United States Bankruptcy Judge Brendan Shannon signed off on Takata’s restructuring plan. The judge’s order clears the way for Key Safety Systems to purchase Takata’s airbag business free and clear of all claims of injuries and economic losses tied to the faulty airbags.

As part of Takata’s bankruptcy restructuring plan, Takata hoped to sell its airbag business to Key Safety Systems a Michigan based company. Key Safety is owned by Ningbo Joyson Electronic Corp. of China. No one would purchase the business, of course, unless they had the court’s assurances that they were acquiring the company’s assets free and clear of all claims.

Under the plan, Key Safety Systems will pay $1.6 billion for Takata’s airbag business. The sale proceeds will be set aside to pay claims from automakers, the government, car owners and passengers killed or wounded by defective airbags.

One year ago, Takata pled guilty to a single criminal charge of wire fraud and agreed to pay a $25 million fine and $125 million to people injured by airbags and $850 million to automakers who are stuck with the bill to replace the defective airbags. The criminal charge stemmed from claims that Takata willfully concealed its defective airbag actuators from regulators, vehicle owners, car dealers and automakers. The government claims that Takata used an unstable propellant in its airbags that can cause the metal canister holding the airbag to explode like a hand grenade.

After the guilty plea, the company limped along before filing for bankruptcy protection in June of last year. At the time of its bankruptcy filing, it was obvious that the company would not have enough money to pay everyone harmed by their airbag systems. The actual harm caused by Takata is estimated to be at least $10 billion and probably much more. The company’s assets are worth just $1.6 billion. That means nickels on the dollar for victims.

Under the approved bankruptcy plan, the $1.6 billion in sales proceeds will be set aside to pay the car companies, the estates of people who were killed by broken airbags and personal injury victims. We do not believe there is nearly enough money.

What the Takata Bankruptcy Plan Means for Car Owners and Injury Victims

Confirmation of the bankruptcy plan has little impact on car owners. That is because the automakers are responsible for the parts they use on an automobile. If your car is wrecked because the wheels fall of your new VW Passat, Volkswagen is responsible. They can’t refuse to honor their warranty and instead tell you to sue the lug nut manufacturer who is located half way around the world.

It works the same way with airbag inflators. If your car is worth less money because of Takata airbags or if it isn’t safe to drive because of the airbags, your beef is with VW (or any of the other automakers who installed Takata airbag systems in their vehicles).

In fact, we have current or anticipated class actions against VW, Audi, Mercedes, Dodge, Chevy, Mercedes and several others because we believe they knew for years that the airbags they were putting in their cars were garbage. The car company’s knowledge of these defects becomes important because for many people, their cars are no longer under warranty.

We believe that the car companies knew that Takata airbags were dangerous yet continued to install them. Why? Because Takata’s airbags were cheaper. There is nothing wrong in wanting to save money, but we believe that the car companies also knew that Takata’s airbags used an unsafe and unstable propellant and were prone to explode. The big automakers put their customer’s safety at risk simply so they could make a few bucks more in profits.

To see if your vehicle qualifies for one of our class actions, visit our Takata Airbag Claim Center page.

For people injured by Takata airbags and the families of those who died, the bankruptcy confirmation is good news but also should make little difference.

We say the news is good because it means there is a pot of money set aside for people hurt or killed by Takata’s notoriously dangerous exploding airbags. We are still waiting to see the details of the claims process, however.

To the extent that there is money available and no proof of fault is required, the injury and death claims fund is good. If the Takata airbag compensation trust operates that set up for victims of asbestos exposure, injury victims will have to prove that the vehicle they were riding in was equipped with Takata airbags and that the airbags caused their injuries. The first part is easy while the second question could be tougher depending on the accident and injury. What victims won’t have to prove is that the airbags were defective. That can be difficult because in many cases, the airbag actuator wasn’t saved after the accident.

Our worry is how much money will be available and how long claimants must wait to receive compensation. Unfortunately, it will take years before every defective airbag actuator is replaced and some may never be replaced. That means many of the injuries and deaths have not even occurred.

We also worry that the car companies will try some end game to force victims to choose between collecting from the bankruptcy trust or from going after the automakers.

We are determined to insure personal injury and death victims are fully compensated. We believe the big automakers knew the airbags installed in their vehicles were dangerous and yet did nothing. Companies like VW continued to install Takata airbags years after the recalls began.

To us, the reality is simple. Corporate greed. Profits before safety. And we intend to hold everyone at fault responsible.

If you suffered a serious, permanent injury caused by an exploding airbag, give us a call. We and our nationwide partners won’t rest until every victim of these dangerous products is fully compensated. We will fight General Motors, Ford, Honda, Toyota or any other automaker who put these deadly products in their vehicles and caused you or a loved one to suffer.

For more information contact attorney Brian Mahany directly at *protected email* or by phone at 414-704-6731. We also invite you to visit our Takata Airbag Injury and Claim Center information page. You won’t find a more complete source of Takata information anywhere. Included is a list of vehicles affected by the recall. (We always suggest that you visit the government’s website for up-to-the-minute recall information and information as to whether you should be driving your vehicle if equipped with Takata airbags. Vehicles that are or have been operated in high heat and humidity areas of the world are at extreme risk. Please be careful.)

The post Takata Bankruptcy Judge Oks Settlement, Limited Cash for Airbag Victims appeared first on Mahany Law.

America has a bunch of new millionaires and even a few billionaires. These aren’t the titans of the Industrial Revolution in America. No oil barons or railroad magnates. Instead they are people who invested early in Bitcoin and other cryptocurrency offerings. And their meteoric rise in wealth hasn’t escaped the watchful eye of the IRS.

For the record, cryptocurrencies aren’t our cup of tea. We don’t have a problem with those who made their millions or billions that way. Hats off to them. As long as you pay your taxes like everyone else, everyone is happy.

Taxes? Yup!

We work in the cryptocurrency space already. To date, it has been helping folks who were ripped off in ICO scams and other crypto schemes. Unfortunately, the cryptocurrency world has brought out the fraudsters.

A few of the people we talked to said they were told that cryptocurrencies would help them hide assets or income from Uncle Sam. For the first few years, cryptos probably were a safe place to hide money from Uncle Sam. The noose is tightening now.

We get the concept, no one likes to pay taxes. But as long as everyone has to pay them we as a society dislike even more those few who choose to deliberately not pay or report taxes. And that leads to today’s post.

The IRS has set its sights on Bitcoin and the cryptocurrency world. That’s right. Uncle Sam is asking the cryptocurrency exchanges for the names, addresses, social security numbers and account information of their clients.

We know that the cryptocurrency world is still in its “Wild West” phase. Back in the 1980’s it was numbered Swiss accounts. If you wanted to hide money from the IRS, you simply opened a “secret” numbered account in Switzerland. Today, Switzerland wants nothing to do with American accounts.

What happened with unreported Swiss accounts is a lesson for those using Bitcoin to evade the IRS.

IRS Whistleblower Program and Cryptocurrency

IRS John Doe Subpoenas

The IRS has a wide variety of tools to go after records. One of those tools is the “John Doe” subpoena. There is a process that lets the IRS seek a court order to get records from banks. In a normal subpoena, the IRS would go to a bank and ask for records of a specific account holder. So if your name is Bernie Madoff, the IRS would issue a subpoena to your bank seeking records of Bernie Madoff.

In the case of unreported cryptocurrency or bank accounts, the IRS doesn’t know who the account holders are. Through a special process authorized by Congress, they can simply go the bank and ask for all accounts. They need a basis (“cause”) to believe that accounts are being used to evade taxes but don’t need to have probable cause to believe that you specifically are evading taxes. You can argue that the process isn’t fair, but the courts think otherwise.

The John Doe subpoenas were highly effective in the offshore banking cases because Uncle Sam carries a big stick in the banking world. Even of you are a foreign bank, the federal government can pretty much shut you down or make operations so unprofitable that you can’t compete in the world financial sector.

How does that work in the crypto world? It doesn’t work well.

The exchanges have servers scattered everywhere and the “currencies” they exchange aren’t pieces of paper in a physical bank vault. And the initial coin offerings (ICO) are worse, often they are simply a website. No one knows for sure where they are located.

Don’t think you are safe in using cryptocurrencies to evade taxes, however.

IRS Whistleblower Program

The IRS, Treasury, DEA, FinCEN and every other alphabet soup law enforcement agency knows that cryptocurrencies are easily abused by drug traffickers, organized crime, terrorists and tax evaders. That means they are investing a tremendous amount of time and effort to catch up.

It also means an increasing reliance on whistleblowers.

My friend Bradley Birkenfeld was one of the early Swiss bank whistleblowers. Bradley was a director at Swiss bank UBS He knew that the bank was knowingly helping US taxpayers evade taxes through secret Swiss accounts. We say “secret” because UBS didn’t send 1099s to the IRS. You once could hide billions of dollars there and unless you were honest and told Uncle Sam, no one knew about your accounts.

Bradley did the right thing and blew the whistle. He had to do slightly less than 3 years in jail for his participation in the scheme but in 2009, the IRS awarded him a $104,000,000.00 whistleblower award. By our calculations, he “earned” $18,895 for every work hour spent in prison. And his time was served in a camp.

Since then other bank whistleblowers have come forward and sold client lists at other major banks. While the United States won’t buy a stolen client list, it will pay huge whistleblower awards and other countries that buy these lists will give them to Uncle Sam.

That is another aspect to this fascinating world of whistleblowing. Although the United States is the only one with an IRS Whistleblower type program, the US and all the other major countries share information on tax cheats.

As a former tax prosecutor, I know firsthand that no government likes tax cheats or pedophiles. We may be enemies with Russia or Cuba or … but if you are doing bad things with kids or not paying the government, Uncle Sam will share that information. And so will our enemies.

Birkenfeld went to jail in 2009. Today, he probably wouldn’t do any time. In just a few short years, the Justice Department’s thinking has evolved. Our government now encourages people with inside information to report that information to the IRS Whistleblower Office.

What does this mean to the cryptocurrency world? Plenty.

We are actively working with the IRS and searching for currency exchange and other cryptocurrency insiders. If you have inside (Uncle Sam calls it “original source”) information of tax cheats using offshore accounts or cryptocurrencies to evade taxes, you may be eligible for an award.

For more information about the IRS Whistleblower Program and how you may be able to qualify for an award, visit our IRS whistleblower page. (If you bought an ICO through a stock broker or investment advisor and were ripped off, visit or cryptocurrency fraud page.)

Ready to see if you qualify for an award? We would love to speak with you. Under American law, all consultations are protected by the attorney – client privilege. Even if you don’t hire us. And we never charge for our services unless you recover an award.

America needs more heroes. Whistleblowers help level the playing field and keep greed in check. For every dollar a tax cheat avoids in taxes, you and I have to work that much harder to make it up. There is a better way. Report tax cheats, make them pay their fair share and earn an award for doing the right thing.

For more information, contact us online, by email *protected email* or by phone (414)-704-6731 (direct).

The post IRS Whistleblower Post – The Feds Eye Bitcoin & Cryptocurrency appeared first on Mahany Law.

If you were to ask us to name the two worst mortgage loan servicers in America, our answer would be Ocwen Financial and PHH Corp. Both have horrendous track records and seem to always get caught putting profits before homeowners. Until today, I would say that things in the loan servicing world couldn’t get any worse.

They just did.

Out of nowhere, Ocwen announced that it was buying rival PHH for $360 million in cash. Cash that it probably plucked from the purses of struggling homeowners. The combined new company will be bigger, scarier and more powerful.

Here is what we know about the shotgun wedding.

Ocwen Financial Corp.

Ocwen is a never ending source of blog fodder. We have been on the forefront of class action investigations of Ocwen. With tons of political muscle and lots of big hedge fund money behind it, Ocwen is hard to keep down. Just when you think the company is finally going under, someone invests more money and Ocwen’s legions of lobbyists promise regulators that they have learned their lesson and are finally ready to behave.

In April of last year, 20 states blocked the company from handling any new loans within their state. In just a few months, that number swelled to 30. That meant in over half the states in the United States, Ocwen was prohibited from servicing any new mortgages. Not even a year later and Ocwen is full of cash, back in good graces with the states and now buying out one of its biggest rivals.

The same month that 20 states came down on Ocwen so did the feds. The Consumer Financial Protection Bureau (CFPB) announced that it was suing Ocwen for “failing borrowers at every stage of the mortgage servicing process.”

In the words of the CFPB,

• Serviced loans using error-riddled information: Ocwen uses a proprietary system called REALServicing to process and apply borrower payments, communicate payment information to borrowers, and maintain loan balance information. Ocwen allegedly loaded inaccurate and incomplete information into its REALServicing system. And even when data was accurate, REALServicing generated errors because of system failures and deficient programming… In 2014, Ocwen’s head of servicing described its system as “ridiculous” and a “train wreck.”

• Illegally foreclosed on homeowners: Ocwen has long touted its ability to service and modify loans for troubled borrowers. But allegedly, Ocwen has failed to deliver required foreclosure protections. As a result, the Bureau alleges that Ocwen has wrongfully initiated foreclosure proceedings on at least 1,000 people and has wrongfully held foreclosure sales. Among other illegal practices, Ocwen has initiated the foreclosure process before completing a review of borrowers’ loss mitigation applications. Ocwen has also foreclosed on borrowers who were fulfilling their obligations under a loss mitigation agreement.

• Failed to credit borrowers’ payments: Ocwen has allegedly failed to appropriately credit payments made by numerous borrowers. Ocwen has also failed to send borrowers accurate periodic statements detailing the amount due, how payments were applied, total payments received, and other information. Ocwen has also failed to correct billing and payment errors.

• Botched escrow accounts: Ocwen manages escrow accounts for over 75% of the loans it services. Ocwen has allegedly botched basic tasks in managing these borrower accounts.

• Mishandled hazard insurance: If a servicer administers an escrow account for a borrower, a servicer must make timely insurance and/or tax payments on behalf of the borrower. Ocwen, however, has allegedly failed to make timely insurance payments to pay for borrowers’ home insurance premiums. Ocwen’s failures led to the lapse of homeowners’ insurance coverage for more than 10,000 borrowers. Some borrowers were pushed into force-placed insurance.

• Bungled borrowers’ private mortgage insurance: Ocwen allegedly failed to cancel borrowers’ private mortgage insurance, or PMI, in a timely way, causing consumers to overpay. Generally, borrowers must purchase PMI when they obtain a mortgage with a down payment of less than 20%, or when they refinance their mortgage with less than 20% equity in their property. Servicers must end a borrower’s requirement to pay PMI when the principal balance of the mortgage reaches 78% of the property’s original value.

• Deceptively signed up and charged borrowers for add-on products: When servicing borrowers’ mortgage loans, Ocwen allegedly enrolled some consumers in add-on products through deceptive solicitations and without their consent. Ocwen then billed and collected payments from these consumers.

• Failed to assist heirs seeking foreclosure alternatives: Ocwen allegedly mishandled accounts for successors-in-interest, or heirs, to a deceased borrower. These consumers included widows, children, and other relatives. As a result, Ocwen failed to properly recognize individuals as heirs, and thereby denied assistance to help avoid foreclosure. In some instances, Ocwen foreclosed on individuals who may have been eligible to save these homes through a loan modification or other loss mitigation option.

• Failed to adequately investigate and respond to borrower complaints: If an error is made in the servicing of a mortgage loan, a servicer must generally either correct the error identified by the borrower, called a notice of error, or investigate the alleged error. Since 2014, Ocwen has allegedly routinely failed to properly acknowledge and investigate complaints or make necessary corrections. Ocwen changed its policy in April 2015 to address the difficulty its call center had in recognizing and escalating complaints… Under its new policy, borrowers still have to complain at least five times in nine days before Ocwen automatically escalates their complaint to be resolved. Since April 2015, Ocwen has received more than 580,000 notices of error. [Name one other company that requires customers to scream at least 5 times in 9 days before listening?]

• Failed to provide complete and accurate loan information to new servicers: Ocwen has allegedly failed to include complete and accurate borrower information when it sold its rights to service thousands of loans to new mortgage servicers. This has hampered the new servicers’ efforts to comply with laws and investor guidelines.

Ocwen didn’t exactly apologize and attempt to fix these problems. Instead, it claimed the government’s lawsuit was politically motivated and inaccurate. In fact, Ocwen claims that homeowners who have Ocwen as their servicer have a much better chance of avoiding foreclosure than if their loan is serviced by someone else.

In the words of the company, “Ocwen strongly disputes the CFPB’s claim that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm. In fact, just the opposite is true…”

So where is the truth? In this day and age of “fake news”, many are caught wondering who they should believe. Ocwen has left such a shameful trail of unhappy homeowners that Joe Q. Public solidly sides with the homeowners. We don’t think that many outside Congress and the 50 state capitols believe their nonsense.

As part of our class action investigation, we spoke with over 200 Ocwen serviced homeowners and several former employees. Our loyalties to homeowners are unshakeable. We believe that every one of the government’s claims are true.

Unfortunately, politicians often live in a bubble or have problems focusing beyond those who made campaign contributions. The Wall Street big boys have the ear of Congress and that includes neutering the CFPB and taking down its consumer complaint database. Ocwen, Bank of America, Wells Fargo and others of their ilk simply don’t like their dirty laundry aired on a government website!

There is plenty more bad ink about Ocwen…. Last year the company paid $56 million to settle an investor lawsuit, the State of New York fined issued a hefty fine to the company, the list goes on. Use the search tool on our blog and you will find plenty of Ocwen horror stories.

PHH Corp

What is Ocwen doing to fix the problem? It is buying a company with a track record that rivals its own. In fact, if there was ever a race to the bottom, these two rivals are both spinning in the vortex at the very bottom of the bowl.

PHH Mortgage and PHH Home Loans Settle NY Fraud Charges

In November of 2016, PHH Corp affiliates PHH Mortgage and PHH Home Loans LLC agreed to pay New York State $28 million to settle a wide range of claims brought by the New York Department of Financial Services.

In accepting the settlement, the state found:

• PHH Mortgage lacked formal and comprehensive policies and processes for executing foreclosure-related documents. Examiners found certain employees who executed foreclosure documents conducted little more than perfunctory reviews of materials prior to execution. Some employees lacked personal knowledge of facts to which they had sworn.
• PHH Mortgage did not adequately monitor the operations of outside vendors it engaged to perform mortgage servicing related tasks, including foreclosure attorneys whose actions on behalf of the company had a direct impact on borrowers in financial distress.
• PHH Home Loans failed to establish adequate controls to prevent mortgage loan originators employed by one PHH entity from originating loans in another PHH entity’s name, or to prevent employees whose mortgage loan originator licenses had expired or been withdrawn from taking loan applications.
• PHH Home Loans had inadequate controls to ensure that electronic signatures appearing on loan applications were those of the mortgage loan originators who actually took the application from the borrower.
• PHH Home Loans’ mortgage loan originator compensation plan failed to prevent against steering borrowers into risky or unnecessarily high-cost loans or basing a mortgage loan originator’s compensation on the terms of the particular loan brokered.

The allegations against PHH and Ocwen may sound like legalese but just about anyone who has had the misfortune of facing a foreclosure or attempting a loan modification now understands this legalese better than most judges!

For example, the CFPB charged Ocwen with initiating foreclosures before completing a review of borrowers’ loss mitigation applications. In simple terms, that meant Ocwen failed to properly process loan modification applications and often foreclosed even though the homeowner was current on their modification payments.

Sound familiar? Many homeowners reading this are certainly shaking their heads in agreement. [Note: Ocwen denied all charges brought by the CFPB.]

In another example, New York said PHH Home Loans failed to follow loan originator compensation rules. Those rules are meant to protect buyers and say that a loan officer’s commission can’t be based on the terms of the loan. If you pay loan officers based on the amount of points charges or the interest rate the borrower pays there becomes no incentive to do right by the customer.

Instead of putting the borrower in something she can afford, the loan officer has a different motive. To make the highest commission possible. Who cares if the borrower defaults in a year? By that point, a greedy loan officer will have made his money and may have ripped off 100 more borrowers since then.

In announcing the settlement between the state and PHH, Governor Cuomo said, “New Yorkers deserve peace of mind when shopping for a mortgage and this administration has zero tolerance for lenders who seek to cut corners and disregard the law at the expense of those seeking the American Dream in the Empire State.”

Justice Department Settles with PHH Corp in Whistleblower Action

PHH didn’t learn it’s lesson. Nine months later in August of 2017 the U.S. Department of Justice fined PHH $74.5 million dollars. The fine was a negotiated settlement between the Justice Department, HUD, the VA and the Federal Housing Finance Administration (FHFA). The FHFA oversees mortgage guaranty agencies Fannie Mae and Freddie Mac.

PHH may be one of the last settlements by HUD. Since Secretary Ben Carson has become the agency head, he has expressed reservations about going after big lenders. The federal government’s seeming reluctance to pursue underwriting and servicing fraud certainly doesn’t stop the states and homeowners from doing so, however.

The case against PHH was started by a whistleblower, Mary Bozzelli. A former PHH underwriter, Ms. Bozzelli was awarded $9 million for blowing the whistle. In settling the charges, PHH was allowed to pay without any admission of wrongdoing.

[Ed. Note: MahanyLaw is the leading bank and mortgage fraud whistleblower law firm. While HUD today appears to have some reservations about pursuing whistleblower cases against loan servicers and big lenders, the Justice Department can still prosecute and in particularly egregious situations, we believe that public pressure will force HUD to also act. If you have inside information about fraud by a lender involving residential loans or by an FDIC insured bank, contact us immediately. You may be entitled to a large cash award.]

The States Charge PHH

The feds, a whistleblower, New York State… who is left to go after PHH? In January 2018, the other 49 states settled with PHH Mortgage. The states accused PHH of fraud in how they handled long modifications and applied payments.

The consolidated state cases were settled for $45 million. Over $30 million of that money is available for homeowners hurt by the company.

CFPB and PHH

How it can it possibly get worse for PHH? Besides getting acquired by Ocwen, there is the little scuffle the company had with the CFPB last year. The agency originally settled with PHH for $6 million and then tried to levy another $103 million fine. In that complaint, the CFPB said the company was taking kickbacks from mortgage insurers. While that doesn’t sound bad, someone winds up paying for those kickbacks. You guessed, the homeowner winds up paying more money so that the insurer can pay a kickback to PHH.

PHH never admitted guilt and challenged the huge fine. A federal appeals court in Washington DC tossed the CFPB’s fine on technical grounds earlier this year. That is the only bullet that PHH has dodged so far.

The Marriage of Ocwen and PHH

Now you understand why we call this a marriage from Hell. Companies like Ocwen and PHH shouldn’t be allowed to stay in business, let alone combine forces.

With their regulatory woes in abeyance for the immediate future, Ocwen says its acquisition of PHH Corp should be complete by the fall of this year. Ocwen’s CEO Ron Farris says of the deal,

“The combination of Ocwen and PHH will result in a strong non-bank mortgage servicer with a robust servicing capability. Ocwen will significantly benefit from PHH’s experienced workforce and their expertise on the MSP servicing platform. We look forward to the opportunity to provide our industry leading capabilities to PHH’s customers and servicing clients.”

Hang on homeowners.

What Can be Done to Hold PHH and Ocwen Accountable?

Glad you asked! As the leading financial services whistleblower law firm, we are looking to speak with insiders from both Ocwen and PHH or their affiliates.

Admittedly, going after either company is a bit tougher in this political climate. There is no sugarcoating that. We still think it is possible, especially if we have great evidence.

To see if you have a whistleblower claim, give us a call. All inquiries are protected by the attorney – client privilege and kept completely confidential.

Even if we can’t bring a claim through HUD, we may be able to bring a whistleblower award claim under the FIRREA or Office of the Comptroller of the Currency’s whistleblower law. We may also be able to bring new state claims.

We also need and want your help – even if off the record – to assist struggling homeowners. If you know of illegal activity that results in homeowners and their families facing illegal foreclosures or getting tossed on the street, we want to hear from you. Remember, we will speak with you confidentially.

For more information, contact attorney Brian Mahany online, by email *protected email* or by phone (414) 704-6731. This contact information is for insiders only (primarily present or former employees).  Are you an Ocwen or PHH homeowner? Keep reading.

Important Info for Homeowners with Ocwen or PHH Loans

If Ocwen is your loan servicer and you have a story to tell, please contact attorney Anthony Dietz online or at *protected email* We cannot take homeowner telephone calls or provide legal advice to nonclients. [Please understand that we receive over 30 calls per day from homeowners seeking personal legal advice. Unfortunately, those calls will most likely not be returned.]

We also invite to you read our Ocwen Fraud Investigations page. That page details our Ocwen class action lawsuit and some of the ways we believe that the company is defrauding homeowners.

Is PHH your servicer? Were they your lender?

We are currently investigating PHH Corp, PHH Mortgage and PHH Home Loans for a wide variety of suspected illegal activity. The highlights of our investigation include:

1. Predatory loans,
2. Using of incorrect loan data,
3. Illegal foreclosures,
4. Failing to properly process loan modifications,
5. Failure to properly credit borrowers’ payments,
6. Mismanagement of escrow accounts (taxes and insurance),
7. Unnecessarily putting homeowners in force-placed insurance,
8. Delayed termination of private mortgage insurance, and
9. Failure to correct errors identified by the borrower.

There are probably more bad things going on than what is on the list.

If you believe that PHH illegally foreclosed on your home, overcharged you or engaged in other illegal activity, contact us immediately.

We haven’t filed any class action as of the date of this post, but we are actively investigating and want to hear your story.

For more information, please contact attorney Anthony Dietz online or at *protected email* (Please accept our apologies in advance. We cannot take homeowner telephone calls or provide legal advice to people who are not clients.)

Homeowners have a right to be treated fairly and with due process. Ocwen and PHH may have been able to settle without admitting any liability, but we know the truth.

The political pendulum has swung in favor of banks and will not likely swing back for the next few years, but juries know the truth. And the truth (at least in our humble opinion) is that Ocwen and PHH have done a horrendous job of servicing loans.

That thousands of homeowners may have been victim to predatory servicing practices and illegal foreclosure sickens us. We think it will sicken jurors too.

Homeowner or insider, we hope to hear from you.

MahanyLaw – Protecting Homeowners through Whistleblower and Class Action Lawsuits

Note: If you have been served with a foreclosure complaint or have a pending sale date, you should immediately seek counsel. We still want to hear your story, but your immediate priority must be protecting your home

The post PHH Corp Says “I Do” to Ocwen – The Marriage from Hell appeared first on Mahany Law.

Steel made in China, India, Vietnam and India costs a lot less than U.S. made steel. Even when you factor in transportation costs, it is still cheaper to import foreign steel. A lot cheaper.

Cheap steel is bad news for the U.S. steel industry and steelworkers. Uncle Sam has tried to slap “anti-dumping” tariffs on certain countries that dump steel in the U.S. at below market prices but the foreign steel makers have learned how to circumvent those tariffs. For example, a Chinese company subject to an anti-dumping tariff could easily transship their products through another country not subject to the tariff and relabel it as if it were made in that country.

That may be changing if President Trump follows through with an across the board 25% tariff on all foreign produced steel. This post examines the impact of the proposed new tariff on whistleblower awards.

Whistleblower awards for foreign steel? Yes! And they can be substantial.

Foreign Steel, Buy America Act and Whistleblower Awards

The Commerce Department can’t regulate where American businesses buy their steel. Construction firms, bridge builders, oil rigger makers and automakers but lots of steel. They naturally look for the least expensive steel. That helps them keep costs down and profits up.

The one exception is for steel that Uncle Sam buys. Since the Great Depression, Congress has sought to protect American manufacturing jobs and the steel industry in particular. Congress did so by passing a series of laws called “Buy America” or “Buy American.”

These laws say that any steel used in government funded projects must be made or “rolled” in the United States. If tax dollars are used in a project, Uncle Sam wants to be sure that any steel or iron comes from a U.S. steel mill.

The biggest government expenditures for steel come from highway and bridge projects and building construction.

Until now, it has been profitable for companies to try and skirt the law by purchasing cheaper Chinese steel and relabeling it as made in the U.S.A. We prosecuted one company that purchased steel samples from a U.S. mill, simply so they could obtain the mill certification saying the steel was American made. The steel used in their construction projects, however, came from Turkey and China.  They would then photocopy the certification from the US mill and attach it to the foreign steel.

Pretty clever until a project expediter blew the whistle and reported the company. That resulted in a $5 million fine and $400,000 whistleblower award.

We have heard that other companies are doing similar things on bridge and railroad contracts. (Amtrak and many commuter rails get government subsidies making their purchases subject to Buy American legislation.)

If President Trump follows through with his recently announced across the board tariff, using foreign steel on government projects won’t be as economical. Let me explain why.

Recent tariffs have focused on a single country thought to be selling for below cost or below the price that it charged at home. In 2016, President Obama imposed a 200% tariff on certain Chinese steel products. Shortly after taking office, President Trump announced tariffs on Chinese steel sheeting.

Now the administration claims that the President will sign a sweeping new tariff next week on both foreign aluminum and steel imports. The new tariff relies on a 1962 law called the Trade Expansion Act. Although tariffs aimed at a particular country are common, the sweeping across the board tariffs proposed by Trump have only been used twice. The Trade Expansion Act allows the President to enact emergency trade sanctions in the event of a national security interest.

Is protecting steelworkers a national security interest? The Commerce Department says yes. They issued a statement saying,

“The continued rising levels of imports of foreign steel threaten to impair the national security by placing the U.S. steel industry at substantial risk of displacing the basic oxygen furnace and other steelmaking capacity, and the related supply chain needed to produce steel for critical infrastructure and national defense.”

President Trump tweeted, “When a country (USA) is losing many billions of trade with virtually every country it does business with, trade wars are good and easy to win.”

We have no doubt that someone will challenge the new tariffs in court.

The new 25% across the board tariff is different from recent steel tariffs. It doesn’t focus on a specific country. All imported steel will be subject to a tariff. It won’t matter if the steel comes from China or Canada.

It’s relatively easy for an unscrupulous steel maker to transship or relabel steel. But sneaking steel into the U.S is another thing.

Steel rods, sheeting and bars are heavy and bulky. There is no easy way to get steel into the United States in bulk without Customs knowing about it. And once they see it, the importer will have to pay the tariff.

The tariff is good for the U.S. steel industry but bad for consumers (higher prices) and our allies (e.g. Canada).

With fewer incentives to use cheap foreign steel, more companies will use American steel in government projects. Whistleblower cases, at least for Buy America / Buy American violations will dry up.

The new tariff hasn’t been imposed yet. And the federal False Claims Act has a six-year statute of limitation. That means companies that cheated Uncle Sam aren’t out of the woods yet. For would be whistleblowers, that means information that may now be a few years old is still eligible for an award.

With Trump’s heavy emphasis protecting U.S. industry, we believe prosecutors will remain interested in Chinese steel and foreign steel cases for the next several years.

False Claims Act – America’s Whistleblower Award Law

The False Claims Act is a Civil War era law that allows anyone with inside information about fraud involving government funds to file a claim. If the government recovers anything from the wrongdoer, whistleblowers can receive an award of between 15% and 30% of whatever the government collects.

With triple damages and high penalties, the fines and penalties can be quite high.

Protecting American jobs isn’t the only reason that we seek foreign steel whistleblowers. There is a safety factor as well.

Remember earlier when we mentioned that all steel sold in the United States comes with a mill certification? That certification contains more than just the country of origin. It also has important information about the quality of the steel. Just like not all cars are alike, not all steel is the same. There are huge variations in chemical composition, tempering and quality.

When a company transships steel and relabels it, the ultimate user doesn’t really know much about the quality of the steel. Even to the trained eye, poor quality steel can look exactly high quality steel.

Would you want to drive over a tall bridge knowing it was made of low quality pot metal? Of course not! We know of two cases in which concrete panels fell because of poor quality steel hangers. One caused a death to a pedestrian outside a county parking garage and the other killed a motorist in a tunnel.

Using mislabeled steel is not a victimless crime. It hurts not only American workers, it could actually kill or cause physical injuries.

Call for Chinese Steel Whistleblowers

If you have inside information about businesses, suppliers or contractors that are using or have used foreign steel on government funded construction projects, you may be entitled to a cash award. Common examples of government funded construction projects include bridge construction, public hospitals, military installations and airports. Even highways use large amounts of steel (rebar in concrete).

The fine print:

To qualify for an award, you must be the original source of the information. What you read in the paper or hear from friends doesn’t qualify. But if a friend or co-worker is the original source, you can “join forces” and file a claim together.

Awards are generally paid only to the first to file. If you are interested in stopping greed and corruption and want an award, don’t delay.

All inquiries are protected by the attorney – client privilege. That means all information you share with us remains confidential, even if you never decide to file an award claim. Our legal services are offered on a contingent fee basis. You only pay us if we collect an award on your behalf.

To learn more about foreign steel cases, visit our Buy America information page. Have a question or want to find out if your information qualifies you for an award, give us a call. We can be reached online, by email *protected email* or by phone 414-704-6731 (direct).

MahanyLaw – America’s Whistleblower Lawyers

Update: We have another post discussing the safety aspects of foreign steel.

The post Last Call for Foreign Steel Whistleblowers? appeared first on Mahany Law.

Years of foot dragging by the big automakers means millions of Americas remain at risk of dying or being seriously injured in vehicles equipped with Takata airbags. Our lawyers have been in the trenches fighting Volkswagen, Audi, GM, Chrysler, Jeep, Mercedes and others over their use of defective airbags.

Since at least 2008, the automakers have known that there are serious safety risks in cars equipped with Takata airbag inflators. (See our Takata airbag personal injury, wrongful death and recall center cornerstone page for details.)

As of November 2017, 35 million cars had been recalled because they contained dangerous airbag inflators manufactured by Takata. The government says that the metal canisters that hold the airbag can explode with such force that they become a grenade.

Well over 100 people have been maimed or seriously injured and 21 people are believed to have been killed by these airbags. Because of an unstable propellant, high humidity or heat can cause the propellant to explode with far more force than is necessary to inflate the airbags. That is why regulators say these life saving airbags can become deadly grenades.  The metal shards from the canister can shred both the airbag itself (rendering it useless) and anyone sitting in the front of the car.

Since November, an additional 3.3 million vehicles have been recalled. The government estimates that by the time the recalls are complete, approximately 70 million vehicles will be affected.

Despite knowing for years that these airbags were defective, tens of millions of cars have yet to receive new airbags as part of the recall program.

Honda was the first company to act. Some 12 million Hondas and Acuras have already been recalled. The company is trying to first fix cars that are driven in high humidity, high heat areas. Scientific evaluations show that this weather combination can accelerate the breakdown of the already unstable propellant.

So who is the worst offender? We thought it was Volkswagen which continued to install defective Takata airbags through last year even though motorists were dropping like flies. In the race to the bottom, however, GM appears to have taken the title of least responsible automaker. Their greed knows no limits.

GM Takata Airbags

Recent SEC filings indicate that GM is actively fighting the National Highway Traffic Safety Administration (NHTSA) and trying to avoid additional recalls.

What is at stake is a $1 billion recall cost for GM versus the lives of over 6.8 million people. The cost to fix an airbag on a GM truck or SUV is about $147. Apparently, our lives aren’t worth that much. GM is willing to take the chance that only a few people might die. The cost of settling any death lawsuits would be worth less than a $1 billion.

That is some cold-hearted math. We recall the exploding GM gas tanks in the 1990’s and the incident where a young boy was burned to death in front of his parents after the vehicle they were riding in was lightly tapped in the rear. The cost to fix the gas tank? $2.20.

A mere two bucks would probably have saved that boy and many others.

The GM exploding gas tank incidents were in the 1980’s but GM doesn’t seem to have grown any more responsible.

GM Takata airbags are the target of an NHTSA recall investigation. GM disclosed in an SEC filing that three times in the last three years they have petitioned the government to avoid recalls. The mainstream media missed the story but we didn’t.

GM suggests that Uncle Sam wants to recall 6.8 million GM trucks and SUVs made between 2007 and 2011. The reason? GM Takata airbags.

GM says it petitioned Transportation Department officials on January 9^th for a third time hoping to avoid a recall. According to their petition, they claim the front passenger inflators were custom-made for its trucks by Takata with bigger vents and stronger steel end caps than other similar system. They also say that no truck inflators have exploded like grenades either in real highway use or in extensive laboratory testing.

Of course, Takata got caught fudging similar lab data and covering up the real results.

What is most telling in this debate is that Takata claims the GM airbags are defective. That’s right, the company who made the airbags and would best know about their safety believes the GM Takata airbags are defective.

Takata has nothing to lose at this point by lying. The company has already been criminally convicted and is now in bankruptcy.

GM Takata Airbags Already Subject to Recall

The following GM trucks and SUVs have already been recalled because of the allegedly deadly airbags. Those vehicles are:

CADILLAC:

2010-2014 Escalade
2010-2014 Escalade ESV
2010-2013 Escalade EXT

CHEVROLET:
2010-2013 Avalanche
2010-2014 Silverado HD
2010-2013 Silverado LD
2010-2014 Suburban
2010-2014 Tahoe

GMC:
2010-2014 Sierra HD
2010-2013 Sierra LD
2010-2014 Yukon
2010-2014 Yukon XL

What remains to be seen is the list of 6,800,000 additional vehicles wants to recall. Chances are good that if you are driving an older model (2007 to 2011) GM SUV or pick up your vehicle is equipped with airbags that both Takata and the government says may be dangerous.

Do we really need to wait before another child or motorists is killed before we find out who is right?

Do You Own A GM Truck or SUV with a GM Takata Airbag?

If you own a one of the recalled GM vehicles and the airbag inflators have not yet been replaced, be very careful. If you are in a high-risk zone, consider parking the vehicle until it can be fixed. The NHTSA has said the following states are in the highest risk zone: Alabama, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, South Carolina, Texas, Puerto Rico, American Samoa, Guam, and the U.S. Virgin Islands.

Your next step should be to visit our Takata Claim Center webpage for more information about your legal rights and what you can do to protect yourself.

If you suffered catastrophic injuries because of an exploding airbag, see our Takata airbag injury site. If the accident was recent, take all steps to preserve the vehicle. Proving that Takata was the reason for the injuries if the airbags remain intact. Unfortunately, it difficult to prove a defective airbag is at fault when the airbag was long thrown in a scrap yard.

If your GM vehicle isn’t on the above list, that could change at any time. We urge you to frequently check the NHTSA website. Their recall list is updated daily. Thus far GM has avoided it day of reckoning but it can’t do so forever.

We worry that there are millions of GM pickup trucks and SUVs that should be parked until replacement airbag inflators become available.

Why Sue GM? Isn’t Takata Responsible for This Mess?

We believe that the automakers knew for years that Takata airbags were dangerous. At this point, the car manufacturers are the only deep pocket left to sue. Takata shut its doors in June of last year. A bankruptcy judge has approved the sale of the company’s assets. The only people left with money are the car companies.

We have already initiated several national class actions against several automakers for the costs to consumers of owning a car with defective airbags and no replacement parts yet available. Several other class actions have already been settled and even more being considered.

GM is responsible for the parts put in their vehicles. Even if they didn’t know at first that the airbag inflators used in their cars were dangerous, they certainly did at least a decade ago. At that point they had an obligation to promptly repair their vehicles.

GM finally got wise in 2015 and stopped using GM Takata airbag inflators. That isn’t much consolation for millions of Americans who get behind the wheel each day wondering if their car is safe to drive. Worse, because GM keeps appealing recall orders, millions of Americans don’t even know that both Takata and the government believe those vehicles are at risk.

Here is a quick summary of what you should do:

GM Vehicle Owner on Our Class Action List: Visit our Takata Airbag Claim Center page.

Other GM Vehicle Owners Subject to an Existing Recall: Follow the instructions of the NHTSA and the GM. The NHTSA has a comprehensive recall page with specific information on GM Takata equipped vehicles.

Seriously Injured or Killed because of an Exploding Takata Airbag: Visit our Takata Airbag Injury page and contact us immediately. We can be reached online, by phone (414-704-6731) or by email (*protected email*)

MahanyLaw – National Takata Airbag Injury Lawyers

The post GM Takata Airbag Injury Lawsuit and Recall Center Update appeared first on Mahany Law.

It’s been a few weeks since our last cryptocurrency post and the industry’s news continues to dominated by scams. Now that the prices of cryptocurrencies has cooled a bit, many of the scams are beginning to surface. We have already several posts on specific cryptocurrency scams and ICO offerings. Use the search feature on our blog for stories on BitConnect, The Crypto Company and SI – Tech Ltd.

Just this week we were contacted by a potential client who invested $1.3 million in a cryptocurrency scheme to a guy he met in an online forum. It turns out the promoter is a convicted felon. His crime? Investment fraud. As more investors chase the lure of huge returns, we figured it was time to update our cryptocurrency scam list.

DavorCoin

DavorCoin billed itself as having the highest returns in the crypto marketplace. How they calculated those returns remains a mystery, however. On January 16, 2018, the price of DavorCoin was $139.77. Two weeks later the Texas State Securities Board issued an emergency cease and desist order against the company. Now its shares are worth less than 3¢.

Texas claims that DavorCoin was operating as an unregistered security and had intentionally concealed material information of its business, how it planned on raising enough money to pay the promises made to investors and the location of their business. (Many Initial Coin Offerings or “ICOs” are nothing more than a website. There is no physical address or business.)

DavorCoin promised investors who “loaned” the company $30,000 a return of $15,390 in just 30 days. That equates to an annual rate of return well in excess of 1000%.

R2B

Texas regulators also halted trading of a company called R2B, an ICO believed to be located in Hong Kong. Investors were promised a cryptocurrency “coin” at an offering price of anywhere from less than a penny to $188. R2B claimed that their coins would be worth $200 within 90 days of trading and within a year would be one of the leading cryptocurrencies.

Bitstrade

Bitstrade calls itself an “open source digital banking platform for Bitcoin & cryptocurrency investments solutions.” The State of New Jersey calls it a scam. In February, the New Jersey Bureau of Securities issued a cease and desist order forbidding the company from selling to New Jersey residents.

Bitstrade claimed that for as little as $10, an investor could earn a 700+% rate of return. Invest $10,000 or more and the rate of return skyrockets to 3650%. That is 10% per day! And those crazy rates of return were guaranteed!

The Bitstrade website says, “investors don’t need thousands or millions to have a private trader working for you day by day.”

Regulators issued the emergency order after finding Bitstrade violated state securities laws by “failing to disclose key material facts to prospective investors, including the names of its executive officers, the address of its principal office, information about Bitstrade’s financial condition, the risks of the Bitstrade Investment, and how Bitstrade invests investors’ money.”

The Bitstrade website lists two business addresses but regulators found that one didn’t even exist and the other is the corporate headquarters of GoDaddy, an Internet domain registrar.

In issuing the order, New Jersey’s Attorney General said, “The Bureau’s action today reinforces our commitment to protecting investors as they navigate the uncharted and largely unregulated domain of cryptocurrency-related investments. We want to make sure that investors tempted to cash in on the cryptocurrency rage aren’t being lured into sending funds to an anonymous internet entity without knowing where the funds are going or how they’ll be used.”

LoopX

LoopX claimed it had the “most advanced loop trading software to date,” whatever that means. Their website proclaimed, “The arrival of electronic currencies could revolutionize the way we pay for goods and services, in much the same way as the Internet shook up how we access information. The LoopX System gives you guaranteed profits every week …”

So just how guaranteed are those profits? Media reports say the company raised $6.5 million in an ICO and then simply vanished.

Prodeum

Need more examples of cryptocurrency scams ? Prodeum is a Lithuania based cryptocurrency startup that at least had a sense of humor when it apparently made off with people’s money. A penis.

Prodeum was going to revolutionize the fresh food industry by putting in on the Ethereum blockchain. How it proposed to do that and pay investors was always a bit fuzzy, however.

In January, their website suddenly went dark. Worried investors searching the company’s website for answers found just one thing. The word “penis.” There was no mention of where their money had gone. The company reportedly also paid freelancers working through fiverr to write “Prodeum” on their bodies and post the photos on social media.

How Do I Recover My Money from ICO and Cryptocurrency Scams?

If you lost money on a cryptocurrency investment there is probably very little we can do. Your money is probably gone. That’s right. Although we are fraud recovery lawyers, it is difficult to fight ghosts and even more difficult to get them to pay money.

Most ICOs and cryptocurrency transactions are carried out online. And often the transactions are made with other untraceable cryptocurrencies like Bitcoin. There is no one or no place to sue and any money raised by the company is untraceable.

There is one exception — cryptocurrency scams peddled by investment advisers and stockbrokers. Any legitimate broker selling one of these investments would get fired in a heartbeat if caught. Unfortunately, there are plenty of bad brokers out there.

Do you remember the movie Wolf of Wall Street? If Jordan Belfort hadn’t been convicted of securities fraud, we have no doubt he would be one of the leading sellers of these cryptocurrency scams.

Brokers know that everyone wants to get in on the cryptocurrency craze. In fact, brokers are losing money because many investors are more interested in the lure of huge returns. AT&T stock and a 2% dividend or BitConnect and a 1000% return?

For us, the answer is easy, but greed is greed and billions of dollars continue to flow into cryptos and ICOs. Worse, many of these crypto scams pay high referral fees giving dishonest brokers a further incentive to sell them.

So how does a broker sell something his firm doesn’t allow? The industry term is “selling away.” The broker sells these riskier investments on the side. Instead of getting a statement from the brokerage firm, you receive one directly from the cryptocurrency investment itself.

There is some good news, however. Even though the brokerage firm has no idea that these unauthorized trades are occurring, those firms can be held liable if the investor thought he or she was investing through the brokerage firm. That is the little known secret of the industry. Investment firms are responsible for the actions of their agents and employees.

We hope would be cryptocurrency investors heed our advice and avoid ICOs. Anything that offers “guaranteed returns,” ridiculous rates of returns, or offers any sort of return without fulling explaining how they expect to generate the income to pay them is probably a scam.

Despite our warnings, millions of dollars get invested daily into ICOs and cryptocurrency promotions. And many of those investments are Ponzi schemes and scams. If you happened to invest through am investment adviser or stockbroker, we may be able to help.

Did you lose $1 million or more in a cryptocurrency scam involving a stockbroker or investment adviser? You may be entitled to a refund of your money and damages. Need more information or think you qualify for an award? Visit our cryptocurrency fraud recovery page or contact us directly at *protected email*, online or by phone at (414) 704-6731 (direct).

All services are offered on a contingent fee basis meaning you do not pay unless we recover money for you.

Do you work for one of these ICOs or cryptos? If you have inside information about fraud you may be eligible for cash whistleblower award from the SEC. Contact us for more details. All inquiries are protected by the attorney – client privilege and kept confidential.

MahanyLaw – America’s Whistleblower and Cryptocurrency Scam Recovery Lawyers

The post Crypto Crazy! Newest Info on Cryptocurrency Scams appeared first on Mahany Law.

As I write this post, Miami and Dade County emergency workers are still clearing the rubble and searching for survivors. For those who don’t know, a new pedestrian bridge built on the Florida International University campus collapsed today. When it fell, it crushed several cars and pedestrians below. The death count remains unknown.

Doubtless there will be many claims by those injured and by the families of those killed. Our prayers and deepest sympathies go out to all that were affected. Hopefully, the lessons from this incident will prevent other tragedies from occurring in the future.

We believe that the FIU bridge collapse was preventable. It will take months for the engineers to determine why the bridge fell. We have our own ideas, however.

For months we have warned about the dangers of contractors doing work on government funded bridge and construction projects. (The FIU bridge was funded in part with a federal DOT grant.)

A series of laws called “Buy America” and “Buy American” require that government funded bridge, highway and construction projects use quality American made steel. The recurring transportation funding bills also require American steel in bridge, rail, highway and other transportation projects.

Congress says that the reason for these Buy American provisions is to bolster the American steel industry. Last week in announcing emergency across-the-board tariffs on steel and aluminum imports, President Trump elevated the protection of the American steel industry to a national security interest.

These Buy American laws are important for another reason. Safety.

Steel is not a fungible commodity. There are different types and grades. Some steel works better in heavy loading bear environments, some is better for long expanses such as found on a bridge. And other steel has better corrosion resistance. (As I write this post, a court today decided a multimillion construction dispute involving the Venetian Hotel in Las Vegas. The builder of the casino’s roof top pool allegedly used steel supports under the pool that weren’t corrosion resistant.)

Every piece of construction steel manufactured (also known as “rolled”) in the United States comes with a certificate of origin. That certificate not only says where the steel was made, it also notes key data about the composition of the steel.

Unfortunately, steel from Turkey and China costs half the price of U.S. steel. And some companies cut corners by falsifying the country of origin on steel. They do that by using a fake certificate from a U.S. steel mill or by transshipping the steel so that it doesn’t get delivered directly from China (or some other foreign country).

Now to connect the dots. When a contractor uses steel with a phony certificate, how does anyone know where it was really made and if it meets the quality specifications of a given project?

They don’t. And when cheap foreign steel is substituted for U.S. made steel, accidents happen, and people are killed.

Several years ago, a concrete façade fell off a parking garage in Milwaukee killing a teen walking on a sidewalk below. The culprit? Defective steel. Where was the steel made? No one knows as the records were gone by the time of the accident.

During the “Big Dig” tunnel project in Boston, another piece of concrete fell, this time killing a motorist. Once again, investigators believe that a defective steel hanger was at fault. And in San Francisco, state officials are eyeing a billion dollar price tag because some of the Chinese steel used on the bridge is corroding.

In defective bridge construction, our usual suspects are Turkish rebar and Chinese made steel girders. Is that the cause of the FIU bridge collapse? Time will tell.

If you have inside information about foreign steel being substituted for American made steel on government sponsored building projects, call us. You may be entitled to an award under the US False Claims Act. More importantly, your actions in stepping forward may prevent another tragedy such as the FIU bridge collapse. For more information, contact us online or by phone at 414-704-6731.

Munilla Construction, Figg Bridge Group and the FIU Bridge Collapse

Why are we worried that cheap foreign steel might be behind the FIU Bridge Collapse? Because the primary contractors on the FIU project have a less than stellar track record. We worry that these tragic accidents will continue to happen until more whistleblowers step forward.

The primary contractors building the FIU pedestrian bridge are Munilla Construction Management and the Figg Bridge Group.

Munilla Construction Management (or MCM) was sued earlier this month after a makeshift bridge broke at a construction site at the Fort Lauderdale – Hollywood International Airport. A TSA worker was hurt when his weight caused the bridge to collapse. The lawsuit accuses Munilla of substandard work and of using “incompetent, inexperienced, unskilled or careless employees.”

Munilla was also the contractor on a major expansion project at the Miami International Airport. A subcontractor on an airport job there was prosecuted by the Department of Justice for using mislabeled foreign steel.

The other major contractor in the FIU bridge project is the Figg Bridge Group of Tallahassee. In 2012, a 90-ton section of a railroad overpass collapsed and fell onto the tracks below. No one was seriously injured. The Miami New Times reports that bridge was being built by Figg.

Whistleblower Awards and the Need to Prevent More Bridge Collapses

Although it will take months to investigate, everyone agrees that the FIU bridge collapse was preventable. Whether the collapse is due to cheap foreign steel, defective workmanship, or a poor design, that bridge should not have collapsed.

The bridge was installed just days before its collapse.

Anytime a contractor defrauds a government agency, that contractor violates the False Claims Act. Passed during the Civil War, the Act has been the government’s primary tool against fraud for over 150 years.

The False Claims Act allows the government to collect triple damages and impose high fines against companies that knowingly or recklessly defraud the government. Obviously, not every construction defect equates to fraud. Defects become fraud, however, when a company covers them up or knowingly substitutes inferior components or does substandard work.

A bad design probably isn’t fraud but covering up defects or substituting cheap foreign steel is.

Something went wrong at FIU and that something resulted in multiple deaths. If you have information about any government funded contract involving substituted goods, gross negligence or shoddy work, give us a call. We can investigate and decide if the case is fraud or negligence.

Our goal is to stop the fraud before someone gets hurt. Our goal is also to help our whistleblower clients receive proper compensation for steeping forward. If we don’t think you are eligible for an award we can still help you report your safety concerns, anonymously if necessary.

Under the False Claims Act, whistleblowers can receive up to 30% of whatever the government or we collect on behalf of the government from the wrongdoers. The law also protects whistleblowers from workplace retaliation.

Today we mourn the victims at Florida State University. Tomorrow we work to prevent another tragedy like this from ever happening again.

For more information, contact attorney Brian Mahany online, by email (*protected email*) or by phone at 414-704-6731. All inquiries are protected by the attorney client privilege and kept confidential. See also our Buy American and Chinese Steel information page.

The post Munilla Construction, Figg Bridge Group and the FIU Bridge Collapse appeared first on Mahany Law.

Cryptocurrencies are probably here to stay. Millennials love them and even banks and a couple countries are looking to blockchain technology to launch traditional currency alternatives. But a Crypto Visa card? It sounds like a great idea, but the SEC says it was just a giant scam. The agency and has charged two Florida men with illegally raising $32 million in a scheme claiming false ties to Visa Inc and MasterCard.

Both the Department of Justice and the Securities and Exchange Commission (SEC) say that Sohrab “Sam” Sharma, 26, and Robert Farkas, 31, ripped off investors when raising money for their new crypto venture, Centra Tech and the Centra token and Centra debit card.

Their efforts to raise money were probably enhanced by celebrity endorsements from Floyd Mayweather and DJ Khaled. Neither Mayweather nor Khaled are accused of any wrongdoing. Mayweather had reportedly released a tweet saying, “Centra’s (CTR) ICO starts in a few hours. Get yours before they sell out, I got mine.”

A Facebook post of a smiling Mayweather holding a Centra debit card has been removed from the Internet.

Media sources say that Farkas was arrested last week as he attempted to fly to South Korea. Authorities say that just prior to his arrest he had asked a Centra lawyer to research U.S. extradition laws.

If the government’s allegations are correct, Centra Tech’s scheme was especially brazen and sophisticated. In addition to using paid celebrity endorsements, Centra’s website claimed it had hired a lawyer from a prominent law firm as the company’s CEO. A former Visa compliance officer was listed as Centra’s chief security officer. The company also touted having a former Credit One Bank consultant on board as COO.

The SEC says that some of the “executives” were fictitious made up names with phony biographies.

Centra Tech: Anatomy of a Phony ICO

According to the SEC, between July 30, 2017 through October 5, 2017, Sharma and Farkas raised at least $32 million from thousands of investors through the sale of unregistered securities issued by Centra Tech., Inc. The government says that the two men controlled the company.

The Centra tokens were issued in a so-called “initial coin offering” or ICO, a term that is meant to describe the offer and sale of digital assets issued and distributed on a blockchain. The men promoted the Centra ICO by claiming phony relationships between Centra and Visa and MasterCard.

Although Sharma and Farkas claim their offering is not a security, the SEC says otherwise. They say the men illegally sold unregistered securities and made material misstatements and omissions designed to deceive investors in connection with the offer and sale of securities in the Centra ICO.

The Commission claims that Centra marketed its ICO by using postings on the internet.

According to prosecutors, Centra lured investors with the promise of creating a line of products that would enable holders of various “cryptocurrencies” to convert those assets easily into U.S. dollars, and spend “cryptocurrencies” in real time with the “Centra Card.” The Centra Card resembles an ordinary debit card. Investors were told that they could use their Centra Card wherever MasterCard or Visa cards are accepted.

In fact, Centra Tech’s website showed a picture of the Centra Card on its website. The card clearly depicted a Visa logo.

Despite all the promises in Centra’s ICO marketing materials, prosecutors say,

“Contrary to Defendants’ false representations, and as Defendants knew or recklessly disregarded: (i) Centra did not have any “partnership” or other relationship with Visa, MasterCard, or The Bancorp; (ii) “Michael Edwards” and other Centra executives pictured in its promotional materials were fictional, and the photographs used to identify the fictional “executives” were photos taken from the internet or pictures of Defendants’ relatives; and (iii) investors who purchased Centra Tokens would not receive future payments or “revenue share” from agreements with Visa or MasterCard.”

A copy of the SEC’s complaint can be found here.

Are ICOs a Securities Offering?

The major securities laws in the United States were written in the 1930’s as America grappled with the Great Depression. Today, technology is changing so fast that Congress can’t catch up. That is very evident in the area of cryptocurrencies.

Cryptocurrency offerors often claim they are outside the jurisdiction of both the SEC and CFTC. They say that ICOs tokens are not securities. Obviously, the government doesn’t agree. Thus far the courts have sided with the regulators, a good outcome for investors.

Anatomy of an ICO (Initial Coin Offering)

An Initial Coin Offering or “ICO” is a fundraising event in which an entity offers participants a unique digital asset, often referred to as a “coin” or “token,” in exchange for consideration (often in the form of other digital assets — most commonly Bitcoin and Ether — or fiat currency).

The tokens are issued on a “blockchain” or cryptographically-secured ledger. Generally, a token entitles its holders to certain rights related to a venture underlying the ICO, such as rights to profits, shares of assets, rights to use certain products or services provided by the issuer, and/or voting rights. These tokens may also be listed on online platforms, often called exchanges, and are tradable for other digital assets or fiat currencies. (Some exchanges have also been accused of being frauds or were successfully hacked causing huge losses to investors.)

The tokens are immediately tradable. According to the SEC complaint, the initial share price for the Centra tokens was 15¢. As Centra ramped up its marketing, the price of Centra tokens soared to $4 in January of 2018. After the SEC and Justice Department filed charges, the price of those shares has plummeted.

ICOs are typically announced and promoted through public online channels. Issuers usually release a “whitepaper” describing the project and the terms of the ICO. To participate, investors are generally required to transfer funds (often Bitcoin or Ether) to the issuer’s digital address, online wallet, or other account. After the completion of the ICO, the issuer will distribute its unique “tokens” to the participants’ unique address on the blockchain. They are also marketed through social media, press releases, websites and sometimes, by other financial professionals.

Although the concept of cryptocurrency is probably here to stay, recovering money for victims of cryptoscams is extremely difficult. MahanyLaw is one of the few law firms that help victims of cryptocurrency fraud recover their money. Our practice, however, is limited to prosecuting cases where the ICO investment involved a stockbroker or investment advisor. Those cases are few and far between.

When ICOs are marketed through white papers, Facebook and websites, getting back an investor’s money is difficult. In many cases, it is almost impossible to determine where the offeror is even located! Because the people running the ICO want to be paid in digital currencies such as Bitcoin, tracing the money is also quite difficult.

Regulators are trying to stop these scams before people lose money. The SEC and several states are to stem the rising tide of scam and phony ICOs. Unfortunately, the bad guys launch new ICOs faster than the government can shut them down. And shutting them down doesn’t put money back in the investors’ pockets.

Did You Lose Money in a Cryptocurrency or ICO Scam?

As cryptocurrencies continue to rise in popularity, we expect more stockbrokers and investment advisors will try to get in the act. The big brokerage firms are certainly worried and with good reason.  Millennials are turning to cryptos instead of traditional investments. That means a loss of commission revenues.

They also know how volatile ICOs can be. Many brokerage firms refuse to permit their brokers to sell these investments.

Unfortunately, money talks and greed often wins out over ethics. We are finding some financial professionals are now peddling these investments on the side. In industry terms, that is called “selling away.” When a broker sells a financial product without his employer’s approval, he is said to be selling away.

At least two crypto investment funds have been launched. Because of the volatility of the underlying crypto assets, however, these funds are extremely volatile. That makes them unsuitable for most investors.

If there is any good news here, investors who purchase an ICO or a crypto fund offering through a licensed broker may have a good claim against that broker’s employer. Selling away subjects both the broker and the brokerage firm to liability.

If you lost at least $1 million in an ICO, a cryptocurrency fund or a crypto investment and the investment involved a licensed financial professional, we may be able to help. For more information about cryptocurrency frauds, visit our cryptocurrency and ICO fraud page. Want to know if you have a case? Contact us online, by email at *protected email* or by phone at (414) 704-6731 (direct). All inquiries are kept in strict confidence.

MahanyLaw – America’s Fraud Recovery Lawyers

The post SEC Busts Another ICO Cryptocurrency Scheme – “Crypto Visa” appeared first on Mahany Law.

Edward Novak was sentenced to 4.5 years in federal prison and fined $770,000 in one of the most gruesome and savage Medicare fraud cases in Illinois history. That he only received 54 months was amazing. And now that Novak will soon be released, he still doesn’t want to repay taxpayers or accept responsibility for his actions.

Novak was the CEO of Sacred Heart Hospital, a once busy 119 bed hospital in Chicago. Originally opened as the Franklin Boulevard Community Hospital in the 1920’s, the hospital went private in 1998. When the FBI raided the facility several years ago, it was owned and operated by Edward Novak. After Novak and 12 others affiliated with the hospital were indicted, the Chicago Sun Times called the Sacred Heart a maggot infested substandard facility. We called it a house of horrors.

Despite being convicted by a jury of his peers, Novak demanded the court set aside the jury verdict. When that didn’t work, he demanded a new trial. Failing in that, he appealed.  His bids to sidestep responsibility for conditions at the hospital were rejected every step of the way.

Even at his sentencing, prosecutors say that Novak showed no remorse and did not accept responsibility for his failings.

And now that Novak will soon be released? He is arguing that he shouldn’t have to pay millions of dollars in restitution. He claims that despite the Medicare fraud scheme, patients still received good care and the government got what it paid for!

To better understand the absurdity of Novak’s position, some history about conditions at Sacred Heart is needed. A history lesson that includes allegations of spraying patients in the operating rooms with Off! to keep bugs out of a patient’s open wounds and unnecessary (and often fatal) surgeries.

Sacred Heart Hospital – a Modern Day House of Horrors

In 2013, the feds indicted 13 people affiliated with Sacred Heart. Among them was Edward Novak. Many physicians and staff members ultimately cooperated with the Feds. Novak was one of the few exceptions and the most defiant.

Records show one Sacred Heart physician was called the “butcher.” There were also allegations that operating room nurses sprayed patients with “Off!” bug repellent to keep flies away from incisions during surgery.

Novak’s number two man, Anthony Puorro, turned on Novak and testified. He was the hospital’s Chief Operating Officer. Purro said the hospital paid kickbacks disguised as “educational stipends” to  physician assistants and doctors who brought in the most patients. (Patient recruitment schemes involving kickbacks are highly illegal.)

A patient recruiter testified that when beds were empty, staff were told to troll for patients. If a recruiter didn’t meet his or her “quota,” they were fired.

And what was Edward Novak doing? Puorro says he actively tracking the referrals made by each of the professional staff.

Many patients also came forward, sometimes it was the families of patients who died at the facility. The families of two patients who died at Sacred Heart said one of doctor there was performing unnecessary tracheotomy surgeries. Not only was he operating on people who didn’t need surgery, his safety record was horrible. They say he had a horrific mortality rate of 17.85%, far in excess of other doctors performing similar procedures.

Prosecutors claimed that ambulance drivers were bribed to take critical care patients to Sacred Heart even if other facilities were much closer. When seconds count, ambulance drivers were going out of their way to take patients to the hospital that paid them a kickback.

The False Claims Act Suit Against Edward Novak

Many of those indicted pleaded guilty. Others stepped forward and voluntarily cooperated. By the time Novak’s criminal trial started, the hospital was for all practical purposes closed.

A defiant Novak was convicted and tried every legal maneuver in the book to avoid prison. He failed.

And now we fast forward to today.

The government believes Novak made millions of dollars in profits from his Medicare fraud scheme. Not only must he pay the $770,000 fine levied in the criminal case, the government wants him to repay taxpayers. Medicare and Medicaid are funded with tax dollars. When you rip off Medicare, you are ripping off every hard-working American taxpayer.

Did a few years in the can make Novak any wiser? Apparently not. Now the battle rages on as to whether Novak should be forced to pay restitution. Incredibly, he still doesn’t appear to take any responsibility for his action. This isn’t a case over how much restitution is owed, rather Novak doesn’t believe he should pay anything! Zero, zip, zilch, nada!

In February, Novak asked a federal judge to toss the government’s request for restitution. “[T]he United States cannot carry its burden of demonstrating that it sustained any financial loss as a result of Mr. Novak’s conduct, and without evidence demonstrating a financial loss, there is no material question of fact for trial on the issue of False Claims Act damages. Additionally, the imposition of any False Claims Act penalties would violate Mr. Novak’s rights under the Excessive Fines Clause of the Eighth Amendment.”

Novak argues that the government can’t prove that it sustained lost any money because prosecutors have “failed to produce evidence showing that any medical care at issue in this case was illusory, unnecessary, or worth an amount less than what Medicare or Medicaid paid for that care. There is no dispute that the medical care at issue was provided to Sacred Heart patients who needed it.”

True, care was provided to those who needed it and according to witnesses at trial, to some folks who didn’t need it. But was the care worth what was paid? Can you even call it “care”? In our humble opinion, a jury of twelve already made that determination. There is a reason why Edward Novak is in jail and it certainly isn’t because he was providing good care.

Defendants in False Claims Act cases often claim there are no damages because a service or product was delivered. Would you pay for a surgery by a doctor called the butcher or one who had a horrific survival rate? How much would you pay for unnecessary surgery? Or for being sprayed with bug repellant to keep the flies and maggots away during surgery?

A federal appeals court has already dealt with this same issue, a case in which illegal kickbacks were at issue. There like here, the wrongdoer argued that since the patients received services, there were no losses. A three-judge panel in Chicago ruled in that case:

“Nor do we think it important that most of the patients for which claims were submitted received some medical care—perhaps all the care reflected in the claim forms . . . Edgewater did not furnish any medical service to the United States. The government offers a subsidy (from the patients’ perspective, a form of insurance), with conditions. When the conditions are not satisfied, nothing is due. Thus the entire amount that Edgewater received on these 1,812 claims must be paid back.”

In simple terms, the court said the government should not have to pay if the care provided was substandard or involved kickbacks. Play by the rules and you get paid. Why should Uncle Sam reward healthcare providers who fail to play by the rules?

And Novak’s second argument? His alleged violation of his Eighth Amendment excessive penalties?

That is also easy to address. It is not uncommon for wrongdoers to face both criminal and civil prosecution for the same offense. A drunk driver who runs over a pedestrian can be prosecuted for the drunk driving offense and even sent to prison. That doesn’t stop the pedestrian who got run over from also suing for damages.

Here the victims are you and I. Taxpayers. And Congress says that those that defraud Medicare and violate the False Claims Act can face triple damages. Is that cruel and unusual punishment? No. The only people who were cruelly treated were patients in Novak’s hospital.

False Claims Act, Whistleblowers and Preventing Harm to Patients

The government’s civil case against Edward Novak was brought under the False Claims Act, a Civil War era anti-fraud statute. Prosecutors love the law because it has real teeth, high penalties and triple damages.

Healthcare workers like the law because it has strong anti-retaliation provisions and allows whistleblowers to earn huge cash awards. Under the statute, whistleblowers with inside information about Medicare fraud can keep 15% to 30% of whatever the government collects from wrongdoers.

Earning an award isn’t difficult. But taking the first step is. Congress recognized that is why such generous awards are offered.

Medicare fraud usually involves overbilling, kickbacks and the like. Taxpayers are the victims in most healthcare fraud cases. Sometimes, however, they involve unnecessary surgeries and substandard care. When that happens, tragedy can occur. Patients can die. (Edward Novak was never convicted of abusing or hurting patients but as owner of the facility, we hold him responsible for the care received by patients in his hospital.)

If you are a healthcare professional with inside knowledge of Medicare, Tricare, Medicaid or other healthcare fraud, call us immediately. The conversation is free and without obligation. We can help you determine if you are entitled to an award, help protect you from retaliation and stop the fraud.

For more information, visit our Medicare fraud whistleblower page. Ready to talk? Contact us online, by email *protected email* or phone 202-800-9791. You will be relieved you did.

The post Guilty CEO Doesn’t Want to Pay (Edward Novak & Sacred Heart Hospital) appeared first on Mahany Law.

Not too many years ago, most pharmaceuticals were manufactured in the United States. That is no longer true. Today 85% of the drugs in our medicine cabinet are made outside the United States. Often in countries with little oversight. One survey suggested 25% to 40% of drugs made in India are “sub-standard.” Even the few drugs made here are often made in unsanitary conditions. There is no way the FDA can police tens of thousands of pharmaceutical and API manufacturing facilities alone. Only with the help of FDA whistleblowers – that’s right, company insiders – can we be assured of safe drugs and fair prices.

Clean rooms that are anything but clean or sterile. Adulterated, over potent or understrength drugs and poor cGMP (current good manufacturing practices) are just part of the problem. Add pharmaceutical companies that encourage doctors to push drugs for unsafe or non-approved purposes, kickbacks, over pricing and pay to delay schemes and it easy to see that the pharmaceutical industry isn’t what it once was.

Standing in the between patients and corporate greed are the production workers and compliance professionals. Most come to work every day and do their job as best they can.

And when they are told to fudge test results, or when they fail lots of drugs only to have management overrule their decisions, problems occur. Ditto for the sales reps who are pressured into pushing drugs for uses not approved by the FDA.

We have seen it all. And if you work for a drug company, so have you.

Our whistleblower clients tell us the first thing they feel is anger. How can this be? Why are we offering kickbacks? Why are we promoting off label use? Or why are we conspiring with some others to keep prices beyond the means of most consumers?

Usually, the anger leads to frustration. Good workers try to address problems internally. When that doesn’t work, some throw up their hands, some leave while others try to escalate the problem with senior management. “Maybe if my boss’ boss knew what was going on she would intervene. Surely the company wouldn’t allow drugs with potency problems to hit the marketplace.”

Nothing seems to happen, however. Days become weeks become months. Then the apathy sets in. You learn that if you want to keep your job, you just keep your mouth shut. You hope things will change. They don’t. Some workers, sales reps and QA professionals find other jobs. Others stay although both demoralized afraid to rock the boat any harder.

But a few become whistleblowers. They are the new American heroes. And in increasing numbers, those whistleblowers are QA professionals. When big pharma hires compliance workers, they better be prepared for the backlash if those workers are ignored.

In increasing numbers, workers are feeling empowered and taking matters into their own hands. They are becoming FDA whistleblowers. The big pharmaceutical companies know this and are trying to make it harder to become a whistleblower.

Big pharma – and even the Chinese, Indian and other offshore generic companies and contract manufacturing plants – are amping up the pressure to keep employees in line.

How? Employment agreements that suggest it is a HIPPA violation to send records to the FDA. Employment agreements that say you can’t sue the company for whistleblower retaliation and even agreements that suggest that you can’t report misconduct to the government! Many times, these agreements are illegal (they are certainly unethical) but employees are afraid of being singled out or losing their job.

Take for example HIPPA. Pharmaceutical companies often scare workers with possible prosecution for HIPPA violations. What they fail to say, however, is that there are exemptions for reporting misdeeds to regulators, law enforcement and disclosures to one’s own legal counsel.

Recognizing the hardships faced by FDA whistleblowers, Congress established the False Claims Act to provide financial incentives to those that do step forward. Under the Act, whistleblowers can keep 15% to 30% of whatever the government collects from the wrongdoers.

How big are those awards?? In the five years since May 2012, pharmaceutical companies under the False Claims Act cases have paid over $19,000,000,000.00. That’s right, $19 billion. With awards of between 15% and 30%, that equates to billions of dollars for FDA whistleblowers!

• GlaxoSmithKline $2 billion
• Johnson & Johnson $1.720 billion
• Pfizer $1 billion
• Abbott $800 million
• Wyeth & Pfizer $786 million
• Merck $650 million

If you have knowledge of a pharmaceutical manufacturer, compounding pharmacy, drug company or distributor that is defrauding the FDA, Medicare, Medicaid or Tricare, contact us immediately. We are ready to help you stop the fraud or unsafe practices and to make sure you get the highest award possible.

Even if you are not ready to blow the whistle or just want some answers, call us. We never charge for consultations and our services are 100% CONFIDENTIAL. Even if you don’t hire us. For more information, contact us online today.

Off Label Marketing

When the FDA approves a prescription drug, that drug is approved only for specific conditions or ailments. Pharmaceutical companies must prove to the FDA that their formulations are safe and effective. Even the manufacturing process for drugs must be approved.

Drug companies spend tens of millions of dollars each year on clinical studies and trials. It could take years before a new drug is approved or an existing drug is approved for a different condition.

Doctors, however, are free to dispense prescription drugs in ways not approved by the FDA. That practice is called an “off label” use. Drug companies can’t encourage or assist in such practices. Many do, however, because it saves them saves years of waiting for FDA approvals. It also allows them to rake in billions of dollars of additional profits.

Some drug companies encourage their sales reps to promote off label use of drugs. Some do so directly while others pressure their sales reps so much that the only way a rep can make her quota is to push drugs for off label uses.

We have many stories on our website about FDA whistleblowers who have earned cash awards for reporting off label use violations. (Use the search feature of our Due Diligence blog.)

In July 2012, GlaxoSmithKline paid $3 billion to settle a variety of charges regarding kickbacks and off label uses of their pharmaceutical products. $1,043,000,000.00 of the settlement was attributable to whistleblower claims regarding off label use of several GSK drugs. Specifically, the FDA and Justice Department said the company was “promoting the drugs Paxil and Wellbutrin for unapproved, non-covered uses, GSK also promoted its asthma drug, Advair, for first-line therapy for mild asthma patients even though it was not approved or medically appropriate under these circumstances. GSK also promoted Advair for chronic obstructive pulmonary disease with misleading claims as to the relevant treatment guidelines.”

Another aspect of the case involved alleged kickbacks paid by GSK to physicians to encourage them to prescribe more of their products.

Anti-Kickback Claims

Federal law and Medicare regulations prohibit drug companies from offering doctors compensation or things of value in exchange for prescribing a company’s drugs. The kickbacks need not be in cash. We have seen cases involving phony medical directorships, speaking fees, research grants where there is no expectation of any research, expensive meal and even trips for staff within the doctor’s office.

Yet another form of illegal behavior involves tying arrangements. Some drug companies will offer steeply discounted discounts on certain medications in exchange for writing more prescriptions of different, more profitable drugs.

Clinical Trial Fraud

Some of the worst frauds we have encountered in the pharmaceutical world involve clinical trial frauds. As noted above, the FDA typically requires every new drug and every new use for an existing drug to be extensively tested. There are human studies, animal studies, and lab work needed before drugs can be approved. These procedures are done for a variety of reasons including to measure how quickly the drug degrades or loses potency. They also involve safety studies to make sure there are no unintended drug interactions. All this can take years and cost millions of dollars.

A few very greedy and unethical companies will fudge the data. That is clinical trial fraud and is not only illegal, it could be deadly. Many companies will engage in a less obvious form of clinical trial fraud. They do so by not reporting adverse reactions or product failures. The results can be just as deadly for patients.

Other companies try to suggest that their medical devices are substantially equivalent to existing approved devices or that their pharmaceutical product is biosimilar. They do this to avoid costly testing or to have less testing. That is legal if the products really are the same.

cGMP Violations

Perhaps the largest danger for the general public comes from adulterated, mislabeled or under- / over potent pharmaceutical products. And who is in the best position to see these violations? Line workers and QA professionals.

In 2010, SB Pharmco Puerto Rico, Inc., a GlaxoSmithKline affiliate, paid $750 million in fines and penalties to settle claims about misbranded and adulterated Paxil CR and Avandamet drugs. The government said the charges arose under the False Claims Act and stemmed from cGMP problems. Specifically, prosecutors and the FDA claimed that some Paxil CR tablets that lacked any active ingredient, and some that lacked any controlled release mechanism. The FDA also claimed  some Avandamet tablets did not contain the FDA-approved mix of active ingredients.

How did the government find out about these cGMP violations?  FDA whistleblowers, of course!

More recently, in 2017 the FDA and Justice Department resolved another cGMP case, this one involving Baxter Laboratories. The government said that HEPA air filters in the sterile “clean room” area of the company’s manufacturing facility had visible mold, a serious cGMP violation. The company paid $18 million even though there was no evidence that any drugs were actually contaminated.

Call for FDA Whistleblowers

In 2017, the International Journal of Health Services reported that over the last 18 years, some 112 million prescriptions were written for drugs that turned out to be unsafe. Those are the prescriptions that the FDA knows about. Millions more drugs are in our medicine cabinet, pharmacy shelves or hospital dispensaries today that are adulterated, under-potent, mislabeled or unsafe. Millions more of prescriptions have been written by doctors on the mistaken belief that certain drugs are safe or effective for uses where the FDA has no evidence of such.

The public is being endangered simply so some billion dollar drug company can squeeze out a few more dollars of profit or avoid the embarrassment of a recall. This where dedicated pharmaceutical industry workers, managers, QA professionals and pharmaceutical reps can make a real difference.

Not only are large cash awards available, under the False Claims Act and related SEC whistleblower laws, retaliation is illegal.

Call us today if you are interested in becoming an FDA whistleblower. Even if you decide not to report, learn your options. All inquiries are protected by the attorney – client privilege and will remain totally confidential.

The call is free. The consultation is free. Even if you are outside the United States or not a citizen, you are still eligible for an award.

For more information, contact us online, by email at *protected email* or by phone at 202-800-9791 (International +01.202.800.9791). See also our information pages for Pharmaceutical Whistleblowers and Off Label Use and Kickbacks.

The post WANTED: Pharmaceutical and FDA Whistleblowers appeared first on Mahany Law.

ERISA – short for the Employee Retirement Income Security Act of 1974 – is a powerful federal law that protects workers who participate in employee pension plans, retirement plans, 401(k)’s and Employee Stock Ownership Plans (ESOPs). Other benefit plans including disability insurance and health insurance may also be covered if offered through the employer. ERISA fraud occurs when the employer improperly denies benefits, retaliates against workers seeking benefits, steals money from these plans or breaches a fiduciary duty owed to workers.

ERISA says that employers owe a fiduciary duty to their employees. That is the highest duty or standard of care recognized by law. Employers owe this duty when it comes to selecting investment plan options and making investment decisions involving pension and 401(k) plans.

Employers commit ERISA fraud or breach their fiduciary duty to employees when:

• Reducing benefits without proper notice
• Charging excessive fees in 401(k) plans
• Stealing assets from benefit plans
• Making risky investments with plan assets
• Making unsuitable investments
• Using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor,
• Failing to properly value plan assets at their current fair market value
• Taking kickbacks from fund administrators
• Receiving excessive compensation for managing the plan (includes third party plan administrators)
• Using 401(k) plans as a piggy bank for use by the employer
• Purchasing company stock at above market prices

MahanyLaw and its ERISA fraud partners pride themselves at being at the forefront of protecting workers’ rights and holding companies accountable for their misdeeds. We prosecute companies for ERISA fraud wherever it occurs.

Investing in Company Stock

Many pension plans invest heavily in company stock. Problems occur when companies that do this engage in accounting shenanigans, overpay for stock or use pension assets for illegal purposes. Unfortunately, some companies fail to appreciate that pension plans and 401(k) monies are held for the benefit of employees and can’t be used for other purposes.

Employers are required by law to put their employees’ best interests first. When companies are desperate, however, pension plans and 401(k) plans are often the first target companies look to for cash.

An MSN Money study on reverse 401(k) theft found that “CEOs routinely steal money from their employees’ accounts. Some even keep 10 percent or more of profits for themselves instead of using it to boost share prices of the stocks their employees hold.”

Many think of ENRON as an accounting scandal but it was one of the largest ERISA frauds in U.S. history as well. Employees not only lost their jobs when ENRON collapsed, they also learned that their retirement plans had been drained and their severance packages were virtually worthless.

What went wrong? Senior officers took millions for themselves. They stole not only from investors, but they also robbed almost every dollar that their employees had saved.

Other Types of Retirement Plan Fraud

Not all fraud involves excessive fees, stealing retirement monies or poor investments. Sometimes losses occur because the plan administrator and employer are simply careless, lazy or negligent. Whether the fraud is intentional such as theft or merely negligent, the result is the same for employees. Their money is gone.

We are beginning to see cases now in which companies and administrators failed to take adequate cybersecurity measures. Identity theft is an international problem and growing by the day. Pensions and 401(k) plans are not immune from these attacks.

Luckily, because ERISA imposes a fiduciary duty on both employers and plan administrators, good lawyers can often get back money lost to cyber hacking attacks.

Excessive Fees

A common example of ERISA fraud occurs when the employer or a third-party manager takes too much compensation. Fees are often hidden and hard to spot by employees. Remember, however, that the employer still owes its employees the highest duty of care.

Even if the employer is not receiving kickbacks or sharing in those fees, it is still responsible when third parties charge too much.

Unsuitable Investments

No one can guarantee investment returns. There is a certain amount of risk within the market. Employers have a duty, however, to fully communicate the risks inherent in their retirement or 401(k) plan options. Although it is common for companies to require workers to invest 401(k) assets in the employer’s stock, sometimes even that can be too risky, especially without adequate disclosures.

ERISA Whistleblower Retaliation

What happens if you discover or think you have uncovered ERISA fraud? Most employees discuss possible problems with their employer first. And unfortunately, some desperate companies retaliate. Congress anticipated this. That is why ERISA has powerful whistleblower protections and anti-retaliation provisions.

The ERISA anti retaliation protections are found in 29 U.S. Code Section 1140. That section protects workers from being fired before they can qualify for certain benefits for which they are eligible.

That same section of the law also protects whistleblowers. ERISA whistleblowers are employees who report violations, so the wrongdoing can be stopped. The law says it “shall be unlawful for any person to discharge, fire, suspend, expel, or discriminate against any person because he has given information or is about to testify in any inquiry or proceeding related to ERISA.”

The general rule is that an employee must report outside the company to be entitled to protections. A few courts disagree. This means that you should speak with an experienced ERISA whistleblower lawyer before reporting internally. Telling your boss or HR might not be enough!

ERISA and pension fraud whistleblowers are heroes. By speaking up about wrongdoing they are protecting not only their benefits but everyone else in the company. If everyone waited, it might be too late to recover the missing funds. (Just ask the former ENRON folks.)

I Have a Government Pension And My Benefits Are Not Covered By ERISA

ERISA covers most employee benefit programs but there are exceptions. Most notably are government pensions.  Even if ERISA does not apply, our Employee Benefits lawyers can still help.

Stealing pension funds, mismanagement of benefit plans and breach of fiduciary duty is illegal no matter what law applies. Often we can create a RICO (Racketeer Influenced and Corrupt Organizations Act) or class action case if a mismanaged union pension plan is involved.

Why Is ERISA Fraud Often Handled as a Class Action?

Finding a lawyer to take a single ERISA fraud can be difficult. Suppose, for example, you learn that your employer is taking too much in fees to administer their 401(k) program. For any single employee, those losses may only amount to a couple hundred dollars. While important, it isn’t practical to find a lawyer willing to take a case where the losses are $200.

In a class action case, many individual plaintiffs join their cases to form one big claim. The class becomes all employees who were invested in the company’s 401(k) or pension plan. Before a class can proceed, a judge must certify a class action lawsuit and all plaintiffs (employees) must have suffered a similar loss or harm.

Once certified, the court generally orders that all known potential class members be notified. They then can either “opt in” and join the lawsuit, individually pursue their ERISA fraud case or do nothing. By doing nothing, they likely won’t receive any money.

So why report ERISA and retirement theft if a class is likely to be created anyway? The first people to report are generally selected to be representatives of the class (“class reps”) and have more say in the litigation and often receive a little extra from the court for serving as a class rep.

Key to any recovery is selecting an experienced ERISA fraud lawyer to file the lawsuit and serve as lead class counsel.

Protect Yourself and Family Today

The ERISA fraud and employee benefits team at MahanyLaw and our partner firms are ready to protect your rights. You worked hard for your retirement and benefits. There is no reason why you risk those monies because of fraud or mismanagement.

To learn more about our services, contact us online, by email *protected email* or by phone at 202-800-9791. We consider cases across the United States.

Worried about legal fees? Most ERISA fraud cases are accepted on a contingent fee (success fee) basis meaning you never owe us fees or costs unless there is a recovery. All inquiries are confidential too!

Bonus Materials – 10 Red Flags That Your 401(k) Is in Danger!

The U.S. Department of Labor, Employee Benefits Security Administration has published the ten warning signs that your 401(k) contributions are being misused.

They are:

1. Your 401(k) or individual account statement is consistently late or comes at irregular intervals
2. Your account balance does not appear to be accurate
3. Your employer failed to transmit your contribution to the plan on a timely basis
4. A significant drop in account balance that cannot be explained by normal market ups and downs
5. 401(k) or individual account statement shows your contribution from your paycheck was not made
6. Investments listed on your statement are not what you authorized
7. Former employees are having trouble getting their benefits paid on time or in the correct amount
8. Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees
9. Frequent and unexplained changes in investment managers or consultants
10. Your employer has recently experienced severe financial difficulty

If you think there is a problem, take action immediately. If your employer is stealing pension fund assets, your savings could soon be gone. Remember that it is illegal to retaliate against workers who report ERISA fraud but many courts do NOT protect workers who only report internally. To be safe, contact us immediately.

Have questions? We will get your answers. Please contact us online, by email *protected email* or by phone at 202-800-9791. We consider cases across the United States.

The post My Employer Stole My 401(k), Now What? ERISA Fraud Lawyer appeared first on Mahany Law.

The traditional automakers we have often reported on are not the only ones involved in scandals and multi-million dollar lawsuits. Even Tesla, a company whose reputation is built around the concept of safe and environmentally-friendly transportation, is now receiving unwanted media attention.

The event that just put the company in the spotlight was the crash and subsequent electrical fire that killed two 18-year-olds in Florida last Tuesday, while they cruised around in a Tesla S. Both Barrett Riley, who was the vehicle’s driver, and Edgar Monserratt Martinez died on the spot. Shortly after, photos of Riley and Martinez beaming hopeful smiles flooded local media. Now, a grieving community has been left with one question, ‘what went wrong?’

These days, we read about dramatic, and often fatal, crashes involving self-driven cars about once or twice a week in America. And Tesla, the company that prides itself on making the ‘safest cars on the planet’ is now facing some harsh questions.

Burn Tesla Burn

Tesla model S and X cars have caught fire in Mexico, Washington, Austria, Indianapolis, California, and beyond. In Indianapolis last February, a Tesla Model S immediately exploded upon impact, killing a young woman and her boss. The first responders at the scene recalled seeing batteries popping out of the vehicle and exploding.

In Austria last October, it took over 35 firefighters to put out the fire that started after a model S crashed against a concrete wall. Yes, you read that right, 35 firefighters, and it took a while. The media referred to the incident as an, “electric car inferno.”

In fact, Tesla itself has acknowledged that electric car fires can take 24 hours to put out! The Austrian firefighters had to wear special breathing equipment to get the job done. Imagine if two Teslas collided and they both caught on fire? How is that for an glimpse of inferno?

Tesla claims that its “battery packs are designed so that in the rare circumstance a fire occurs, it spreads slowly so that occupants have plenty of time to get out of the car.” But that’s not at all what happened in the Fort Lauderdale crash.

Only a few days before the fatal crash in Fort Lauderdale, Tesla’s billionaire CEO, Elon Musk, argued, during an earnings call, that when an accident involves a car in autonomous mode, “it’s headline news, and the media fails to mention that actually they shouldn’t really be writing the story, they should be writing the story about how autonomous cars are really safe. But that’s not the story that people want to click on.”

“So, if the press is hounding the regulators, and the public is laboring on misapprehension that autonomy is less safe because of misleading press, then this is where I find the challenge of predicting it to be very difficult,” Musk said, with a bit of a holier-than-thou attitude if you ask me.

Ask the Expert

According to Florida attorney and consumer safety author John Uustal, who has written about autonomous car crashes,“Self-driving vehicle accident cases must weigh the responsibility of the drivers and pedestrians, the operator, the vehicle manufacturer, and sensor software and hardware manufacturers.”

The National Transportation Safety Board is currently investigating the crash that took the lives of the two Florida teenagers when their Tesla S caught fire after hitting a wall. There were actually three occupants inside the vehicle. A third teenager was ejected during the accident and required hospitalization. While early reports indicate that the car may have been speeding, investigators said they would focus on the causes of the fire.

The lithium-ion batteries used in Tesla cars (also featured in devices like portable computers and smartphones) cause a chain reaction when they burn, reaching much higher temperatures than standard gas-powered car batteries. (Remember those exploding Samsung phones? The batteries were also responsible in that case)

Moreover, in spite of Tesla’s advertising of anti-overheating technology, people on Tesla’s user forums have complained about unusually high temperatures inside the cars, attributing them to less than perfect battery cooling technology.

According to NTSB Chairman Robert Sumwalt, the agency, “has a long history of investigating emerging transportation technologies, such as lithium-ion battery fires in commercial aviation, as well as a fire involving the lithium-ion battery in a Chevrolet Volt in collaboration with the National Highway Traffic Safety Administration.”

Sumwalt also said that the goal of the probe will be to establish how the Tesla’s emerging technology impacted the outcome of the crash.

Car Fires Less Deadly Many Decades Ago?

By the way, Uustal has litigated prominent car fire cases, and has a unique perspective on Tesla engineering: “Long ago, General Motors engineers were saying that in any crash where the occupants survive the impact, the fuel system must also survive intact. The memo was called Thou Shall Not Die of Fire. That was 1972!”

In Uustal’s view, we essentially achieved that goal in modern fuel system designs. “If the company cares, they can do it,” he explains, “Batteries are just a different source of fuel, certainly not more dangerous than gasoline; one tank of gasoline is equivalent to over 100 sticks of dynamite. Those GM engineers were saying that people should never die from post collision fires. If you survive the crash, you must not die in a fire. It’s that simple.”

Perhaps we are not all that better off in 2018 after all…

Unsafe Manufacturing Plants

TESLA appears to be in trouble on several fronts; it was just fined over $110,000 for plant safety issues at its Massachusetts solar power facility. The Occupational Safety and Health Administration imposed the fines after a Tesla employee was severely injured. According to regulators, Tesla did not provide workers with sufficient training or protective equipment, and employees who took certain courses online were not tested for proficiency.

As if the flames needed any more fanning, less than two months ago, Tesla was forced to issue a Model S recall over potential power steering failures connected to driving in harsh winter conditions. In 2015, the company recalled all of its Model S cars due to a seatbelt issue.

Last year, the company was hoping for a Safety Award for the Tesla S model, but the Insurance Institute for Highway Safety didn’t find the vehicle to be up to its high standards. During crash tests performed to award the distinction, the head of the dummies in the Tesla S hit its steering wheel one our of every five times. This was attributed to the improper length of the seatbelts. The car only got an “acceptable” mark in various tests.

Ethics and Responsibility

John Uustal, who has written extensively about how responsibility should be weighed in accidents involving autonomous cars, believes that, “as self-driving tech developers keep complaining about the ‘exaggerated’ media attention given to crashes involving cars in auto-pilot mode, the issues of ethics and responsibility become increasingly central. As much as they would like to dismiss the technology’s repeated failures, sensors should function as expected, cars should not flat out explode, and the companies that put those vehicles and that technology on the road must be held accountable.”

When self-driven car software that is often riddled with bugs is left to make life and death decisions on U.S. roads, things can go very wrong, and judging from the current scenario, that is not about to change anytime soon.

[Ed. Note: We believe that John Uustal and his firm, Kelley Uustal, are the finest automobile products liability lawyers in the country. From exploding GM gas tanks to exploding Takata airbags to exploding Teslas, John is our go to guy.]

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Cybersecurity Whistleblowers Are Growing Corporate Challenge

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Signals from the U.S. Securities and Exchange Commission over how seriously it takes cybersecurity, combined with a Supreme Court ruling on whistleblower protections, are putting pressure on companies to be more careful about how they deal with potential tipsters, lawyers say.

The securities regulator issued guidance in February on how companies should handle cybersecurity issues. In April it fined Altaba Inc., formerly Yahoo Inc., $35 million over its handling of a 2014 hack, marking the first time the SEC penalized the victim of a breach.

“It’s going to incentivize people inside an organization to step forward and disclose,” said Brian Mahany, a whistleblower lawyer and founder of Mahany Law LLC. “I think the SEC is saying to companies, ‘We’re taking this seriously. You take it seriously.’”

Two of the five SEC commissioners—Kara Stein and Robert Jackson Jr.—said after the guidance was released that the agency hasn’t gone far enough, a sign of pressure from the top to deal with cybersecurity concerns.

Cybersecurity isn’t new ground for the SEC. The agency issued guidance in 2011 saying while no rules explicitly address cybersecurity-related disclosures, more general requirements may oblige firms to release information. Many companies responded by telling investors more about the danger they faced from hackers, but the risk has continued to grow. That prompted the SEC to weigh in again, the agency said.

“I definitely think this is a growth issue,” for companies, said Dallas Hammer, an attorney at Zuckerman Law who represents employees in whistleblower matters. “We’re getting [inquiries] about this every week.”

The February guidance is “definitely much more pointed,” said Mr. Hammer. It says companies’ internal controls should enable them to prevent and detect breaches, assess their significance and make sure they are properly disclosed. Keeping insiders from trading on nonpublic knowledge about breaches is also a focus of the guidance, he said.

That gives whistleblowers reason to believe that by telling authorities about a cybersecurity problem, or a company’s failure to disclose one, they would be reporting a securities-law violation. People who blow the whistle are protected from retaliation under the 2002 Sarbanes-Oxley Act and the 2010 Dodd-Frank Act if they believe they are reporting violations of SEC rules.

“This is significant if you have a blocking point in your chain of reporting,” for cybersecurity issues, said Alexis Ronickher, a plaintiffs’ lawyer at the whistleblower law firm Katz Marshall & Banks LLP.

A Supreme Court decision in February adds to the challenge for companies, said Gregory Keating, who heads the whistleblower-defense practice at the Boston law firm Choate Hall & Stewart LLP. The court decided antiretaliation provisions under Dodd-Frank apply only to individuals who flag potential wrongdoing to the SEC.

Just reporting problems in-house at work isn’t enough, so whistleblowers are now more likely to go to the agency, said Mr. Keating. And employers may not know a staff member has gone to the SEC until the regulator approaches them about allegations.

To ease the path for workers to raise concerns internally, companies should open multiple channels for reporting, Mr. Keating said. Another step would be to train managers to know part of their job is to to recognize and deal with whistleblowers’ concerns, and to evaluate them on how good they are at handling complaints,

One challenge is information-technology staff are responsible for both discovering cybersecurity issues and dealing with them, he said. A manager who receives a complaint about security from the IT staff may not realize that amounts to an instance of whistleblowing. But after that point any negative action—a bad performance review, for example—against the worker could give rise to a claim of retaliation.

“Employers need to be vigilant,” Mr. Keating said.

Perhaps the most important steps, Mr. Hammer said, are making sure a whistleblower isn’t treated differently after coming forward with a potential problem, raising concern about retaliation, and creating confidence among staff that management will seriously address concerns.

“That’s going to keep most people from coming to me,” he said. “Most people don’t want to be whistleblowers.”

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Baxter is one of the largest pharmaceutical companies in the world. With 67 manufacturing plants and 48,000 employees, Baxter is one of the biggest manufacturers of sterile IV solutions. Last year the company was ordered to pay $18 million after a whistleblower stepped forward and said the company’s Marion, North Carolina “clean room” was anything but clean. Under FDA “CGMP” regulations (“current good manufacturing practices”), IV solutions must be manufactured and packaged in absolutely sterile conditions.

Pharmaceutical companies pay millions of dollars to build clean rooms. Just like you see on TV, workers are required to gown up and anything entering the room must be first be sterilized. Part of maintaining a sterile environment includes keeping air handling equipment clean. A clean room won’t stay clean very long unless the air circulating in the room is constantly filtered. And that is exactly what one whistleblower said was the problem at the North Carolina Baxter plant.

So just how much trouble can you get in for violating FDA current good manufacturing practices for air handling equipment and cleanliness? Last year Baxter Healthcare Corporation again learned its lesson the hard way, agreeing to pay $18.158 million to resolve both criminal and civil allegations that its North Carolina drug manufacturing facility failed to follow current good manufacturing practices (CGMPs).

Drug makers use HEPA filters to keep the air in the clean rooms clean. HEPA is short for high-efficiency particulate air. A HEPA filter works by forcing air through an extremely fine mesh. Harmful particles such as pollen, pet dander, dust mites, and even smoke are caught in these filters. Like the filter on a vacuum, HEPA filters need to be constantly replaced. If the filters are not clean, they can become bacteria magnets.

By refusing to change moldy HEPA filters involved in the manufacture of sterile intravenous (IV) drug solutions, Baxter Healthcare Corporation violated the federal False Claims Act, agreeing to a $2.158 million civil settlement. Baxter HVAC technician, Christopher Wall, collected a $431,000 cash whistleblower award for reporting the violations. (The remainder of the settlement was tied to violations of the Food, Drug and Cosmetic Act. Baxter was allowed to resolve the charges without pleading guilty to any criminal charges.)

Baxter Management Told HVAC Tech To “Just Wipe It Off”

Baxter Healthcare Corporation employee Christopher Wall owes his successful whistleblower claim to powerful photo evidence he obtained while working as an HVAC tech at Baxter’s Marion facility, North Cove.

His photos of mold growing on HEPA filters situated near IV bag filling machines prompted a 2012 FDA inspection that found “several mold species and other particulate matter” on air filters involved in the production of IV solutions – solutions that, if contaminated, can kill a patient within a matter of days.

Case documents filed in U.S. District Court suggest the IV solutions produced at Baxter’s North Cove facility account for around 60% of all sterile IV solutions used in U.S. hospitals. The drug packaging machine involved in the case filled about 60,000 IV bags per day.

Christopher Wall, who has been working for Baxter since 1979 (and still does), initially notified management about the moldy filters and potential contamination concerns in 2011, and again in 2012. Wall claims management told him to “just wipe it off” and not to replace the filters.

Like most conscientious pharma workers, Wall spoke to his boss and then his boss’ boss. When that didn’t work he spoke with a senior manager, Human Resources and ultimately the plant manager. Nothing. Ultimately, managers were getting tired of Wall’s complaint. One told him, “Whatever you do, don’t bring up changing the HEPA filters.”

The contaminated HEPA filters remained, during which time Wall took photos and used them to file an FCA whistleblower lawsuit claiming Baxter knowingly billed the Department of Veterans’ Affairs for the illegally manufactured IV solutions.

Most whistleblowers try to fix problems internally before reporting outside. Wall was no exception. Only after unsuccessfully telling four different layers of management and being ignored did Wall become a Baxter whistleblower.

Wall’s powerful photo evidence of FDA CGMP violations prompted a 2012 FDA investigation (the filters remaining in place for 16 months until just prior to the inspection).

“Despite notification by an employee of potential contamination concerns, Baxter was poorly focused on instituting sufficient safety standards for their products,”  said U.S. Attorney for the Western District of North Carolina, Jill Westmoreland Rose.

Filter testing revealed several species of mold growing on the HEPA filters. While the FDA found no evidence of IV fluid contamination coming out of the Marion facility, they did conclude that Baxter had knowingly violated FDA CGMP regulations – and that’s all that is required to file an FCA whistleblower claim.

CGMP Non-Compliance Violates False Claims Act

Under the Federal Food, Drug, and Cosmetic Act, the government claimed that, between July 2011 and November 2012, Baxter introduced adulterated drugs into interstate commerce by failing to comply with FDA cGMP.

The Baxter settlement is the third FDA CGMP False Claims Act settlement in recent years, (following the $750 million GalaxoSmithKline case and the $505 million Ranbaxy case)  highlighting the popularity of these claims.

QA professionals, drug calibration specialists, laboratory technicians, pharmaceutical sales reps, public health administrators, drug manufacturing company executives and other pharmaceutical safety or quality control professionals are the most common people to run across violations and file FDA CGMP whistleblower claims.

Those with knowledge of CGMP violations may qualify for a whistleblower award as long as that product or the company that produced it is involved in a government-funded program like Medicare, Medicaid or TRICARE. [Most pharmaceuticals qualify.]

Any company that violates the FCA must pay between $11000 and $21000 per false claim, plus treble damages. For exposing FDA CGMP violations, FDA pharma whistleblowers collect between 15% and 30% of the total government recovery.

Baxter Enters Deferred Prosecution Agreement – Pays $18M

Baxter has agreed to pay approximately $2.158 million to settle allegations that, as a result of its CGMP non-compliance, the drug manufacturer caused the submission of false claims to the Department of Veterans Affairs in violation of the FCA. Whistleblower Chris Wall will receive nearly 20% of the settlement amount ($431,535.99) as his cash award.

In addition, Baxter entered a deferred prosecution agreement admitting that it distributed adulterated drugs in interstate commerce in violation of the Federal Food, Drug, and Cosmetic Act.

Under the agreement, Baxter must draw up improved compliance policies, submit regular reports to the government regarding the execution of these new policies, and pay penalties and forfeitures equaling $16 million. The company was able to settle without a formal plea of guilt.

“Following current Good Manufacturing Practices is essential to ensure the safety and efficacy of our drugs,” said Benjamin C. Mizer, the Justice Department’s Civil Division Head and Principal Deputy Assistant Attorney General. “Today’s settlement shows that the government will continue to hold companies accountable for failing to fulfill this critically important responsibility.”

We are amazed that Baxter spent millions of dollars on building clean rooms but decided to cheap out on the filters. This case being on the heels of another adulteration case involving Baxter, one where approximately 100 Americans were believed to have died because of adulterated heparin manufactured by Baxter.

Call for Baxter Whistleblower (Pharmaceutical Whistleblowers)

The 2007 Baxter heparin deaths were tragic and preventable. Baxter won’t say how much it paid to settle the cases stemming from the poisonous heparin. (The company admits that some people had a “reaction” to the drug.) We believe, however, that there were 740 lawsuits against the company. All but one appear to have confidentiality provisions (gag orders) preventing victims or their families from discussing the cases.

In the 2007 case, no one from Baxter stepped forward initially and became a whistleblower. Dozens of lives could have been saved. Fortunately, Christopher Wall stepped forward in 2012. His actions may have saved countless lives.

Whistleblowers are the new American heroes. They play an essential role in the pharmaceutical world. The FDA simply does not have enough staff to inspect every facility and every smaller company that makes the active ingredients for drugs. There are literally over ten thousands of these plants worldwide.

The FDA relies on pharmaceutical whistleblowers to step forward and report violations. Under the False Claims Act, these whistleblowers are entitled to between 15% and 30% of whatever the government collects from the wrongdoers. Their actions save lives and save taxpayers billions of dollars each year.

With 67 plants worldwide, we wonder if Baxter will ever learn their lesson. That is why we are actively seeking a Baxter whistleblower (or whistleblower from any pharmaceutical company.)

Not a US citizen? Not a problem. False Claims Act whistleblowers can be paid to citizens and non US citizens alike. All you need is original source (inside) information.

For more information, contact us online, by email *protected email* or by phone at 414-704-6731 (direct). You can also visit our pharmaceutical and FDA whistleblower page. All inquiries are protected by the attorney – client privilege and kept confidential. We take cases worldwide if the drugs are being marketed in the US. There is no fee for our services unless we win your case and you collect an award.

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How to Protect Yourself and Your Family From Long-Term Care Insurance Scams

When shopping for long-term care insurance, be on the lookout for these bank account-draining scams.

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Long-term care insurance consumers — usually upper-middle age and older Americans — face enough hurdles in finding the best policies. Complicated contracts, high fees and charges, and booming premiums await any long-term care insurance buyer.

On top of that lurks another, more sinister issue for buyers, and it’s one of the worst forms of elder fraud — long-term care insurance fraud.

It’s a big problem, given the skyrocketing costs of long-term care services these days, and the burgeoning need for long-term care financial help.

According to a 2017 study by Genworth, the median monthly cost of long-term home healthcare services is $3,994, and the median cost of a semi-private nursing home room is $3,750.

Long-term care insurance fraud comes in many forms, experts say.

Faulty policies: Unsuitable long-term care policies tend to favor maximum profit over a person’s unique health care needs. Potential traps include policies with ultra-high premium costs and insurance companies that try to sell two overlapping long-term care insurance policies when only one is needed.

Upgrade scams: Often, long-term care insurance scammers will try to “churn” a long-term care customer by making them cancel their current policy and plug in a new, more expensive policy that offers no benefits over the old policy. Churning is particularly onerous given the fact that when an existing insurance policy ends, premiums paid out on the old policy are forfeited. Additionally, pre-existing conditions that weren’t in play under the old policy may drive up premium costs on the new policy.

Phony policies: Long-term care insurance scammers may also try to sell bogus policies that accept the customer’s premiums, but don’t pay out any cash when the insurance is needed down the road. Long-term care consumers should always check with their state’s insurance department to validate an insurer before signing on the dotted line, and make sure the company is licensed to sell insurance in your state.

Long-term care insurance scams also can include other trap-doors that can lead to non-coverage, says Brian Mahany, a Wisconsin-based fraud recovery attorney and healthcare whistle blower.

“Long-term care insurance fraud can also include falsely representing benefits of a long-term care policy (i.e., saying they will cover all your long-term care needs) and high-pressure pitches to sell expensive policies (the insurer will warn you about being a burden on your kids),” he says.

Mahany says that insurance scammers who sell selling fake policies that don’t pay anything are a major threat. “By the time the person learns that their policy is fake, they have paid tens of thousands of dollars,” he notes.

Seniors and family caregivers can nip long-term care insurance scams in the bud by getting together, thinking like a team, and being smart about long-term care decision making.

“(Family) meetings are a good idea, but consider having a facilitator in the room to help remove sibling politics and keep the conversation focused on the financial health of your parent,” advises Frank McAleer, senior vice president of wealth, retirement and portfolio solutions at Raymond James.

Families can also incorporate digital tools earlier in the process to manage senior long-term care decisions to better avoid any fraudulent activity. “For instance, [online fraud protections and remediation tools] can assign a trusted contact to receive copies of financial transactions in real-time,” McAleer says.

Creating an effective, sustainable long-term care strategy, whether on your own, or in a family setting, is hard enough without the prospect of fraud hanging over your head.

Stay on track by being vigilant about long-term care insurance decisions, vet any and all providers, and bring in a trusted financial professional if there are any doubts at all about the veracity of a long-term care insurance provider.

Do that and you’ll keep fraudsters at bay, and your long-term care plan on the right track for years to come.

The post The Street appeared first on Mahany Law.

Last week New York City hosted the Consensus 2018 conference. The conference was timed to coincide with Blockchain Week. Despite huge double-digit percentage drops in the value of Bitcoin and many other cryptocurrencies, the mood at the conference remained upbeat. (According coinmarketcap.com, cryptos lost $45 million in value between May 11^th and May 18^th.)

Even though Bitcoin is holding at around $8,000, one prognosticator claimed it would still close the year at $50,000. John McAfee, founder of the well-known antivirus software bearing his name, sees Bitcoin surpassing the $1 million mark in just two years.

The industry euphoria evident at the conference worries us. Rented Lamborghinis, a yacht big enough to hold a party for 1000 people… these are not the signs of a bear market.

Or a rational one, either.

If the Dow Jones Index or S&P 500, fell by 50%, there would be panic in the streets. Today’s youth weren’t around for the Great Depression, however. Nor were their parents. Yet millions of Americans are still mesmerized by the thought of easy money.

When the 1930’s ushered in the Great Depression, it was real companies that saw their value tumble. Railroad, mining companies. These businesses had employees, they made things and owned real assets.

But what is behind a crypto company. A couple millennials, a rented post office box and a website. In many cases, that is all. And that should be enough to worry any would-be investor.

Warren Buffet called the crypto market “rat poison squared.” We agree.

Google this month banned cryptocurrency ads. The SEC is cracking down on ICOs and so are other governments around the world. But will these actions have any effect on cryptocurrency prices and offerings?

It is impossible to tell if all the money is in, that is, are there still more people on the sidelines waiting to invest. Will there be a rally? A continued slow decline (Bitcoin has already lost half its value in the last several months)? Or might we see a dead cat bounce where the market makes a brief but small rally before crashing?

No one knows. But that uncertainty, the hype and extreme volatility is precisely why Bitcoin and most of the newer Initial Coin Offerings (ICO’s) are completely unsuitable for most investors.

To date, most investors continue to purchase their crypto investments through coin exchanges, directly from promoters or ICOs. Normally that would be fine but here it is more akin to purchasing from the devil himself.

If the deal goes south, who do you sue? Where is your money? Does the company making the offer really exist? Are they in the United States? We traced one ICO to a vacant lot in California.

So what can we do if you lose your money?

Surprisingly, very little! That is not the answer you expect from a law firm that prides itself on its asset recovery and fraud fighting skills. But there is a sliver of hope if you purchased from a broker or financial professional.

Buying from a promoter is probably a nonstarter. Ditto from an exchange. There isn’t much we can do for you. If you fall into that category and lose everything, your best hope is the SEC or FBI. Maybe if the ringleaders go to prison there might be some restitution. That is, if the money hasn’t been spent. (If the conference was any indication, there are still people partying like they are on the Titanic – before it hit the iceberg. Snoop Dog playing at your event of finding a yacht that can hold 1000 partyers isn’t cheap.

Brokerage Firms Can Be Sued for Cryptocurrency Fraud Losses

Because the commissions can be quite high, a few stockbrokers and financial advisors have been “dabbling” in the cryptocurrency market. And it’s usually without the blessing of their employer.

Brokerage firms and banks know that these investments are very risky. That is why so many of the forbid their advisors from peddling them.

So why would a broker tempt fate and sell them anyway? The answer is money.

With so many discount brokerage firms and online trading platforms available, commission revenue has been seriously squeezed. A stockbroker is lucky to get one half of one percent. But a crypto can pay 8% or more.

When brokers sell unapproved products to customers, the process is called “selling away.” Even if they sell unapproved products and do so without their employer’s knowledge, the brokerage firm is still responsible for those losses.

“Selling Away” Red Flag Warning Sign

 Brokers that sell away will often ask investors to make their check payable directly to the broker or to a third party / promoter. Usually, when you make an investment through a stockbroker, you make payment to the brokerage firm. For example, if you buy $10,000 of GM stock through your broker at Merrill Lynch, your check is made payable to Merrill Lynch and not the broker’s personal account or General Motors.

Legitimate Cryptocurrency Securities

The SEC and CFTC are now approving cryptocurrency exchange traded funds. These work like a mutual fund. Although the fund itself may be legit, the ICO and crypto currencies purchased by the fund may not be. Already there are several crypto ETFs available to U.S. investors: Amplify Transformational Data Sharing ETF (BLOK), Reality Shares Nasdaq NexGen Economy ETF (BLCN), First Trust Indxx Innovative Transaction & Process ETF (NASDAQ: LEGR) and Innovation Shares NextGen Protocol ETF  (KOIN).

And these ETFs can be as volatile as the cryptocurrencies themselves.

That extreme volatility makes them unsuitable for most investors. Especially those needing immediate access to their money (retirees or soon to retire), the elderly and those with a low or moderate risk tolerance.

Also quite volatile are Bitcoin futures which can be traded on both the CBOW and CME. And with the launch of Bitcoin futures along came a few brokerage firms willing to sell these futures contracts. As of this writing we believe that TD Ameritrade and TradeStation are both allowing trades in the new contracts.

Simply because a brokerage firm allows trading in a particular offering doesn’t make them liable for any losses. What you do with your money is your business. Brokers get in trouble, however, when they start making recommendations and those recommendations are deemed unsuitable for a particular customer.

We know of at least one investor lawsuit brought against Bitcoin Savings & Trust. That company allegedly made claims that their investors could make 7% weekly profits. They also claimed to “safeguard [an investor’s] Bitcoin in a manner akin to a brick-and-mortar bank safeguarding a customer’s valuable goods and money.”

Sounds legit like a bank, right? Well the previous name of this supposed bank was Pirate Savings & Trust. That was apparently even to wild for them. According to court records, Bitcoin Savings & Trust was a Ponzi scheme. It isn’t a legit bank. In fact, it is not even an incorporated entity.

The SEC also took action but not before millions of dollars of investor monies were lost.

That means if you buy from a bank or brokerage firm, make sure it is really legitimate.

As this was being published, we checked with investing.com to see what brokerage firms are holding themselves as cryptocurrency brokers. While there are many who will offer Bitcoin futures and cryptocurrency ETFs, a whopping two companies were brave enough to put their licenses on the line and serve as cryptocurrency brokers. (One of those companies is Cryptobitup. We know nothing about them other than they appear to be located in London yet investing.com claims they are regulated by the Russian Financial Market Relations Regulation Center. With a minimum investment of just $250 there are red flags galore!)

Call to Action – Cryptocurrency Fraud Victims and Whistleblowers

If you lost money in a cryptocurrency scheme and you invested in an ETF, futures contract or mutual fund, we can help. Ditto if you purchased any type of ICO or the like from a stockbroker or investment adviser. As long as the investment was solicited – an “unsolicited trade” is one in which the investment was your idea – both the broker and brokerage firm can be held liable.

SEC Cryptocurrency Whistleblowers. Working in the industry? The SEC is actively looking for whistleblowers that can expose these schemes. Under the SEC Whistleblower Program, financial services workers with inside information about fraud involving Initial Coin Offerings or other cryptocurrency schemes may be entitled to substantial cash awards.

We have not seen any IRS whistleblower awards yet but suspect they will also be interested. Just like Swiss accounts once were used to launder money and evade taxes, today that dubious honor falls on cryptocurrencies. Like the SEC, the IRS also has a whistleblower program.

Worried that you might get in trouble for your role in the scheme? It is probably better to get ahead of the problem than wait for the knock on your door. And not having U.S. citizenship is also not an impediment. The feds want to shut down the crypto Ponzi schemes that harm investors and give the entire blockchain movement a black eye.

For more information, visit our ICO cryptocurrency fraud page. Ready to talk or want to know if you have a case? Contact us online, by email (*protected email*) or by phone (202-800-9791.) All inquiries are kept strictly confidential. Both stockbroker fraud recovery and SEC whistleblower actions are handled on a success fee (contingent fee) basis.

MahanyLaw – America’s Corporate Policeman

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Airport construction contracts can involve billions of dollars. Much of that money comes from taxpayers. As I write this post from LaGuardia Airport, a billboard boldly claims that the new LGA makeover is estimated to cost more than $1,000,000,000.00 – that’s right over $1 billion!

We previously successfully prosecuted a corrupt contractor who supplied non-compliant steel components used in the construction of the Miami Airport intermodal center.

The Justice Department announced this week that former Detroit Metro Airport utilities manager James Warner was charged with receiving $5 million in bribes.

Because these airport contracts involve so much money, the inclination to raid the cookie jar or rip off the airport authority is simply too great for many. Today, its Michigan taxpayers that are taking it on the chin. But Warner isn’t the only one connected to the ever widening airport construction probe. He is the third person indicted and probably not the last.

According to a recently unsealed indictment, Warner was charged with conspiracy, federal program bribery, theft from a federally funded program, conspiracy to commit money laundering and obstruction of justice.

Warner was a manager with the Wayne County Airports Authority, operator of the Detroit Metro Airport. As a manager, Warner’s duties included oversight of maintenance and inspections. The feds say that he had the authority over certain contracts. Those contracts included a contract with Pitrula & Sons, a key paving and water main vendor for the airport.

Prosecutors say that William Pitrula, owner of the company bearing his name, and Warner conspired to create phony invoices for work at the airport. Those invoices would “grossly inflate” the amount of work and dollar value of that work. When Pitrula got paid from the airport, he would allegedly kickback some of the money with Warner. Both men profited while taxpayers were left writing the checks.

The feds got involved because federal transportation monies help fund work at the airport.

Prosecutors say this cozy arrangement allowed Pitrula to get $18,000,000 in payments from the airport and kickback $5 million of those payments to Warner.

This form of bribery and theft is unfortunately common place in many government construction projects. But there is more.

In a separate conspiracy charge, prosecutors say that Warner tried to shake down another vendor, Envision Electric. They were the company awarded the contract to maintain the airport’s parking garages.

Prosecutors say that Warner fed inside information to Gary Tenaglia, owner of Envision. This helped Envision win the lucrative maintenance contract.

As maintenance inspector, Warner would sign off on work performed by Tenaglia’s company even if that work was substandard. Warner then demanded a kickback.

Court records say that “James Warner told Gary Tenaglia he needed to pay to be part of the ‘brotherhood’ at the airport. One night, James Warner took Gary Tenaglia out to dinner to discuss the kickback arrangement. During the meal, [Warner] wrote ‘5k’ on a napkin. He folded it and slid it across the table to Gary Tenaglia. After [Tenaglia] acknowledged the meaning of the writing on the napkin, James Warner retrieved the napkin and ate it.”

Warner also allegedly told Tenaglia, “You wouldn’t be here if it weren’t for me, your ass would be out.”

Media reports say that the feds have already seized $3.9 million from Warner and $7.5 million from an unnamed contractor.

Both contractors are expected to plead guilty and cooperate with prosecutors. Warner was just arrested this week and pleaded not guilty.

Payoffs from Contractors – Opportunity for Whistleblowers

Many readers are thinking this is business as usual in Detroit. It is and in many other cities across the United States. It doesn’t have to be that way, however.

We believe that several people knew something was amiss. Yet no one stepped forward. Few do. Some don’t want to get involved. Some don’t want to lose their job and some worry that they might get in trouble themselves for going along with things or lying for their boss.

Congress understood this and passed the False Claims Act (“Lincoln Law”) during the 1860’s. Over 150 years later that law is still on the books and has become one of the most important anti-fraud tools available to prosecutors.

To make sure that concerned citizens step forward, Congress allows whistleblowers to claim a piece of whatever prosecutors obtain from wrongdoers. There are powerful anti-retaliation provisions in the law too. (Michigan has a similar state whistleblower law but is applicable only to state funded Medicaid fraud. Because the Wayne County Airports Authority relies heavily on federal transportation monies, defrauding the county agency becomes a federal offense.)

As noted above, some would be whistleblowers worry that because they have gone along with things for so long, they too can get in trouble. The odds of that happening, however, are remote.

The Justice Department is after the corrupt politicians, government employees running these shakedowns and the contractors themselves. They want the kingpins, not the minions.

Even if you were a manager, it is better to cooperate early and grab the “get of jail free” card. The alternative is spending your life looking over your shoulder. We can help you find peace of mind by sitting down with prosecutors and insuring you remain a witness and not a target.

Each year the government pays out hundreds of millions of dollars of whistleblower  You can be the next recipient. But you have to be the first to file and you have to possess inside information. The fraud also has to involve federal program

Ready to learn more? If you are living in Georgia, visit our Michigan whistleblower page. Living somewhere else? Our government contractor fraud page has lots of helpful information as well.

Have specific questions or want to learn if you have a claim? Contact us by email *protected email* or phone (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and there is never a charge for a consultation. We have recovered over $100 million for our whistleblower clients and are still just as eager to help the next.

MahanyLaw – America’s Whistleblower Lawyers

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Statistics can be fascinating. Today we are bombarded with almost too much data and information. By using statistics, we can better digest that information and bring order to raw data.

Of course, with so much attention focused today on the Bitcoin and cryptocurrency craze, we are interested in finding out more about the folks investing in cryptos. Our friends at finder.com were only too happy to share their statistical research with us.

Here is what we learned:

First, cryptocurrency investment certainly has become mainstream. 7.95% of Americans have invested in a cryptocurrency or ICO (initial coin offering).

Bitcoin is the most common cryptocurrency investment… 5.15% of Americans hold Bitcoin while 1.80% are holding Ethereum. And what is the average investment amount? For Bitcoin holders, the average is $3450. Ethereum holders, however, only purchased an average of $1243.

But what do all these statistics mean?

For us, it means cryptocurrency isn’t a passing fad. Millions of Americans have invested. And because the market is so new and unregulated, it is also filled with scams.

Who are the victims of those scams? Once again, we can turn to the statistics. At one end of the scale are baby boomers such as myself. Apparently, we have not felt the bug to purchase cryptocurrencies. Just 2.24% of baby boomers claim to have invested.

On the opposite side of the spectrum are millennials. Almost 18% of them are invested in cryptocurrency.

And why haven’t more people invested?

• 40% of Americans say they don’t see the need.
• 35% believe that cryptocurrencies are too high risk
• 27% don’t understand blockchain or how value is assigned to virtual money
• 18% believe that cryptocurrencies are a scam

And a final interesting statistic? Men are almost three times more likely to purchase cryptocurrencies than women.

Our job as fraud lawyers is to best protect investors of any age or gender from becoming fraud victims. In the case of cryptocurrencies, prevention takes on far more importance.

Why? Because recovering money in cryptocurrency scams is often impossible. The currencies themselves are impossible to trace. When your money is gone, its gone.

Although Bitcoin and Ethereum are considered legit by most investors, there are new ICO offerings weekly. And many of those are scams.

Because the scammers frequently require investors pay for their investment in Bitcoin and often use fictitious addresses, recovering money from these scams is difficult.

Recovering Cryptocurrency Losses from Financial Professionals

Although we post plenty of stories about cryptocurrency fraud, we don’t profess any magic abilities to recover money from these schemes. That is why we emphasize caution and prevention.

There is an exception, however. An ever increasing number of financial professionals are getting involved in cryptocurrencies. Every investor that decides to invest in an ICO instead of stocks or bonds, represents a lost commission.

Recently we have seen an uptick in ICOs and cryptocurrency ETFs being offered by stockbrokers, investment advisers and other financial professionals. When they fail to conduct proper due diligence or make an unsuitable recommendation, both they and their employers can be held responsible for any investor losses.

If you lost $1 million in a cryptocurrency scheme or ICO and purchased your investment with the help of a financial professional, we may be able to help.

For more information, visit or cryptocurrency, ICO and Bitcoin fraud page. Want to know if you have a case? Give us a call. All inquiries are kept confidential and are offered at no fee. For more information contact attorney Brian Mahany online, at *protected email* or by phone at 414-704-6731.

Special Note for ICO Insiders

We are a leading SEC Whistleblower Reward law firm. If you work or worked inside one of these businesses and have information about offering fraud or phony books and records, we definitely want to talk to you. The SEC will allow you to remain anonymous.

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The Supreme Court’s recent Murphy Oil decision regarding class action waivers is a disaster for American workers and those that believe in good corporate governance. Last week a closely divided court ruled that companies can force employees to waive their right to sue for employment law violations. Yes, as a condition of an employment your boss can make you waive your right to sue or participate in a class action. (Read more about the decision on our FLSA Employment Law information page.)

In 2012, the National Labor Relations Board (NLRB) took the position that employers couldn’t force workers to waive certain fundamental rights including the right to seek judicial redress of employment law violations… violations that include minimum wages, pay for all time worked or overtime pay.

Two federal appeals courts quickly backed the NLRB. The 7^th Circuit (covering three Midwest states) and the 9^th Circuit (9 western states including California, Alaska and Hawaii) said the National Labor Relations Act precluded lawsuit waiver clauses.

Passed in 1935 during the Great Depression, the Act prohibits a wide variety of management practices that hurt American workers.

Despite a large number of federal courts supporting the NLRB’s interpretation of the Act, the 5^th Circuit Court of Appeals ruled in favor of employers and the lawsuit / class action waivers.

That split among courts made the issue ripe for review by the U.S. Supreme Court. That review happened on May 21^st, 2018. Five justices lead by conservative Justice Neal Gorsuch ruled that the class action and lawsuit waivers were legal. That means that employers can force workers as a condition of employment to give up these fundamental rights.

As a practical matter, the Supreme Court has closed the courthouse doors to American workers. It is simply not economical for lawyers to take single cases, especially if they must go through expensive arbitration. That means workers denied proper pay are going to have to handle their own case without a lawyer.

We have no doubt that many either won’t bother or will lose.

In a perfect world, employers would clean up their act and insure that all workers are properly paid. We expect the opposite, however.

With the NLRB and lawyers effectively neutralized, workers that are subject to an arbitration provision or class action waivers are on their own. No one is left to protect their rights.

And so what are employers saying? One prominent employment law firm that represents employers (not workers) had this to say,

“In light of the Supreme Court’s ruling, employers should revisit their employment agreements and consider including arbitration provisions waiving class and collective actions, particularly when assessing ways to minimize significant liability for wage and hour claims. Given the employee-focused framework of the FLSA, the minimal pleading threshold for bringing suit, the potential for large attorney fee awards, and the abundance of collective action proceedings generated by the FLSA, forcing individual arbitrations on these issues could provide a means of reducing liability exposure and defense costs.”

You read that correctly, the way to “minimize liability” isn’t to follow the law. Instead, minimizing liability is making sure your workers can’t sue!

We don’t blame the defense law firms for giving this advice. The push to curtail Fair Labor Standards Act (FLSA) lawsuits comes from the U.S. Chamber.

The Chamber has long been working to dilute both the FLSA and the National Labor Relation Act. A Chamber report had lots to say about the Supreme Court’ decision to take up the issue, and in particular the NLRB: “It has overturned numerous longstanding precedents, challenged many common sense employment policies, and created a great deal of uncertainty for both workers and employers.”

Murphy Oil – How Did We Get Here?

Last week’s landmark Supreme Court decision has a humble beginning. Murphy Oil Company operates gas stations in Wal Mart parking lots.

In November 2008, Sheila Hobson applied to work as an attendant at a Murphy Oil station in Calera, Alabama. As a condition of employment, Hobson had to agree to a provision waiving her right to pursue employment-related claims through a class or collective action in any forum and, instead, compelled her to pursue claims solely through individual arbitration.

In June of 2010, Sheila joined up with three other women who worked as cashiers or assistant managers for Murphy Oil. The group said they were required to perform fuel surveys before and after their shift. A fuel survey involves checking the prices of fuel at other area gas stations. Because they must perform these surveys before and after their shift, they were not paid for their time.

The women sued. The issue soon became whether the women even had the right to sue. What started out as a case about unpaid work time soon became a critical legal issue, can you be forced to give up your right to sue in order to get hired?

Ultimately the NLRB would take up the cause for Sheila and her co-workers.

While the case was pending before the U.S. Supreme Court, the Justice Department engaged in an extremely rare move and took the side of the employer even though another federal agency – the NLRB – had sided with the employees.

Class Action Waivers, the FLSA and the Aftermath

Can all of this be fixed? It can but at this point it will take Congress to clarify the law and make it clear that greedy businesses can’t take away fundamental rights of workers.

We expect a wave of new employment agreements to sweep the country. HR departments are already busy rewording their contracts.

There is still time, however, to bring actions for violations of federal minimum wage laws and overtime rules too.

We urge anyone who believes they are not being properly paid to contact us immediately. Time is running out. Under existing FLSA rules, companies can be held responsible for up to 3 years of wages. (More in some states such as California.)

For more information visit our FLSA FAQ page or contact us directly. Attorney Brian Mahany can be reached online, by email or by phone (202) 800-9791.

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The Centers for Disease Control and Prevention says that 1 out of 59 American children are autistic. Hundreds of thousands school age children have autism, a range of conditions characterized by challenges with social skills, interpersonal relationships, repetitive behaviors, speech and nonverbal communication. Medical professionals characterize it as a developmental disability, although many people diagnosed with the disorder are very highly functioning.

As society focuses more on autism, new and competing therapies emerge. One of those oldest therapies is Applied Behavioral Analysis (ABA). Treatment oportunities are rapidly expanding as many states have now required Medicaid and private health insurance to pay for ABA and other autism therapies.

One of the largest provider of autism care today is Centria. As of February, the company boasted 5000 employees providing services in 9 states. (Arizona, California, Michigan, New Jersey, New Mexico, Ohio, Oregon, Texas and Washington.)

Earlier this year a group of whistleblowers claimed that Centria was defrauding Medicare. Despite tough anti-retaliation laws, the company sued the employees for defamation. The battle lines were quickly drawn. Centria claims that it runs a clean operation. The three former employees paint a much different picture.

The whistleblowers claim the company is guilty of a wide range of fraud including forgery, HIPAA (patient privacy) violations, billing fraud, falsifying healthcare records and employing unqualified people. As whistleblower lawyers, we see the theme of their claims repeated in many cases – profits before patients.

Usually whistleblower claims would be sorted out years down the road in court. The company is seeing red, however, and wants not only the fraud claims dismissed, it also wants to three whistleblowers to be punished.

Retaliation against whistleblowers can be quite effective, although its illegal. By filing a lawsuit against the whistleblowers, corrupt companies hope to send a stern warning to would-be whistleblowers. “If you blow the whistle, we will punish you.” That sort of bully behavior typically has a chilling effect on other workers.

The lawsuits come on the heels of an $8 million state grant awarded in 2017 to Centria. The monies are to be used to extend autism services and Applied Behavioral Analysis to an underserved group of patients, many in the poor and minority communities.

The company plans to add 1200 news jobs in Michigan, many of them ABA therapists.

Applied Behavioral Analysis – Treatment or Scam?

Many of the “therapists” working for Centria are classified as “behavior technicians.” Despite the fancy title, these technicians do not need a college education and only make $13 or $14 per hour to start.

Lack of proper training for the techs doesn’t mean the company is a scam. It certainly raises red flags for us, however.

According to Centria’s lawsuit against its former employees, the three whistleblowers defamed the company by releasing a so-called “law enforcement summary.” In that summary, the trio claim that the Centria and some of its executives engaged in serious wrongdoing including:

1. Engaged in a racketeering scheme specifically designed to falsely diagnose kids with autism who either do not have autism or have milder symptoms of the disorder. By misdiagnosing kids as autistic, the company could bill Medicaid or private insurance upwards of $50,000 per year per child.
2. Forged parent signatures on patient care contracts. They claim this was especially prevalent with parents who did not speak English.
3. Defrauded Medicaid.
4. Violated HIPAA and patient confidentiality rules by not properly securing patient files.

The company, of course, vehemently denies the allegations.

Despite the company’s denials, the Detroit Free Press says that it has confirmation that the Michigan Attorney General’s Office is investigating Centria.

Among the more serious allegations are the claims that the company misdiagnosed kids as having autism and engaged in billing fraud. The latter involves claims that the company pushed parents to enroll kids in up to 40 hours a week of therapy even if the kids didn’t need such intense care.

We often see cases where dishonest healthcare companies are more motivated by profit than patient wellness.

In another instance of billing fraud, the Detroit Free Press claims that some Centria employees say they were to pushed to bill for services that were never even rendered. In 2017 the company was cited for billing for home therapy for a patient that was actually in the hospital at the time.

The whistleblower claims against Centria mostly center on billing and medical necessity determinations, but what about the therapy they are providing? Is Applied Behavioral Analysis even effective? (Because it requires so many hours, it is certainly one of the most expensive treatment options.)

ABA is the leading therapy for kids diagnosed with autism. And companies like Centria are happy to provide therapists and bill Medicaid and Medicare for up to 40 hours per week at $55 per hour.

But is it effective? ABA certainly has it advocates. But there are fierce critics who say it is cruel and based on the premise that autistic kids need to be “fixed” and made to be more “normal.” A growing body of behavioral science says that we should accept neurodiversity and recognize that kids with autism are different. We can help them function and communicate but they don’t need 40 hours a week of a forced regimen in an effort to make them “more normal.

One women interviewed said that her son is the product of ABA. After hundreds of hours of Applied Behavioral Analysis, her son can now approach people on the street and say, “Hello, what’s your name.” She worries, however, that her son is becoming a robot. She says he will frequently walk away without waiting for an answer. She doesn’t think he even knows why he is asking people on the street for their name. instead “he just knows to do his part.”

Whistleblower Awards for Autism Scams

We are not medical doctors or behavioral therapists. The debate over Applied Behavioral Analysis is likely to rage on for years. We do know, however, that our children deserve the best care possible. And nothing good can ever come from companies that put profits before kids, that misdiagnose or that bill for unnecessary services or services never rendered.

Is Centria guilty? We will leave that up to the Michigan Attorney General’s Office and the three brave whistleblowers who stepped forward with their claims.

Because ABA is so expensive, we suspect there are real fraudsters in the autism therapy space. Companies that use unqualified therapists (licensing requirement vary widely between states). Companies that bill for more services than were actually provided. And companies that bill for services never even performed.

The fraud fighters at MahanyLaw are ready to help stop the greed and corruption. We also work hard to get our clients the highest whistleblower awards allowed by law.

Awards? YES!

Whistleblower Awards for Information about Autism Therapy Billing Fraud

29 states and the District of Columbia have Medicaid fraud whistleblower laws that give whistleblowers up to 30% of whatever the government recovers from wrongdoers. Multimillion dollar awards are common.

In addition to the state Medicaid programs, California and Illinois have private insurance whistleblower award programs.

Finally, the U.S. Department of Justice can issue awards in all 50 states and Puerto Rico for information about Medicare fraud and the federal match on Medicaid.

All of these laws require filing a sealed lawsuit in court. That scares away some folks but it shouldn’t. We can handle everything from the investigation to filing of the complaint to meeting with investigators and even trying the case if it comes to that.

The bottom line? Congress and more than half the states have passed powerful laws to encourage whistleblowers to step forward and address fraud and greed. In cases like misdiagnoses, there is another reason to step up. Patient safety.

Being diagnosed with autism can have a lifelong stigma. And it is expensive. When kids are young, an incorrect diagnosis can stick with them and actually impair their development. And for what reason? So a company can pocket an extra few bucks?

This story wouldn’t be complete without addressing retaliation. We have only seen one client ever sued by a wrongdoer. In our experience courts do a remarkable job of protecting whistleblowers. They know companies want to silence anyone who rocks the boat and make an example of them so others don’t follow in their footsteps.

The federal False Claims Act and most states have powerful anti-retaliation laws. We can’t prevent the occasional employer who files a frivolous lawsuit, but we can and will prosecute them for damages. Under federal law, those damages include double damages and attorney fees.

If we take your case we can help you avoid being sued and protect you if you do suffer retaliation.

For more information, visit our healthcare fraud whistleblower information page. Have questions or want to see if you qualify for a reward? Contact us online, by email *protected email* or by telephone 414-704-6731.

All inquiries are protected by the attorney – client privilege and kept confidential. There is no fee for a consultation and our services are available on a contingent fee basis meaning you never owe us anything unless we collect money for you.

MahanyLaw – America’s Healthcare Whistleblower Lawyers 

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