Whistleblower Blog Archives - Page 23 of 35

Whistleblower Blog

Whistleblower Lawyer Update: Medical Equipment Fraud, Fraudulent Billing by Doctor, and Home Health Care Fraud Highlight Week of Indictments in Health Care Compliance Cases

August 6, 2007
Michael Sullivan

This past week produced examples of why whistleblowers and their attorneys must continue to insist that false claims and health care fraud not be tolerated. The indictments of Texas medical equipment suppliers–who are alleged to have overbilled Medicare and Medicaid for expensive scooters and chairs while providing cheaper ones –show how prevalent false claims are.

The indictment of a physician in West Virginia for allegedly falsifying the time spent in patient visits shows another common type of health care fraud and false claims.
(more…)

Should a Tax Whistleblower in the New IRS Whistleblower Program Use an IRS Form 3949?

July 28, 2007
Michael Sullivan

Question about the new IRS Whistleblower Rewards Program: if you go to the Internal Revenue Service’s website, the IRS notifies persons that, if they have evidence of suspected tax violations, they should use a Form 3949 and send it to an Internal Revenue Service Office in Fresno, California. While this blog is not legal advice, we have not seen a basis for individuals seeking a reward under the new IRS Whistleblower Program for blowing the whistle to utilize this form. The reason is because
(more…)

Justice Department Attorneys Announce $30.5 Million Settlement in Qui Tam Whistleblower Case of Medicaid Fraud

July 27, 2007
Michael Sullivan

Another False Claims Act Recovery by Government Lawyers Is Part of $42.65 Million Heath Care Fraud Settlement

A qui tam whistleblower case alleging Medicaid fraud by Maximus, Inc. of Reston, Virginia led to a $30.5 million settlement under the False Claims Act this week.

According to the Justice Department, the whistleblower case settlement accompanied a deferred prosecution agreement and corporate integrity agreement by Maximus to end the government’s investigation of Maximus’ contract with the District of Columbia’s Child and Family Services Agency (CFSA).
(more…)

The Profile of the New Tax Whistleblower

July 25, 2007
Michael Sullivan

When the Tax Relief and Healthcare Act of 2006 was signed into law on December 20, 2006, Congress hoped to encourage businessmen and women to come forward with information concerning tax cheats. The new IRS Whistleblower Program (found at 26 U.S.C. § 7623) purposely focuses on large claims. To qualify for whistleblower rewards, a minimum of $2 million in taxes, penalties and interest must be involved. Given this amount of money, the primary targets of the new legislation are businesses whose employees and/or former employees
(more…)

IRS to Scrutinize Derivatives–Do They Allow Offshore Investors to Avoid Withholding Taxes on U.S. Stock Dividends?

July 20, 2007
Michael Sullivan

IRS Seeks Documents from Citigroup and Lehman Brothers Holdings on Derivatives

Now that Congress has created a meaningful IRS Whistleblower Rewards Program, tax whistleblower attorneys took note of yesterday’s report that the IRS is looking into whether derivatives trades for hedge funds and other investors are being used to avoid tax withholding obligations, according to the Wall Street Journal yesterday. The IRS reportedly has issued “Information Document Requests” to Citigroup and Lehman Brothers Holdings to find out.

As Reuters reports, the derivatives trades in
(more…)

Pharmaceutical Company Bristol Settles Massachusetts Lawsuit Over Pricing of Drugs

July 20, 2007
Michael Sullivan

Alleged Overcharging for Prescription Drugs Leads to $13 Million Settlement in Boston

Pharmaceutical fraud harms the Medicare and Medicaid programs–and the citizens who pay for them. Drug companies’ alleged overcharging for prescription drugs has led to fraud investigations and lawsuits by whistleblower attorneys in the past. This week, shortly before trial, pharmaceutical manufacturer Bristol-Myers Squibb Co. reportedly agreed to pay $13 million to resolve allegations that it overcharged for its Taxol cancer medicine and other drugs.

The settlement follows a ruling last month
(more…)

In Case Alleging Fraud Against IRS in Misuse of Tax Shelters by Former KPMG Partners, Judge Dismisses Charges Against 13 Defendants

July 16, 2007
Michael Sullivan

Most Defendants in KPMG Case Escape Prosecution–At Least For Now

As we have written about previously, abusive and fraudulent tax shelters promoted by accounting firms are high on the list of conduct that the IRS (and IRS tax whistleblowers) seek to stop. Today, the government’s prosecution of 13 former KPMG partners and other executives was derailed–at least for now–when the trial judge dismissed charges against them, while allowing the charges to remain against other defendants.

Judge Lewis Kaplan had already ruled that these defendants’
(more…)

IRS Declares That Tax Fraud and Evasion from Back-Dating of Stock Options Is a Top Priority

July 15, 2007
Michael Sullivan

IRS Tax Whistleblowers with Knowledge of Stock Option Backdating Should Take Note

Now that the IRS has an effective IRS Whistleblower Rewards Program for whistleblowers who report tax fraud, tax evasion, or other violations of the Internal Revenue laws, the IRS’ recent announcement of focusing on back-dating of stock options should be interesting. In continuing our past discussions of claims under the IRS Whistleblower Rewards Program, we point out the tax fraud that the IRS has decided to target involving back-dated stock options.

The IRS recently announced that backdating of stock options is a “Tier I Compliance Issue and therefore is a mandatory examination item for taxpayers with backdated stock option grant and/or exercise prices.”

This unlawful practice can produce adverse tax consequences for the corporation issuing the option. As the IRS announcement explains, corporations are subject to a $1 million annual limit on the deduction for compensation to the CEO and four other highest compensated officers in a publicly traded corporation.

Under Treasury Regulations section 1.162-27(e)(2)(vi), there is a “qualified performance based compensation” exception to the $1 million deduction limit for compensation attributable to option exercises if the option exercise price equals or exceeds the per share value on the grant date and certain other requirements are met. A failure to satisfy this requirement may cause compensation attributable to the option exercise to be subject to the $1 million deduction limit.
(more…)

False Claims Act Case Against Texas Computer Services Firm Is Settled

July 12, 2007
Michael Sullivan

Fraud and False Claims by Government Contractor in Dallas Leads to $2.6 Million Settlement with Justice Department

The statute most used by whistleblowers and whistleblower attorneys has resulted in yet another recovery of money for false claims. The Justice Department has announced that Affiliated Computer Services, Inc. (ACS) has agreed to pay more than $2.6 million to settle a False Claims Act case.

The government alleged that ACS, from 2002-2005, inflated its claims for payment of government funds for recruiting and enrolling individuals in various
(more…)

New State False Claims Act with Qui Tam Whistleblower Provisions Is Signed in Florida

July 7, 2007
Michael Sullivan

AARP Applauds State Law to Combat Medicaid Fraud with Qui Tam Whistleblower Approach

We were pleased to see that Florida has joined New York, Georgia, Oklahoma and more than a dozen other states in creating a State False Claims Act with qui tam whistleblower provisions similar to the federal False Claims Act. As we have discussed at length on this whistleblower lawyer blog, Congress has created financial incentives for states to pass whistleblower laws with qui tam
(more…)

Search

Topics

Our Other Blog

Federal Subsidies and the False Claims Act

February 9, 2008
Michael Sullivan

If an organization or individual is receiving a federal subsidy of any kind and makes false statements to the Federal Government with respect to such subsidies, such false statements could subject the receiver of the subsidy to liability under the Federal False Claims Act. In short, if a recipient of a federal subsidy makes false statements concerning eligibility for the subsidy and/or the amount of the subsidy sought or obtained, the recipient could be sued for fraud by a whistleblower with knowledge of the false
(more…)

New Whistleblower Law Provides Protection for Defense Contractor Employees

January 30, 2008
Michael Sullivan

Two days ago on 1/28/08 President Bush signed into law the National Defense Authorization Act for the fiscal year 2008. This legislation includes a provision protecting defense contractor employees who blow the whistle on contracting fraud. 10 U.S.C. § 2409 has specifically been amended via Section 846 to protect employees for disclosing “information that the employee reasonably believes is evidence of gross mismanagement of a Department of Defense contract or grant, a gross waste of Department of Defense funds, a substantial and specific danger to
(more…)

Tax Fraud Prosecution Over Abuse of Offshore Transactions Leads to Convictions of CPAs and Attorney by IRS and Justice Department (from Whistleblower Lawyer Blog)

January 29, 2008
Michael Sullivan

Our whistleblower lawyer blog has followed closely investigations of hedge funds and other offshore investors for tax fraud and other IRS violations. After investigating a tax fraud conspiracy involving offshore companies and offshore bank accounts, the Justice Department and the IRS have announced that an attorney and two certified public accountants have pleaded guilty to tax fraud and aiding the preparation of a false tax return.

Attorney Graham R. Taylor of Tiburon, Calif., pleaded guilty last week, shortly before a trial scheduled in Salt Lake City before U.S. District Court Judge Tena Campbell. Certified Public Accountants Stephen F. Petersen of Coalville, Utah, and Reed H. Barker of Littleton, Colo., pleaded guilty to the tax fraud a week earlier, and Petersen also entered a guilty plea to aiding in the preparation of a client’s false tax return.

The alleged $20 million fraud scheme included using phony documentation for fictitious currency transaction losses, false insurance expense deductions, and “bogus” capital losses for the purpose of fraudulently offsetting taxable income for clients, according to the government. The defendants used offshore companies, offshore bank accounts, the services of offshore nominees, and opinion letters that allegedly gave legal authority for the fraudulent transactions.

CPA Petersen of Coalville also admitted that he and an attorney who still faces charges would typically receive a fee of up to 30 percent of the tax evaded by the clients.

Attorney Taylor admitted that he devised, marketed and implemented a tax shelter known as “The Hybrid” to assist others in evading income taxes. Taylor also admitted that he prepared tax opinion letters with fraudulent misrepresentations; that he used persons in the Cayman Islands as nominees for his clients; and that he falsely disguised client funds through fraudulent transfers.

The three defendants who pleaded guilty, together with alleged co-conspirators attorney Dennis B. Evanson of Sandy, Utah, accountant Brent H. Metcalf of Cottonwood, Utah, and investment broker Wayne F. DeMeester of Sammamish, Wash., had been indicted in late 2005 for conspiracy to defraud the United States, conspiracy to commit mail fraud, and wire fraud. Five of these defendants also were charged with tax evasion and assisting in the filing of false tax returns.

The case was investigated by the IRS Criminal Investigation division. It is being prosecuted by the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the District of Utah. Jury selection for the remaining defendants began yesterday.
(more…)

Whistleblower Qui Tam Case Result: “Big Dig” Settlement of $458 Million Announced

January 25, 2008
Michael Sullivan

The “Big Dig” collapse has led to a $458 million settlement by contractors responsible for the Boston Central Artery/Tunnel highway project. Whistleblowers using the federal and state False Claims Acts helped bring about that result.

Of the $458 million settlement, $23 million is being paid to the United States under the federal False Claims Act, and $40 million will go to Massachusetts under its state False Claims Act, as a result of qui tam whistleblower litigation. (As we have written about extensively on
(more…)

Hedge Fund Tax Probes Expand to Congress Following IRS Hedge Fund Inquiries

January 18, 2008
Michael Sullivan

Both the IRS Financial Services group (part of its LMSB Division) and the IRS Whistleblower Office have emphasized to me–as recently as yesterday–their strong interest in hedge fund abuses that violate the tax laws.

The tax whistleblower section of our whistleblower lawyer blog has followed the expanding probes and increased scrutiny of hedge funds, including our segments on “IRS to Scrutinize Derivatives–Do They Allow Offshore Investors to Avoid Withholding Taxes on U.S. Stock Dividends?” in July 2007, and on “(more…)

IRS Whistleblower Progress: Kudos to These Tax Whistleblower Attorneys

January 17, 2008
Michael Sullivan

The progress of the new IRS Whistleblower Program has been a subject of great interest of this whistleblower lawyer blog. I would like to congratulate two fellow tax whistleblower attorneys, Erika Kelton of Phillips & Cohen, LLP, and Paul D. Scott of the Law Offices of Paul D. Scott, for their contributions to its progress.

Last September, I had the pleasure of appearing with them, IRS Whistleblower Office Director Stephen Whitlock, and Professor Dennis Ventry in a panel discussion in Washington to
(more…)

Qui Tam Whistleblower Law Signed by New Jersey Governor

January 16, 2008
Michael Sullivan

This whistleblower lawyer blog reported earlier that the New Jersey Assembly had passed the New Jersey False Claims Act, which provides incentives to whistleblowers (“relators”) to expose fraud affecting state funds–much like the federal False Claims Act does.

Governor Jon Corzine signed the new bill into law yesterday, which makes New Jersey the 20th state to enact a state False Claims Act with qui tam whistleblower provisions similar to those of the federal False Claims Act. (Click here
(more…)

Durable Medical Equipment (DME) Fraud Crackdown by CMS Announced–to Combat False Claims Act Violations of Types Often Exposed by Whistleblowers and Their Attorneys

January 12, 2008
Michael Sullivan

Some of the many types of health care fraud that this whistleblower lawyer blog has followed involves “durable medical equipment” (DME). The sale of wheelchairs, walkers, oxygen supplies and equipment, hospital beds, orthotics, prosthetics, and various medical devices is yet another opportunity for dishonest suppliers to defraud taxpayers.

This week, the Centers for Medicare & Medicaid Services (CMS) announced an initiative designed to improve care, save $1 billion annually, and lower Medicare beneficiaries’ out-of-pocket costs–by promoting competition in the sale of durable medical
(more…)

IRS Tax Whistleblower Procedures Continue to Take Shape

January 11, 2008
Michael Sullivan

The new IRS Whistleblower Office’s Rewards Program that we have followed closely on this whistleblower lawyer blog made further progress this week. The IRS gave notice on January 9 that it intends to create a proposed new system of records–“Whistleblower Office Records.”

The purpose is to allow the new IRS Whistleblower Office to administer the IRS Whistleblower program more effectively, in contrast to the “old,” decentralized procedures that the IRS used before Congress authorized the new IRS Whistleblower Rewards in December 2006.

The new Whistleblower Office Records will contain records pertaining to whistleblower award applications that were filed before or after the new Whistleblower Office was created in early 2007. Based on my earliest discussions with IRS Whistleblower Office Director Stephen Whitlock, it is an essential step to bring all whistleblower submissions to the same place so that the Whistleblower Office can administer the program effectively.

We congratulate Mr. Whitlock and the Whistleblower Office on their continued efforts and progress to make the Whistleblower Program as effective as it can be.

The Notice is “Whistleblower Office Records — Treasury/IRS 42.005,” 73 F.R. 1667-1669. It is reprinted below:
(more…)

False Claims Act Passed in New Jersey Continues Trend of New State Qui Tam Whistleblower Statutes

January 7, 2008
Michael Sullivan

The wave of new state False Claims Acts with qui tam whistleblower provisions has been a frequent topic of this whistleblower lawyer blog. In 2007, New York, Georgia, and Oklahoma joined the 16 other states that have enacted versions of the federal False Claims Act, the government’s primary weapon for fighting fraud against taxpayers.

Today, New Jersey’s Assembly unanimously passed the New Jersey State False Claims Act, which upon signature by the Governor will make New Jersey the 20th state to have a state version of the venerable qui tam whistleblower statute.

We congratulate New Jersey for taking the prudent action of passing a state False Claims Act. As we have written about extensively, Congress through the Deficit Reduction Act of 2005 has created financial incentives for states that pass such qui tam whistleblower laws that are at least as effective as the federal False Claims Act.

The New Jersey False Claims Act expands on the federal Act. It also includes criminal provisions as well as civil liability for treble damages and civil penalties. The text of the Act passed today is reprinted below:
(more…)