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State Enforcement Actions

					
Each state enforces its laws and defends its interests, and states often work with the federal government in investigating and prosecuting corporate frauds. 聽Whistleblowers with knowledge of fraud or wrongful conduct that involves state or local funds or programs may be able to bring a claim under a state or local False Claims Act, and may be eligible to receive a monetary reward and protection against retaliation.


Below are summaries of recent settlements, successful prosecutions, and enforcement actions by states.聽If you believe you have information about fraud which could give rise to a claim under a State or Local False Claims Act or other whistleblower reward provision, please contact us to speak with one of our experienced whistleblower attorneys.

				

			

			
						
					
			

	
		
		

			

				
				
April 24, 2018

				 California announced that it secured a default judgment against Luxy Accessory, Inc. (Luxy), a jewelry distributor based in Los Angeles, and its owner Hyun Sook Kim for selling jewelry with excessive levels of lead and cadmium. Much of the jewelry was intended for children, and some was mislabeled as 鈥渓ead free.鈥� These acts constitute a violation of California鈥檚 Metal Containing Jewelry Law and the Unfair Competition Law. They also constitute unlawful advertising. The judgment consists of $1,626,000 in civil penalties and an order to comply with all statutes and regulations applicable to the manufacture, distribution, or sale of jewelry in California. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 23, 2018

				 Florida announced that a Florida man, Alexei Legassov, was sentenced to nine years in state prison for filing more than $1.2 million in false claims for refrigerated cargo purportedly spoiled in cross-country transport by his long-haul trucking companies based out of Middlesex County, NJ. Palm Coast. The charges stem from crimes Legassov committed in connection with several long-haul trucking companies he owned and/or operated in Middlesex County, including Akmos Trade Limited; Moon and Eggplant Limited; Passing Score LLC; and G.K. Refrigerated Line, LLC. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 19, 2018

				 California announced the arrest and grand jury indictment of five individuals for defrauding the state鈥檚 beverage container recycling program by creating fraudulent weight tickets for California Redemption Value (CRV) refunds. The five defendants personally benefitted from a recycling fraud in Sacramento County that cost the California Redemption Value fund $80.3 million. California鈥檚 beverage container recycling program, administered by the California Department of Resources Recycling and Recovery (CalRecycle), encourages recycling through a 5- to 10-cent deposit on CRV-eligible beverage containers. Consumers can redeem their containers at privately owned recycling centers certified by CalRecycle. Recycling centers are responsible for ensuring that only eligible bottles and cans that are sold in California, where the CRV deposit was paid, are redeemed. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 18, 2018

				 New York announced that it won a $858,000 judgment against a Fulton County mobile home park and its owner over their failure for years to adequately treat the park鈥檚 sewage. Albany Supreme Court Judge Kimberly O鈥機onnor assessed the penalty after finding that C and J Enterprises LLC ("CJE") and its owner, James P. Burr, repeatedly violated New York environmental laws and a consent order governing the proper treatment of sewage from the Deerfield Estates mobile home park. As a result, sewage pooled on the surface of the ground in areas in close proximity to homes, and accessible to children and pets. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 17, 2018

				 New York announced the unsealing of an indictment charging Robert J. Mirel and Deborah Barnett, the owners and operators of Arlington Equipment Corp. d/b/a Arlington Manipulators, with defrauding companies and business owners by pretending to sell glass installation equipment and laundering hundreds of thousands of dollars in criminal proceeds through their shell and shelf companies. The Attorney General鈥檚 investigation, dubbed 鈥淥peration Bob the Builder,鈥� revealed that Arlington Equipment Corp. was one of the only manufacturers of glass manipulators in North America at the time the business started in Queensbury, NY. Glass manipulators are used by glass and glazing companies around the world to help perfectly install heavy glass in high-rise buildings and position custom pieces of glass at angles other than 90-degree intervals. As the indictment alleges, over at least five years, Mirel and Burnett allegedly took advantage of this near monopoly and stole over $1.2 million from over 40 customers across the country, the New York Department of Labor, The New York Department of Tax and Finance, and several employees, who were not fairly compensated. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 16, 2018

				 New Jersey announced that a New Brunswick man and his companies have been ordered to pay $750,000 for selling New Jersey investors more than $7 million worth of unregistered securities that were tied to an alleged $1.2 billion nationwide Ponzi scheme. Jeffrey Mitchell Isaacs, JB Financial Resources, and related entities sold the unregistered securities for the Woodbridge Group of Companies ("Woodbridge"), which has been charged by the U.S. Securities and Exchange Commission ("SEC") with operating a Ponzi scheme that defrauded 8,400 investors across the country. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 13, 2018

				 New Jersey announced that Rabbi Osher Eisemann, the founder and director of the School for Children with Hidden Intelligence (鈥淪CHI鈥�) in Lakewood, N.J., who was first indicted in March 2017 on second-degree charges, now faces a first-degree charge of corruption of public resources as the result of a superseding indictment returned. The purported fundraising foundation for the school, Services for Hidden Intelligence, LLC, also is charged in the new indictment with first-degree corruption of public resources. The superseding indictment alleges Eisemann, 61, misappropriated approximately $779,000 in public tuition funds 鈥� as well as an additional $200,000 in school funds from undetermined sources 鈥� using the foundation to steal and launder the money. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 11, 2018

				 New York announced a $550,000 settlement with Liberty Power Holdings, LLC (鈥淟iberty鈥�), as part of an ongoing investigation into energy service companies (ESCOs). The investigation uncovered that the company鈥檚 contractors and subcontractors lured consumers with false promises of savings, and then charged them costly early termination fees when they tried to get out of their contracts. Additionally, sales representatives used other deceptive means to enroll consumers, such as falsely claiming to represent the consumers鈥� current utility provider or having someone who was unauthorized to give consent such as a minor sign the enrollment agreement. As a result, many consumers did not even realize that they had been enrolled in Liberty. According to the settlement, Liberty will implement new restrictions on their marketing practices to prevent future frauds and pay $550,000, which will be used to refund eligible consumers. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 9, 2018

				 Illinois filed a lawsuit against Major Energy Electric Services LLC (Major Energy), an alternative retail electric supplier (ARES), for misleading thousands of Illinois customers about the company鈥檚 costly electricity contracts using high-pressure sales tactics to push people to enroll without explaining the service or the costs. Madigan was joined by consumer advocates with AARP, the Better Business Bureau and U.S. PIRG to announce her lawsuit. The deceptive sales pitches have resulted in nearly all Major Energy customers consistently paying higher rates for electricity. Since April 2012, Major Energy customers have paid nearly $2.5 million more in rates and extra fees than they would have paid if they had remained with the regulated utility. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 6, 2018

				 Florida arrested an unlicensed nurse for defrauding the Medicaid program out of more than $715,000. According to the investigation, Lanre Saad Kelani, 61, practiced as a health care profession without a license for a Medicaid recipient with a serious disease that needed 24-hour home nursing care. Kelani used a sibling鈥檚 name and license number to provide the services. FL				 			
	
		
		
	


 			


											

						

								

									
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