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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 21, 2017

				 Illinois announced charges against the operator of a south suburban home health care business for defrauding the state out of over $200,000 in employee tax withholdings. Reginaldo Sulit, 48, of Chicago, was charged with theft of government funds and income tax fraud in his position as an officer and shareholder of Alliance Home Healthcare in Worth, Ill. Sulit was arraigned this week in Cook County Criminal Court. Madigan alleged that between June 2013 and September 2016, Sulit withheld money designated for employee income taxes from Alliance Home Healthcare employees鈥� paychecks without remitting the taxes to the Illinois Department of Revenue (IDOR). Madigan alleged Sulit stole over $203,900 through his scheme. 				 					 

						
Tagged in:
													  Employment Tax Fraud, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 20, 2017

				 California announced a $9.8 million settlement with Walgreens, one of the largest drugstore chains in the United States. The settlement involved allegations that Walgreens failed to adhere fully to requirements imposed by California law for the dispensing of certain prescriptions drugs under Medi鈥慍al. The settlement is the result of lawsuits filed by whistleblowers and investigated and resolved by federal and state prosecutors. The lawsuits alleged that for more than five years, Walgreens falsely certified that it had complied with diagnosis-related requirements for the lawful dispensing of prescriptions to Medi鈥慍al patients. Through the Bureau of Medi鈥慍al Fraud and Elder Abuse (BMFEA), the Attorney General鈥檚 office regularly works with whistleblowers and law enforcement agencies to investigate and prosecute fraud perpetrated on the Medi鈥慍al program. False claims lawsuits pursued by the Attorney General in the last two years have recovered tens of millions of dollars from some of the nation鈥檚 largest pharmaceutical companies for allegations of improper marketing, falsifying reports to inflate prices, and other wrongful practices. 				 					 

						
Tagged in:
													  FCA State, 
													  Lack of Medical Necessity, 
													  Medicaid, 
													  Pharma Fraud, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 18, 2017

				 In the largest-ever recovery of its kind, New York announced a $40 million settlement with Alabama-based Harbert Management Corporation and top executives at the firm. Harbert Management was the fund sponsor for Harbinger Capital Partners, a $26 billion hedge fund based in New York City (鈥淗arbinger Fund鈥�). The settlement resolves whistleblower allegations that members of Harbinger鈥檚 investment manager failed to pay millions in New York State tax on performance income for several years. The settlement is the largest tax-related recovery by the Attorney General鈥檚 office, resulting from an action filed under the New York False Claims Act, which was amended to cover tax claims in 2010 in a bill sponsored by then-State Senator Eric Schneiderman. 				 					 

						
Tagged in:
													  FCA State, 
													  Tax Fraud, 
													  Whistleblower Case, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 12, 2017

				 California announced that it has joined a multistate settlement with Western Union, which resolves an investigation that focused on complaints by consumers who used the financial institution鈥檚 wire transfer service to inadvertently send money to third parties involved in schemes to defraud consumers. Western Union has agreed to pay $586 million to provide refunds to victims through a related, but separate, agreement with the Federal Trade Commission and U.S. Department of Justice filed in January. Under the terms of the federal settlement, California consumers who made a wire transfer through Western Union between January 1, 2004 and January 19, 2017 may be eligible for more than $65 million in refunds. 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 10, 2017

				 Pennsylvania announced criminal charges against 15 people for their roles in a drug pipeline that distributed and sold 15,000 bricks of heroin in York and Blair counties over a two-year period. The heroin sold for approximately $5 million. A statewide investigating grand jury recommended the charges in this case. The grand jury determined the drug organization was headed by Wayne Davis, 36, and Lawrence Francis, 39, both of York. According to the grand jury presentment made public, Davis and Francis were responsible for transporting heroin and ecstasy along a New York City-York (PA)-Altoona pipeline during 2015 and 2016, when both men sold the drugs and engaged others to sell on their behalf. 				 			
	
		
		
	


 			




	
		
		

			

				
				
April 7, 2017

				 California announced that Dominique Lewis, an influential member of the Baby Insane Crips, a Long Beach street gang that operated a scheme to perpetrate tax fraud, pled guilty to 18 felony charges including identity theft, grand theft, and conspiracy. Lewis was sentenced to 23 years in prison. Lewis, who was brought into custody after being at large for 10 months, was a ringleader behind a theft scheme that compromised the personal identifying information of hundreds of Californians and resulted in losses of more than $3.2 million in taxpayer funds. 				 					 

						
Tagged in:
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 4, 2017

				 A Kansas-based insurance company has agreed to pay more than $2.8 million to settle allegations that it used deceptive and unlawful practices to sell health insurance to Massachusetts consumers. The settlement will provide more than $2.3 million to consumers. According to the complaint, Unified Life Insurance Company (ULIC) sold health insurance to Massachusetts consumers that was not authorized for sale and engaged in a host of deceptive practices, such as claiming its insurance included services that it did not cover. According to the AG鈥檚 complaint, ULIC also excluded Massachusetts consumers from coverage based upon their health status or preexisting conditions, and failed to cover basic health services 鈥� such as behavioral health services, maternity services, preventive services for women and children, and other essential benefits required by Massachusetts law. The coverage at issue was sold across state lines and was issued through a third-party association. 				 					 

						
Tagged in:
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 30, 2017

				 New Jersey announced that a lawyer from Essex County was found guilty at trial of conspiring with others to steal approximately $873,520 from a lender by using stolen identities to file fraudulent mortgage loan applications for two bogus real estate transactions, falsifying settlement statements and diverting loan proceeds. The state presented testimony and evidence at trial that Hand conspired with others, including Thomas D鈥橝nna, 41, of Saddle Brook, N.J., in two fraudulent real estate sales between January 2009 and April 2009. The sales involved properties at 248 River Road in Garfield and 91 Isabella Avenue in Newark. In both sales, D鈥橝nna, or a company he owned, sold the property, while no actual buyer existed. The defendants used identities stolen from residents of Puerto Rico to apply for loans for the purchases, submitting false bank statements and other false information to support the applications. The lender provided loans of $415,865 for the Garfield property, and $457,655 for the Newark property. Hand was the attorney and settlement agent for both closings. 				 					 

						
Tagged in:
													  Housing and Mortgage Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 30, 2017

				 Pennsylvania announced a $30.4 million settlement with Volkswagen for environmental damages caused by a device the automaker placed on its cars which allowed excessive pollutants to escape into the air in violation of federal and state laws.  The settlement with Volkswagen is part of a $157 million overall settlement agreement between the automaker and the Attorneys General of 10 states, including Pennsylvania. In an earlier settlement with Volkswagen for consumer protection law violations, the automaker agreed to pay an additional $23.1 million in civil penalties and costs to the Commonwealth of Pennsylvania, the Office of Attorney General, and two related state funds. All told, Volkswagen will be paying $53.5 million to the Commonwealth of Pennsylvania and its agencies under these two settlements for consumer protection and environmental violations. PA, 				 					 

						
Tagged in:
													  Environmental Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 29, 2017

				 A major subprime auto loan funder in Massachusetts, Santander Consumer USA Holdings Inc. (Santander), will pay $22 million for its role in facilitating unfair, high-rate auto loans for thousands of Massachusetts car buyers. The AG鈥檚 investigation, handled jointly with the Delaware Attorney General鈥檚 Office, revealed that Santander allegedly funded auto loans without having a reasonable basis to believe that the borrowers could afford them. In fact, Santander predicted that many of the loans would default, and allegedly knew that the reported incomes, which were used to support the loan applications submitted to the company by car dealers, were incorrect and often inflated. Car loans to consumers with poor credit, known as subprime auto loans, are often made through contracts signed at the car dealership, but the loans are funded by non-dealer financial institutions, like Santander. As part of the funding process, many financial entities resell or repackage the loans, passing them along to third parties. Money obtained from this process is then used to fund more subprime loans. 				 					 

						
Tagged in:
													  Financial Institution Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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