WHISTLEBLOWER QUOTE OF THE DAY:

“Issuers of securities offerings must make truthful disclosures about the company and its business operations so investors know what they’re getting into when they buy the stock.”

Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office
 

DAILY WHISTLEBLOWER HEADLINES:

Aegerion To Admit Guilt, Pay $40M Over Drug Marketing

Aegerion Pharmaceuticals said Thursday it expects to plead guilty to two misdemeanors, pay $40 million and enter into multiple settlements related to alleged violations of drug marketing requirements, securities law and the Health Insurance Portability and Accountability Act.

The breathtaking scope of the preliminary deals centers on the marketing and distribution of Juxtapid, which treats a genetic cholesterol disorder and is one of two products sold by the Massachusetts drugmaker. Under the resolutions, Aegerion would avoid a devastating exclusion from government health care programs.

In a statement, Aegerion CEO Mary Szela said company officials “are deeply committed to legal and regulatory compliance” and “look forward to putting these matters behind us.”

The criminal pleas both involve so-called misbranding violations under the Federal Food, Drug and Cosmetic Act. One count involves marketing of Juxtapid — which carries a black box warning regarding liver toxicity — without full directions for use. A second count involves failure to comply with so-called risk evaluation and mitigation strategies, or REMS, that are used to restrict the distribution of potentially dangerous drugs.

The $40 million would go to the U.S. Department of Justice and the U.S. Securities and Exchange Commission for various alleged misdeeds. Aegerion said it will enter a settlement under the False Claims Act as well as a five-year deferred prosecution agreement related to alleged violations of HIPAA and alleged obstruction of justice involving the REMS. read more »

Taxpayers covered $14 billion in erroneous charges by private health plans paying for seniors’ care, report says

Medicare paid out $14.1 billion in improper claims in one year to private health insurance companies that bill the government for care to the elderly, but the plans have not had to pay back the money, a new report finds.
The private plans, called Medicare Advantage, have weak defenses against fraud, and even when they are audited, the investigations take years, the Government Accountability Office found.

“As the [Medicare Advantage] program continues to grow, safeguarding the program from loss is critical,” said the report released this week.

The problems are part of the growth across government of what are known as “improper” payments. Many programs, including Social Security and those that provide benefits to veterans, are struggling to check billions of dollars a year that should not have been paid out, whether because of fraud or unintentional mistakes.

GAO concluded that while Medicare knows the importance of monitoring the private plans for billing irregularities, auditing is stuck in red tape at a massive loss to taxpayers. read more »

SEC Charges Shell Factory Operators With Fraud

The Securities and Exchange Commission today announced fraud charges against a California stock promoter and a New Jersey lawyer who allegedly were creating sham companies and selling them until the SEC stopped them in their tracks.

The SEC alleges that Imran Husain and Gregg Evan Jaclin essentially operated a shell factory enterprise by filing registration statements to form various startup companies and misleading potential investors to believe each company would be operating and profitable.  The agency further alleges that their secret objective all along was merely to make money for themselves by selling the companies as empty shells rather than actually implementing business plans and following through on their representations to investors.

Moving quickly to protect investors based on evidence collected even before its investigation was complete, the SEC issued stop orders and suspended the registration statements of the last two created companies – Counseling International and Comp Services – before investors could be harmed and the companies could be sold.

“Issuers of securities offerings must make truthful disclosures about the company and its business operations so investors know what they’re getting into when they buy the stock,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.  “We allege that Husain drummed up false business plans and created a mirage of initial shareholders while Jaclin developed false paperwork to depict emerging companies that later sold as just empty shells.” read more »

Aegerion Pharmaceuticals Announces Preliminary Agreements in Principle With DOJ and SEC Related to Ongoing Investigations

CAMBRIDGE, Mass., May 12, 2016 (GLOBE NEWSWIRE) -- Aegerion Pharmaceuticals, Inc. (“Aegerion” or the “Company”) (NASDAQ:AEGR), a biopharmaceutical company dedicated to the development and commercialization of innovative therapies for patients with debilitating rare diseases, announced today that it has reached preliminary agreements in principle with the Department of Justice ( “DOJ”) and the staff of the Securities and Exchange Commission (“SEC”) regarding a settlement of the ongoing investigations by these agencies into the Company’s sales activities and disclosures related to JUXTAPID® (lomitapide) capsules (“JUXTAPID”). 

“These preliminary agreements in principle with the DOJ and the SEC represent an important step forward towards addressing the immediate issues facing Aegerion and positioning the Company for near-term value creation and growth,” said Chief Executive Officer Mary Szela. “As a company, we are deeply committed to legal and regulatory compliance, and we have made significant investments to ensure that these values resonate throughout our organization.  We look forward to putting these matters behind us and to continuing our focused efforts on developing and commercializing innovative therapies for patients with debilitating rare diseases.”

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