Bailout Fraud Cases Emerge
May 9, 2009 by casey
In the first major disclosure of corruption and fraud in the $750 billion federal bailout program, investigators said Monday that they have opened 20 criminal probes into possible securities fraud, tax law violations, insider trading and mortgage modification fraud.
Neal Barofsky, the special inspector general overseeing the bailout program, said in an interview that the investigations are just the first wave of cases by his office. He expects the first criminal indictments to occur later this year.
Ultimately, fraud could run into the tens of billions of dollars, according to Barofsky. The risk of those kinds of criminal activities is growing as the bailout becomes bigger and more complicated.
A 247-page report released by Barofsky’s office said that the very character of the bailout program makes it “inherently vulnerable to fraud, waste and abuse, including significant issues relating to conflicts of interest facing fund managers, collusion between participants and vulnerabilities to money laundering.” In a series of recommendations, Barofsky asked the Treasury Department for greater transparency and better protections against fraud.
“You don’t need an entirely corrupt institution to pull one of these schemes off,” he said. “You only need a few corrupt managers whose compensation may be tied to the performance of these assets in order to effectively pull off collusion or a kickback scheme.”
If you are witnessing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.
Source: Baltimore Sun, April 29, 2009
Hurricane Katrina Fraud Perpetrators Will Pay $4 Million
May 9, 2009 by casey
On April 24, 2009, the Department of Justice released the settlement of a False Claims Act case involving Lighthouse Disaster Relief and its partners, Gary Heldreth and Kerry Farmer, in their conduct surrounding Hurricane Katrina.
Lighthouse, Heldreth and Farmer were alleged to have accepted $5.3 million for work they did not complete. They allegedly breached a contract with the Department of Homeland Security to build and operate a base camp to house and feed first responders of the recovery efforts in New Orleans following Hurricane Katrina. The defendants were alleged to have made false statements to FEMA employees in order to be paid prematurely, then failed to build a base-camp fulfilling the agreements of their contract.
Lighthouse, Heldreth and Farmer will pay $4 million in addition to the $1.3 million already collected by the government.
“This settlement demonstrates that the United States will aggressively pursue those who exploit the taxpayers in times of disaster,” said Tony West, Assistant Attorney General for the Civil Division.
If you are witnessing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.
Alta Colleges Will Pay $7 Million to Resolve False Claims Allegations
May 9, 2009 by casey
The U.S Department of Justice reported on April 20, 2009, the settlement of a False Claims Act involving Alta Colleges Inc. The Denver-based company, which has over 12,000 students at 19 campuses in six states, will pay the United States $7 million to resolve allegations that the Texas schools it owns submitted false claims to obtain federal student aid funds.
In order to receive federal student aid, it was alleged that Alta’s Texas colleges fraudulently claimed to have met particular requirements to meet the necessary state licensing requirements. The colleges allegedly mislead the state licensing agency that they had complied with Texas job-placement reporting requirements and that the schools’ interior design programs complied with the necessary requirements for a professional license.
The settlement resolves allegations that were initially filed in a federal lawsuit brought by whistleblowers under the federal False Claims Act. The False Claims Act permits private citizens to bring lawsuits on behalf of the United States and to share in any recovery. Under the settlement, the whistleblowers who initiated the lawsuit will receive $1.19 million.
If you are witnessing fraud on the government, contact us by calling 800-377-1812 for strictly confidential advice from experienced counsel, with no fee obligation.
