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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.

				

			

			
						
					
			

	
		
		

			

				
				
December 20, 2016

				 Massachusetts announced that a Burlington woman has been sentenced to jail and ordered to pay up to $570,000 in restitution for stealing from public agencies by billing for unlicensed psychological services. Nita Guzman, age 52, pleaded guilty on Friday in Middlesex Superior Court to the charges of Medicaid False Claims (2 counts), False Claims to Public Agency (1 Count), Larceny (4 Counts), and Unlicensed Practice of Psychology (2 Counts). An AG鈥檚 investigation revealed that Guzman, through her company New England Psychological Consultants, Inc., billed Medicaid, Medicare, and Lawrence Public Schools more than $550,000 for unlicensed mental health services. 				 					 

						
Tagged in:
													  Improper Medical Personnel, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 19, 2016

				 New Jersey announced that the owner of an Essex County trucking company has been charged with bilking nearly $389,000 from his insurance carrier by providing false payroll information to obtain lower premiums on workers compensation coverage. Elvis Parra, owner of E&K Trucking, Inc. in Newark, was indicted Friday on second-degree charges of theft by deception and misconduct by a corporate official, third-degree insurance fraud, and fourth-degree workers compensation fraud in connection with the alleged scheme that cheated Liberty Mutual Insurance Company (鈥淟iberty Mutual鈥�) out of premiums. According to the indictment, Parra falsely represented that his trucking company employed only three drivers who were paid a total of $75,000 annually, when in reality he paid more than $2.9 million in annual wages to an additional 81 owner/operator drivers, according to prosecutors. 				 					 

						
Tagged in:
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 16, 2016

				 Virginia announced that Southwest Virginia communities will enjoy cleaner water thanks to enhanced environmental protections agreed to as part of a settlement between Virginia, Alabama, Kentucky, Tennessee and the Southern Coal Corporation for the company鈥� s continued and systemic polluting of waterways in violation of state and federal laws.  The Commonwealth of Virginia will receive $112,500 as part of a $900,000 civil penalty, and Southern Coal Corporation will commit to environmental improvement plans and facility upgrades to comply with the Clean Water Act and prevent any illegal discharge of pollutants into Southwest Virginia waterways. The company will also hire an independent auditor to monitor its compliance and will post all its discharge reports online so the public can know what is being discharged into their waterways and whether the company is fulfilling its obligations. 				 					 

						
Tagged in:
													  Environmental Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 15, 2016

				 Ohio joined 19 other state attorneys general in filing a federal lawsuit against Heritage Pharmaceuticals and several other generic drug makers accused of conspiring to reduce competition and inflate prices in the United States for two drugs: doxycycline hyclate delayed-release (an antibiotic) and glyburide (a diabetes medication). The lawsuit names as defendants Heritage Pharmaceuticals Inc., Aurobindo Pharma USA Inc., Citron Pharma LLC, Mayne Pharma (USA) Inc., Mylan Pharmaceuticals Inc., and Teva Pharmaceuticals USA Inc. The states allege that Heritage Pharmaceuticals, through senior executives and salespeople, organized and initiated a wide-ranging series of conspiracies with other companies to allocate markets, artificially inflate and manipulate prices, and otherwise thwart competition. According to the complaint, the defendants routinely coordinated their schemes by interacting directly with competitors at events, such as industry trade shows and customer conferences, and through direct email, phone, and text message communications. 				 					 

						
Tagged in:
													  Pharma Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 14, 2016

				 Michigan announced that Scott Rookus, of Jenison, pled no contest to two felony charges, one count of Racketeering and one count of Fraudulent Sale of Securities in relation to his role in running a million dollar Ponzi scheme between 2010 and 2015. Rookus was originally charged with more than 30 crimes regarding the alleged Ponzi scheme in June 2016. Between 2010 and 2013, Rookus allegedly solicited and obtained investments of approximately $1.5 million for his holdings company, New Haven Holdings. His customers many of whom were senior citizens, were told that earnings from their investments would come from the profits of Rookus鈥� enterprises, when in fact the money he took resulted in an alleged Ponzi-scheme from which he was the primary beneficiary. 				 					 

						
Tagged in:
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 14, 2016

				 New York joined twelve other states, the District of Columbia, and the Federal Trade Commission in announcing a $17.5 million settlement with ruby Corp., which owns the dating website AshleyMadison.com. The settlement follows an investigation into the July 2015 hack of the website that resulted in the online publication of user information for millions of AshleyMadison.com members, including photographs, usernames, email addresses, communications, and other profile information. The settlement includes an immediate payment of $1,657,000 divided amongst the states and the Federal Trade Commission, of which New York will receive $81,330.94. The remainder of the $17.5 million payment is suspended based on ruby Corp.鈥檚 inability to pay. Up to 652,627 New York residents were members of Ashley Madison at the time of the security breach. 				 					 

						
Tagged in:
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 14, 2016

				 Florida announced a million dollar settlement reached with an obstetrician and gynecologist in Ocala. Dr. Rasiklal Dhanji Nagda is a Medicaid provider and owner of Nagda Medical, Inc. According to Attorney General Bondi鈥檚 Medicaid Fraud Control Unit鈥檚 investigation, Nagda submitted more than 700 claims to Medicaid for intrauterine devices not approved by the Food and Drug Administration, and received reimbursements from the Medicaid program. Nagda allegedly used a credit card to order large quantities of Bayer鈥檚 Mirena IUDs from an online pharmacy, GetCanadianDrugs.com, on a monthly basis. FL				 					 

						
Tagged in:
													  FCA Federal, 
													  Medicaid, 
													  Medical Devices and DME, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 8, 2016

				 New York and 41 other states announced a $19.5 million multistate agreement with Bristol-Myers Squibb (鈥淏MS鈥�) arising from alleged improper marketing and promotion of the drug Abilify. Abilify is one of several second-generation antipsychotic prescription drugs, commonly referred to as 鈥渁typical antipsychotics,鈥� that were originally used to treat schizophrenia. New York alleged that BMS improperly promoted Abilify for pediatric use and for use in elderly patients with symptoms consistent with dementia and Alzheimer鈥檚 disease.  In fact, in 2006, Abilify received a 鈥渂lack box鈥� warning stating that elderly patients with dementia-related psychosis who are treated with antipsychotic drugs have an increased risk of death.  The complaint further alleged that BMS violated state consumer protection laws by misrepresenting and minimizing risks of the drug including metabolic and weight gain side effects and by misrepresenting the findings of scientific studies. , 				 					 

						
Tagged in:
													  Pharma Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 8, 2016

				 New York announced the settlement of a lawsuit against SG Hylan Motors Corp., a Staten Island dealership doing business as Staten Island Honda and Staten Island Nissan (collectively 鈥淪G Hylan鈥�) and a separate settlement with Best Auto Outlet, Inc. (鈥淏est Auto鈥�) located in Floral Park.  The SG Hylan settlement resolves a lawsuit filed by the Attorney General in July 2016, which alleged that these auto dealerships unlawfully sold 鈥渁fter-sale鈥� products and services, including credit repair and identity theft protection services, to over 2,300 consumers, sometimes exceeding a cost of $2,000 per consumer.  The settlement requires SG Hylan to pay $1.5 million in restitution to these consumers. The agreement with Best Auto, which returns $115,000 in restitution to consumers, concludes an investigation into this dealership for similar misconduct 鈥� alleged unlawful sale of credit repair and identity theft prevention services, and other 鈥渁fter-sale鈥� items to over 200 consumers. 				 					 

						
Tagged in:
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 1, 2016

				 Michigan announced that Fuataina Afutiti, of Westland, was sentenced to 30 months to up to 20 years in prison for stealing nearly $2 million dollars from the Veterans Health Administration Credit Union. The former President and CEO of the credit union used the stolen funds for her personal use including leasing luxury cars, gambling and financing personal vacations. Afutiti, 50, plead guilty as charged to one count of Receiving Proceeds from a Continuing Criminal Enterprise and one count of Embezzlement from a Credit Union. She was sentenced Thursday, December 1, 2016 before Judge David Groner, in the 3rd Circuit Court in Wayne County. Afutiti will report to prison on January 4, 2017. 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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