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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.

				

			

			
						
					
			

	
		
		

			

				
				
November 11, 2016

				 鈥� New York announced the arrest of attorney Anthony Cornachio, 74, of Garden City and charges against NRI Group, LLC (鈥淣RI鈥�) and Canarsie A.W.A.R.E., Inc. (鈥淐anarsie鈥�), which are Medicaid-enrolled drug treatment programs controlled by Cornachio. The Attorney General鈥檚 Medicaid Fraud Control Unit (鈥淢FCU鈥�) also charged three-quarter housing operators Yury Baumblit, 66, and Rimma Baumblit, 60, of Brooklyn, and their company Back on Track Group, Inc. In papers filed in New York City Criminal Court, Kings County and New York State Supreme Court, Kings County, prosecutors allege that Yury Baumblit and Rimma Baumblit, in exchange for payments from Cornachio鈥檚 companies, forced residents of their 鈥渢hree-quarter鈥� homes to either face eviction or attend NRI and Canarsie regardless of the residents鈥� actual need for drug treatment services. During the course of this scheme, which dates back to at least 2013, Cornachio allegedly paid Back on Track Group, Inc. over $900,000.00 in illegal kickbacks.  As a result of this kickback scheme, prosecutors allege that Cornachio, through NRI and Canarsie, submitted, and caused to be submitted, at least $1.7 Million in false claims for reimbursement to Medicaid. 				 					 

						
Tagged in:
													  Healthcare Fraud, 
													  Medicaid, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 10, 2016

				  鈥� New York announced that it has reached settlements resolving investigations into the National Vietnam Veterans Foundation, which also operated as the American Veteran Support Foundation (the 鈥淣VVF鈥�), its former President and Founder, John Thomas Burch, Jr. (鈥淏urch鈥�), and its Vice President, David Kaufman (鈥淜aufman鈥�). NVVF has operated nationwide since 1992 and began soliciting in New York in approximately 2008.  By 2014, NVVF was collecting nearly $9 million nationwide from its fundraising campaigns, soliciting small dollar donations from the public through direct mail and phone calls 鈥� purportedly to help Vietnam Veterans.  Nearly all of the money raised through its direct mail campaigns was instead used to pay its fundraisers.  For example, in 2014, $7.7 million of the $8.6 million raised was used to pay NVVF鈥檚 fundraisers.  The fraction that actually made it to NVVF was further reduced by a pattern of abuse, mismanagement and misspending by NVVF鈥檚 former President, Burch. 				 					 

						
Tagged in:
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 4, 2016

				 New Jersey announced that the owner of an in-home senior care company in Atlantic County was sentenced to state prison for engaging in a scheme with her sister and a lawyer to steal millions of dollars from their elderly clients. Jan Van Holt, 60, of Linwood, former owner of 鈥�A Better Choice,鈥� a firm that offered elderly clients in-home care and legal financial planning, was sentenced to 12 years in state prison, including 5 陆 years of parole ineligibility. Van Holt and Steen conspired with Barbara Lieberman, 64, of Northfield, a lawyer who specialized in elder law, to steal over $2.7 million from 12 elderly clients from 2003 through 2012. 				 					 

						
Tagged in:
													  Home Health and Hospice, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 2, 2016

				 A Thurston County Superior Court judge ordered the Grocery Manufacturers Association to pay $18 million in penalties and punitive damages, after Washington鈥檚 lawsuit revealed GMA intentionally violated Washington campaign finance laws. The case arose from Washington鈥檚 investigation of the finances of opposition to voter Initiative 522, which would have required labeling of genetically modified organisms, or GMOs, in food sold to consumers. The ruling against GMA 鈥� a Washington, D.C.-based trade group representing major food, beverage and consumer companies 鈥� is believed to constitute the largest campaign finance judgment in United States history. 				 					 

						
Tagged in:
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 2, 2016

				 New York announced a $1.6 million settlement with Queens-based American Hope Group, Inc. and its principal, Mauricio Villamarin Martinez (collectively 鈥淎merican Hope Group鈥�), following an investigation into a fraudulent mortgage rescue scheme that preyed upon financially vulnerable Hispanic homeowners who were desperate to save their homes from foreclosure. The AG鈥檚 investigation found that American Hope Group collected millions of dollars in monthly fees from consumers, yet routinely failed to deliver on its promises to provide substantial relief from unaffordable mortgage payments through loan modifications and other forms of foreclosure prevention. The settlement, a Consent Order, concludes the AG鈥檚 investigation into American Hope Group鈥檚 mortgage rescue scheme. 				 					 

						
Tagged in:
													  Housing and Mortgage Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 28, 2016

				 California announced a $15 million settlement securing restitution for Californians who invested money with Beverly Hills-based investment adviser Stanley Chais, money that he then funneled into Bernard Madoff鈥檚 notorious Ponzi scheme. Chais was responsible for one of the largest operations channeling money directly to Bernard Madoff, violating California鈥檚 consumer protection and corporate securities laws.  He deceived his clients, many of whom were elderly, into paying him substantial fees, claiming he was actively managing their money while in actuality turning their investments over to Madoff.  As a result, many lost their life savings when Madoff鈥檚 fraudulent scheme was ultimately exposed in late 2008. 				 					 

						
Tagged in:
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 27, 2016

				 Pennsylvania and 33 other Attorneys General reached a $41.2 million settlement with the makers of Hyundai and Kia automobiles following allegations that the companies misrepresented mileage and fuel economy ratings. An investigation by the states showed the companies misrepresented mileage and fuel economy ratings on certain vehicles from 2011, 2012 and 2013. The companies also allegedly sought to capitalize on the erroneous mileage estimates by placing them prominently in a variety of advertisements and other promotional campaigns. These actions distorted facts that may have been substantial to consumers鈥� decisions to purchase particular vehicles during a time of high gasoline prices, the states鈥� investigation revealed.  PA, , , 				 					 

						
Tagged in:
													  Environmental Fraud, 
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 25, 2016

				 New York announced that it has reached separate $6 million settlements 鈥� for a total of $12 million in penalties and costs 鈥� with DraftKings and FanDuel, resolving lawsuits alleging false and deceptive advertising practices by the companies. The settlement agreements impose the highest New York penalty awards for deceptive advertising in recent memory. The agreements also require sweeping reforms to the companies鈥� marketing, including clear disclosure of terms and conditions for marketing promotions, expected winnings, and expected performance in the online contests, as well as resources for players at risk for compulsive gaming disorders, including addiction. Furthermore, the companies will be required to maintain a webpage that provides information about the rate of success of users in its contests, including the percentage of winnings captured by the top 1%, 5% and 10% of players. 				 					 

						
Tagged in:
													  Government Investigation, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 24, 2016

				 New Jersey announced that a doctor from Middlesex County pleaded guilty to engaging in sophisticated fraud and money laundering schemes by which he hid approximately $3.6 million in income from his medical practices to evade taxes.  He also pleaded guilty to using money from the schemes to pay illegal kickbacks to doctors.

Dr. Manoj Patharkar, 45, of South Amboy, N.J., pleaded guilty before Superior Court Judge Michael A. Toto in Middlesex County to first-degree conspiracy, first-degree money laundering, seven counts of third-degree filing fraudulent tax returns, and three counts of third-degree failure to pay taxes. He also entered guilty pleas to all of those same counts on behalf of his corporation Pain Management Associates of Central Jersey (PMACJ). Those charges were contained in an Aug. 24, 2015 indictment. In addition, he pleaded guilty to an accusation charging him with second-degree conspiracy and second-degree commercial bribery in connection with the illegal kickback scheme. 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Provider Fraud, 
													  Tax Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 3, 2016

				 California orthopedic clinics Orthopedic Associates of Northern California, San Bernardino Medical Orthopaedic Group Inc. (doing business as Arrowhead Orthopaedics) and Reno Orthopaedic Clinic agreed to pay a combined $2.39 million to resolve federal and state False Claims Act allegations that they improperly billed federal and state health care programs for reimported osteoarthritis medications, known as viscosupplements.聽 According to the government, the clinics purchased deeply discounted viscosupplements that were reimported from foreign countries and billed them to state and federal health care programs in order to profit from the reimbursement system, when such reimported viscosupplements were not reimbursable by those programs. 聽The reimported products allegedly included labeling in foreign languages and in English for additional uses not approved in the United States.聽 The government further alleged there was no manufacturer assurance that the drugs had not been tampered with or that it was stored appropriately.聽 The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by a Senior Musculoskeletal Specialty Manager in the Biosurgery Division of Sanofi S.A. 聽The whistleblower will receive a whistleblower award of approximately $430,000 from the proceeds of the government's recovery.聽 				 					 

						
Tagged in:
													  FCA State, 
													  Healthcare Fraud, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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