Category Archives: Fraud

First Circuit’s New England Compounding Center Decisions Illustrate Reach of Federal Criminal Law

In 2012, New England Compounding Center (“NECC”) shipped contaminated anti-pain medication to hospitals and clinics around the country, with devastating consequences. Patients around the country developed fungal meningitis and spinal and paraspinal infections. At least 63 died, and nearly 700 more suffered debilitating injuries. In opinions issued on July 9, 2020, the First Circuit addressed—and, for the most part, rejected—efforts by NECC’s owner and chief pharmacist to vacate their convictions and set aside the lengthy prison sentences they were ordered to serve for their roles in shipping the contaminated drugs.… More

Texas Man Using Online Name Generator Latest to Be Charged with PPP Loan Fraud

In the past two weeks, the federal government has charged several individuals in Paycheck Protection Program loan fraud schemes.  The allegations have ranged from applying for loans for non-operating businesses to using loan funds to buy cars and jewelry.  Charges announced this week showed a whole new level of creativity.  A Texas man, Samuel Yates, allegedly used an online name generator to make up the names of hundreds of employees in an effort to obtain a $5 million loan. … More

DOJ Reportedly Issues PPP-Related Subpoenas to Banks

In yet another sign that the federal government is following through on its warnings about PPP loan fraud, the Department of Justice, according to reports from Reuters, has issued grand jury subpoenas to several Wall Street banks related to an investigation into PPP loans.  The subpoenas were reportedly issued by the DOJ’s Fraud Section.  The issuance of the subpoenas does not necessarily indicate wrongdoing by the banks. … More

Purchasing a Rolls-Royce Is Not a Permissible Use of PPP Funds

Federal prosecutors continued to quickly respond to PPP loan fraud, bringing two additional cases that allege clear misuse of the funds intended for small businesses.  In one case, prosecutors in Georgia charged reality TV personality Maurice Fayne, aka “Arkansas Mo” of “Love & Hip Hop: Atlanta” fame, with bank fraud for allegedly using $1.5 million of a $2 million PPP loan to maintain his luxury lifestyle. … More

SCOTUS Overturns Federal Program and Wire Fraud Convictions Resulting from Bridgegate Scandal

Earlier today, the Supreme Court threw out federal program and wire fraud convictions for two former public officials who conspired to induce traffic jams in Fort Lee, New Jersey as political retaliation in 2013.  Bridget Anne Kelly and William Baroni were convicted of fraud charges in 2015 for their role in diverting lanes of traffic on the George Washington Bridge to “send [Fort Lee’s Mayor Mark Sokolich] a message” after Sokolich refused to support Governor Christie’s re-election campaign in 2013. … More

Federal Prosecutors Ask Massachusetts Hospitals to Help Root Out Fraud Related To COVID-19

The United States Attorney for the District of Massachusetts is proactively seeking to find, investigate, and prosecute unlawful attempts to exploit the COVID-19 pandemic and is asking hospitals to assist.  U.S. Attorney Andrew Lelling sent a letter to leaders of Massachusetts hospitals asking them to report any “individuals and companies that may have acquired vital medical supplies in excess of what they would reasonably use, or for the purpose of charging exorbitant prices.”  The Secretary of Health and Human Services has designated 15 categories of supplies as “scarce,” thereby enabling prosecutors to seek certain civil and criminal enforcement remedies against anyone accused of hoarding or gouging prices for those supplies.  … More

COVID-19 Fraud Prosecutions Off and Running

The Department of Justice (DOJ) announced a criminal complaint last Friday in the most significant COVID-19 fraud prosecution to date.  A complaint is a charging document usually submitted to a court to obtain an arrest warrant.  It is not an indictment, and, unless an early resolution is reached, in order to pursue the case further DOJ will have to present the case to a grand jury to vote on charges (whenever grand juries are once again in session).… More

White Collar Year in Preview: False Claims Act Trends in 2020

Editors’ Note: This is the fourth in our start-of-year series examining important trends in white collar law and investigations in the coming year. Our previous entry discussed  anti-corruption trends in 2020. Up next: a look at State Attorney General trendsLook for additional posts throughout the month of January.

More than halfway into the Donald Trump administration,… More

White Collar Year in Preview: Healthcare Fraud Trends in 2020

Editors’ Note: This is the second in our start-of-year series examining important trends in white collar law and investigations in the coming year. Our previous entry discussed SEC enforcement in 2020. Up next: a look at trends in anti-corruption and under the Foreign Corrupt Practices Act. Look for additional posts throughout the month of January.

2019 saw ongoing action in the healthcare space.… More

White Collar Year in Preview: SEC Enforcement Trends in 2020

Editors’ Note:  This is the first in our start-of-year series examining important trends in white collar law and investigations in the coming year.  Up next:  a look at trends in health care enforcementLook for additional posts throughout the month of January.

As we look towards the SEC Division of Enforcement’s agenda for 2020,… More

Biotech CEO Convicted of Securities Fraud and Obstructing SEC Investigation

The chief executive of a Boston-based biotech company, Frank Reynolds, was convicted of defrauding investors and obstructing an SEC investigation. Reynolds founded the biopharma startup PixarBio Corp. in 2013 and took the company public in 2016. By the next year PixarBio was in a tailspin and an SEC probe was opened. Reynolds is now facing possible jail time and millions in fines after he stoked the brief meteoric rise of PixarBio with promises of ground breaking inventions,… More

Challenge to Attorneys’ Fees in False Claims Act Cases

Thanks to inexact language in a settlement agreement, a for-profit hospital chain can challenge whistleblowers’ eligibility for attorneys’ fees under the False Claims Act (“FCA”).  The single sentence that spawned nearly 5 years of litigation was: “All Parties agree that nothing in this Paragraph or this Agreement shall be construed in any way to release, waive or otherwise affect the ability of CHS to challenge or object to [whistleblower’s] claims for attorneys’ fees,… More

Supreme Court Extends Securities Fraud Liability to Knowing Dissemination of False Statements Made By Others

Recently, in Lorenzo v. Securities and Exchange Commission, No. 17-1077, the Supreme Court held that an investment banker had committed securities fraud by copying and pasting false statements prepared by his supervisor into emails to prospective investors, even though he was not on the hook for making the statements himself.

The decision focuses on Rule 10b-5 of the Securities and Exchange Commission,… More

U.S. Government Charges Chinese Conglomerate with Fraud, Conspiracy

On January 28, 2019, the Department of Justice announced that a 13-count indictment against Chinese telecommunications conglomerate Huawei Technologies Co. Ltd. and various affiliated parties was unsealed earlier that day.  Huawei is charged with bank fraud, wire fraud, violations of the International Emergency Economic Powers Act, obstruction of justice, and various related conspiracy charges.

All charges in the indictment stem from Huawei’s alleged long-standing ploy to deceive financial institutions and the U.S.… More