Business

There's an ongoing investigation regarding shareholder losses related to the price discrepancies that came about between Exchange-Traded Funds (“ETFs”) and their underlying assets on August 24, 2015.

Persons with non-public information regarding any ETF should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the SEC whistleblower program, whistleblowers who provide original information may receive rewards up to 30 percent of any successful recovery made by the SEC.

The disconnected price declines occurred in some of the industry’s largest funds: The $19 billion Vanguard Dividend Appreciation ETF (NYSEArca: VIG), which is focused on blue-chip stocks, traded down by as much as 37% while the net asset value of the stocks in its index only fell about 7%. Finally, the $13 billion SDPR S&P Dividend ETF’s (NYSEArca:SDY) price dropped by as much as 38%, although the value of its stock index declined by only 6.2%.

Although the prices eventually corrected, retail investors lost an undetermined amount. Volatility in ETF markets could have an enormous impact on investors as ETFs in the U.S. comprise roughly $2.4 trillion in assets under management and make up over 27% of stock trading volume on U.S. Exchanges.

Among the issues being looked at in the current investigation include representations made by ETF sponsors about pricing, the role of participating dealers and market makers, and the role of high speed trading and arbitrage by the market makers and others.

On September 17, 2015, the 4th U.S. Circuit Court of Appeals issued a decision reviving cases that were originally filed in September of 2011 and then a second filed in January 2013 by a former employee of Norfolk Southern Railway Company (NS).  

In the first lawsuit, the whistleblower claimed that NS suspended him due to his race.  After the district court sided in favor of NS, he filed a second lawsuit. This complaint alleged that NS suspended him for reporting rail safety offenses, in violation of the whistleblower protection provision of the Federal Railroad Safety Act (FRSA). The district court again granted summary judgment in favor of NS, asserting that the whistleblower's second lawsuit was barred by the FRSA's “Election of Remedies” provision, which provides that “[a]n employee may not seek protection under both this section and another provision of law for the same allegedly unlawful act of the railroad carrier.” 49 U.S.C. § 20109(f).

In July 2011, NS suspended the whistleblowing employee without pay for six months. Neither party agreed to the factual basis of the suspension. NS claims it suspended the employee because he drank a beer on duty and then operated a company-owned automobile in violation of company policy. The plaintiff, who is African–American, claims the suspension was motivated both by his race and in retaliation for federal rail safety whistleblowing. 

Less than two months after filing his first lawsuit, Lee filed a complaint with the Occupational Safety and Health Administration (OSHA) under the FRSA's whistleblower provision, 49 U.S.C. § 20109. That provision prohibits railroad carriers from, among other things, discriminating against employees who “refuse to violate or assist in the violation of any Federal law, rule, or regulation relating to railroad safety or security.” Id. § 20109(a)(2). According to Lee, federal law required him to identify—or “bad order”—defective rail cars for repair. NS capped the number of cars he could tag with such orders, however, effectively requiring him to violate federal law. When he refused to comply with the caps, Lee alleges that NS suspended him in July 2011.

First, the district court concluded that, to the extent Lee's claims were based on the collective bargaining agreement, they were preempted by the Railway Labor Act (RLA), 45 U.S.C. § 151 et seq., which requires arbitration of such claims. The court further concluded that NS was not vicariously liable for the individual instances of racial harassment by Lee's co-workers.

Less than a month after the district court granted NS summary judgment in the first lawsuit, Lee filed his FRSA retaliation lawsuit. The allegations in this second lawsuit largely track those in Lee's OSHA complaint. Lee again alleged that he was tasked with tagging defective train cars with “bad orders,” but that NS capped the number of cars he could tag. In doing so, Lee contends NS pressured him to “violate federal rail safety regulations and laws and violate NS's own safety and mechanical department rules.” 

On May 20, 2014, the district court granted summary judgment to NS on Lee's FRSA claims, concluding that Lee's first lawsuit for racial discrimination under Section 1981 constituted an election of remedies under FRSA Section 20109(f) that barred Lee's subsequent FRSA retaliation action. Lee then timely noted this appeal.

A former city employee who claimed she was fired for acting as a whistleblower on official misconduct filed a complaint in April 2011.  Her specific accusations were that the city was in violation of New Jersey's Conscientious Employee Protection Act when it fired her for whistleblowing during her employment. The details of the settlement were not disclosed.

Between 1995 until her dismissal in 2011, the whistleblower served as the city's principal personnel clerk. She was barred from asserting several pieces of evidence if the case went to trial. The barred evidence included her claim the city fired her for cooperating with FBI agents conducting an investigation in 2005 during Operation Bid Rig.

Operation Bid Rig was the state's largest federal corruption sting, targeting dozens of politicians and officials in Monmouth and Ocean counties and elsewhere in the state.

A settlement has been reached in a whistleblower class action lawsuit brought against PAE Government Services Inc (PAE) and RM Asia (HK) Limited (RM Asia). They are accused of violating the False Claims Act by taking part in a bid-rigging scheme that resulted in false claims for payment under a U.S. Army contract for services in Afghanistan.

The whislteblower will receive a $261,000 share of the government's recovery.

The whistleblower case, filed in 2011, alleged that former managers of PAE and RM Asia funneled subcontracts paid for by the government to companies owned by the former managers and their relatives by using confidential bid information to ensure that their companies would beat out other, honest competitors.   

In a related criminal investigation, the U.S. Attorney’s Office of the Eastern District of Virginia previously obtained guilty pleas from former PAE program manager Keith Johnson; Johnson’s wife, Angela Gregory Johnson; and RM Asia’s former project manager, John Eisner, and deputy project manager, Jerry Kieffer, for their roles in the scheme.

A settlement has been reached in a whistleblower class action lawsuit brought against GE Healthcare Inc regarding a company it acquired in 2004, Amersham Health Inc.  Amersham is accused of causing Medicare to make overpayments by providing false or misleading information.

The whistleblower will receive $5.1 million from the government’s recovery.

The whistleblower lawsuit, filed in 2006, alleged that Amersham Health provided false or misleading information to Medicare regarding the number of doses available from vials, causing Medicare to pay for Myoview at artificially inflated rates. Myoview is distributed in multi-dose vials of powder. In a process known as reconstitution, nuclear pharmacies mix the powder with a radioactive agent to prepare individual doses that are injected into patients as part of the cardiac imaging procedures. Certain Medicare payment rates for Myoview were based, in part, on the number of doses available from vials of Myoview.

A settlement has been reached in a whistleblower class action lawsuit brought against Science Applications International Inc. (SAIC); its subcontractor, Applied Enterprise Solutions LLC (AES); AES CEO Dale Galloway; and former government employees Stephen Adamec and Robert Knesel. They are accused of submitting or causing the submission of false claims and conspired to submit such claims under a contract with the General Services Administration (GSA).

According to the settlement details,  SAIC will pay $20,400,000 and AES and Dale Galloway will pay $2,166,000. Adamec and Knesel are paying $110,000. The whistleblower will receive a $560,000 share of the recovery and was previously agreed to during the previous settlement of $2,000,000 with Lockheed Martin.

The contract in questions was to provide support services for the National Center for Critical Information Processing and Storage (NCCIPS) at the NAVO MSRC at the John C. Stennis Space Center in Hancock County, Miss. GSA awarded the NCCIPS task order in April 2004 to Science Applications International Corporation (SAIC), which teamed with Lockheed Martin and Applied Enterprise Solutions (AES) to perform under the task order. SAIC was paid a total of $115 million under the contract, of which Lockheed Martin was paid $2 million according to the terms of its subcontract with SAIC.

The case, filed in May 2009, alleged that prior to the issuance, and once the NCCIPS solicitation had been publicized, that then government employees, Stephen Adamec and Robert Knesel, conspired with Lockheed Martin, Galloway, SAIC and AES to ensure that SAIC and its teaming partners were awarded the task order by (a) sharing non public, advance procurement information with the SAIC team that was not provided to other potential bidders; (b) sharing information about the solicitation with the SAIC team before providing that information to other bidders; and choosing a type of contract and putting language in the solicitation in order to bias the selection process to favor the SAIC team.

A settlement has been reached in a criminal lawsuit brought against Maxim Healthcare Services Inc who is accused of defrauding Medicaid programs and the Veterans Affairs program of more than $61 million. 

The settlement requires payment of approximately $130 million to Medicaid programs and the Veterans Affairs program to resolve False Claims Act liability for false home healthcare billings to Medicaid programs and the Veterans Administration under civil agreements relating to this matter. Maxim has agreed to pay a criminal penalty of $20 million. 

The settlement resolves allegations that Maxim billed for services that were not rendered, services that were not properly documented, and services performed by 13 unlicensed offices. Maxim has agreed to pay approximately $70 million to the federal government and approximately $60 million to 42 states.

The whistleblower will receive approximately $15.4 million as his share of the recoveries from the federal government and the states.

The criminal complaint, filed in September 2011, accuses Maxim, a privately-held company based in Columbia, Md., with hundreds of offices throughout the United States, of submitting more than $61 million in fraudulent billings to government health care programs for services not rendered or otherwise not reimbursable. The investigation revealed that the submission of false bills to government health care programs was a common practice at Maxim from 2003 through 2009. During that time period, Maxim received more than $2 billion in reimbursements from government health care programs in 43 states based on billings submitted by Maxim.

If you have a similar case please fill out the form below or email mail@whistleonfraud.com or call: 619 - 866 – 6157

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If you or someone you know experienced a similar situation or any other wrongdoing within a corporation you should contact mail@whistleonfraud.com or call: 619 - 866 – 6157

A settlement has been reached in a whistleblower class action lawsuit brought against St. Jude Medical Inc in St.Paul, MN, who is accused of  inflating the cost of replacement pacemakers and defibrillators purchased by the Departments of Defense and Veterans Affairs.

The whistleblowers will receive $730,000 from the settlement amount.

The case, filed in August 2008, alleged that St. Jude actively marketed its pacemakers and defibrillators by touting the generous credits available should a device need to be replaced while covered under warranty. At the same time, St. Jude allegedly knew that it failed to grant appropriate credits to the purchasers of devices in a large number of cases where a product was replaced while still under warranty. As a result, the United States contended that St. Jude submitted invoices to Department of Veterans Affairs hospitals and Department of Defense military treatment facilities that overstated the cost for replacement pacemakers or defibrillators.

A settlement has been reached in a whistleblower class action lawsuit brought against APTx Vehicle Systems Limited, Alchemie Grp Ltd, and Haslen Back, the director and shareholder of Alchemie.  They are accused of wire fraud conspiracy.

In relation to the criminal charges, British contractor APTx Vehicle Systems Limited agreed to plead guilty to conspiracy to defraud the United States, the Coalition Provisional Authority that governed Iraq from April 2003 to June 2004, the government of Iraq and JP Morgan Chase Bank. In relation to the civil charges, APTx, Alchemie and Haslen Back, agreed to pay $2 million to the United States to resolve False Claims Act violations. The whistleblower will receive $540,000 as its share of the settlement amount.

According to the criminal information, APTx engaged in a fraudulent scheme involving an August 2004 contract valued at over $8.4 million for the procurement of 51 vehicles for the Iraqi Police Authority.  The contract was initially awarded to a different, “prime” contractor, which in turn subcontracted the procurement to APTx for over $5.7 million.  Payment under the contract was by letters of credit issued by JP Morgan Bank.

The criminal information further charges that in May and June 2005, APTx submitted shipping documents to JP Morgan to draw down on the letters of credit, which falsely and fraudulently asserted that all 51 vehicles were produced and ready to ship to Iraq.   In fact, as APTx knew, none of the vehicles had been built, none of the vehicles were legally owned or held by APTx and none of the vehicles were in the process of transport to Iraq.  The fraudulent shipping documents also listed a company as the freight carrier that APTx knew was not a shipping company and named a fictitious company as the freight forwarder. 

A settlement has been reached in a whistleblower class action lawsuit brought against Fluor Hanford LLC who is accused of using federal funds for lobbying.

The whistleblower will receive $200,000 of the government’s settlement.

The case, filed in February 2011, alleged that Fluor used Department of Energy (DOE) funds to lobby Congress and other federal officials to increase funding for the HAMMER Center, in violation of a federal law known as the Byrd Amendment, which prohibits the use of federal funds for lobbying.

Between 2005 and 2009, Fluor contracted with the DOE to manage and operate the Hazardous Materials Management and Emergency Response (HAMMER) Center. The HAMMER Center provides homeland security and emergency response training to first responders and law enforcement personnel.