New Whistleblower Protections for Contractors Gain Traction in Congress

A bipartisan group of House members on Thursday unveiled a Whistleblower Protections for Contractors Act (H.R. 5920),following movement last month on a similar bill in the Senate.

The bipartisan measure would give subgrantees and personal services contractors the same whistleblower protections currently afforded contractors, grant recipients and subcontractors.

“Whistleblowers are the front line of defense against waste, fraud, and abuse," read a joint statement from Reps. Elijah Cummings, D-Md.; Jason Chaffetz, R-Utah; John Conyers, D-Mich.; Stephen Lynch, D-Mass.; and Hakeem Jeffries, D-N.Y. "The employees who work on federal contracts and grants see firsthand when taxpayer money is being wasted, and they must be protected against retaliation when they blow the whistle on wrongdoing. This bill makes such protections permanent and ensures more employees are covered.” read more »

H.R.5920 - To enhance whistleblower protection for contractor and grantee employees.

Bill To enhance whistleblower protection for contractor and grantee employees. read more »

HSBC trader at centre of fraud probe sat on Bank of England forex panel

The former HSBC currency trader at the heart of a US fraud investigation spent more than two years on a panel that advised the Bank of England, it has emerged, as the Department of Justice widens its probe to examine more currency trades.

Stuart Scott, who left HSBC in late 2014, has “strongly denied” allegations that he ramped up the price of the pound ahead of a $3.5bn (£2.7bn) currency deal for the oil firm Cairn. A warrant was out for the British trader’s arrest yesterday after his former colleague Mark Johnson, HSBC’s global head of foreign exchange, was freed on $1m bail in New York.

Mr Scott last night remained tight-lipped about his possible extradiction, leaving his house only briefly to hand over a piece of paper with details of his solicitors. read more »

Ex-Fox Rothschild Atty Gets 6 Months For Insider Trading

A former Fox Rothschild LLP attorney was slapped with a six-month prison sentence on Friday following his conviction on charges that he used insider information to trade ahead of a $760 million insurance industry merger his firm was helping to handle.

U.S. District Judge Cynthia Rufe handed down the sentence in Philadelphia after Sudfeld, who was found guilty on a securities fraud charge in February, tearfully apologized for the disgrace he’d brought on a profession he said he held dear.

$1 Billion Health Care Fraud Took Advantage Of Medicare In Florida, Agents Say

The Justice Department calls is the largest criminal health care fraud case ever brought against individual suspects: three people are accused of orchestrating a massive fraud involving a number of Miami-based health care providers.

The three facing charges are all from Florida's Miami-Dade County; they include Philip Esformes, 47, owner of more than 30 Miami-area nursing and assisted living facilities, hospital administrator Odette Barcha, 49, and physician's assistant Arnaldo Carmouze, 56, the Justice Department says.

"Medicare fraud has infected every facet of our health care system," U.S. Attorney Ferrer said as indictments against the three were announced Friday. read more »

How Chicago Became The Center Of A Spoofing Test Case

While the rapid-fire nature of modern-day trading can make the commodities industry difficult to prosecute, that hasn't stopped the U.S. Attorney's Office in Chicago from taking aim at high-frequency trading, as the recent first-of-its-kind conviction in a "spoofing" case demonstrates.

Following the July 13 sentencing of Michael Coscia, convicted in November of engaging in the market manipulation tactic known as spoofing, U.S. Attorney Zach Fardon told reporters his office was dedicated to prosecuting wrongdoing on the nation's futures exchanges.

The Chicago branch of the U.S. Department of Justice may have "precious few resources," but it has chosen to dedicate them toward the newly created securities and commodities fraud section in order to protect "fairness and integrity in the markets," according to Fardon. read more »

Ex-CEO Convicted For Running $900M Online Ponzi Scheme

 A North Carolina jury on Thursday convicted the former CEO of penny auction-linked ZeekRewards for operating a $900 million internet Ponzi scheme that prosecutors say defrauded more than 900,000 investors.

After a three-week trial, the jury convicted Paul Burks, 69, of Lexington, North Carolina, of wire fraud, mail fraud and conspiracy, according to Jill Westmoreland Rose, the U.S. attorney for the Western District of North Carolina.

Prosecutors say Burks ran the scheme through Rex Venture Group LLC which operated sham penny auction site Zeekler and its purported advertising division ZeekRewards. Burks falsely told investors that Zeekler was taking in massive profits from penny auctions and that they could get in on the action by putting their funds in ZeekRewards — at one point claiming a guaranteed 125 percent return on investments, according to the government. read more »

JPMorgan Nearing $200M Settlement On Asia Hiring: Report

JPMorgan Chase & Co. is closing in on a deal to pay $200 million to settle civil and criminal investigations into the firm's hiring practices in Asia, which include hiring scions of Chinese power brokers, according to a published report.

Federal prosecutors and regulators are expected to consummate the deal, which will include an admission that JPMorgan Chase broke U.S. laws, within the next few months, The Wall Street Journal reported Thursday. The investigation, carried out by the U.S. Department of Justice, U.S. attorney for the Eastern District of New York and U.S. Securities and Exchange Commission, centers on possible violations of the U.S. Foreign Corrupt Practices Act, according to the report. read more »

Virtual Bitcoin Bank Founder Gets 18 Months For Ponzi Fraud

A Manhattan federal judge on Thursday sentenced a Texas man who founded and operated virtual bank Bitcoin Savings and Trust to 18 months in prison for operating a bitcoin-related Ponzi scheme through online currency exchanges.

U.S. District Judge Lewis A. Kaplan also ordered Trendon Shavers to pay back $1.25 million to his victims. The government said many of the victims are known by their online names and asked for 90 days to augment its information on that score.

“Your honor, I royally screwed up,” said Shavers, whose counsel asked for a sentence of probation. The judge cut a significant chunk of prison time from agreed-upon guidelines that called for a sentence of 33 to 41 months but did not go that far despite Shavers' quick guilty plea and acceptance of responsibility. read more »

Boston Scientific Reaches $275M Settlement With IRS

Boston Scientific Corp. has agreed to pay $275 million to the Internal Revenue Service to resolve transfer pricing issues in a $3.5 billion dispute before the U.S. Tax Court, according to a filing with the U.S. Securities and Exchange Commission on Wednesday.

The medical device maker said that it entered into a stipulation with the IRS on Tuesday to settle the controversy for the 2001 to 2007 tax years, and that the agreement is contingent upon the IRS Office of Appeals applying the same basis for the settlement to the 2008 to 2010 tax years.

The deal, which comes five days before consolidated cases were set to go to trial, may also be subject to review by the U.S. Congress Joint Committee on Taxation. Boston Scientific said it believes the basis for the settlement provides a framework that can be applied to all of the company’s U.S. income tax returns filed after 2010. read more »

Relator Not Entitled to a Portion of Funds Voluntarily Repaid by FCA Defendant 

The False Claims Act allows relators to share in a recovery even where the United States pursues an “alternative remedy” rather than direct FCA litigation. In a recent decision, the District of Massachusetts determined that where an entity voluntarily repays stolen funds and takes action to do so as soon as the theft was discovered, that repayment does not constitute an “alternative remedy” requiring a relator’s share. read more »

Securities Fraud Related to Biodiesel Fraud Scheme Convicted in Jury Trial

U.S. Attorney Josh J. Minkler for the Southern District of Indiana announced today the guilty verdict after an eight-day jury trial of Jeffrey Wilson of Evansville, Indiana, who was charged with securities fraud related to a massive multi-state fraud scheme.  Wilson’s crimes centered on the e-biofuels biodiesel business in Middletown, Indiana, which was a wholly-owned subsidiary of Imperial Petroleum.  Wilson, the Chief Executive Officer (CEO) and President of Imperial Petroleum, was convicted in federal court before U.S. District Judge Sarah Evans Barker for the Southern District of Indiana Wednesday night for securities fraud, filing false reports with the Securities and Exchange Commission (SEC), falsely certifying reports to the SEC, lying to the company’s outside auditor and lying to federal investigators. read more »

SEC Halts Ongoing Fraudulent Stock Scheme

The Securities and Exchange Commission today announced it has won a court-ordered asset freeze to halt an ongoing fraud by two former brokers with disciplinary histories who allegedly raised more than $5 million from investors without using the money as promised.

In an emergency action filed in federal court in Chattanooga, Tenn., the SEC alleges that James Hugh Brennan III and Douglas Albert Dyer sold purported shares in eight similarly named companies to more than 240 investors since 2008 without ever registering the stock as they promised.  Instead, according to the SEC’s complaint, Brennan and Dyer transferred investor funds into their personal accounts or those belonging to their wives.  The SEC further alleges that Brennan and Dyer continue to solicit investors while touting their securities industry experience and failing to disclose that Brennan was banned from the brokerage industry and Dyer suspended and fined for executing unauthorized transactions in customers’ accounts. read more »

Accountant Suspended for Failing to Spot Fraud in Company Audit

The Securities and Exchange Commission today suspended an accountant for conducting a faulty audit of the financial statements of a public company that was committing fraud, and the firm where he was a partner at the time has been prohibited from accepting new public company clients for one year.

New York-based accounting firm EFP Rotenberg LLP also agreed to pay a $100,000 penalty to settle the SEC’s charges, and it can only begin accepting new public company clients again next year after an independent consultant certifies that the firm has corrected the causes of its audit failures.  The accountant, Nicholas Bottini, agreed to pay a $25,000 penalty in addition to being permanently suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. read more »