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SEC and Law Enforcement Partners Crack Stock Promotion and Kickback Schemes

The Securities and Exchange Commission today announced fraud charges against 10 individuals involved in schemes to trick investors into buying shares of a particular company stock.  

The schemes were allegedly fraught with cash bribes and other kickbacks to registered representatives and unregistered brokers who solicited investors to buy stock in ForceField Energy Inc.  The SEC alleges that investors were unaware those soliciting them were being paid by a ringleader – ForceField’s then-chairman of the board Richard St. Julien – to steer them to the stock, and that some of the perpetrators attempted to evade law enforcement by going so far as to communicate with prepaid disposable “burner” phones and encrypted, content-expiring text messages.    

But the SEC and other law enforcement have followed leads, utilized technological tools, and tracked down the alleged culprits, filing a complaint against St. Julien and nine others in federal court in Brooklyn, including one who referred to himself as St. Julien’s “brown bag man” as he distributed cash bribes and another who touted the stock in a newsletter called “Wall Street Buy Sell Hold.”

“We allege that these men sold investors on the merits of buying ForceField Energy stock while leaving out the most important detail of all: they were being bribed with money and other benefits behind the scenes to tell them that,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “The SEC and its law enforcement partners have pieced together the schemes despite the best efforts of the alleged perpetrators to communicate and distribute cash in clandestine ways.”

The U.S. Attorney’s Office for the Eastern District of New York brought criminal charges against St. Julien last year.  In a parallel action today, the U.S. Attorney’s Office announced criminal charges against the other nine individuals. read more »

United States Recovers over $8 Million in False Claims Act Settlements for Fraud Against the VA and Medicare

United States Attorney Billy J. Williams announced that Holiday Acquisition Corp. and Fortress Investment Group, LLC (collectively Holiday) agreed to pay $8.86 million to resolve alleged False Claims Act violations for submitting false claims to the United States Department of Veterans Affairs (VA) to qualify veterans or a surviving spouse of a veteran for monthly benefits from the Aid and Attendance Program, announced U.S. Attorney Billy Williams.

The settlement resolves a lawsuit brought under the qui tam provisions of the False Claims Act by Sheila and Louis Rose, who worked as managers at several of the Holiday Retirement properties.  The Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery.  Under the civil settlement announced yesterday, Mr. and Mrs. Rose will receive approximately $1.5 million out of the federal share of the recovery.  The lawsuit is captioned United States of America ex rel. Sheila Rose and Louis Rose v. Fortress Investment Group, LLC. et al., Case Number 3:13-cv-00314-MO. 

The Holiday suit alleged that the defendants violated the False Claims Act by engaging in a number of fraud schemes related to VA program benefits.  Specifically, the Relators allege that the named defendants knowingly assisted veterans or their surviving spouses in completing and submitting false claims for veteran’s benefits under the Aid and Attendance and Housebound Benefits program.  The named defendants expressly denied the allegations in the suit and did not admit any liability in reaching the settlement.

The Holiday settlement was based on a claim in the suit which alleged that false statements were made about the services provided by the defendants’ facilities which caused the VA to determine a veteran was eligible for aid and attendance benefits, when in fact, the veteran was not eligible and the benefits should not have been paid.

“Pursuing corporations who engage in fraud remains a top priority of the U.S. Attorney’s Office and the Department of Justice,” said U.S. Attorney Billy Williams.  “We are committed to holding them accountable for profiting at the expense of taxpayers and taking advantage of our nation’s veterans.”

This settlement illustrates the government’s emphasis in combating fraud and followed shortly after another settlement in a health care fraud case against Hung Viet Tran.  In March 2016, Tran paid $825,000 to resolve Medicare and Medicaid fraud claims.  The scheme involved billing for prescription drugs that he never dispensed, dispensing generic medications and billing for the more expensive brand name, and dispensing Costco brand fish oil but billing for brand name prescription Omega 3 fatty acids.  In addition to the settlement amount, Tran will also be excluded from participating in all Federal health care programs for fifteen years. The Tran settlement was a joint investigation with the U.S. Attorney’s Office for the District of Oregon and the Oregon Department of Justice - Medicaid Fraud Unit.  The state Department of Justice prosecuted the criminal case and the U.S. Attorney’s Office prosecuted and settled the civil matter. read more »

Panama Papers Whistleblower Speaks; Wants To Hand Mammoth Leak To Cops

By Thomas Fox-Brewster, Forbes

The man or woman behind the biggest ever document leak has spoken, slamming wealth inequality and a weak media, in the whistleblower’s first comments since the Panama Papers were revealed last month. Currently known only as John Doe, they also said the epic trove of 11.5 million documents revealing the tax avoidance schemes of the uber wealthy could soon be in the hands of the police.

Doe said those running Mossack Fonseca, the law firm accused of breaking laws in trying to facilitate tax dodging, should be the first to be tried in court, “with no special treatment”. He continued: “In the end, thousands of prosecutions could stem from the Panama Papers, if only law enforcement could access and evaluate the actual documents. ICIJ and its partner publications have rightly stated that they will not provide them to law enforcement agencies. I, however, would be willing to cooperate with law enforcement to the extent that I am able.”

But Doe did raise concerns about the treatment of other whistleblowers. They pointed to Edward Snowden, the NSA whistleblower currently residing in Russia in fear of prosecution by the Obama administration. “For his revelations about the NSA, he deserves a hero’s welcome and a substantial prize, not banishment,” they added. Doe also pointed to Bradley Birkenfeld and Antoine Deltour, who separately revealed information on tax avoidance schemes facilitated by major banks and political figures. read more »