Hedge Fund Operators Indicted for US$30 Million
Consumer Protection, Financial Integrity
The US Federal Bureau of Investigation (FBI) has announced that Coadum Capital principals Thomas Repke and James Jeffery have been indicted for US$30 million on 22 counts of mail fraud, wire fraud and conspiracy in a “major international investment fraud scheme that defrauded over 100 victims around the country out of tens of millions of dollars”. Coadum Capital offered shares in hedge funds and promised 5% monthly returns to investors who contributed over US$30 million in funds. The defendants described the investments as “Principal Preserved Alternative Investments for Growth Oriented Clients” and falsely promised investors that their money would remain secure in an escrow account, whilst knowing that no such protection was being given, having then transferred the funds to overseas accounts.
FBI’s media release (27 December 2010)
Medical Centre to Pay US$30 Million
Business Ethics and Corporate Culture
The US Department of Justice (DoJ) has announced that Detroit Medical Centre has agreed to pay US$30 million to settle false claims allegations that it engaged in “improper financial relationships with referring physicians”. The relationships allegedly involved office lease agreements that either did not meet fair market value or were not made in writing.
DoJ’s media release (30 December 2010)
False Claims Allegations Settled for US$6.3 Million
Business Ethics and Corporate Culture
The US Department of Justice (DoJ) has announced that seven hospitals, Lakeland Regional Medical Center, Decatur General Hospital, St Dominic-Jackson Memorial Hospital, Seton Medical Center, Greenville Memorial Hospital, Presbyterian Orthopaedic Hospital and Eliza Coffee Memorial Hospital have agreed to pay US$6.3 million to resolve false claims charges. These hospitals allegedly overcharged Medicare in the period 2000 to 2008 for kyphoplasty procedures, a minimally-invasive procedure that was deliberately performed on an in-patient basis so as to increase their Medicare claims.
DoJ’s media release (4 January 2011)
Company and Its Subsidiaries to Cough Up US$92 Million
Anti-Bribery and Anti-Corruption
The US Department of Justice (DoJ) has announced that Alcatel-Lucent SA (Alcatel) and three of its subsidiaries have agreed to pay US$92 million to settle an investigation into alleged violations of the Foreign Corrupt Practices Act. Alcatel allegedly pursued business opportunities around the world through its subsidiaries and regularly used consultants and third-party agents to pay millions of dollars in bribes to foreign government officials in order to retain business in Costa Rica, Honduras, Malaysia and Taiwan. As a result of this corruption, Alcatel allegedly secured three contracts in Costa Rica worth more than US$300 million, amongst others, and made profits exceeding US$23 million. In addition to the monetary penalty, Alcatel and its subsidiaries will also conduct an enhanced compliance program and also “retain an independent compliance monitor”.
DoJ’s media release (27 December 2010)
Sexual Harassment Case Settles for US$195,000
Employment and Workplace Issues
The US Equal Employment Opportunity Commission (EEOC) has announced that Omnicare Inc (Omnicare) has agreed to pay US$195,000 to settle a sex discrimination lawsuit, brought against it by the EEOC. A pharmacy manager at Omnicare’s Pinnacle Pharmacy in La Crosse, Wis, allegedly subjected a class of five women to sexual harassment such as “approaching female employees from behind and grinding his crotch on them, and making sexually explicit and demeaning comments to female employees”. In addition to the penalty, Omnicare will provide sexual harassment training to employees, provide reports to the EEOC, distribute its policy against sexual discrimination and conduct surveys “assessing the company’s complaint reporting system”.
EEOC’s media release (21 December 2010)