Whistleblower News: SEC Settlement, BoA Home Buyer Case & Florida Qui Tam Whistleblower Lawsuit

Jun 14, 2016

WHISTLEBLOWER NEWS QUOTE OF THE DAY:

"This unauthorized exchange of confidential client information could have given Keygent an improper advantage over other municipal advisors that were candidates for the same business. The Dodd-Frank Act prohibits this type of deceptive behavior by advisors when dealing with municipal issuers."

— Andrew Ceresney, Director of the SEC Enforcement Division

DAILY WHISTLEBLOWER HEADLINES:

SEC: Muni Advisors Acted Deceptively With California School Districts

The Securities and Exchange Commission today announced that two California-based municipal advisory firms and their executives have agreed to settle charges that they used deceptive practices when soliciting the business of five California school districts.

An SEC investigation found that while School Business Consulting Inc. was advising the school districts about their hiring process for financial professionals, it was simultaneously retained by Keygent LLC, which was seeking the municipal advisory business of the same school districts.  Without permission, School Business Consulting shared confidential information with Keygent, including questions to be asked in Keygent’s interviews with the school districts and details of competitors’ proposals including their fees.  The school districts were unaware that Keygent had the benefit of these confidential details throughout the hiring process.  Keygent ultimately won the municipal advisory contracts.
 
 
This is the SEC’s first enforcement action under the municipal advisor antifraud provisions of the Dodd-Frank Act.
 
 
“This unauthorized exchange of confidential client information could have given Keygent an improper advantage over other municipal advisors that were candidates for the same business,” said Andrew Ceresney, Director of the SEC Enforcement Division.  “The Dodd-Frank Act prohibits this type of deceptive behavior by advisors when dealing with municipal issuers.”
 
 
School Business Consulting also is charged with failing to register as a municipal advisor.
 
 
“These laws apply not only to municipal advisors, but also those who solicit business on behalf of municipal advisors,” said LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit.  “Municipal entities should be able to trust that their selection of a municipal advisor is untainted by any breach of fiduciary duty.” read more »

BofA, Countrywide Hit With Appraisal Suits By Home Buyers

A proposed nationwide class of home buyers have accused Bank of America Corp., Countrywide Financial Corp. and appraisal firm LandSafe Inc. of conducting phony appraisals in an attempt to secure more loans, filing a lawsuit in California federal court on Thursday stemming from previously settled whistleblower claims.

The suit, brought by Hagens Berman Sobol Shapiro LLP, is the latest action taken against the institutions for the same alleged scheme that resulted in a $1 billion settlement in a False Claims Act case involving the Home Affordable Modification Program and Federal Housing Administration-backed loans. Hagens Berman was also behind the sealed complaint in that case, representing whistleblower Kyle Lagow, who went on to receive $14.5 million as a reward. read more »

Ex-Exec Says Firing Due To Unauthorized-Worker Concerns

A former Bai Beverage Co. executive has slapped the antioxidant drink maker with a whistleblower lawsuit in New Jersey state court, alleging he was fired after raising concerns that the company employed unauthorized immigrants and subjected them to poor working conditions and unwarranted terminations.

David Rivera, a former senior operations manager at the company’s Princeton, New Jersey, facility, alleges that about 100 warehouse workers were given little light to do their jobs, worked amid piles of garbage and shared a single bathroom, forcing some to urinate in a corner, according to a lawsuit filed last month in Burlington County Superior Court. read more »

Lumber Co. Misled Agencies Over EB-5 Funding, qui tam Suit Says

A lumber company has been named in a qui tam action filed in Florida federal court by a former human resources generalist who alleges that the company submits false statements to government agencies regarding job creation and EB-5 funding.

In a complaint filed in March and unsealed in Florida’s Middle District on Friday, Emma Tirella accuses Klausner Lumber One LLC of regularly submitting false statements to the federal government, the state of Florida and local governmental agencies to obtain public grants and funding, as well as financing for the EB-5 immigrant investors program, relating to the company’s lumber sawmill project in Live Oak, Florida.

Specifically, Tirella accuses Klausner of repeatedly making the false statements about job creation and training expectations in order to meet and maintain the requirements to receive public funding and EB-5 financing. She alleges, the program has obtained millions of dollars in federal, state and local taxpayer funds through fraudulent misrepresentations and has improperly funneled the money to various Klausner entities for purposes outside of the funding agreements. read more »