certified Healthcare Workers and Why Both Matter (And How to Collect a Cash Reward for Reporting the Practices That Bill for Either)

Recently we wrote about a false certifications case in South Carolina. Doctor’s Care and its management company agreed to pay $22.5 million to settle charges that they billed for doctors and nurses not certified by Medicare. Today we write about a new case where the government intervened in a case alleging that Connections Community Support Programs, Inc. billed for providers who were not qualified.

Qualified provider, certified provider… Is there a difference? Absolutely.

Much of the healthcare we receive in the U.S. is paid by tax dollars. If you are a Medicaid, Medicare or Tricare recipient, your care is subsidized with tax dollars. Uncle Sam says that in order to be paid, providers must both be qualified and certified. There is a difference but both are required.

Today’s case in Delaware involves Connections, a mental health services company, billing Medicare and Medicaid for services that were not performed by a qualified provider. The company billed government healthcare programs claiming that patients were seen by a licensed clinical social worker and other professionals. They weren’t. The complaint says instead that patients were seen by unsupervised and unqualified workers.

According to a complaint filed Friday,

“From at least January 1, 2015, through at least October 31, 2019, Connections, one of the largest providers of outpatient mental health and substance abuse services in Delaware, fraudulently billed Medicare and Medicaid by at least (i) billing for mental health services rendered by individuals whose professional qualifications did not allow them to bill Medicare or Medicaid for reimbursement under the names of individuals whose qualifications did allow for reimbursement and (ii) billing Medicaid for mental health services using incorrect procedure codes for the person performing the service, resulting in higher payments to Connections than were permitted.

“In falsely certifying the identity of the individual providing the mental health service, Connections, in violation of the False Claims Act, caused Medicare and Medicaid to pay for millions of dollars in services for which Connections was not entitled to reimbursement.”

The original complaint was filed in 2019 by two former employees of the company who recognized the fraud and became whistleblowers.

False Claims Act and Whistleblower Rewards

The case against Connections Community Support Programs was filed as a False Claims Act (or “qui tam”) action. That law allows whistleblowers with inside information about fraud involving government programs to receive a cash reward. Typical rewards are between 15% and 30% of whatever the government collects from the wrongdoer.

Collecting a whistleblower reward involves filing an action in federal court. That action is filed under seal meaning it is secret. Sealed filings allow the government to better and quietly investigate the claims. Keeping a complaint secret also protects the whistleblower from retaliation.

Ultimately when the investigation is complete, the court orders the case unsealed. At that time the government can “intervene” and take over the case or allow the whistleblower’s own lawyers to prosecute. If the investigation clears the defendant of any wrongdoing, the case is typically dismissed.

After investigating the two whistleblower claims in this case, federal prosecutors elected to intervene and take over the case. According to their new complaint, at least 4,000 claims were submitted by Connections falsely claiming that the services were provided by licensed social workers.

A Justice Department spokesperson on Friday said,

“Federal healthcare regulations and policies that govern mental health services exist to ensure that Medicare and Medicaid beneficiaries are treated by qualified professionals.  We expect all providers to submit claims that are true, accurate, and complete, and entrust that they will do so.  Connections violated that trust, and in the process, defrauded Medicare and Medicaid out of more than $4.5 million dollars.  My office is committed to pursuing all providers who submit false claims to federal healthcare programs to obtain money to which they are not entitled.”

In a separate action filed the same day, prosecutors also accused Connections and three of its officers with violating the Controlled Substances Act. They say the company can’t account for hundreds of bottles of methadone.

Because the False Claims Act provides for triple damages and high penalties, the company could wind up paying more than $15,000,000.00 if the allegations are proven true. Any whistleblower reward would be based on what is actually recovered from the company.

[We remind readers that the government’s decision to intervene in a Medicare fraud case is not a finding of wrongdoing. Connections, like all defendants, is entitled to their day in court.]

False Credentials or Unqualified Professionals

Many folks believe that Medicare fraud is a victimless crime. Aside from the obvious rip off of taxpayers, using unqualified medical professionals to treat patients is dangerous. It is one thing to not have the proper paperwork – that is usually what we see in cases of using uncredentialed healthcare workers. Those folks are usually at least qualified but lack the right credentials to bill Medicare. We say “usually” because some folks are ineligible to be credentialed because of prior fraud or abuse problems.

This case involves unqualified professionals. That usually means they don’t have the right training or didn’t pass state testing requirements. Do you want to be treated by a doctor who failed med school? Do you want the person providing advanced mental health counseling to only have a high school diploma and not formal college training?

Do You Have Information About Unqualified or Uncredentialed Healthcare Workers?

If you have inside information about healthcare workers who are not credentialed or not qualified, you may be entitled to a cash reward. The False Claims Act pays rewards nationwide for information regarding healthcare billed to Medicare, Tricare or Medicaid. 29 states and the District of Columbia pay for rewards regarding state funded Medicaid. Illinois and California also pay rewards for healthcare paid for by private insurance.

To learn more, visit our Medicare fraud information or our cornerstone posts on unqualified and uncredentialed healthcare workers. Ready to see if you have a case? Contact us online, by email brian@mahanylaw.com or by phone 202.800.9791.

Cases accepted nationwide. All inquiries protected by the attorney – client privilege and kept confidential. We work on a contingency or success fee basis meaning we don’t get paid unless we recover money for you.

The post Medicare Fraud Involving False LSCW Qualifications appeared first on Mahany Law.

Affinity Fraud is a Form of Investment Fraud in which the Fraudster Preys upon Members of an Identifiable Group such as Religious or Ethnic Communities

According to Investopedia, affinity fraud is a type of investment fraud in which a con artist targets members of an identifiable group based on things such as race, age, religion, etc. The fraudster either is or pretends to be, a member of the group.

These schemes work because the victims are more likely to trust members of a group to which they belong. Many of Bernie Madoff’s victims were wealthy members of the Jewish community. Folks in that community trusted Bernie because he was one of them.

How Does Affinity Fraud Work? 

Fraudsters who carry out affinity frauds frequently are (or pretend to be) members of the group they are trying to defraud. The group could be a religious group, members of a particular congregation, members of an ethnic group, or members  of the military. One Florida fraudster targeted members of the SE Florida gay community. Fraudsters target any group they think they can convince to trust them with the group members’ hard-earned savings.

At its core, affinity fraud exploits the trust  that exist in groups of people who have something in common. Frequently the fraudster will enlist respected leaders from within the group to spread the word about the scheme. Those leaders may not realize the “investment” is actually a scam, and they may become unwitting victims of the fraud themselves.

Particularly in insular ethnic or immigrant groups, it can be difficult for regulators to detect an affinity scam. Victims often fail to notify authorities or pursue legal remedies.

How to Avoid Affinity Fraud

Here are a few tips to help you avoid becoming a victim of an affinity fraud scam.

• Even if you know the person making the investment offer, be sure to research the person’s background, as well as the investment itself – no matter how trustworthy the person who brings the investment opportunity to your attention seems to be. Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not.
• Never make an investment based solely on the recommendation of a member of an organization or group to which you belong. This is especially true if the recommendation is made online. An investment pitch made through an online group of which you are a member, or on a chat room or bulletin board catered to an interest you have, may be a fraud.
• Do not fall for investments that promise spectacular profits or “guaranteed” returns. Similarly, be extremely leery of any investment that is said to have no risks. Do you remember that saying, “If its too good to be true it probably is”? That certainly applies here. Very few investments are risk-free. Promises of quick and high profits, with little or no risk, are classic warning signs of fraud.
• Be skeptical of any investment opportunity that you can’t get in writing. Fraudsters often avoid putting things in writing. Avoid an investment if you are told they do not have time to put in writing the particulars about the investment. You should also be suspicious if you are told to keep the investment opportunity confidential or a secret.
• Don’t be pressured or rushed into buying an investment before you have a chance to research the “opportunity.” Just because someone you know made money, or claims to have made money, doesn’t mean you will, too. Be especially skeptical of investments that are pitched as “once-in-a-lifetime” opportunities, particularly when the salesperson bases the recommendation on “inside” or confidential information.
• Check to see if the person offering the investment is licensed. Not every type of investment needs to be sold by someone licensed. Most do, however. Ask the person offering if they are licensed and if not, why not. Assuming they say they are licensed, check it out first. (People selling securities are typically licensed by the SEC and the Financial Industry Regulatory Authority. You can check those folks on FINRA’s free BrokerCheck tool.

We have many affinity fraud stories on our Due Diligence Blog (be sure to use the search feature for more information.)  Simply as an illustration, in this post we discuss a “credit counselor” who targeted African Americans.

Credit counselors are there to help us manage our finances, get out of debt and help us achieve financial freedom. Apparently Alfred Parker of Woodland Hills, California didn’t quite understand that. Parker, who worked as a credit counselor for a non-profit company providing credit counseling to low-income families, was sentenced to 46 months in a federal prison. His crime? Bilking $2 million from his victims.

Targeting primarily African-American people, Parker raised $2 million with the promise of “guaranteed” returns as high as 40% in just 3 months. The money was to be used to help people avoid foreclosures and make payments on their debts.

Parker instead used the money to purchase a Rolls Royce Phantom, 2 Ferraris, and a $2.5 million home. In typical Ponzi scheme fashion, some of the money also went to pay earlier investors. The government says he even paid for his wedding with money stolen from others. He will not be joining his new bride for a honeymoon anytime soon.

Not getting enough money from individual victims, Parker obtained a $200,000 line of credit by falsely claiming that he had $2,000,000 in savings and significant rental income from property in Cleveland. Both false statements. In fact, Parker forged documents and presented them to the bank.

Parker is spending the next several years in a federal prison. United States District Court Judge R. Gary Klausner condemned Parker for presenting himself as a religious man and preying on the African American faith based community.

Security regulators consistently put affinity fraud in their yearly top ten lists of scams tactics. Faith based affinity schemes have hit the African American community hard in recent years. Using one’s religious affiliation establishes a false sense of security in the minds of victims.

Unfortunately religious affinity fraud is as old as the Bible. Most have heard the story from the Bible about Jesus driving the moneychangers from the Temple during his ministry because they had made it a “den of thieves.”

Two thousand years later, little has changed.

—

Mahany Law is a full service , national boutique law firm that assists victims of fraud recover their money. Our investment fraud lawyers handle cases anywhere in the United States. Typically we target stockbrokers, investment advisors and other licensed financial professionals  From welfare benefit plans to Ponzi schemes to bad investment advice, we can help.

To learn more, visit our investment fraud recovery page. Does the case involve a lawyer? Visit our sister legal malpractice site. Ready to see if you have a case? For a no obligation, Contact Brian Mahany directly online, by phone at (202) 800-9791 or by email brian@mahanylaw.com.

The post Affinity Fraud – How to Avoid Becoming the Next Victim appeared first on Mahany Law.

Dirty Dental Appliances and Non Sterile Surgical Instruments? Yikes!

Non Sterile Dental and Surgical Instruments? Unfortunately, It’s True and the Hospitals That Were Caught Are Well Known

[Post updated May 2021]

When we first wrote this post, it was to report about the Detroit Medical Center. Now a Pennsylvania hospital system is getting fined for filthy dental tools. We can’t believe that well into the 21st century hospitals can’t seem to grasp the concept of keeping their equipment sterile.

Detroit Medical Center and Dirty Surgical Instruments

DMC boasts that it is one of the largest teaching hospitals in the United States. Affiliated with Wayne State University and Michigan State University, medical students from around the world learn their craft at DMC. According to a recent investigation by the Centers for Medicare and Medicaid Services (CMS), however, interns at Detroit’s largest hospital were operating on patients with dirty, unsterile instruments.

Things were so bad that the feds began “termination proceedings.” The hospital was set to lose its federal funding in just two months.

In a 14 page report, the feds blasted the facility for unsanitary conditions. Included in the report:

• Improper sterilization of surgical instruments – one in three sets of instruments inspected were not sterilized
• Lack of training on sterilization and infection control
• Hospitals workers putting dirty gloves back into a box of clean gloves
• Lack of sanitation audits
• Blood on floors / failure to sanitize operating rooms between surgeries
• Destruction of training records – what records that did remain showed instances where more than half of the staff missed required training on sterile cleaning procedures

The inspection by CMS was done without notice (a surprise) and was based on a whistleblower complaint. If handled properly, whistleblowers can receive large cash awards for their inside information of Medicaid and Medicare fraud. (More on that below.)

The Detroit News has been covering problems at DMC and with its corporate owner Tenet Healthcare for years. In a feature article this week, the paper interviewed a sterile processing expert who was aghast at the findings. He said, “If I had the ability I would not let a patient go in there until there’s a lot of re-education, retraining and personnel changes.” Another expert said that “This is insanely basic stuff – people don’t do things this foolish even at home.”

Unfortunately, only the state can shut down the hospital. CMS has the ability to shut off federal funding which would preclude the facility from accepting any Medicare or Medicaid recipients or federal employees as patients.

DMC traces its roots back to 1863 and the founding of Harper Hospital. The following year Harper began treating Civil War patients. It grew until 1985 when many of Detroit’s major hospitals merged into the present day Detroit Medical Center. In 2013, the for-profit Tenet Healthcare acquired the hospital system.

Problems with sanitation seem to begin at the same time Tenet Healthcare took over. The Detroit News reports that in June of 2014, ophthalmologists were “so fed up” with sterility issues that they threatened to take patients to other hospitals for surgery.

The system hired a person in October of 2014 to manage sterilization procedures. Several months later the paper reports that she contacted Tenet and considered herself a whistleblower. She told the parent company that she was not getting any support from hospital administrators to make changes.

Upper Allegheny Health System and Dirty Dental Instruments

Five years later and we are again learning of another claim of dirty, non sterile medical equipment. In May 2021 the Justice Department settled a whistleblower lawsuit brought against Upper Allegheny Health Systems, the operator of hospitals and dental clinics in New York and Pennsylvania.

Between 2010 and 2015, UAHS submitted false claims to Medicaid for dental services that were performed using drills that had not been appropriately sterilized. Dental drills – called handpieces – are required to be heat sterilized between each patient use. Upper Allegheny didn’t have enough drills and therefore didn’t have time between patients to properly sterilize their tools. Instead the company directed personnel to use wipes to clean the drills between patients.

Because Medicaid is paid for with state and federal tax dollars, the use of unsterilized equipment violates both the Federal False Claims Act and New York False Claims Act.

Upper Allegheny Health Systems settled without an admission of wrongdoing and agreed to pay a $2.7 million penalty. In announcing the settlement, Buffalo’s U.S. Attorney issued a statement saying,

“It is inconceivable that a healthcare business would seek to cut corners when it comes to the appropriate cleaning and sterilization of medical devices. This settlement under the False Claims Act holds UpperAllegheny accountable for the risks created for patients in the past, while ensuring that in the future patient safety will be preserved and that taxpayers will only pay for services which are properly provided.”

Cash Rewards for Whistleblowers

The cases against Upper Allegheny Health and Tenet Healthcare were brought by whistleblowers. Under the federal False Claims Act, whistleblowers who bring these cases are entitled to between 15% and 30% of whatever the government collects from the wrongdoer. We anticipate the whistleblower in the UAHS case will receive approximately $540,000.00.

Because Medicaid is funded both by the federal government and the states, a second reward is often available from the state. In this case, New York is one of 29 states and the District of Columbia that also pays rewards.

To qualify for a reward, one needs inside or “original source” information about the fraud. Billing clerks, doctors and other medical professionals are ideally suited to earn a reward (and help stamp out greed and fraud). The whistleblower reward provisions are an essential element of the False Claims Acts and have enabled them to become what one Justice Department official referred to as “the most powerful tool the American people have to protect the government from fraud.”

Tenet Healthcare Whistleblower Claims

No discussion of the Detroit Medical Center would be complete without a special mention of its parent, Tenet Healthcare. Tenet has an inglorious reputation for healthcare fraud. The company has paid hundreds of millions of dollars in fines and penalties tied to the federal False Claims Act, a Civil War era fraud recovery statute.

In 2016 Tenet Healthcare paid $514 million to settle civil and criminal fraud charges brought under the False Claims Act and federal Anti-Kickback Statute. (The whistleblower in that case will be receiving $84 million.)

That Tenet is a “frequent flyer” in the Medicare fraud world is indisputable. The bigger question is why? Our answer? Profits before patients.

The Tenet Healthcare website says the company is a “leading healthcare services company working across the system to improve service delivery and patient outcomes.” Things are so bad at DMC, however, that CMS says there is the potential for “unsatisfactory patient outcomes”. That is regulatory speak for infections, longer recovery periods and even death.

Tenet Healthcare is a for profit company. It exists to pay dividends and make money for its shareholders. There is nothing wrong with for profit institutions, most people in the United States work hard in the hopes of making more money. When a healthcare company becomes too focused on profits, however, patients suffer.

Under the federal False Claims Act, whistleblowers can receive up to 30% of what the government receives from wrongdoers. Because the False Claims Act is an anti-fraud law, to claim an award one must do more than show mere negligence or sloppiness. In the case of DMC and Tenet, investigators have been on the hospital’s case for months regarding unsanitary conditions. The hospital’s own employee charged with cleaning up the mess reported directly to Tenet in April of 2015 about conditions. At some point, what may have been a simple lapse in housekeeping became fraud.

Why do we say fraud? Because each time a hospital sends a bill to Medicare, it certifies that it is in compliance with all Medicare and Medicaid rules. Putting dirty surgical gloves back in the box or using non sterile surgical instruments is certainly not in compliance with rules. Once you certify that you are in compliance and know that you are lying, that is a fraud.

Do You Have Information About Non Sterile Medical Devices?

If you have inside information of healthcare providers using non sterile (unsterile) medical devices or any other type of Medicare or Medicaid fraud, contact us. By doing so, you join the growing number of healthcare professionals committed to quality patient care and against greed and corruption. Our team of whistleblower lawyers will help you stop the fraud, protect you from illegal retaliation and help secure the largest award possible.

We began this story by noting that the recent CMS surprise inspection was the result of a complaint. Most whistleblowers are content to call the 800 fraud hotline number provided by CMS. Doing so can earn you an award of up to $1000. To get the large percentage awards, you must file a sealed complaint in federal court. That is where we get involved.

If you are looking to receive an award and want to insure your complaint is investigated, the best way is to not call the hotline but instead file a False Claims Act complaint. While the complaint is being investigated, it remains under seal meaning secret. Sometimes we can further protect whistleblower identities through special filing techniques.

Want to learn more? First, visit our Medicare Fraud Whistleblower information page. 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.

MahanyLaw – America’s False Claims Act / Qui Tam Lawyers

[For more information on Tenet, visit our main Tenet Healthcare fraud page.]

New DMC post added October 2018. Looking for DMC Whistleblowers. Post examines new allegations of poor patient care and retaliation against four physicians who tried to speak up.]

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Did Uber Try to Pull Off a $6 Billion Tax Fraud?

Never a week goes by where we don’t hear from an unhappy Uber or Uber Eats driver. Although we no longer accept Uber cases, we remain honored for having had the opportunity to represented so many wonderful men and women who drove for the company. That means we continue to stay atop of all things Uber. This week we report on a possible $6 billion tax evasion scheme.

International finance magazine IFC Review reports that it is using approximately 50 Dutch shell companies to avoid paying taxes.

Investopedia defines “shell company” to be a business entity “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.”

Using offshore shell companies makes it easier for Uber to hide money from taxing authorities like the IRS and gives the company an unfair tax advantage.

Tax avoidance and tax evasion are entirely different. Tax avoidance is legal while evasion is a crime. Thus far Uber has not been charged with any crime.

According to the IFC, “Uber transferred its intellectual property through a $16 billion “loan” from one of its subsidiaries in Singapore that in turn owns one of Uber’s Dutch shell companies, a maneuver that grants the company a $1 billion tax break every year for the next 20 years, the researchers found.”

While this may sound overly technical, the bottom line is that Uber is using creative accounting and moving money around the world in order to avoid paying taxes. Little guys like us wind up making up the difference.

The Center for International Corporate Tax Accountability and Research says Uber earned $5.8 million in global revenue yet through creative accounting was able to $4.5 billion in tax losses.We have been unable to find any response from Uber to these charges.

IRS Whistleblower Rewards for Corporate Tax Evasion Information

No one likes paying taxes. But 99% of us do it. As mentioned earlier, strategies to reduce one’s taxes are legal as long as no laws are broken. There is often fine line, however, between tax avoidance (legal) and tax evasion (illegal).

In 2019 we reported that Uber was being investigated by the IRS. Documents filed with the SEC that year indicated the company was being investigated over “transfer pricing” issues. For those not familiar with complex tax law, transfer pricing refers to the practice of pricing transactions between a company’s divisions and subsidiaries.

We suspect Uber skirts dangerously close the line between what is legal and what isn’t. And that where you come in.

Under the IRS Whistleblower Program, insiders with knowledge of tax fraud may be eligible for a large cash reward. Rewards can be as high as 30% of whatever taxes, interest and penalties are collected from the wrongdoer. Given Uber’s size, the rewards could be huge.

Do You Have Inside Information About Fraudulent Shell Companies?

If you are the first to report tax fraud and have inside information necessary to prove your case, the Mahany Law IRS whistleblower and may be able to help you secure a reward. To learn more, visit our IRS whistleblower rewards and our shell company money laundering pages. Ready to see if you have a case? Contact the MahanyLaw Whistleblower Lawyers for a no-fee absolutely confidential consultation,  online, by email brian@mahanylaw.com or by phone 202-800-9791.

IRS Whistleblower cases considered worldwide.

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Credit Union Employee with Information about Fraud? Employees of NCUA Insured Credit Unions Are Eligible for Cash Whistleblower Rewards

Shreveport Louisiana is a sleepy little city. Not much happens there. So it was big news on April 13^th, 2017 when the government showed up and changed the locks on the doors of the Shreveport Federal Credit Union.  Founded in 1956, for decades the credit union served thousands of families in northwest Louisiana.

Typically the feds step in at 5:00 pm on a Friday when taking over a bank. This time the takeover took place on a Thursday evening as the bank was already going to be closed for Good Friday weekend.

Having previously represented the FDIC and the former Resolution Trust Corporation, I am familiar with how the feds takeover a bank. They do so with no advance notice and like to come in over a weekend so that on Monday morning customers can walk in with little or no disruption of service. The weekend gives bank regulators time to seize books and records and place a new management team in place.

Credit unions are regulated by the National Credit Union Administration, a federal agency located in Alexandria, Virginia. When the NCUA takes action against a struggling credit union, it usually tries to do so through a conservatorship where new management is installed. If there is no likelihood that the bank can be saved the agency can order a liquidation. Either way, customer accounts are protected up to $250,000.00.

When the NCUA took control, it issued a press release that said very little. In a separate FAQ page, the agency simply said it was taking action “to maintain safe and sound credit union operations.”

In October, the NCUA determined that there was “no prospect for restoring viable operations.” The agency ordered the credit union liquidated and the accounts were transferred to the Red River Employees credit Union of Texarkana.

We know of at least two other credit union liquidations that year.

What Went Wrong (and What You Can Do to Help)

Sometimes a bank or credit union goes under because of conditions in the local economy. For example, a credit union serving a local military base would be in real trouble if the base closed and all the jobs were relocated to other areas of the country.

From what we now know, Shreveport Federal Credit Union went under because its CFO was embezzling (stealing) millions of dollars.

We now know that the day the before the NCUA took over Shreveport FCU, the credit union’s CFO died suddenly. Alesia Smith Cummings was just 51 years old. Her obituary doesn’t list her cause of death but we wouldn’t be surprised if she sensed that the feds were closing in.

Now that she is dead, the NCUA says she embezzled $13 million from the struggling credit union, probably enough to cause it to fail. (We remind readers that Ms. Cummings was never charged with any crime, she was dead at the time the NCUA took control of the bank.)

The CU Times now reports,

“Cummings was allegedly the only person engaged in a long-term embezzlement scheme, which the NCUA claimed its examiners independently uncovered during the spring of 2017.

“The alleged fraud included posting phony deposits to an array of automated clearing house receivable accounts such as undistributed payroll, accrued vacation and 401(k) match accounts. Cummings also allegedly created fake fees that were used to pay bonuses to employees, including large bonuses to Smith. The federal agency also claimed Cummings embezzled funds by making transfers from the ACH clearing accounts to her account, an account she jointly owned with her father to other accounts owned by Smith.”

Recently the NCUA obtained permission from a federal judge in Shreveport to sue the accounting firm that formerly represent the Shreveport Federal Credit Union. Regulators believe accountants should have uncovered the embezzlement years earlier when conducting annual audits.

FIRREA – Credit Union Whistleblower Rewards

In 1989 after the savings and loan crisis, Congress passed the Financial Institutions Reform Recovery and Enforcement Act (FIRREA). That law was designed to make it easier for prosecutors to go after bank officials and others that threaten the financial stability of banks. The law also applies to credit unions.

Although the Shreveport Federal Credit Union customers were protected when the agency brokered the sale of the failed credit union to another entity, bank liquidations still cost the government millions of dollars. That means taxpayers are left to foot the bill.

We don’t know if anyone at Shreveport FCU knew about the embezzlement. In our experience, an embezzlement of this size that went on for so many years probably didn’t escape notice by other bank employees. Banks are highly regulated and that includes significant record keeping obligations.

FIRREA was amended after the 2008 financial crisis and now allows the federal government to pay whistleblower rewards to anyone with information about certain types of bank fraud. If a bank officer’s behavior threatens the stability of the bank, there is probably a good chance of qualifying for a reward.

Had Smith – Cummings been stopped earlier, Shreveport FCU might never have gone into liquidation and taxpayers would be on the hook for another subsidized bailout. Unfortunately, we often see bank employees that are simply too afraid to speak out. Often there is the problem of knowing where to turn.

If you have information about fraud involving a federally insured bank or credit union, you may qualify for a bank whistleblower reward. Improper conduct covered by FIRREA includes:

• False entries in a bank’s books or records. (This section covers a wide variety of banking sins and can include bribes, AML or Anti Money Laundering violations and bad loan underwriting / servicing violations)
• Mail fraud
• Wire fraud
• Making false statements or false entries in books and records. Merely concealing misconduct could trigger liability.
• Illegal gifts or commissions for procuring loans
• Theft, misapplication or embezzlement by a bank officer or employee.
• Use of false statements with respect to loan applications. (Useful for prosecuting outside third parties whose actions harm banks.)
• Improper influence of the FDIC
• Defrauding / Attempting to defraud a bank
• False statements and overvaluing of securities
• Presenting a false claim to the government
• Concealment of assets

Ready to learn more? First, visit our FIRREA bank fraud whistleblower information page. If your information involves Bank Secrecy Act / anti-money laundering, we have information on that too.

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

The post Credit Union Employee? Rewards for Info on Embezzlement appeared first on Mahany Law.

Big Things on the Horizon for IRS Whistleblowers

How would you like to pay 15% less taxes? If everyone paid their fair share you could according to the IRS. A new report indicates that wealthy Americans withhold over $600 billion each year in taxes. Over the next decade the amount of unpaid taxes will exceed $7 trillion. (IRS Commissioner Charles Rettig claims that the so-called “tax gap” is $1 trillion per year)

President Biden and the IRS want to put a big dent in tax evasion. That means bulking up the enforcement arm of the IRS. More audits, more enforced collection actions and more tax cops (IRS-CID special agents). According to the IRS, “These unpaid taxes come at a cost to American households and compliant taxpayers as policymakers choose rising deficits, lower spending on necessary priorities, or further tax increases to compensate for the lost revenue.”

Can the government stop tax cheats? No but it can make a big dent. The problem is that it takes time.

As former tax commissioner in Maine, I know that it takes about five years to get a revenue agent fully trained and up to speed. IRS criminal special agents need a similar amount of time. If you add in both training time and the time to get a case through court, it could take five to seven years before we begin seeing the first results from IRS criminal prosecutions.

IRS Overhaul Plan

So how does the administration propose to address the hundreds of billions in taxes not collected each year?

There are four components to the administration’s plan.

First, the IRS is seeking an additional $80 billion in funding to the IRS budget over the next decade. They claim they need the money because their budget has been slashed by 20% during the past decade. Many of the best auditors and special agents retired and were never replaced.

The proposal also wants to use some of that additional funding to develop a new data management system. They say the current system dates back to the 1960’s! By using data analytics, they think they can better target their auditing efforts.

The IRS also plans to crack down on unregulated tax preparers and increase penalties for aiding and abetting tax evasion. (Since the COVID-19 pandemic began we have been overwhelmed with calls about folks that assist others in obtaining phony PPP loans.)

Finally, the IRS wants banks and other financial firms to provide more them data.

IRS Whistleblowers Play Important Role in Stopping Tax Cheats

Random audits aren’t very effective. Even if the IRS doubled its audit staff, it couldn’t even audit 1% of all taxpayers each year. Extra auditors are needed but unless they know where to look, simply adding more revenue agents, special agents and revenue officers (IRS speak for collections staff) is only part of the answer. Ditto for replacement of their ancient computer system.

This is where whistleblowers play a critical role. Folks with inside information about companies and individuals who are cheating the system are key to reducing the nation’s tax burden.

Congress recognized the importance of whistleblowers and created the powerful IRS Whistleblower Program. That program pays cash rewards of between 15% and 30% of whatever the IRS collects from the wrongdoer. That includes interest and penalties.

While we have been successful in getting the IRS to accept our whistleblower cases, there is still much to be done.

A recent Forbes article said, “The IRS’s failure to take advantage of whistleblower information about large-scale tax fraud and abuse is disgraceful and inexplicable.” While we share that frustration, we believe that any failure by the IRS is mostly due to the lack of staffing.

Unfortunately, the IRS only less than 1% of the tips they receive. Until staffing fully ramps up (we believe that will take five years from the date of any new hires), it becomes critically important to find the best IRS whistleblower lawyers. More on that below.

Rules for IRS Whistleblower Program

The IRS offers for two types of rewards.

If the taxes, penalties, interest in dispute exceed $2 million, the IRS will pay 15 percent to 30 percent of the amount collected. If the case deals with an individual, his or her annual gross income must be more than $200,000. If the whistleblower disagrees with the outcome of the claim, he or she can appeal to the Tax Court. These rules are found at Internal Revenue Code IRC Section 7623(b) – Whistleblower Rules.

The IRS also has a reward program for other whistleblowers – generally those who do not meet the dollar thresholds of $2 million in dispute or cases involving individual taxpayers with gross income of less than $200,000.

The rewards through this program are less, with a maximum award of 15 percent (capped at $10 million). These rewards are discretionary. The rules for these cases are found at Internal Revenue Code IRC Section 7623(a) – Informant Claims Program, and some of the rules are different from those that apply to cases involving more than $2 million.

Unlike the False Claims Act, the IRS Whistleblower Program does not require you to have an attorney. You can simply fill out a form online.

Why are we sharing this information? Good luck in getting the IRS to take your case. As we said earlier, the IRS accepts less than 1% of the tips they receive. Those are terrible odds.

Hiring the right IRS whistleblower lawyer can make the difference between receiving a multimillion check and having your whistleblower tip languish in a black void.

We regularly meet with the director and staff of the IRS whistleblower program. We also have a recently retired IRS special agent on board to help us find someone in the agency interested in your case and even to hand file that case.

Ready to Collect an IRS Whistleblower Reward?

To learn more, visit our IRS whistleblower information page. Ready to see if you are entitled to a reward? Visit us online, by email brian@mahanylaw.com or by phone 202-800-9791.

All inquiries kept strictly confidential. We accept cases on a contingency fee basis meaning you owe us nothing unless we are successful getting you a reward. IRS whistleblower cases accepted worldwide.

The post $600 Billion Each Year in Unpaid Taxes – IRS Whistleblower Post appeared first on Mahany Law.

More than a dozen paper companies and mills named in class action lawsuit

The lawsuit alleges dangerous PFAS chemicals were allowed to leach into private wells and land

(131K)

More than a dozen paper mills and paper companies were named in an amended class-action lawsuit filed this week in Somerset County Superior Court.

The lawsuit was first filed against Sappi North America in March on behalf of a Somerset County resident, Nathan Saunders. The lawsuit alleged Sappi’s Somerset Mill in Skowhegan is the source of the PFAS contamination. Tests by the Maine Department of Environmental Protection showed very high levels of the chemicals, which have been linked to serious health problems, in his private well.

More than 60 private wells in Fairfield and other communities have levels of compounds above the EPA’s safe advisory limit.

An amended lawsuit filed by Brian Mahany, the attorney for plaintiffs, now names paper manufacturers, mills, and other companies, including Northern Paper, Kimberly Clark, Scott Paper, and Huhtamaki, which runs a paper packaging mill in Waterville. The lawsuit claims all of the companies are responsible for the PFAS contamination.

Mahany spoke to NEWS CENTER Maine by phone on Thursday.

“I think we have come up with a pretty comprehensive list of which paper mills were dumping their biosolids in Kennebec and Somerset Counties,” Mahany said. “That’s not to say the investigation won’t name more.”

The lawsuit is seeking unspecified damages. A spokeswoman for Sappi North America strongly denies the allegations.

“Sappi strongly disputes any contention that Sappi’s Somerset mill is the source of PFAS contamination in Fairfield. Sappi is well known for its record of environmental stewardship at the Somerset mill and at all of its manufacturing facilities,” spokesperson Olga Karagiannis said.

For more information about PFAS from the Agency for Toxic Substances and Disease Registry, click here.

The post News Center Maine June 3, 2021 appeared first on Mahany Law.

New Reward Opportunities for Bank Money Laundering Whistleblowers

The Justice Department announced that Swiss bank, Julius Baer & Co admitted in court that it conspired to launder $36 million in bribes to soccer officials with the Fédération Internationale de Football Association (FIFA). As part of the court proceedings, Julius Baer entered into a three year deferred prosecution agreement. The bank had been charged with criminal conspiracy to commit money laundering

As part of the plea deal, the bank has agreed to pay more than $79 million in penalties (including a fine of $43,320,000 and forfeiture of $36,368,400).

In announcing the agreement, a senior Department of Justice official said,

“Today’s resolution sends a strong message to all banks and other financial institutions that if they knowingly misuse our financial system to hide their clients’ criminal proceeds or to promote a corrupt scheme, they will be held to account. From the time of the first FIFA-related indictment, the department has promised to hold accountable the financial institutions involved in this global criminal scheme. We are delivering on that promise.”

According to court documents, between February 2013 to May 2015, Julius Baer, working through relationship manager Jorge Luis Arzuaga, conspired with sports marketing executives including the controlling executive of Torneos y Competencias S.A., an Argenine sports media and marketing company, to launder through the United States at least $36 million in bribes to soccer officials in exchange for broadcasting rights to soccer matches. Julius Baer conspired to execute these illegal transactions through accounts at the bank to conceal the true nature of the payments and promote the fraud. Arzuaga pled guilty in 2017 and was sentenced last year.

Banks have a requirement to monitor accounts for money laundering. Prosecutors say that Julius Baer’s AML controls miserably failed to detect or prevent the money laundering transactions that facilitated the bribery scheme. Although a senior bank relationship manager (Arzuga) was part of the scheme, his supervisors and the bank’s compliance department should have alerted to numerous red flags.

The Justice Department says,

“[T]hey would have known there were multiple, significant red flags, including facially false contracts, payments to third parties at the direction of a FIFA official, and services purportedly rendered by shell corporations — all of which would have alerted the Bank to the bribery, money laundering or other illegal activity… According to [the bank’s] admissions, the bank knew that Arzuaga’s clients’ accounts were associated with international soccer, which was generally understood to involve high corruption risks. Nevertheless, bank executive directed the opening of these accounts be fast tracked in the hope that these clients would provide lucrative business.”

The fines in this case were enhanced because prosecutors say that Julius Baer initially hindered the investigation and made misleading statements about their role in the conduct.

AML Whistleblower Rewards

Employees, compliance officials and other insiders of banks are eligible for large cash whistleblower rewards for reporting misconduct. Assuming the bank is insured by the FDIC or NCUA, there may be rewards of up to $1.6 million under the Financial Institutions Reform Recovery and Enforcement Act (FIRREA).

A new whistleblower program enacted in 2021 specifically providers for even larger rewards for information about anti-money laundering violations. The new Anti-Money Laundering Act (AMLA) provides rewards of up to 30% of any monies recovered from the wrongdoers. There is no cap on rewards. And unlike some whistleblower programs, there are no prohibitions on compliance officers from receiving a reward.

Another benefit of AMLA is the ability to remain completely anonymous.

Yet another provision protects whistleblowers from retaliation.

To learn more, visit our FIRREA and AML Whistleblower Program 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.

AML and bank whistleblower cases accepted worldwide. All information protected by the attorney – client privilege and kept completely confidential.

The post New AML $79 Million Settlement – Julius Baer appeared first on Mahany Law.

There Are Thousands of Unapproved Stem Cell Clinics in the U.S. At Best, You Are Throwing Away Your Money, at Worst, Your Life

An investigation by the Arizona Republic found 238 unlicensed stem cell clinics. That is just in Arizona! If you extrapolate that figure it suggests there are 10,731 unlicensed clinics nationwide!

How is this possible?

There are many reasons. The stem cell business is still the wild, wild west. The FDA has jurisdiction but simply doesn’t have the resources to police thousands of unregulated clinics. In one instance, the newspaper found a clinic being operated by music teachers.

In most cases, folks who visit these places simply lose their money. Most stem cell products sold in the U.S. contain no live stem cells. The unlicensed clinics are usually selling freeze dried stems cells – if what they cell contains any stem cells.

In order to work, stem cells need to be live. Freeze dry something and you are killing the cells.

If there is a silver lining to this story, the patients who receive these freeze dried stem cell aren’t harmed. yes, they lost between $1000 and $10,000 but physically, they aren’t harmed. If I inject water into my veins chances are good that nothing bad happens.

There are dangers, however. Sometimes these stem cell clinics sell product made by dangerous labs. The products they dispense aren’t sterile or they do contain live cells along with whatever disease the donor may have contracted.

A hospital would never do an organ transplant without loads of testing and steps to insure the sterility of the process. But the makers of stem cell products are often based in someone’s garage. Would you want a heart transplant in a garage? Would you want the person performing the transplant to be a music teacher? But somehow we let our guard down when the transplant is simply a shot.

Many patients are attracted to stem cells after conventional treatments don’t work. The FDA recognizes that stem cells can be beneficial but have only approved the treatment in a handful of circumstances. Unfortunately, we have clinics claim they can cure everything from cancer to male pattern baldness to diabetes.

What the FDA Says to  People Considering Stem Cell Therapies

Many of the unlicensed stem cell clinics claim that the FDA does not need to review or approve the treatment. That is false. Worse, some claim they have approval when they don’t.  The FDA recommends that if you are considering treatment do the following:

First, ask if the FDA has reviewed the treatment. Ask your personal physician to help you confirm this information. A legitimate clinic should have no objection speaking to your physician.  You also can ask for the FDA-issued Investigational New Drug Application number.  Ask for this information before getting treatment— even if the stem cells are your own.

Second, request the facts and ask questions if you don’t understand. Make sure you understand the entire process and known risks before you proceed. You also can ask for a short description of the product and information about its safety and effectiveness.

Third, find out who operates the clinic. Often the questionable clinics are not operated by licensed medical doctors or osteopathic physicians.

How Do I File a Stem Cell Lawsuit?

Despite all your questions and due diligence, something bad happens. Now what?

If the product you received had FDA approval and the folks administering the product were properly licensed, consult with a medical malpractice lawyer. (We can help you find someone.) According to the National Institutes of Health (NIH), more than 1,000 clinical trials examining stem cell therapies are currently underway. To date, we have not received any complaints from anyone in an approved clinic trial or from someone receiving an FDA approved product for an approved use

All manufacturers of FDA-regulated stem cell products must adhere to strict FDA safety guidelines regarding manufacturing practices to ensure safety, potency, and purity. When they don’t, they face both criminal and civil penalties.

The problems almost always arise from patients injured by contaminated products. Those are the cases we take. Victims who were injured because of contaminated (adulterated) 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 the treatment – we only consider cases with serious personal injuries.)

Since properly prepared stem cell therapies rarely cause serious complications, you may be eligible to file a stem cell lawsuit if you suffered serious injury due to a stem cell product.

To meet FDA current good manufacturing practices (cGMP) requirements, stem cell companies must maintain a sterile facility to prevent risk of contamination. Live stem cells are often irradiated to ensure no bacterial or viral contamination is present, something that will never happen in a garage based operation.

Stem cell companies must also only market their cells for uses approved by the FDA. Telling patients or doctors that a stem cell product FDA-approved for lymphoma treatment is “also useful for Type I diabetes treatment” is dangerous and illegal.

Many stem cell products are manufactured overseas, making efficient FDA regulation difficult. Others are made in what we call “garage labs” with no clean rooms. Unfortunately, these facilities are usually on no one’s radar and have no insurance.

Working with our national network of dangerous drug lawyers, we can help you receive answers and compensation for injuries. Stem cell products may be the future of modern medicine. Unfortunately, there are far too many companies rushing into the field with untested or dangerous products and making wild claims of miracle cures.

Although we are happy to help if you are injured, know that many of these unlicensed clinics and the labs producing the stem cell products used in these clinics have no insurance. Avoid the pain and suffering by doing your due diligence before receiving treatment.

If the only thing that happened is that you simply lost your money, consider yourself lucky.

To learn more, visit our cornerstone content on stem cell lawsuits. We list the FDA approved products and approved uses for stem cells.  We also go into more detail on how you can be harmed from adulterated or nonsterile product. (We also have a cool video on that page.)

Injured and need a lawyer? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. Cases considered nationwide. We do take injury cases on a success or contingency fee basis.

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Do You Have Information about HUBZone Fraud (or any Small Business or Minority Owned Business Designation Fraud)? You May Be Entitled to a Large Cash Reward

A private contractor doing work on a multibillion Department of Energy product has agreed to pay $3 million to resolve claims that it falsely presented two subcontractors as HUBZone small businesses. The claims also involved falsely designating a subcontractor as a woman owned small business.

The case was brought by a whistleblower who will receive $865,000 for stepping forward and reporting the misconduct.

HUBZones and Disadvantaged Business Enterprises

Like many federal agencies, the Department of Energy (DOE) sets aside a certain percentage of contracting dollars for minority owned businesses and business that are based in economically struggling areas.

Congress created the HUBZone Empowerment Act in 1998. The act allows the SBA to designate geographic locations in which businesses are struggling. The government’s term is “historically underutilized business zones.”

To be a HUBZone contractor, one must be a small business as defined by the SBA, have a principal place of business in an area designated as a HUBZone, must have at least 35% of its employees residing in the zone and must apply for certification.

The government also has programs for minority owned business enterprises that provide opportunities for women, native Americans, certain minorities and veterans.

In recent years, the federal government has prosecuted dozens of businesses for improperly claiming they are a qualified minority owned or disadvantaged owned business. The prosecution in this case shows that the government is also scrutinizing businesses that falsely claim they are a HUBZone business.

Most of these prosecutions were brought by whistleblowers. The federal False Claims Act allows these folks to receive a large cash reward for reporting the misconduct. More on that below.

Justice Department Prosecutes DOE Contractor for HUBZone Fraud

In June, the Justice Department announced it had settled with CH2M Hill Plateau Remediation Co. CH2M was the prime contractor in a multibillion contract to clean up nuclear waste at the Hannaford DOE site. To win the contract, the company promised to comply with DOE rules. For HUBZone set asides.

Prosecutors say that CH2M hired a subcontractor called Indian Eyes LLC which has already been disqualified from claiming HUBZone status. A second company, ABC-Phoenix, was also found to be unqualified.

Although the whistleblower also claimed that CH2M violated set aside rules for women owned businesses, it doesn’t appear the Justice Department acted on those claims.

False Claims Act Rewards for HUBZone and DBE Whistleblowers

Earlier in this story we mentioned that the case was brought by a whistleblower. The federal government can’t audit and investigate every company that claims it is minority owned or employs 35% of its work force from an impoverished area. Instead, the government relies on whistleblowers, folks with inside information about fraud and corruption.

In the CH2M case, the whistleblower was Salina Savage, the owner of a woman owned business who successfully challenged the minority owned status of one of CH2M’s subcontractors. Her claim against CH2M is that they knowingly ignored red flags and hired ineligible subcontractors.

Salina isn’t simply an outsider who knew her competition was probably not woman owned. She became a transportation specialist and member of DOE’s Motor Carrier Evaluation Program tasked with knowing who was qualified to work on sensitive DOE projects. When she started her own company, she knew the players.

Under the federal False Claims Act, anyone with inside information about fraud involving a federal program or federal funds can earn a reward of between 15% and 30% of whatever the government collects from the wrongdoer. Multi-million dollar rewards are not uncommon.

To earn a reward, the whistleblower must file a sealed complaint in federal court. While being investigated by the government, the whistleblower’s name remains confidential (even from the wrongdoer).

Ultimately the government decides whether to take the case, seek its dismissal or allow the whistleblower’s own lawyer to prosecute the case on the government’s behalf.

To learn more, visit our False Claims Act whistleblower rewards page. Ready to see if you qualify for a reward? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791.

HUBZone fraud and other whistleblower cases accepted nationwide. All inquiries are protected by the attorney – client privilege and kept strictly confidential.

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Dell Hit With Fraud Case Over Alienware Area-51m Upgrade Claims

Focuses on “unprecedented upgradeability”

(149K)

A California man has filed for a class action lawsuit against PC manufacturer Dell, claiming that the company “intentionally misled and deceived” buyers of its Alienware Area 51-m R1 gaming laptop, which was advertised to be more upgradeable than other gaming notebooks.

The plaintiff, Robert Felter, who is based in San Francisco, alleges that Dell misleads customers to believe that the laptop would be upgradeable, possibly into future generations of components. The case, Felter v. Dell Technologies, Inc. (3:21-cv-04187) has been filed with the United States District Court in the Northern District of California.

The Alienware Area 51-m was announced at CES 2019 and launched soon after. (The complaint claims the announcement was made in the summer of 2019, which is incorrect.). Among the Area 51-m’s biggest touted innovations were a user-replaceable CPU and GPU.

At media briefings, Alienware representatives told the press that the CPU could be upgraded as long as it used Intel’s Z390 chipset. The laptop used Intel’s 9th Gen Core desktop processors, up to the Intel Core i9-9900K. Dell developed separate proprietary Dell Graphics Form Factor (DGFF) modules for the Nvidia graphics.

The lawsuit, however, claims that consumers were told that “core components” (meaning the CPU and GPU) could be replaced beyond the current generation of hardware.

“Dell’s advertisement to the public didn’t place any restrictions on the upgradeability of the laptop,” lawyer David W. Kani said in an email to Tom’s Hardware. “They also never disclosed that those with the highest spec CPU and/or GPU that their device would not be upgradeable.”

Representatives for Dell said the company’s policy is not to comment on pending litigation.

The complaint reads that “Dell’s representations of the upgradability of the Area 51M R1 also extended to units that were equipped with the fastest, most advanced Core Components available to the market, thus creating a reasonable expectation with consumers that the upgradability of the Area 51M R1 extended to yet to be released INTEL CPUs and NVIDIA GPUs, and did in fact create such expectations with consumers.” Several times, the complaint refers to Dell’s claims of “unprecedented upgradeability.”

Those words indeed live on Dell’s web page for the Alienware Area-51M R1.

“Gamers have made it clear that they’ve noticed a lack of CPU and GPU upgradability in gaming laptops,” it reads. “The Area-51m was engineered with this in mind, finally allowing gamers to harness power comparable to even the highest-performance desktop… CPU upgrades can be done using standard desktop-class processors, while GPU upgrades can be done with GPU upgrade kits available on Dell.com or with the Alienware Graphics Amplifier.”

Upgrade kits for the graphics card finally launched in November of 2019 and included options for the Nvidia GeForce RTX 2070 and Nvidia GeForce RTX 2080. Those were the GPUs in the earliest sold Area-51m units, though later ones launched with the weaker RTX 2060 and GTX 1660 Ti. Those with an RTX 2070, could, in theory, upgrade to an RTX 2080, and those with lesser GPUs could move up the chain.

But in May of 2020, Alienware released the Alienware Area-51m R2, a refresh that added support for 10th Gen Intel Core desktop processors and a wider range of GPUs from the Nvidia GeForce GTX 1660 Ti up to the newer Nvidia GeForce RTX 2080 Super and an AMD option, the Radeon RX 5700M.

In June, Alienware laid bare the limits of the upgradeability of both machines. Like the earlier laptop that only supported 9th Gen Intel processors, the new one would only support Intel 10th Gen. The top-end RTX 2080 Super and RTX 2070 Super would be the end of the line of GPUs.

It’s the release of the second-generation Area-51m that is the crux of Felter’s argument.

“The Area 51M’s CPU was not upgradeable to the new INTEL 10th generation CPU, nor was its GPU upgradeable to the new NVIDIA RTX SUPER 2000 series,” the complaint states. “In fact, the only way Plaintiff could own a laptop with these newly released upgraded Core Components was to spend several thousand dollars more than what an upgrade would cost to purchase the then-newly released Alienware Area 51M R2 or a similarly equipped laptop from another manufacturer.”

In other words: To further upgrade the laptop, Felter would have to buy a new model.

Additionally, the plaintiff and his attorneys claim that because Dell includes Intel and Nvidia components in its machines and has roadmaps in advance, that the company knew the laptop could not be upgraded.

The case is an interesting one in the enthusiast space. At its essence, this boils down to a motherboard with Intel’s Z390 chipset as well as the proprietary graphics cards. Motherboards are upgraded at a regular cadence to work with the latest processors, though occasionally new processors will work on older boards. This could potentially set a sort of precedent about how far out a motherboard needs to support a CPU. In desktops, GPUs typically work for years, as long as it’s not using an outdated standard. But Dell’s graphics were in a proprietary form factor.

Felter is seeking damages, relief and attorneys fees for himself and those in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington state who purchased the laptop on their own since its release in 2019. He is represented by attorneys Brian H. Mahany of Mahany Law and Steven I. Hochfelsen and David W. Kani of Hochfelsen & Kani, LLP.  He is asking the court for a jury trial.

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