WHISTLEBLOWER NEWS QUOTEs OF THE DAY:

“This Court now has the opportunity to send a message, loud and clear, that our financial markets operate on principles of honesty and transparency, and do not allow a select few traders to profit in the trading markets through illegal bait and switch schemes at the expense of other traders.”  

- U.S. Attorney Zachary Fardon

"It's hard to see why he was doing that other than greed,"

- U.S. District Judge Harry Leinenweber

DAILY WHISTLEBLOWER HEADLINES:

Total Says FERC $225M Manipulation Penalty is Unfounded

A Total SA unit on Tuesday blasted the Federal Energy Regulatory Commission's bid to impose $225 million in penalties and disgorgement against the company and two employees for alleged natural gas market manipulation, claiming its trading activity was aboveboard and accusing FERC staff of relying on untrustworthy whistleblowers.

FERC in April slapped Total Gas & Power North America Inc. with a show cause order that formalizes enforcement staff accusations that Total traders violated the Natural Gas Act and FERC's anti-manipulation rule by making largely unprofitable trades of physical natural gas in order to move market prices to benefit other positions they had. The alleged scheme manipulated gas prices in the southwestern U.S. between June 2009 and June 2012, according to FERC. read more »

Whistle while you work: Canada’s gambit

The Ontario Securities Commission today becomes the first of Canada’s 13 regulators to offer financial rewards to whistleblowers. Successful tipsters can earn up to C$5m ($3.9m). The commission, the country’s largest, dismissed suggestions that adopting an American-style cash-for-clues policy would distort behaviour, and that more suitable, cashless models could be found in Britain, or even in the neighbouring province of Quebec. Instead, the hope is that money will be extra inducement for financial high-flyers who know the normally career-ending consequences of whistleblowing. Canada certainly needs more of them to come forward to clear its murky reputation as a swindlers’ playground: of the 1,205 companies and individuals prosecuted for securities offences between 2012 and 2015, fewer than 40 went to jail. Canadians are already enthusiastic whistleblowers to America, beaten only by the (more numerous) British in spilling the beans to the SEC. That looks promising for the new programme.  read more »

U.S. District Court Orders $4.5 Million Civil Judgment Against Lexington Woman And Her Medical Device Companies For Committing Grant Fraud

The U.S. District Court has entered a civil judgment of $4,506,267 in favor of the United States and against a Lexington woman, and the medical device companies she owns, holding them liable for making false statements that allowed them to receive millions of dollars in federal grants from the National Institutes of Health (NIH).

This civil judgment, announced today by the U.S. Attorney’s Office, is part of a settlement agreement resolving False Claims Act allegations that Vesta Blue, 70, and her companies, LifeTechniques, Inc. and Care Team Solutions LLC, defrauded NIH of millions of dollars over the course of eight years.

“Ms. Brue defrauded the government in two ways, each of which cost taxpayers,” said United States Attorney Kerry B. Harvey.  “By including false statements in grant applications, her companies received grants to which they were not entitled, thereby depriving qualified small businesses of those funds.  Ms. Brue then diverted the funds – which should have been used to develop new healthcare technologies – to support herself and her businesses.  read more »

Whistleblower sues CollegeAmerica claiming wide-scale fraud

The former director of a college satellite center in Cheyenne owned by the Center for Excellence in Higher Education has sued the company in U.S. District Court in Denver, claiming it fraudulently recouped millions of dollars in federal money and asked her to lie to qualify for accreditation.

Debbi Potts, who said she quit her job in 2012 after being asked to lie on federal reports, also named CollegeAmerica Denver Inc., an associated business, as a defendant in a lawsuit filed Tuesday by Denver attorneys Logan Martin and Zachary Westerfield and Salt Lake City attorney Brandon Mark.

She seeks compensatory damages and attorneys fees. read more »

U.S. made $136.7 billion in improper payments in 2015

Uncle Sam sure can mess up a lot of money.

In fiscal year 2015, the federal government made $136.7 billion in improper payments, according to a report by the Government Accountability Office (GAO). And the problem is worsening. Last year’s total is more than $30 billion greater than the 2013 amount.

“Improper payments — payments that should not have been made or were made in incorrect amounts —have presented a continuing challenge to the fiscal position of the federal government and have been estimated to total over $1 trillion government-wide since 2003,” the GAO said in the report released this week. “In the last 2 fiscal years, total estimated improper payments at federal agencies have increased considerably.”

Although those sums are huge, Obama administration data indicate the 2015 payment accuracy rate is 95.61 percent, up more than a percentage point from when President Obama took office.

The report does not say why the payments have increased so much so quickly. It is not even clear just how great the problem is.

“For several years, GAO has reported that the federal government is unable to determine the full extent to which improper payments occur and reasonably ensure that actions are taken to reduce them,” according to the report. read more »

New Legal Tool, Qui Tam, is used in Florida EB-5 Case

A new legal tool has been unveiled against a Florida EB-5 user by a once-fired employee of the lumber mill in question.

The former employee has filed a Qui Tam case in federal court seeking to recover losses suffered by the federal government. To the best of my knowledge this is the first use of this legal tool in the EB-5 business.

These Qui Tam cases, which have an honorable history dating back to the Civil War, are instances in which private citizens, acting for the federal government, sue to recover moneys allegedly fraudulently obtained from the federal government. If the citizen suing -- the term is “relator” -- wins, he or she gets part of the financial settlement. read more »

The Overpayment Rule and the Implied False Claims Theory: “What You Don’t Know Can Still Hurt You”

In 2010, the Affordable Care Act (“ACA”) enacted new rules governing overpayments made by the Medicare and Medicaid programs. Under these rules, providers have 60 days from the date that the overpayment has been identified to return the overpayment or face penalties and treble damages under the False Claims Act (“FCA”).  As described below, recent regulations have clarified some of the issues surrounding the ACA obligation to refund overpayments, at least for overpayments under Medicare Parts A and B.  But, determining whether a provider has “identified” an overpayment – and thus started the 60 day countdown – can still be nuanced and complex. read more »

GAO report criticizes Energy Department’s handling of whistleblower complaints

The Department of Energy’s nuclear program seldom holds its civilian contractors accountable for unlawful retaliation against whistleblowers, according to a draft Government Accountability Office report obtained by McClatchy.

The widely critical report found the DOE has taken little or no action against contractors responsible for creating chilled work environments at nuclear sites across the country and has yet to write effective regulations for doing so.

Only two violation notices have been issued in the past 20 years, the report notes. And employees who seek help for retaliation can be thwarted by a whistleblower protection program that’s hard to navigate without legal help, the report says. read more »