Three Charged in $364M Scheme That Paid for Splurges on Diamonds, Bugattis and Mansions

A federal grand jury has indicted three men for what officials describe as a $364 million Ponzi scheme to defraud investors, reports The Dallas Morning News.

Jay B. Ledford and Cameron R. Jezierski of Texas, along with Kevin B. Merrill of Maryland, raised money from investors who thought they were buying into cheap portfolios of consumer debt on credit cards and student and auto loans, investigators from the Federal Bureau of Investigation and Securities and Exchange Commission said.

“The defendants lured investors through an elaborate web of lies, duping them into paying millions of dollars into this Ponzi scheme,” said U.S. Attorney Robert K. Hur in a statement.

The report by Lison Joseph says the trio spent more than $73 million of investors’ money at casinos and to buy diamond jewelry and luxury cars including Lamborghinis, Ferraris, Bentleys and Bugattis.

Read the Dallas News article.

 

 




Patrick Quigley Joins Bradley’s Washington Office as Counsel

Patrick R. Quigley has joined Bradley Arant Boult Cummings LLP’s Washington, D.C. office as counsel in the Government Contracts Practice Group.

“We are pleased to welcome Patrick to Bradley in our D.C. office,” said Bradley Washington, D.C., Office Managing Partner Douglas L. Patin. “Patrick brings deep experience in government contracts work, as well as past government service, which will be greatly beneficial to our clients.”

Quigley focuses his practice on litigating bid protests, contract claims, prime/subcontractor disputes, and small business size protests/appeals at the Government Accountability Office, U.S. Court of Federal Claims, boards of contract appeals, and U.S. Small Business Administration, as well as at other federal agencies and in state courts. He conducts internal investigations and defends clients in False Claims Act litigation, government investigations, and suspension and debarment actions.

Most recently, Quigley was an attorney with Arent Fox LLP in Washington, D.C.

Prior to his law career, Quigley served for 16 years with the U.S. Department of State, first as a special agent in the Diplomatic Security Service, and then as a foreign service officer. During his government service, he was assigned to Somalia, El Salvador, Colombia, Peru, India, and Washington, D.C.

Quigley received his J.D. (cum laude) from George Mason University School of Law and his Bachelor of Arts from Emory University.

 

 




Citigroup Pays $12 Million to Settle Dark Pool Probe

Image by Mike Mozart

Reuters is reporting that Citigroup Inc. on Friday was ordered to pay more than $12 million by U.S. regulators after it was found that the bank’s investment banking and financial advisory unit misled users of a “dark pool” operated by one of its affiliates.

The article explains:

The bank will pay a penalty of $6.5 million and disgorgement and prejudgment interest totaling $5.4 million, while its affiliate, Citi Order Routing and Execution (CORE), will pay a penalty of $1 million, the U.S. Securities and Exchange Commission (SEC) said in a statement.

Read the Reuters article.

 

 

 




Former FDA Chief Counsel Rejoins Sidley as Practice Leader in Washington, D.C.

Rebecca “Becky” Wood, former chief counsel to the Food and Drug Administration, has rejoined Sidley Austin LLP as a partner.

The firm announced Wood will co-lead both the firm’s Food, Drug, and Medical Device Regulatory practice and its FDA group in Washington with partner Coleen Klasmeier.

Wood previously served as Chief Counsel to the Food and Drug Administration (FDA) and Associate General Counsel in the Office of the General Counsel, Department of Health & Human Services. She will focus her practice on providing counsel on a wide range of contentious and non-contentious FDA regulatory and litigation issues to clients in the life sciences industry and private equity firms investing in the area.

In her role as Chief Counsel to the FDA, Wood served on Commissioner Scott Gottlieb’s leadership team. She was the principal legal advisor on major initiatives, including efforts to streamline the drug and device development and approval process, modernize the agency’s regulatory framework, combat addiction to opioids and nicotine, enhance the product safety and labeling of food and medical products, and address drug pricing. She served as a liaison to the Department of Justice and the White House and advised agency leadership on legislative matters. She also focused on First Amendment and preemption issues.

“We are delighted that Becky is rejoining us,” said Klasmeier. “Regulatory insight is at the core of our life sciences practice. Based on both her long experience in the industry and her role as the lead legal advisor to the FDA during a transformational period, Becky will enhance our ability to offer deep strategic insight into the complex regulatory issues facing our clients and to defend our clients’ conduct when challenged. Becky’s perspective on the rapidly changing regulatory environment is unique.”

Prior to joining the FDA in 2017, Wood served as a partner at Sidley for more than a decade. She focused her practice on district court and appellate litigation arising under the Federal Food, Drug, and Cosmetic Act and the United States Constitution, including managing class actions and multi-plaintiff cases. Earlier in her career, she served as a law clerk to Judge Pasco M. Bowman II of the United States Court of Appeals for the Eighth Circuit.

“Becky is an extraordinarily accomplished litigator,” said Mark Hopson, global co-chair of Sidley’s litigation practice and managing partner of the Washington, D.C. office. “The intersection of her premier regulatory and litigation practices will greatly bolster the firm’s capabilities to help clients across a wide spectrum of legal areas.”

 

 




SEC Says Biotech Billionaire CEO Took Part in Pump-and-Dump Schemes

Economy - stock exchangeA biotechnology billionaire faces charges from the Securities and Exchange Commission of being part of pump-and-dump schemes that netted $27 million and left retail investors holding the bag, reports MedCity News.

In a lawsuit filed in federal court in New York, the SEC alleged OPKO Health chairman and CEO Phillip Frost took part in three pump-and-dump schemes between 2013 and 2018.

Reporter Alaric Dearment explains that the complaint alleges that Frost was involved in schemes to promote the stock of some companies on the crowd-sourced investment content site Seeking Alpha, on which articles would appear promoting their shares and touting Frost’s involvement in the companies. After the stock prices were pumped up, the defendants would sell it off, the SEC alleges.

Read the MedCity article.

 

 

 




Annual Security Report Deadline is Approaching

The U.S. Department of Education’s deadline for institutions to comply with the Annual Security Report is Oct. 1, 2018, points out Canopy Programs by United Educators.

Canopy Programs is offering assistance with its Clery Compliance Toolset, which can generate reports that include policies and procedures, as well as statistics for the past three calendar years.

The online tool will allow users to effectively:

  • Develop policies and procedures
  • Log crime and fire incidents
  • Request and log crime statistics from local law enforcement
  • Generate daily crime logs

Request a demo or download a white paper.




Former Dewey Chairman Reaches Agreement With SEC to Pay Six-Figure Civil Penalty

The ABA Journal reports that former Dewey & LeBoeuf chairman Steven Davis has reached an agreement with the U.S. Securities and Exchange Commission to pay a $130,000 civil penalty.

The SEC alleged that some executives of Dewey & LeBoeuf, which closed in 2012, misled lenders and bond buyers about the firm’s financial condition.

Dewey’s former finance director former controller also agreed to pay civil penalties.

Read the ABA Journal article.

 

 




Registration Open for 2018 Eastern District of Texas Bench Bar Conference

Registration has begun for the 2018 Eastern District of Texas Bench Bar Conference, which is being held in conjunction with The Center for American and International Law’s Patent Trial and Appeal Board Bench Bar Conference.

Hosted by the Eastern District of Texas Bar Association, the annual event is one of the largest of its kind nationally, bringing together practicing lawyers, general counsels, in-house counsels, respected judges, and industry experts from across the globe to discuss the latest issues in patent law and intellectual property litigation. Topics will also include Corporate Cyber Threats, Qui Tam litigation, Trade Secret Theft and Protection, and many others.

The Honorable Andrei Iancu, U.S. Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO), will be the keynote speaker.

The 22nd annual EDTX Bench Bar Conference is set for October 17-19 at the Marriott Legacy Town Center in Plano, and registration information is available here.

Contact Andrea Williams-McCoy for more information on conference programs, registration and lodging at 903-870-0070 or andrea@siebman.com.




EPA Proposes Affordable Clean Energy Rule to Replace Clean Power Plan

The U.S. Environmental Protection Agency’s proposed Affordable Clean Energy (ACE) rule would establish guidelines for states to develop plans to address greenhouse gas emissions from certain existing fossil-fuel-fired power plants.

A post on the Beveridge & Diamond website says ACE would replace the Obama Administration’s 2015 Clean Power Pla, which EPA has proposed to repeal on the basis that it exceeded EPA’s authority.

“In particular, the current Administration does not believe it has authority under Section 111 of the Clean Air Act to require regulated entities to take actions “outside the fenceline,” as contemplated by the CPP.  Accordingly, the ACE plan would impose only “inside the fenceline” requirements on electric generating units,” write authors Brook J. Detterman and Grant Tolley.

Read the article.

 

 




United Airlines Loses Challenge to Union Drive

Bloomberg reports that a vote on unionization by 2,700 United Airlines in-flight catering workers can proceed over the company’s objections, the general counsel of the National Mediation Board ruled.

The hospitality union Unite Here had filed a petition, with support from three-quarters of United’s kitchen workforce, seeking a vote, but the airline filed a complaint alleging fraud and misrepresentation by the union before the petition was filed, contending that Unite Here organizers had shown up at workers’ homes claiming to be representatives of the airline conducting a poll, reports Josh Eidelson.

Eidelson reports that “NMB General Counsel Mary Johnson wrote that after interviewing employees, the agency’s investigators had determined that ‘there is no evidence that employees did not understand that Unite Here was a union and was not a representative of United.'”

Read the Bloomberg article.

 

 




Judge Guts FTC’s $4-Billion Lawsuit Against DirecTV

The U.S. Federal Trade Commission failed to convince a federal judge in San Francisco that DirecTV should pay nearly $4 billion in restitution to customers for allegedly misleading consumers about the costs of programming packages, Bloomberg reports.

The said that “the scope of the maximum potential recovery in this case has been substantially curtailed,” according to reporter Pamela MacLean.

The FTC suit alleged that DirecTV failed to disclose to consumers in 40,000 print, mail, online and TV advertisements that its lower introductory pricing lasted just one year but tied buyers to a two-year contract.

Read the Bloomberg article.

 

 




White Paper: Update on the U.S. Department of Education’s Clery Enforcement Measures

Canopy Programs’ new white paper, “An Update on the U.S. Department of Education’s Clery Enforcement Measures,” provides an overview of the Clery review process and cases involving institutions that were fined for Clery Act violations in 2017.

Despite the change in federal administration, the U.S. Department of Education has continued to aggressively enforce the Clery Act. Specifically, the department issued fines against 10 institutions in 2017 based on program reviews that were conducted in the past several years totaling $800,000, or an average of $80,000 per institution.

The complimentary white paper offers insight into these cases, including:

  • A review of the institutional demographics by type and enrollment size
  • What caused the program reviews to take place
  • An analysis of the length of time for the program reviews
  • Which categories of violations resulted in fines

Download the white paper.

 

 




Special Receiver Appointed in Federal Lawsuit Against Wells Fargo in Texas Case

Micah Dortch, managing partner of the Dallas office of the Potts Law Firm, has been appointed a special receiver in litigation originally brought by the Securities and Exchange Commission against a group of Texas businessmen, the firm announced. That lawsuit seeks to recover funds from what was characterized as a fraudulent investment scheme directed by Thurman P. Bryant III of Frisco and Arthur E. Wammel of Pearland, along with affiliated companies and individuals.

The firm says that evidence in the case revealed that, in less than three years, the defendants were able to withdraw or transfer more than $20 million in cash from Wells Fargo Bank accounts in violation of industry standards and the bank’s own policies. Despite numerous five-figure and six-figure cash withdrawals, Wells Fargo management never verified, questioned or restricted any of the activities, according to allegations.

According to the SEC complaint, originally filed in 2017, the defendants raised more than $22 million from more than 100 investors to purportedly fund short-term mortgage loans for later sale to long-term lenders. The SEC says that no such program existed, and that Bryant and Wammel were operating a Ponzi scheme, with limited returns paid to investors from monies raised from other investors.

Dortch has been appointed by the court to investigate the role of Wells Fargo in the matter and to seek financial compensation on behalf of the defrauded investors, filing a complaint alleging that Wells Fargo failed to follow its fiduciary role.

“As stated in the complaint, Wells Fargo either knew about the scheme or willfully ignored the questionable actions being made in violation of its own internal rules,” said Dortch. “I’m honored to take on this role and gain a just resolution for these innocent victims.”

The case is Ecklund v. Wells Fargo Bank, N.A., No. 4:18-cv-00452-ALM, filed in U.S. District Court for the Eastern District of Texas in Sherman.

 

 




Department of Energy Streamlines Small-Scale LNG Export Authorizations

The Department of Energy has announced a final rule that will expedite the approval process for small-scale exports of natural gas, reports Cadwalader.

Special counsel Brett A. Snyder writes:

The DOE explained that the new rule is intended to accelerate its processing of small-scale export applications and reduce administrative burdens for the small-scale natural gas export market.

Effective August 24, 2018, the DOE will issue an export authorization, without public notice and comment, to an applicant submitting a complete application to export natural gas, including liquefied natural gas (“LNG”), to countries with which the United States has not entered into a free trade agreement (“FTA”) that requires national treatment for trade in natural gas and with which trade is not prohibited by U.S. law or policy (i.e., non-FTA countries), if the application meets two criteria.

Read the article.

 

 




The Entire W.Va. Supreme Court Faces Impeachment for Alleged Corruption

The Washington Post is reporting that a West Virginia House panel moved this week to impeach the state’s entire Supreme Court.

Fourteen articles of impeachment allege corruption, maladministration, incompetence, neglect of duty and potential criminal behavior — impeachable offenses under the state constitution, writes Isaac Stanley-Becker.

Federal investigators secured a 23-count indictment charging former chief justice Allen H. Loughry II, now suspended without pay, with fraud, witness tampering, lying to a federal agent and obstruction of justice. Another seat on the court was vacated when Menis E. Ketchum II resigned in July, days before he was accused of federal wire fraud.

The Post report says other justices are “accused of ‘unnecessary and lavish spending’ on renovation of their offices, travel budgets and ‘regular lunches from restaurants,’ among other expenses, as well as failure to carry out administrative duties and properly develop guidelines for the use of public resources.”

Read the Post article.

 

 




DOJ Says Ruling on AT&T-Time Warner Ignored ‘Economics and Common Sense’

The federal government challenged a judicial decision allowing AT&T to purchase Time Warner, arguing to a federal appeals court in Washington that the ruling suffered from “faulty logic” and ignored basic economic principles, according to The Washington Post.

The Justice Department asserted that the district court misunderstood the power dynamics at work when television distributors such as AT&T negotiate with TV programmers over content prices and terms, writes Brian Fung.

In its filing, the DOJ called the decision a “deeply flawed assessment of the government’s evidence.”

“It is fundamental to the economics of bargaining that a party derives leverage from having the ability to walk away, even if it never actually does so,” the Justice Department wrote.

Read the Washington Post article.

 

 




Hall Estill Represents OIEC in Historic Rate Reduction for OG&E Customers

Attorney Tom Schroedter with Hall Estill represented Oklahoma Industrial Energy Consumers (OIEC), an association of OG&E’s large power users, as an intervenor in Oklahoma Gas and Electric Co.’s application for Corporation Commission approval of a rate hike.

In a release, the firm said that Oklahoma Gas and Electric Company’s industrial customers will realize significant benefits from the largest single rate reduction ever awarded a state electric utility following the Oklahoma Corporation Commission’s approval of a settlement in mid-June.

The firm has offices in Tulsa, Oklahoma City, Denver, Northwest Arkansas and Oregon.

The firm’s release continues:

The commission’s order approved a settlement agreement which provides for a large rate reduction and a one-time refund to OG&E customers resulting from federal income tax law changes. Large industrial consumers will realize meaningful savings and avoid cost increases as a result of the rate case settlement. OIEC worked with the Oklahoma Attorney General’s office in advocating for and negotiating this significant decrease which results in fair and reasonable rates for OG&E customers.

“It is tremendously rewarding to work on this historic settlement which provides such substantial savings for industries and businesses across the state,” said Schroedter.

Beginning in July 2018, OG&E customers received a rate reduction of $64 million along with a one-time refund of $18.5 million that appeared as a credit on the July bill.

“We are fortunate to have outstanding attorneys like Tom who work diligently on behalf of our clients to represent the interests of Oklahoma’s industries,” said Mike Cooke, Managing Partner for Hall Estill. “Tom is a fabulous asset to our clients and brings a great depth of industry knowledge and unmatched enthusiasm to our team.”

Schroedter has practiced at Hall Estill for over 25 years and has built his legal career around Energy & Natural Resources and Utilities Law.

 

 




Health Care Fraud: How a Strike Force is Selected for a City

During the latest National Health Care Fraud Takedown, investigators targeted Houston and Dallas to identify and charge more than 40 people with a range of fraud allegations.

How is a region designated as a health care strike force area? Former federal prosecutor and Houston trial attorney Ashlee McFarlane of Gerger Khalil & Hennessy explains in a post on the website of Androvett Legal Media & Marketing.

“Dallas is a health care strike force city, meaning the Department of Justice and federal agencies have identified Dallas (like Houston) as a hot bed for health care fraud, based on data analysis and reviewing payments of claims submitted to federal health care benefit programs like Medicare,” says McFarlane.

“Kickbacks are the foundation of almost every health care fraud case. “As a former prosecutor, I can tell you—kickbacks are the first thing agents and prosecutors look for in building an investigation.

“There’s no way to know the number of kickbacks being paid in a city. You have to start investigating a case. However, when there are providers who are outliers in the billing data, federal agents often look to see if kickback payments are used to induce referrals.”

Dallas and Houston are among 10 locations nationwide with Medicare Fraud Strike Force operations. According to the Department of Justice, a Medicare Fraud Strike Force consists of a partnership between the DOJ and Department of Health and Human Services to prevent fraud and enforce anti-fraud laws.

 

 




‘Stupid, Dumb and Fat’ Comments Get Cleveland Lawyer Suspended

A Cleveland lawyer who has already paid a $300,000 settlement to his former paralegal for insulting her has now been suspended from the practice of law for six months.

WKYC reports that the Ohio Board of Professional Conduct accused Howard Evan Skolnick, a lawyer since 1993, of violating professional conduct rules by “verbally harassing” the woman for more than two years. The board recommended a a six-month suspension to be held in abeyance.

But the Ohio Supreme Court issued a one-year suspension, with six months stayed on the condition that he engage in no further misconduct.

Reporter Phil Trexler wrote” “Court records show he called her “stupid, dumb, fat and `whorey’.” He also lodged insults against the woman’s husband and her mother. Records show Skolnick also sexually harassed the woman and a female co-worker by making a request for a sexual favor while inside a car.”

Read the WKYC article.

 

 

 




Annual Security Report Preparation: 10 Questions to Ensure Compliance

Canopy Programs by United Educators has published “Annual Security Report: 10 Questions to Ensure Compliance,” designed to help protect educational institutions and ensure an accurate and compliant Annual Security Report (ASR) by considering 10 important questions.

“Preparing your institution’s Annual Security Report (ASR) is critical in demonstrating your school’s compliance with the Clery Act,” Canopy Programs says on its website. “Inaccuracies in the ASR—which must contain crime statistics and numerous statements of policy and procedure—and other Clery compliance deficiencies can result in review and oversight by the U.S. Department of Education (ED), fines (currently $55,907 per violation), and reputational damage.”

The publication discusses such questions as:

  1. Have we requested crime statistics from local law enforcement agencies with jurisdiction over our Clery geography?
  2. Is our Daily Crime Log up to date and available upon request?
  3. If we are a multiple campus institution, do we publish an ASR for each campus?

Continue reading “10 Questions to Ensure Compliance.”