With over 10,000 whistleblower tips since 2011, the Securities and Exchange Commission (“SEC”) recently unveiled its most detailed portrait yet of the whistleblowers who have received awards under the SEC incentive program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to its 2014 SEC Annual Report to Congress on the Dodd-Frank

The owner and operator of a Miami home health care company recently was sentenced for her part in a $6.5 million Medicare fraud scheme, after falling into the cross-hairs of the federal government’s Health Care Fraud Prevention and Enforcement Action Team (“HEAT”). Cruz Sonia Collado owned a home health care company, Nestor Home Health, in Miami. According to the DOJ, Collado paid kickbacks and bribes to patient recruiters for referrals to Nestor Home Health for home health and therapy services that were medically unnecessary or were never provided. Over a nearly 4 year period, between March 2009 and January 2014, Medicare paid more than $6.1 million—of the $6.5 million claims submitted—to Nestor Home Health for home health services. Collado was sentenced to 75 months in prison, followed by three years of supervised release. She also was ordered to pay over $6.5 million in restitution. The Department of Justice (“DOJ”) and Department of Health and Human Services (“HHS”) formed HEAT in an effort to help prevent waste and crack down on abuse of Medicare and Medicaid programs. And the group of has been active.
Continue Reading Can you feel the HEAT? Medicare Fraud Strike Force Strikes Again

Recent SEC actions confirm that the SEC is making good on its promise to focus attention on the municipal bond market and the disclosure obligations of municipalities. According to the SEC, investors hold approximately $3.7 trillion dollars in municipal debt today, in contrast to just $20 billion in 1945. In light of the increase in municipal bond debt, the SEC conducted a comprehensive review of the municipal securities market in 2012. That same year, the SEC issued recommendations, including potential legislative changes and suggested rulemaking, to improve the municipal securities market and to enhance disclosures available to investors. More recently, in March the SEC Enforcement Division launched the Municipalities Continuing Disclosure Cooperation (“MCDC”) initiative. The MCDC initiative provides standardized settlement terms for issuers and underwriters in the municipal bond market who self-report violations of disclosure obligations. Importantly, the MCDC initiative permits issuers who were already under investigation the opportunity to accept the MCDC standard terms. The MCDC initiative expires on September 10. A recent California school district case, involving the Kings Canyon Joint Unified School District (“Kings Canyon”) was the first case to be resolved under the MCDC initiative.
Continue Reading The SEC’s Increasing Focus on the Municipal Bond Market

It is no secret that whistleblower complaints are on the rise. According to the SEC Office of the Whistleblower’s (OWB) recently released annual report, during the 2013 fiscal year, OWB received more than 3,200 whistleblower complaints, tips, and referrals—up from 3,001 in 2012 and just 334 in 2011 (the year OWB was created). Similarly, in fiscal year 2013, DOJ saw a record 752 qui tam complaints filed under the False Claims Act (FCA) whistleblower provision. Whistleblower awards are also on the rise. In fiscal year 2013, the DOJ recovered $3.8 billion in settlements and judgments based on the FCA. More than three quarters of the DOJ’s recovery—$2.9 billion—was related to whistleblower lawsuits, with whistleblowers receiving $345 million of the recovery. In September 2013, the SEC OWB paid more than $14 million to a single whistleblower. The SEC OWB also recently announced that it paid an additional $150,000 to the recipient of the first whistleblower award, for a total of more than $200,000. But not all whistleblowers receive large payouts, and many face retaliation for their actions. A recent Fourth Circuit decision makes the relatively light burden of proving retaliation more difficult. And an upcoming decision by the Second Circuit could affirm the lower court’s limitations on who can recover whistleblower awards.
Continue Reading Whistleblowers: Boom or Bust?

The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) are partnering to sponsor regional compliance outreach programs for broker-dealers.  The programs, which launch on April 30 in Denver and Los Angeles, are designed for risk, audit, legal, and compliance professionals who are employed by broker-dealers and will focus on promoting

There are 99 federal agencies that are subject to the Freedom of Information Act (FOIA) and—according to the Justice Department’s Office of Information Policy (OIP)—there are also 99 sets of FOIA regulations.  As Congress contemplates a move to further legislate agency responses to FOIA demands, the OIP is commencing an interagency effort this Spring to draft a single regulation to iron out inconsistences among the varied federal practices.  Additionally, a number of federal agencies have moved to adopt the FOIAOnline website, which allows users to submit FOIA requests online and track the progress of those requests. The renewed attention to FOIA and—relatedly—denials of FOIA requests, highlights the risks that accompany document productions made to federal authorities.  Consider the not-uncommon scenario:

  • Your Company gets subpoenaed by the federal government.
  • You produced thousands, if not hundreds of thousands, of Company records.
  • Now, your documents are subject to a FOIA request and possible public dissemination.

Is there any way to protect against this?

Continue Reading Take 4 – Protecting Confidential Commercial Information from FOIA