Fund giant Legg Mason has been ordered to pay more than $32 million to resolve a charge with the Securities and Exchange Commission (SEC) that it was in violation of policies in the Foreign Corrupt Practices Act. According to the SEC, Legg Mason paid bribes to Libyan government officials from 2004 to 2010. Permal Group Inc., a former asset management subsidiary of Legg Mason, partnered with French bank Société Générale to pay $26.5 million in bribes to officials under Muammar Gaddafi. Why? So the country would buy bonds from the Paris-based bank, which was managed by Legg Mason at the time.

In 2004, Libya was emerging from international economic sanctions. As a result, Libyan banks and other financial institutions needed to invest their significant assets, and “financial institutions from around the globe aggressively sought access to these assets,” reports the SEC. Contact a MA whistleblower lawyer if you have information about fraudulent or illegal activities against the U.S. government.

“I Cooked Him”

Around the same time, Permal partnered with Société Générale, engaging in an illegal scheme to secure investments by bribing government officials. They used a middleman in these transactions, and coded language to communicate without raising any red flags. For instance, the term “cooking” was used by the middleman in reference to his ability to convince officials to invest through the use of bribes.

“I cooked him,” one banker told another on a recorded call. “Only we have to go there, start the fire, have a barbecue.”

According to the SEC, the person they “cooked” was a Libyan government official, to whose relative the middleman had transferred around $75,000 earlier that day.

Through its scheme, Legg Mason profited more than $31 million in Libyan investments.

The Risk of Corruption

“Companies must take adequate steps to identify and mitigate the risks of bribery and corruption present in their global business. Those risks are particularly acute when, as here, agents and middlemen are used as part of a company’s efforts to obtain business with government clients,” said Charles Cain, chief of the Enforcement Division’s FCPA Unit.

After the SEC found Legg Mason to be in violation of the Securities Exchange Act of 1934, the company agreed to settle the case by paying back $27.6 million in illegally-obtained funds and another $6.9 million in interest.

In a letter to shareholders, Legg Mason wrote that “the misconduct by former employees of the legacy Permal business that the government found was totally unacceptable. It violated our high standards, our long-held core values and our ‘no-chalk’ culture.” A Boston whistleblower attorney can help you determine how to proceed if you have information about illegal or fraudulent securities activities.

Legg Mason is Not a Lone Wolf

The Legg Mason case is only the latest in a surge of Wall Street firms found to be tied to bribes involving the known terrorist regime. In June, SocGen settled for $585 million after being caught paying $90 million in bribes to Libyan officials in a similar scheme. Goldman Sachs was also implicated, with Libya accusing the company of bribing officials with everything from money to prostitutes.

Although many may see the Legg Mason case as vindication and just desserts, the $32 million settlement is not even half of the company’s estimated second-quarter liability. Continue reading

A judge ruled last week that attorneys for former Penn State assistant football coach, Mike McQueary, would be awarded $1.7 million for legal fees incurred from disputing treatment he received after providing information that led to the arrest of Jerry Sandusky – the former Penn State football assistant football coach who was found guilty of multiple child molestation charges in 2012.

McQueary was awarded over $7 million in October for defamation and misrepresentation claims and close to $5 million in November. Additionally, the judge’s order gave McQueary $15,000 for a bowl game bonus that he would have received had he not been wrongfully suspended in the wake of Sandusky’s arrest.

McQueary provided vital testimony in the trial against Sandusky when he reported to have seen an act of child molestation happening in a facility locker room in 2001. He reported the action to then head coach, Joe Paterno, who in turn reported the act to the athletic director of Penn State, but no follow-up action was taken with authorities or police.

“All tyranny needs to gain a foothold is for people of good conscience to remain silent.” – Thomas Jefferson

The role of a whistleblower is indispensable in any truly democratic, free society. Whistleblowers throughout history have put aside their own fears of persecution, belittlement and, in some cases, imprisonment or death in order to stand tall as purveyors of truth and justice.

A whistleblower is defined as any person or persons which reveals information pertaining to harmful or illicit actions taken by an individual or a governmental, corporate or private group, which may in turn lead to a criminal investigation and/or penalties levied against that group. An essential part of the whistleblowing definition is the distinction that such information would not likely otherwise become known if not for the action of the whistleblower.

The act of fraud – knowingly deceiving an individual, government entity or business, usually for personal profit – is unfortunately a common practice across the world, from something as small-time as selling a knock-off designer brand purse to something as high-profile as widespread corporate revenue schemes.

Sometimes, perpetrators of fraud are only brought to light with the help of a whistleblower, usually through a program operated by the Securities Exchange Commission (SEC) or the Internal Revenue Service (IRS). Both governmental organizations have robust whistleblowing programs that help catch fraudsters.

The following is a summary of three types of fraud, usually committed by bigger businesses.

The Internal Revenue Service (IRS) is the federal governmental body responsible for collecting taxes from individual citizens as well as companies. Failing to pay taxes, criminally misreporting your wages or conducting other acts of tax fraud are serious crimes that can result in heavy fines and jail time.

The IRS also contains an office that deals entirely with assisting whistleblowers – essentially any person or persons who help bring an act of tax fraud or tax evasion to the attention of the IRS – in bringing charges against individual offenders of tax law.

Being a whistleblower for the IRS can be an incredibly lucrative endeavor, as well as a just thing to do, since the people getting the whistle blown on them are almost certainly in clear, knowing violation of the law. A whistleblower can be awarded up to 30 percent of the additional taxes, penalties and other amounts collected by the IRS as a result of the crime coming to light.

Cases involving doctors, hospital staff, patients and administrators defrauding the federal government out of large amounts of money through healthcare scams are, unfortunately, almost a monthly occurrence. Medicare fraud results in higher healthcare costs for everyone, and it is estimated that the government loses billions of dollars every year as the result of fraud.  Multi-million dollar, and in sometimes over $1 billion, cases are publicized by government enforcement agencies – such as The U.S. Department of Health and Human Services’ Health Care Fraud Prevention and Enforcement Action Team (HEAT) and their targeted strike force teams – to try and inform the public about these schemes and serve as a warning to others who may try to perform similar unscrupulous acts.

Generally speaking, there are three main types of Medicare fraud – all of which involve either an individual or collective of co-conspirators falsifying official government documents with their own best interests in mind, usually at the expense of patients, the government or other healthcare professionals. The three main types of Medicare fraud are:

Phantom Billing

Phantom billing occurs when a hospital, treatment center or other kind of healthcare facility bills Medicare for services, drugs, treatments or any billable item that the patient did not knowingly authorize or did not receive. The fraudster may bill Medicare for a test that the patient did not require, and did not even undergo. In this type of fraud, the patient is not aware that the unauthorized billing is taking place.

Patient-involved Billing

In this form of fraud, the patient or patients are actually in on the scam. They will provide their Medicare information and then knowingly falsify claims that the healthcare provider makes about their treatment, usually for financial or medical-related kickbacks.

Upcoding and unbundling schemes

“Upcoding” schemes involve the healthcare provider pretending that a patient needs more expensive treatments and services than actually necessary by falsifying the Medicare billing codes. “Unbundling” refers to when a healthcare facility splits a series of tests or procedures into individually-billed items, which results in higher Medicare costs than if the tests or procedures were billed as a “bundle.”

The government does not play around with Medicare fraud

The United States Department of Health and Human Services, the Attorney General’s Office, the Office of the Inspector General and the United States Department of Justice combined resources in 2007 to create task forces specifically designed to go after all types of Medicare fraud in the country. They are based out of Florida, California, Michigan, Texas, New York, Louisiana and Illinois. These task forces, in accordance with their parent government agencies, relentlessly pursue fraud and have garnered some impressive results. According to their data, the task forces have found over 1,500 criminal actions, leading to 2,185 indictments and a grand total of nearly $2 billion in recovered money. Continue reading

The Occupational Safety and Health Administration (OSHA) maintains a robust whistleblowing program which encourages and protects individuals who wish to report a safety concern from retaliatory penalties placed on them by their employers.

You may submit a whistleblower report multiple ways, including an online form, a document which you may print, fill out and mail in, or by telephoning or writing a letter to your local OSHA office. OSHA will then conduct an interview with the whistleblower to assess whether or not an investigation is necessary.

OSHA has official protections legislation in place for a large variety of different hazardous situations to employees. They prevent retaliation against employees who report hazardous safety conditions or safety violations. Some of them include:

• The Asbestos Hazard Emergency Response Act
  • Protects employees that report incidents of asbestos

• The Clean Air Act
  • Prohibits retaliation against employees that report issues regarding air quality

• Federal Water Pollution Control Act
  • Prohibits retaliation against employees that report incidents of polluting water sources

• Solid Waste Disposal Act
  • Protects employees that report violations relating to the disposal of solid and hazardous waste

• Federal Railroad Safety Act/ National Transit Systems Security Act
  • Protects employees of railroad carriers and contractors and transit employees who report hazardous safety or security conditions

• Pipeline Safety Improvement Act
  • Protects employees who report violations regarding pipeline safety and security

• Surface Transportation Assistance Act
  • Protects truck drivers and transit employees that refuse to violate safety regulations

• Affordable Care Act
  • Protects employees who report violations regarding discrimination, denial of coverage based on preexisting conditions or insurance company violations

• Consumer Financial Protection Act
  • Provides protections for employees that violate financial policies placed by the Bureau of Consumer Financial Protection, such as Wall Street infractions or fraudulent activity

• Consumer Product Safety Improvement Act
  • Protects employees that report violations of consumer product safety, including manufacturers, importers, distributors, private labelers, and retailers

• FDA Food Safety Modernization Act
  • Protects employees of food manufacturers, distributors, packers, and transporters that report any violation regarding the Food, Drug, and Cosmetic Act.

Continue reading

Although there is no perfect system that can prevent all types of criminal activity, the United States federal government has secured some huge victories in recent times prosecuting enormously large healthcare companies found to be committing fraud and taking advantage of patients for their own financial gain.  Both Tenet Healthcare Inc., a multinational healthcare services conglomerate worth $18 billion, and Life Care Centers of America, the largest private nursing care company in the United States, have been caught red-handed this year defrauding the federal government and putting the needs of their patients second by deferring them to out-of-the-way healthcare centers and administering unnecessary services respectively.

Tenet Healthcare was found to be purposefully deferring pregnant patients to certain subsidiary facilities for profitable kickbacks, while also overcharging for unnecessary services. Life Care Centers of America was found to be overcharging for unnecessary services and keeping patients longer than necessary to squeeze more money out of patients and the federal government.  As a result of these infractions, Tenet Healthcare has agreed to settle for $513 million and Life Care Centers of America has agreed to pay $145 million as a result of the lawsuits levied against them by state and federal prosecutors, awarding millions of dollars back to the government and taxpayers across the country.

The depth and scale of these fraudulent activities is alarming. In Tenet Healthcare’s case, it is the fourth major healthcare scandal they have faced since the early 1990s. In the case of Life Care Centers of America, their fraudulent activities were tracked between 2006 and 2013. In both cases, the criminal activities involved taking advantage of the patients that place their trust in their services for their own personal profit.

Life Care Centers of America has agreed to pay out $145 million in a settlement with the United States government after it was discovered that they has been defrauding Medicare and TRICARE by overcharging for rehabilitation and therapy services that their patients did not require between 2006 and 2013.  Through their more than 220 skilled nursing care centers across the country, Life Care Centers of America engaged in fraudulent activities that involved overbilling elderly for services they did not request or did not require and also billing patients with less serious care requirements as though they needed the highest level of necessary care – “Ultra high” – which netted them more money from the federal government.

In some cases, the nursing care centers would keep patients for much longer than necessary to extend their stay and bleed more money out of the patients and the government. The lone shareholder of Life Care Centers of America, Forrest L. Preston, was implicated in a separate lawsuit for his profiting from the widespread scam.  “Billing federal healthcare programs for medically unnecessary rehabilitation services not only undermines the viability of those programs, it exploits our most vulnerable citizens,” said Eastern District of Tennessee U.S. Attorney Nancy Stallard Harr. “We are committed to working with our federal partners to protect both.”

Life Care Centers of America, the largest private nursing care company in the country, based in Tennessee, in addition to paying the hefty settlement, is now the subject of a five-year Corporate Integrity Agreement with the federal government, which means they are now required to be reviewed by independent agencies to assess the necessity of their rendered services for the next five years.  The allegations, legal action, and eventual settlement was brought to light by two former Life Care employees, who made authorities aware of the scheme via the whistleblowing protections of the False Claims Act. Tammie Taylor and Glenda Martin will receive a share of $29 million for their part in exposing the crime.