GM Settles Criminal Investigation into Ignition Switch for $900 Million

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The Department of Justice has resolved its criminal investigation into General Motor’s conduct concerning the sale of cars with defective ignition switches and the delayed recall of those vehicles. The result is an agreement by GM to pay $900 million

GM’s $900 million penalty was 25 percent less than the fine handed out to Toyota Motors in 2014. The DOJ indicated that once the company came forward, the speed of its internal investigation and the fact that it took responsibility for its behavior allowed it to settle the case much faster than the one against Toyota. GM also paid $35 million previously to resolve violations of regulations enforced by the NHTSA requiring companies to announce recalls in a timely fashion. GM paid the maximum fine for a single violation.

GM was accused of wire-fraud and a scheme to conceal a deadly safety defect. GM failed to fix the defect at issue, which has been blamed for more than 120 deaths, over a period of more than a decade. The DOJ has not closed the door on prosecuting specific employees yet, but indicated it may be difficult to hold them responsible. GM also reached a settlement agreement with over a thousand victims of the defect.

The House has yet to act to pass legislation to address the increase in misconduct by auto manufacturers. Several bills to address auto safety issues have been introduced but there has not been much momentum on them. Earlier this year, the Senate passed a bill to authorize monetary rewards for auto whistleblowers employed by auto manufacturers, parts dealers and suppliers if the government collects monetary sanctions as a result of the information. Unlike the Dodd-Frank Act, the payment of rewards is discretionary rather than mandatory to eligible individuals.

In other automaker news, the EPA has accused Volkswagen of evading the Clean Air Act emissions standards with a defeat device. The vehicles reportedly emitted nitrogen oxide well in excess of the legal limit but detected when an emissions test was being conducted in order to hide the air pollution from federal regulators. The maximum Clean Air Act fine is $37,500 per vehicle, leading to a potential fine of as much as $18 billion if the maximum penalty were to be handed out.

To learn more about the auto whistleblower law, contact one of our whistleblower attorneys via our contact form or by calling 1-800-590-4116.

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FCPA Enforcement in 2017

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The end of the Obama Administration was one of the busiest in the resolution of government investigations ever. The SEC and DOJ wrapped up nine Foreign Corrupt Practice Act investigations in the course of two months.

U.S. Takes on Disaster Fraud and ICO Fraud

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Disaster-relief fraud and Initial Coin Offering (ICO) fraud are two areas that have been making headlines recently. Based on communications reported in the media from government agencies, both areas will be the subject of government scrutiny in the next few years. With regard to disaster fraud, the Justice Department recently notified its personnel to improve efforts to fight it. The SEC has also created a Cyber Unit to improve its ability to address electronic and online violations of the federal securities laws, including ICO fraud.

SEC Investigating Och-Ziff for FCPA Issues in African Mining

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The Securities and Exchange Commission and Justice Department are investigating possible violations of the Foreign Corrupt Practices Act (FCPA) by Och-Ziff Capital Management. According to reports, a portion of a $150 million investment in African mining in 2008 went to foreign officials in Zimbabwe.

The hedge fund is reportedly in discussions with the U.S. Government to settle its investigation into other business dealings it had from Libya to South Africa. The investigation has been going on for four years now but was only disclosed last year following a report in the Wall Street Journal. In an earnings call, the company said it was hopeful the investigation and legal expenses would be complete by the end of the year. They also said that an enforcement action was reasonably likely.

Och Ziff has run into other trouble recently as well. Last month, an adviser to Och-Ziff funds agreed to pay $4.25 million for providing inaccurate trade reporting data to prime brokers. The reporting error led to inaccuracies in both records provided to the SEC during investigations as well as the books of broker-dealers. The four brokerages relying on Oz Management data had 552 million shares inaccurately listed on their books and records. The inaccurate SEC reports stemmed from requests for market data by the Commission in connection with insider trading or manipulation investigations. In total, 14.4 million shares were incorrectly reported to the SEC. Among the issues identified was in the reporting of trades as either long or short sales.

Do you have questions about this area of the law? We have put together an informational guide for FCPA whistleblowers. If you have questions after reviewing it, one of our FCPA whistleblower attorneys will answer any remaining questions. We can assist you in reporting your evidence of bribery by a publicly traded company or other covered entity to the U.S. Government. Please contact an attorney via our contact form or call 1-800-590-4116.

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Bribery News: Embraer Moves Toward Settlement; Rolls Royce Investigation Expands

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Summer may be a slow time on the stock market but we’re getting a steady stream of bribery news with just two months left in the government’s fiscal year. On the FCPA front: Embraer announced that it has reserved $200 million for a settlement under the U.S. Foreign Corrupt Practices Act. Internationally: Germany and the U.K. have expanded their investigations into bribery allegations involving Rolls Royce.

Deeper Insights into Government Enforcement Under Trump Administration

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It was an interesting week on government enforcement as the Obama Administration is closing out its term with fines against auto industry manufacturers VW ($4.3 billion) and Takata (expected to be up to $1 billion). After the inauguration, these enforcement decisions will be in the hands of the Trump Administration.

Whistleblower Lawsuit Against Education Management Over Student Loans Settles for $95.5 Million

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Education Management Corp, a for-profit college company often abbreviated as EDMC, has settled a whistleblower lawsuit brought under the False Claims Act alleging illegal recruiting practices for $95.5 million.

Unnecessary Drug Testing & Kickbacks Cost Millennium Health $256 Million

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One of the nation’s largest urine drug testing laboratories settled a False Claims Act lawsuit today to resolve allegations that it billed Medicare and Medicaid fraudulently for unnecessary services and referrals influenced by kickbacks. In the settlement, Millennium Health (formerly Millennium Laboratories) agreed to pay $256 million. It appears that the company is going to enter Chapter 11 bankruptcy and shareholders are going to make an initial payment of $50 million toward the settlement.

The company agreed to pay $227 million to resolve allegations under the False Claims Act. The FCA is the government’s leading tool against fighting spending as a result of fraud. It provides for treble damages and has been used in the past few years to recover billions of dollars lost to health care fraud. It rewards whistleblowers with payments of between 15 and 30 percent of the amount recovered by the US Government.

Millennium was accused of misrepresenting the need for expensive testing to doctors by encouraging them to setup custom profiles which in fact became standing orders for additional testing that occurred without regard to individual patient need. Medicare prohibits the billing of services which are not reasonable and medically necessary.

Millenium also offered gifts (test specimen cups) to physicians to boost their testing referrals, according to the U.S. Government. I haven’t looked at the procedural history of the case in the context of the False Claims Act, but the specimen cup issue may have been brought to light by an antitrust lawsuit originally filed by one of its competitors. The Department of Justice weighed in on that case after the start of its investigation to say that the free testing cups were a violation of the Stark Law and Anti-Kickback Statute.

Ten million of the settlement amount covered a separate whistleblower lawsuit brought by a healthcare provider in Florida which reported the company for unnecessary genetic testing performed without regard to patient need.

The San Diego-based company has been under investigation since 2012. The settlement is another example of the Justice Departments ongoing pursuit of diagnostic testing companies. Earlier this year, another laboratory (Health Diagnostics Laboratory) settled allegations that it paid physicians improperly for the referral of blood sample testing. Health Diagnostics claimed that the payments were a reasonable amount for the work performed by the doctor.

An article in the Wall Street Journal in 2014 discussed the explosion of annual Medicare payments for high tech testing of urine for drugs. In 2007, less than $50 million was spent on such tests. In 2013, Medicare spent more than $600 million on the monitoring of patient treatment for pain and substance abuse. With the tremendous explosion of payments in this area, it is no surprise that the U.S. Government is looking into improper payments in this area aggressively.

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Whistleblowers Earn $597 Million in FY 2015 as DOJ Recovers $3.5 Billion through False Claims Act

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Whistleblowers helped the Justice Department recover $2.8 billion in fiscal year 2015. For their assistance, they received nearly $600 million in rewards, which I believe is a record.

State Street to Pay Gov’t $382 Million Over Hidden FX Markups

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Hidden costs imposed by banks on trading clients are at issue again today with the Securities and Exchange Commission announcing a $382.4 million settlement with State Street over misleading mutual funds and other custody account clients.

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