Justice Department Announces Deferred Prosecution Agreement With Basler Kantonalbank

Bank Admits to Helping U.S. Taxpayers Conceal Income and Assets from the United States; Agrees to Pay $60.4 Million

Basler Kantonalbank (BKB), a bank headquartered in Basel, Switzerland, entered into a deferred prosecution agreement (DPA) that was approved today by the U.S. District Court for the Southern District of Florida, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division, United States Attorney Benjamin G. Greenberg, and Chief Don Fort for Internal Revenue Service-Criminal Investigation.  As part of the agreement, Basler Kantonalbank will pay $60.4 million in total penalties. read more »

SEC Charges Moody’s With Internal Controls Failures and Ratings Symbols Deficiencies

The Securities and Exchange Commission today announced that Moody’s Investors Service Inc., one of the nation’s largest credit ratings agencies, has agreed to pay a total of $16.25 million in penalties to settle charges involving internal control failures and failing to clearly define and consistently apply credit rating symbols. This marks the first time the SEC has filed an enforcement action involving rating symbol deficiencies.

Moody’s agreed to pay $15 million to settle charges of internal controls failures involving models it used in rating U.S. residential mortgage-backed securities (RMBS) and will retain an independent consultant to assess and improve its internal controls. Moody’s separately agreed to pay $1.25 million and to review its policies, procedures, and internal controls regarding rating symbols. Moody’s did not admit or deny the SEC’s charges.

According to the SEC’s order in the internal controls proceeding, Moody’s failed to establish and document an effective internal control structure as to models that Moody’s had outsourced from a corporate affiliate and used in rating RMBS from 2010 through 2013. Moreover, Moody’s failed to maintain and enforce existing internal controls that should have been applied to the models. Ultimately, Moody’s corrected more than 650 RMBS ratings with a notional value exceeding $49 billion, due, in part, to errors in the models. Also, in 54 instances, Moody’s failed to document its rationale for issuing final RMBS ratings that deviated materially from model-implied ratings.

“Rating agencies play a critical role in our capital markets and need to have effective controls over their rating processes,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement. “As our order notes, the SEC put Moody’s on notice about its internal controls obligations yet it did not develop an effective process to ensure the accuracy of the models it relied upon when rating residential mortgage-backed securities.” read more »

Ambulance Industry Defendants pay $21 Million to Settle Allegations of Unlawful Kickbacks and Improper Financial Relationships

Seven ambulance industry defendants have agreed to pay the government a total of over $21 million to settle a False Claims Act lawsuit alleging that they knowingly submitted claims to the Medicare and Medicaid programs that violated the Anti‑Kickback Statute, the Justice Department announced today.

The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.

The settlements announced today resolve allegations brought in a whistleblower action filed under the False Claims Act in the U.S. District Court for the Eastern District of Texas by Stephen Dean.  Dr. Dean alleged that East Texas Medical Center Regional Healthcare System, Inc. and East Texas Medical Center Regional Health Services, Inc. (together, “the ETMC Defendants”), and their affiliated ambulance company, Paramedics Plus, LLC (“Paramedics Plus”), offered kickbacks to several municipal entities to secure their lucrative ambulance business, including Emergency Medical Services Authority (“EMSA”), Alameda County, California, and Pinellas County Emergency Medical Services Authority in Florida (“Pinellas EMSA”).  The False Claims Act authorizes private parties to file suit for false claims on behalf of the United States, and permits the United States to intervene in such suits, as it did here in part.

Prior to intervening in Dr. Dean’s lawsuit, the United States settled with Alameda County and Pinellas EMSA.  Alameda County agreed to pay the government $50,000, and Pinellas EMSA agreed to pay the United States $66,000, plus an additional $5,200 to the State of Florida.  After filing suit against the ETMC Defendants, Paramedics Plus, EMSA, and its former president and CEO, Herbert Stephen Williamson, the United States settled with the ETMC Defendants and Paramedics Plus for $20.649 million and EMSA for $300,000.  Williamson agreed to pay the United States and the State of Oklahoma $80,000.  The latter two settlements were based on the defendants’ ability to pay. read more »