Jury Convicts Canadian Man in WTC Rebuild Fraud

A jury has convicted a Canadian man who secured nearly $1 billion in contracts to rebuild the World Trade Center and then defrauded a program meant to benefit minorities and women.

The jury in Manhattan federal court deliberated less than a day before convicting Larry Davis. The 65-year-old Mississauga, Ontario, man had insisted he did not defraud the program.

Prosecutors said Davis falsely claimed he had complied with rules requiring that he hire subcontractors who qualified for a program meant to benefit businesses owned by minorities and women. read more »

Whistleblowers Are Poised to Collect $100 Million

Madoff tipster Markopolos is in position to get cut of awards tied to State Street, Bank of New York Mellon cases.

After his warnings about Bernard Madoff’s Ponzi scheme went ignored for years, Harry Markopolos urged U.S. regulators to encourage tipsters. Now, the forensic accountant and a team he put together are in position to benefit from those new incentives. read more »

Appeals Court Upholds SEC’s In-House Court as Constitutional

A federal appeals court said the Securities and Exchange Commission’s in-house court proceedings meet constitutional requirements, providing the agency with a major victory as it defends its effort to bring more cases in house. read more »

Whistleblowers to Get Full Share of Collected Proceeds, Including Fines and Forfeitures

The Tax Court held a husband and wife who supplied information to the Internal Revenue Service are entitled to a full 24 percent of the “collected proceeds,” which includes a criminal fine and civil forfeitures to the government, not just tax restitution. 

In the case, Whistleblower 21276-13W v. Commissioner, the targeted taxpayer pleaded guilty to conspiring to defraud the IRS, file false federal income tax returns, and evade federal income tax. The unidentified taxpayer paid tax restitution of $20,000,000; a criminal fine of $22,050,000; a civil forfeiture of $15,821,000, representing gross fees the taxpayer received from its U.S. clients; and the relinquishment of all claims to $16,260,693 that had been previously forfeited to the United States. read more »

Company Paying Penalty for Violating Key Whistleblower Protection Rule

The Securities and Exchange Commission today announced that an Atlanta-based building products distributor is settling charges that it violated securities laws by using severance agreements that required outgoing employees to waive their rights to monetary recovery should they file a charge or complaint with the SEC or other federal agencies.

BlueLinx Holdings Inc. has agreed to pay a $265,000 penalty.

According to the SEC’s order, BlueLinx added the monetary recovery prohibition to all of its severance agreements in mid-2013, nearly two years after the SEC’s adoption of Rule 21F-17 that prohibits any action to impede someone from communicating with the SEC about possible securities law violations.  BlueLinx’s restrictive language forced employees leaving the company to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits. read more »

Novartis Korea Execs Indicted, Accused Of Bribing Docs

Six current and former South Korean executives with global pharmaceutical giant Novartis were indicted Tuesday, the company confirmed to Law360, with prosecutors accusing them of bribing doctors to use their products to the tune of $2.3 million.

The Korea Herald on Tuesday reported that the Seoul Western District Prosecutors’ Office indicted six Novartis Korea executives and were facing accusations of paying more than $2.3 million in bribes to doctors in exchange for choosing the company’s products. Six publishers of medical journals and 15 doctors were also indicted, the newspaper said.  read more »

DOJ Says Judge Misread Kickback Exception In FCA Case

The U.S. Department of Justice on Monday urged a Massachusetts federal judge to rethink the dismissal of a False Claims Act suit against health product supplier CCS Medical Inc., saying its acceptance of price reductions fell outside an Anti-Kickback Statute exemption.

In a statement of interest, the DOJ voiced support for three whistleblowers who are asking U.S. District Judge Rya W. Zobel to reconsider her July dismissal of allegations against CCS. According to the DOJ, dismissal was improper because the price reductions given to CCS by Coloplast Corp. were conditioned on more than the mere purchase of catheters and other merchandise — instead, they were conditioned on converting patients to Coloplast products. read more »

1st Circ. Told No Fraud Was Public Before Covidien FCA Suit

A whistleblower claiming a Covidien Ltd. unit tricked Medicare into illegally funding off-label uses for a blood-blocking device told the First Circuit on Monday that the district court’s decision to toss his False Claims Act suit because the alleged fraud was already public was “literally based on thin air.”

Former ev3 Inc. salesman Jeffrey D’Agostino said that the core fact of his complaint — that Onyx, an agent meant to block blood flow in patients undergoing surgery for a rare disorder known as brain arteriovenous malformation, migrated into unintended blood vessels — was not publicly known until his complaint was unsealed. read more »