A New Jersey sales manager pled guilty to a one count information charging her with distribution of a misbranded drug, Bextra. Mary Holloway faces up to six months in prison and up to $100,000 in fines or twice the amount of the gross gain or gross loss.
The FDA approved Bextra for osteoarthritis, adult rheumatoid arthritis, and primary dysmennorhea. Holloway's pharmaceutical company asked the FDA to approve Bextra for acute pain, including that associated with surgery. The FDA explicitly denied this use because it knew of a study in which patients who had undergone coronary artery bypass graft surgery experienced excess cardiovascular events. Eventually, Bextra was taken off the market.
Holloway knew about the FDA's concerns and that it had denied approval for use with acute pain. She told her sales force of 100 people to sell Bextra for those denied uses. Holloway directed her sales force to sell Bextra for acute pain associated with surgery, and she told them to sell it for unapproved dosages. Holloway also encouraged her sales staff to make false safety claims about the drug.
Pharmaceutical sales representatives struggling with unethical and illegal misconduct like Holloway's can assist the federal government in uncovering fraud by filing a False Claims Act complaint. Meritorious FCA claims can result in simultaneous civil and criminal actions, depending on the circumstances.
Monday, June 22, 2009
Tuesday, June 16, 2009
Billion Dollar Tax Fraud and the Isle of Man
Federal prosecutors recently indicted two lawyers and an investment firm executive in one of the "largest tax fraud schemes ever uncovered in this country," according to US Attorney Jeffrey Sullivan of Seattle. Matthew G. Krane, Jeffrey Greenstein, and Charles Wilk face tax evasion, money laundering, and conspiracy charges. The scheme involved a shell company on the Isle of Man.
The Los Angeles Times reported in early June that Wilk and Greenstein allegedly set up a tax shelter scheme that created more than $1.3 billion in fraudulent losses for clients. Krane, according to prosecutors, accepted a $36 million kickback for enticing one of his clients into engaging in the scheme. The client had assurances from at least one noted tax attorney that the tax shelter was legitimate. According to the LA Times, prosecutors found that Wilk and Greenstein created a paper portfolio showing $9.6 billion in losses from technology stocks. The stocks, however, did not exist.
The scheme involved a complex series of transactions set up through a shell company on the Isle of Man. The Isle of Man lies in the Irish Sea at the geographic center of the British Isles. It's not part of the United Kingdom, though the UK has some responsibility for the island's external affairs and defense. The Isle of Man is not part of the European Union nor is it part of the Commonwealth of Nations.
Key to the Isle's economy is its offshore banking industry. The Isle of Man features a low tax economy - no capital gains tax, wealth tax, or inheritance tax. The highest income tax rate is 18%, and the corporate tax rate is 0%.
The complexity of tax schemes involving foreign governments makes the investigation tough for prosecutors. Kenneth Hines, special agent in charge of the IRS in Seattle said to the LA Times, "You're dealing with foreign governments, foreign jurisdictions, all the records that the two agents have to pile through...it could take years, because everything has to come through official channels."
For more information, see $1.3-billion tax-shelter scam alleged. Los Angeles Times. June 5, 2009.
The Los Angeles Times reported in early June that Wilk and Greenstein allegedly set up a tax shelter scheme that created more than $1.3 billion in fraudulent losses for clients. Krane, according to prosecutors, accepted a $36 million kickback for enticing one of his clients into engaging in the scheme. The client had assurances from at least one noted tax attorney that the tax shelter was legitimate. According to the LA Times, prosecutors found that Wilk and Greenstein created a paper portfolio showing $9.6 billion in losses from technology stocks. The stocks, however, did not exist.
The scheme involved a complex series of transactions set up through a shell company on the Isle of Man. The Isle of Man lies in the Irish Sea at the geographic center of the British Isles. It's not part of the United Kingdom, though the UK has some responsibility for the island's external affairs and defense. The Isle of Man is not part of the European Union nor is it part of the Commonwealth of Nations.
Key to the Isle's economy is its offshore banking industry. The Isle of Man features a low tax economy - no capital gains tax, wealth tax, or inheritance tax. The highest income tax rate is 18%, and the corporate tax rate is 0%.
The complexity of tax schemes involving foreign governments makes the investigation tough for prosecutors. Kenneth Hines, special agent in charge of the IRS in Seattle said to the LA Times, "You're dealing with foreign governments, foreign jurisdictions, all the records that the two agents have to pile through...it could take years, because everything has to come through official channels."
For more information, see $1.3-billion tax-shelter scam alleged. Los Angeles Times. June 5, 2009.
Thursday, June 11, 2009
Judicial Fraud - Exponential Victims
The ABA Journal has been closely following a Pay for Jail scheme perpetrated by judges and at least one attorney in Luzerne County, Pennsylvania. Two county judges pled guilty to accepting $2.6 million in kickbacks for sending teenagers to a juvenile detention facility partially owned by attorney Robert J. Powell.
Powell helped judges Ciavarella and Conahan hide the income they received, and he admitted to paying cash to Conahan. Despite earlier insistence that he was a victim in the judges' scheme, Powell pled guilty this week to two felony charges and forfeited his interest in a jet and a yacht.
The conduct of the two judges casts doubt on their juvenile convictions issued from 2003 to 2008. The Pennsylvania State Supreme Court reversed those of former president judge Ciavarella in a ruling handed down in late March. The court appointed a special master to review the situation. The exact number of reversals is not known. AP estimates convictions at issue in the hundreds, while the Philadelphia Inquirer puts the figure at 1200.
More details can be found at the ABA Journal's website.
Powell helped judges Ciavarella and Conahan hide the income they received, and he admitted to paying cash to Conahan. Despite earlier insistence that he was a victim in the judges' scheme, Powell pled guilty this week to two felony charges and forfeited his interest in a jet and a yacht.
The conduct of the two judges casts doubt on their juvenile convictions issued from 2003 to 2008. The Pennsylvania State Supreme Court reversed those of former president judge Ciavarella in a ruling handed down in late March. The court appointed a special master to review the situation. The exact number of reversals is not known. AP estimates convictions at issue in the hundreds, while the Philadelphia Inquirer puts the figure at 1200.
More details can be found at the ABA Journal's website.
Monday, June 1, 2009
Don't Believe Guarantees of Confidentiality
Other firms offer a guarantee of confidentiality in tax fraud whistleblower claims. Don't believe them; read the details carefully. You'll find that the "guarantee" is the firm will give up its fee if your name gets out. That's all. The firm won't cover your damages. Whistleblowers should understand that this means the law firm is taking a bit of a risk, but that's all.
The truth is that there is a slim, slim chance that the IRS will have to call you as a witness against the fraudster. If that happens, then your name will be released. It's the same situation for all IRS Reward claimants. One firm doesn't have any better ability to protect your identity than any other. The likelihood of this occurring is small, and perhaps that is what the firms guaranteeing confidentiality are relying upon.
At KEMY, we're straightforward. Yes, there is a tiny risk your name will get out. It's unlikely, but it could happen. The decision about whether your name comes out depends on many, many factors, all revolving around the unique circumstance of the fraud and the evidence required to prove it. If KEMY decides to take your case, you can rest assured that we will represent you from the beginning through to the resolution of your claim. All along the way, we'll be honest about your risks and your possibilities for recovery.
The truth is that there is a slim, slim chance that the IRS will have to call you as a witness against the fraudster. If that happens, then your name will be released. It's the same situation for all IRS Reward claimants. One firm doesn't have any better ability to protect your identity than any other. The likelihood of this occurring is small, and perhaps that is what the firms guaranteeing confidentiality are relying upon.
At KEMY, we're straightforward. Yes, there is a tiny risk your name will get out. It's unlikely, but it could happen. The decision about whether your name comes out depends on many, many factors, all revolving around the unique circumstance of the fraud and the evidence required to prove it. If KEMY decides to take your case, you can rest assured that we will represent you from the beginning through to the resolution of your claim. All along the way, we'll be honest about your risks and your possibilities for recovery.
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