Justice Department Recovers Over $2.8 Billion from False Claims Act Cases in Fiscal Year 2018

The Department of Justice obtained more than $2.8 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2018, Principal Deputy Associate Attorney General Jesse Panuccio and Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division announced today.  Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $59 billion.

“Every year, the submission of false claims to the government cheats the American taxpayer out of billions of dollars,” said Principal Deputy Associate Attorney General Panuccio. “In some cases, unscrupulous actors undermine federal healthcare programs or circumvent safeguards meant to protect the public health.  In other instances, deceitful contractors overcharge our military or sell faulty equipment to our law enforcement agencies.  Such fraud will not be tolerated by the Department of Justice.  The nearly three billion dollars recovered by the Civil Division represents the Department’s continued commitment to fighting fraudsters and cheats on behalf of the American taxpayer.” read more »

McKinsey Faces a Perilous Fight in a Texas Bankruptcy Case

The courtroom fight hinges on whether McKinsey or its clients have hidden interests in a bankrupt coal company that the firm has been advising, a practice prohibited by federal laws meant to ensure that one insider can’t effectively cut itself or its friends a great deal at the expense of others.

The man leveling the accusations, Jay Alix, is a retired turnaround expert who has made it his personal mission to harry McKinsey. Mr. Alix has spent four years first needling the firm’s leadership, then attacking it in court, accusing it of violating federal laws and unethical behavior.

Normally a firm of McKinsey’s size would swat away a gadfly’s attacks. But in this case, which involves the bankruptcy of Colorado’s Westmoreland Coal, Mr. Alix has a powerful ally: the United States Justice Department. On Dec. 14, the department said in a court filing that McKinsey was fraught with “pervasive disclosure deficiencies” and should be dismissed from the Westmoreland case immediately and stripped of the fees it had earned so far. read more »

JPMorgan to Pay More Than $135 Million for Improper Handling of ADRs

The Securities and Exchange Commission today announced that JPMorgan Chase Bank N.A. will pay more than $135 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).

ADRs – U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank.  The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.

The SEC’s order found that JPMorgan improperly provided ADRs to brokers in thousands of pre-release transactions when neither the broker nor its customers had the foreign shares needed to support those new ADRs.  Such practices resulted in inflating the total number of a foreign issuer’s tradeable securities, which resulted in abusive practices like inappropriate short selling and dividend arbitrage that should not have been occurring. read more »

Plantronics to pay $36 million to settle SEC investigation into Polycom

Headsets maker Plantronics Inc said on Wednesday it has entered an agreement with the U.S. Securities and Exchange Commission to settle an investigation into Polycom Inc, which it acquired in July.

Plantronics will pay $36 million to settle the investigation, which began after Polycom reported it discovered evidence of “possible improper behavior” by former employees at its China unit.

The company in August said the SEC and the U.S. Department of Justice (DOJ) were investigating into possible violations of the Foreign Corrupt Practices Act by Polycom. read more »