Whistleblower sues Duke, claims doctored data helped win $200 million in grants

On a Friday in March 2013, a researcher working in the lab of a prominent pulmonary scientist at Duke University in Durham, North Carolina, was arrested on charges of embezzlement. The researcher, biologist Erin Potts-Kant, later pled guilty to siphoning more than $25,000 from the Duke University Health System, buying merchandise from Amazon, Walmart, and Target—even faking receipts to legitimize her purchases. A state judge ultimately levied a fine, and sentenced her to probation and community service.

Then Potts-Kant's troubles got worse. Duke officials took a closer look at her work and didn't like what they saw. Fifteen of her papers, mostly dealing with pulmonary biology, have now been retracted, with many notices citing "unreliable" data. Several others have been modified with either partial retractions, expressions of concern, or corrections. And last month, a U.S. district court unsealed a whistleblower lawsuit filed by a former colleague of Potts-Kant. It accuses the researcher, her former supervisor, and the university of including fraudulent data in applications and reports involving more than 60 grants worth some $200 million. If successful, the suit—brought under the federal False Claims Act (FCA)—could force Duke to return to the government up to three times the amount of any ill-gotten funds, and produce a multimillion-dollar payout to the whistleblower. read more »

Federal Court in Nevada Orders My Global Leverage, LLC and Toney Blondo Eggleston to Pay More than $1.4 Million in Restitution and a Monetary Penalty for Engaging in Illegal, Off-Exchange Precious Metals Transactions

The U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Andrew P. Gordon of the U.S. District Court for the District of Nevada entered an Order of default judgment (Order) against My Global Leverage, LLC (MGL), which did business in Las Vegas, Nevada, and its owner and managing member Toney Blondo Eggleston, who resided in Las Vegas and Newport Coast, California, for engaging in illegal, off-exchange precious metals transactions.

The Court’s Order requires MGL and Eggleston, jointly and severally, to pay $692,488 in restitution and a $773,040 civil monetary penalty. The Order also imposes permanent trading, solicitation and registration bans against MGL and Eggleston, and a permanent injunction that prohibits them from engaging in illegal, off-exchange precious metals transactions.

The Court’s Order stems from a CFTC Complaint filed on April 23, 2015, that charged MGL and Eggleston with engaging in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis. The Complaint further charged, and the Order finds, that Eggleston was MGL’s controlling person and is therefore liable for MGL’s violations of the Commodity Exchange Act. read more »

CFTC Wins Fraud Trial against Florida-Based Precious Metals Traders Robert Escobio, Southern Trust Metals, and Loreley Overseas Corporation

The U.S. Commodity Futures Trading Commission (CFTC) announced today a victory after trial involving a fraudulent precious metals scheme perpetrated by Robert Escobio of Miami, Florida, through his companies Southern Trust Metals, Inc. (Southern Trust) and Loreley Overseas Corporation(Loreley) (collectively, Defendants). U.S. District Judge James Lawrence King of the U.S. District Court for the Southern District of Florida issued his Findings of Fact and Conclusions of Law (Order) and Final Judgment (Judgment) in favor of the CFTC on August 29, 2016. The Judgment permanently enjoins and prohibits Escobio and the two companies from trading and orders them to pay restitution in the amount of $1,543,892 and a civil penalty of $254,919.66 for an illegal precious metals scheme. The Judgment also orders Southern Trust and Escobio to pay additional restitution of $559,725 and an additional penalty of $120,112.33 for an unregistered futures scheme.

The three-day trial held by Judge King from July 25-27, 2016, capped off two years of contentious litigation in which the Defendants disputed almost every aspect of the CFTC’s case. read more »

$2.6B FCA Suit Against Phone Cos. Too Vague, Judge Says

A California federal judge took a would-be whistleblower to task Thursday for accusing Verizon, Sprint and AT&T of filing $2.56 billion in fraudulent bills with the government without the needed specifics to keep his False Claims Act suits alive, leaving room only for the government to file another complaint.

U.S. District Judge Charles R. Breyer dismissed, with prejudice, Richard Knudsen’s second amended complaints against the companies — accused of overcharging local, state and federal agencies for cellphone service — concluding the tech support consultant had already been given two chances to provide more specifics but had failed each time. The order was without prejudice against the government, which didn’t intervene directly but asked for the opening all the same.

Knudsen had argued he was hamstrung by confidentiality agreements barring disclosures about the three companies, with which he had worked on telecommunication rate plan optimization, according to the ruling, but he never filed any documents under seal when given permission to do so. Nor did Knudsen ever provide a promised audit of Cellco, i.e. Verizon, that he purportedly performed covering a three-month period, Judge Breyer said. read more »

Raytheon padded timecards in Afghanistan, whistleblower alleges

A whistleblower lawsuit now playing out in Central Florida federal courts accuses defense contractor Raytheon of telling workers in Afghanistan to report working ten hours per day, when many only worked two hours a day.

Steven Kalch, a former Raytheon employee, alleges in the lawsuit that he witnessed and reported “gross mismanagement and misuse of government property” to supervisors and the U.S. Army.

Kalch, of Norwood, Missouri, worked in Kabul from 2012 to 2014 as a personal trainer. Before that, that lawsuit says Kalch served as an officer in the Army from 1981 to 2015, holding the final rank of Lieutenant Colonel, and deployed six times with in Iraq, Kuwait, Afghanistan and Germany.

He alleges Raytheon fired him after he tried to report the alleged fraud and waste, in January 2014.

Raytheon has yet to formally answer the lawsuit in court. Raytheon’s media office said the company doesn't comment on litigation. read more »