Two Colorado Financial Services Executives Sentenced in Multimillion-Dollar Fraud Scheme

A former CEO and a former corporate counsel of a Colorado financial services company were sentenced on June 19 and June 20, in Denver, Colorado, for their participation in a multimillion-dollar investment scheme in which they falsely told investors that they could access substantial financing, including hundreds of millions in cash in an overseas bank account, in exchange for up-front fees.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Inspector in Charge Craig Goldberg of the U.S. Postal Inspection Service’s Denver Division, and Acting Inspector in Charge Bill Hedrick of the U.S. Postal Inspection Service’s Chicago Division, made the announcement.

Brian G. Elrod, 59, of Buffalo Creek, Colorado, formerly the CEO of a financial services company known as Compass Financial Solutions Ltd. (CFS), was sentenced to serve 38 months in prison, followed by three years of supervised release.  Additionally, Elrod was ordered to pay restitution in the amount of $2,440,051.29. William E. Dawn, 80, who was CFS’s corporate counsel, was sentenced to time served.  U.S. District Judge William J. Martinez handed down the sentence for Elrod, and U.S. District Judge Robert E. Blackburn sentenced Dawn and ordered him to pay restitution in the amount of $366,752.01. read more »

Purdue Pharma continued deceptive sales practices for OxyContin after 2007, whistleblower says

A former sales representative whistleblower for Purdue Pharma tells CBS News the drug maker continued to engage in deceptive sales practices for its opiate painkiller OxyContin, later than the company previously acknowledged. In a 2007 settlement with the federal government, the company acknowledged it falsely promoted OxyContin as less addictive than its rivals. Purdue at the time claimed its "misstatements" ended in 2001 as it paid more than $600 million in penalties. read more »

Federal whistleblower case forced multimillion-dollar settlement from Jacksonville-based company

Healogics, a Jacksonville-based company that manages hundreds of hospital-based wound care centers across the country, has agreed to pay up to $22.5 million to settle allegations that it violated the False Claims Act by knowingly over-billing Medicare for unnecessary hyperbaric oxygen therapy, according to the U.S. Justice Department.

Medicare covers hyperbaric therapy, which treats a patient with oxygen under increased atmospheric pressure, the Justice Department said. The settlement announcement resolves claims that Healogics knowingly submitted or caused the submission of false claims to Medicare for medically unnecessary or unreasonable hyperbaric therapy from 2010 through 2015, the Justice Department said.

The allegations arose from a lawsuit filed by James Wilcox, Healogics’ former director for research and quality for medical affairs, plus a separate lawsuit filed by doctors Benjamin Van Raalte and Michael Cascio plus former Healogics program director John Murtaugh, the Justice Department said. The lawsuits were filed under whistleblower provisions of the False Claims Act, which permit citizens with knowledge of fraud against the government to file action on behalf of the United States and share in any recovery. read more »

Whistleblowers Advocates Challenge Bank of England Over Report

Two advocacy groups asked the Bank of England to withdraw a four-year-old report arguing against paying financial rewards to tipsters, seeking to correct what the organizations consider misinformation as countries around the world consider whistleblower legislation.

“We are concerned that continued use of the BoE Report as a policy reference will only serve to inhibit the implementation of effective antifraud laws in the U.K.,” the U.S.’s National Whistleblower Center and European Center for Whistleblower Rights, based in Berlin, wrote in a letter dated Wednesday to Mark Carney, governor of the Bank of England.  read more »

Deutsche Bank Settles New York Forex Probe for $205 Million

Deutsche Bank AG agreed to pay $205 million to settle a long-running investigation of its foreign exchange trading by New York’s banking superintendent, resolving one of several remaining regulatory issues that have dogged the bank in the U.S.

Employees at the bank participated in multiparty chat rooms where they shared confidential client information, discussed the coordination of trading activity and attempted to manipulate foreign exchange prices or benchmark rates, according to New York’s Department of Financial Services. The bank acknowledged those actions, which occurred from 2008 through 2013, in a consent order filed Wednesday.

The settlement leaves Germany’s largest bank with several significant unresolved investigations in the U.S., as it embarks on its fourth global turnaround plan in three years and is scaling back staff in the U.S. Deutsche Bank was one of the biggest participants in the foreign exchange market over the period covered by the DFS. It wasn’t called out for the sort of misdeeds that cost its rivals billions of dollars in earlier settlements with the U.S. Justice Department and led to guilty pleas from five global banks.

In a statement, the Frankfurt-based lender said it was pleased that the New York regulator had recognized its “extensive cooperation and remediation” and that the settlement is fully covered by the bank’s existing provisions. read more »