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Government Enforcement Exposed - "The GEE"
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17 Jan 2018 Trace Schmeltz – About the Author

Trace Schmeltz is the founding editor and a regular contributor to the GEE Blog.  As a trial lawyer and student of the capital markets, Trace tries complex financial and corporate cases and counsels his clients in the financial industry and elsewhere as to how to avoid legal and regulatory issues.  Trace has tried securities, mergers and acquisitions (M&A), corporate governance, and complex commercial cases, as well as white collar criminal cases. Throughout the course of his career, he has represented corporations, boards of directors, individual officers, hedge funds and hedge fund managers, investment banks, banks, futures commission merchants, broker-dealers, investment advisers, commodity trading advisors and commodity pool operators.     His practice includes representing individuals and corporations in regulatory actions and investigations under the securities…

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06 Sep 2017 Don’t Let DOJ Defections Fool You: Corporate Conduct Still in the Crosshairs

  Authors: Michael Battle, Roscoe Howard and Patrick Miles   The early months of the Trump administration have brought about the resignations of the two most prominent lawyers behind the U.S. Department of Justice’s recent campaign against corporate wrongdoing. The departures of Deputy Attorney General and Acting Attorney General Sally Yates, and DOJ Compliance Counsel Hui Chen, coupled with the administration’s business-friendly rhetoric, might tempt corporate compliance officers to conclude that the DOJ is shifting its emphasis away from corporate prosecutions.   They shouldn’t. In fact, neither those high-profile defections nor the change in administration is likely to alter the mindsets of the working lawyers in the DOJ’s 94 U.S. Attorney offices. Those prosecutors will not only continue pursuing the same types of cases they…

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02 Aug 2017 Corporate Law Alert – SEC Issues Guidance on Initial Coin Offerings and Cryptocurrencies

  On July 25, the U.S. Securities and Exchange Commission (SEC) issued its most comprehensive public guidance to date on digital assets such as cryptocurrencies and tokens. Key points from the guidance are:   Initial Coin Offerings (ICOs) are required to be registered with the SEC if the digital assets are securities offered or sold in the U.S. Digital assets can be evaluated for securities status using traditional securities law criteria Automated functions through smart contracts or other code remain subject to securities laws Companies dealing in digital assets should consider seeking counsel as to whether the digital assets are securities Companies dealing in digital currencies may need to register as broker-dealers, securities exchanges, or alternative trading systems Companies investing in digital assets and advising on investment…

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17 Jun 2016 Supreme Court Preserves Implied Certification Theory in Closely Watched False Claims Act Case

In the much-anticipated ruling on Universal Health Services Inc. v. United States ex rel. Escobar, the United States Supreme Court today held that False Claims Act liability can be predicated on an implied certification theory of liability.  (For the factual background and procedural history of the case, see our earlier blog post about the court’s grant of certiorari.) The court also clarified the materiality threshold that must be satisfied to pursue actionable claims under this theory, finding that materiality can be established with or without express language in the regulations that it is a condition of payment.   In upholding the theory of implied certification, the court addressed the situation under which a misleading omission could render a claim false or fraudulent, stating that when…

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01 Apr 2016 DOJ Launches Targeted Elder Justice Task Forces

  On March 30, the Department of Justice (“DOJ”) announced the formal launch of 10 regional Elder Justice Task Forces designed to identify nursing homes and other long-term care (“LTC”) facilities that provide “grossly substandard care” to residents.   Similar to DOJ’s previously launched Medicare Fraud Strike Force and Health Care Fraud Prevention & Enforcement Action Team (“HEAT”) initiative, the newly created Elder Justice Task Forces will focus on coordination and information sharing among federal, state and local enforcement agencies to combat suspected cases of physical abuse and financial fraud. Each task force will consist of representatives from the U.S. Attorneys’ Offices, state Medicaid Fraud Control Units, state and local prosecutors’ offices, the Department of Health and Human Services, state Adult Protective Services agencies, Long-Term…

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19 Feb 2016 Can the Government Unlock My Cell Phone? Part II: Federal Judge Says “Yes.” Federal Judge Orders Apple to Assist FBI in Unlocking iPhone

  Following up on our recent post exploring the federal government’s efforts to search cell phones, a U.S. magistrate judge recently issued an order requiring Apple Inc. to assist the Federal Bureau of Investigation (FBI) in unlocking an iPhone used by Syed Farook, one of the two individuals responsible for the mass shootings in San Bernardino, California.   During the execution of a search warrant of Farook’s vehicle, the FBI recovered a password-locked Apple iPhone 5C. See In re Search of an Apple IPhone Seized During the Execution of a Search Warrant on a Black Lexus IS300, California License Plate 35KGD203, No. 5:15-mj-00451, Dkt. No. 18 (C.D. Cal. Feb. 16, 2016). While the iPhone is actually owned by Farook’s former employer, San Bernardino County, which…

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28 Dec 2015 U.S. Supreme Court to Decide the Validity of the False Claims Act’s Implied Certification Theory

The United States Supreme Court granted certiorari in the First Circuit case Universal Health Services, Inc. v. Escobar to decide the validity and application of the implied certification theory of the False Claims Act (FCA). The FCA imposes civil liability for knowingly presenting, or causing to be presented, a false or fraudulent claim to the government for payment or approval. Courts have recognized two types of FCA claims: those that are factually false and those that are legally false. Legally false claims are founded on a false certification of compliance with a federal statute, regulation or contractual requirement and are further categorized as either expressly or impliedly false. An expressly false certification may occur when a request for payment explicitly certifies compliance, whereas the doctrine…

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16 Nov 2015 SEC Reduces Dodd-Frank Whistleblower Award for “Unreasonable Delay,” Announces Policy of “More Heavily” Punishing Delay After Award Program’s Implementation

Continuing our coverage of the SEC’s whistleblower award program, the SEC recently announced a notable award order. What is notable about this award is not the size of the bounty, but the fact the SEC reduced the award for “unreasonable delay” in reporting, stating for the first time that “the award could have been higher had this whistleblower not hesitated.”   As we have previously discussed, the Dodd-Frank Act’s whistleblower award program permits the SEC to award whistleblowers a bounty between 10 percent and 30 percent of an enforcement sanction. While this is not the first time the SEC reduced an award due to a claimant’s delay, the SEC had mitigated its prior reductions by noting the delays pre-dated the Dodd-Frank Act. Here, in contrast,…

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06 Nov 2015 Protected Activity and Individual Liability: Broadened Interpretations of the False Claims Act Anti-Retaliation Provision

The False Claims Act’s (FCA) anti-retaliation provision allows private whistleblowers to file an FCA complaint without retaliation from their employers. A series of 2015 decisions interpreting the recent amendments to the FCA indicate that courts have increasingly broadened their view as to which types of activities are protected under the anti-retaliation provisions and whom they may be brought against. The expansion of protected activities and persons covered requires corporate entities to be aware of the inevitable increase in anti-retaliation actions due to the broadened scope of the FCA’s whistleblower protections.   Prior to 2009, the anti-retaliation provisions protected only those acts done in furtherance of an FCA qui tam action. Protected activity included only that which provided an employer notice of possible litigation. The passage…

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03 Aug 2015 Partial Victory for Blagojevich: Seventh Circuit Concludes Criminal Statutes Do Not Prohibit “Logrolling”

In mid-July, the Seventh Circuit reversed five of former Illinois Governor Rod Blagojevich’s 18 felony convictions. The court’s ruling may not be of much help to Blagojevich – the court noted that his sentence remains below guidelines – but it does have significant implications for public officials who face federal prosecution for “logrolling,” or trading one public act for another.   In 2008, Blagojevich infamously sought to benefit from his power to appoint a successor to Barack Obama’s soon-to-be vacated Senate seat. The Seventh Circuit focused on the government’s claim that Blagojevich offered to appoint Obama advisor Valerie Jarrett to the Senate in return for, alternatively, a Cabinet appointment or help obtaining a private-sector job.   The court found a critical difference between these two…

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