Whistleblower News: Kickbacks, Insys, SEC Fraud05/16/2018
Feds claiming Insys used strip club visits, super-doses and more to boost Subsys sales
Prosecutors have already charged Insys founder John Kapoor and won guilty pleas from two characters in an ongoing kickbacks probe. Now, the Justice Department has escalated the case by joining in with whistleblowers who've detailed a stunning range of techniques the company allegedly used to push its powerful opioid painkiller.
The DOJ is allying with a half-dozen whistleblowers—among them former Insys employees and workers at a pharmacy benefits manager—who allege the company violated the federal False Claims Act by marketing Subsys for unapproved uses and using free dinners and entertainment to persuade doctors to prescribe more of its fentanyl nasal spray.
Six states also joined the litigation, according to the government’s filing. The action comes just two months after the DOJ charged five New York doctors with participating in the alleged kickback scheme and revealed that two former Insys employees pleaded guilty and are now cooperating with the government. The DOJ has requested that the False Claims litigation be held until the criminal cases against Insys are completed. read more »
Deutsche Bank Got a Scolding From the Fed
A tense scene unfolded inside Deutsche Bank AG’s Manhattan tower just hours before news began leaking that the firm was looking for a new chief executive officer.
U.S. regulators on that day in late March gave senior executives a stern warning that remains in effect: Europe’s biggest investment bank, they said, must act more urgently to fix lapses described in a series of settlements with the Federal Reserve over the past few years. Their patience was wearing thin.
The uneasy encounter, which was followed by another meeting between the Federal Reserve Bank of New York and Chairman Paul Achleitner, underscores a daunting behind-the-scenes challenge facing new CEO Christian Sewing. He doesn’t only have to reshape the firm, revive profits and improve morale -- he has to get regulators off Deutsche Bank’s back.
This account of the frayed relationship between the German bank and the Fed is drawn from interviews with people with direct knowledge of the situation, who asked not to be identified because they aren’t authorized to discuss the confidential talks.
Representatives for Deutsche Bank and the New York Fed declined to comment.
Sewing should have a good sense of what still needs fixing to please the regulators -- he after all served as deputy chief risk officer and oversaw audit and legal during his three decades at the bank before taking the top job last month. read more »
SEC Files Charges in International Manipulation Scheme
The Securities and Exchange Commission today charged four individuals for their roles in a fraudulent scheme that generated nearly $34 million from unlawful stock sales and caused significant harm to retail investors.
According to the SEC’s complaint, the defendants manipulated the market for and illegally sold the stock of microcap issuer Biozoom Inc. As part of the alleged scheme, the defendants hid their ownership and sales of Biozoom shares by using offshore bank accounts, sham legal documents, a network of nominees, anonymizing techniques, and other deceptive practices. The defendants also allegedly directed a wide-ranging promotional campaign and employed sophisticated, manipulative trading techniques to artificially inflate Biozoom’s share price. The alleged scheme culminated in the defendants’ illegal sales of Biozoom, which netted them nearly $34 million in unlawful proceeds.
“Manipulative and deceptive conduct undermines the integrity of our markets,” said Antonia Chion, Associate Director in the SEC’s Division of Enforcement. “The charges announced today demonstrate our commitment to unraveling even the most sophisticated international schemes that exploit retail investors.” read more »
SEC, FINRA fine broker and Chinese clearing bank $7.2 million for suspicious penny stock sales
The Securities and Exchange Commission settled charges on Wednesday against broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC, the U.S. unit of Industrial and Commercial Bank of China Limited, for failing to file Suspicious Activity Reports or SARs for sales of billions of penny stock shares. Without admitting or denying the SEC's findings, Chardan agreed to pay a $1 million penalty, ICBCFS to pay $860,000, and Chardan's anti-money laundering officer Jerard Basmagy, who the SEC alleged aided and abetted the violations, will pay $15,000. Basmagy also agreed to industry and penny stock bars for a minimum of three years. read more »