Archive for the ‘Whistle Blowers’ Category

Liechtenstein Bank to Pay $23.8 Million to Resolve Criminal Tax Investigation

The DOJ entered into a non-prosecution agreement with Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein (LLB-Vaduz).  Under this agreement, LLB-Vaduz will pay more than $23.8 million to the United States and will not be criminally prosecuted for opening and maintaining undeclared bank accounts for U.S. citizens from 2001 through 2011. LLB-Vaduz admitted to assisting a U.S. taxpayers in evading tax obligations, filing false federal tax returns with the IRS and otherwise hiding accounts held at LLB-Vaduz from the IRS.

The NPA requires LLB-Vaduz to forfeit $16,316,000, representing the total gross revenues that it earned in maintaining these undeclared accounts, and to pay $7,525,542 in restitution to the IRS, representing the approximate unpaid taxes arising from the tax evasion by LLB-Vaduzs clients. For more information, see the DOJ Press Release.

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IRS Fraud Office Pays First Major Whistleblower Reward

Three years ago, the Internal Revenue Service established an office that would allow whistleblowers to report information on big tax fraud scams and receive rewards. For the first time, it appears as if the IRS is paying out a substantial reward.

The Wall Street Journal reports that the IRS Office paid $5.5 Million in reward money to a whistleblower who reported tax fraud among several companies. More money is still possible as the IRS continues to investigate and resolve claims involving the accused companies.

The case began nearly eight years ago and involved international stock and tax fraud scenarios, completed in part by an international corporate conglomerate. It is reported that the case recovered over $60 million in unpaid taxes so far.

This award is the first major IRS payout to a whistle blower, but gives future whistleblowers and their attorneys confidence that the relatively new program is working, according to Dean A. Zerb, a former fraud investigator and key player in creating the new IRS office.

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U.S. District Court for the Eastern District of Texas Bars Twelve Sub-promoters of Alleged $30 Million Tax Credit Scam

On February 24, 2010, the Justice Department announced that the Honorable Marcia Crone of the U.S. District Court for the Eastern District of Texas has permanently barred twelve (12) people from promoting an alleged tax fraud scheme involving false income tax credits. The twelve (12) are among thirty-two (32) defendants named in a civil injunction lawsuit who allegedly helped customers claim more than $30 million in false federal income tax credits designed for producers of fuel from non-conventional sources. A total of 23 of the 32 defendants have now been barred. The thirty-two (32) defendants include four (4) Certified Public Accounts, twenty-seven (27) tax preparers and one other individual.

According to the government’s original complaint, the tax fraud scheme involved claiming tax credits based on the purported recovery and sale of methane from landfills in Puerto Rico, Illinois, New York, Ohio, and Connecticut. The complaint averred that no methane was ever produced or sold and that the defendants allegedly created fictitious business records to falsely document the purported production and sales. The tax preparers allegedly sold interests in the fictitious methane production facilities to thousands of customers in at least fourteen (14) states across the country and prepared income tax returns for customers claiming tax credits based on the fictitious methane sales.

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The State of NY Allows Whistleblowers to File Qui Tam Lawsuits

A recently passed law in the state of New York will allow IRS whistleblowers to file qui tam lawsuits against the wealthy who cheat on their taxes under the False Claims Act.

Under the qui tam law, whistleblowers who file suits against those who defraud the government can receive a portion of the potential penalty imposed by the state on the defendant. Previously, the law had focused on those who committed Medicare Fraud or Defense Contractor Fraud, but now the scope has been expanded in New York to include those who cheat on their taxes, according to the New York Times.

Qui tam law experts said that the New York law is the first of its kind in the US. Another positive step by NY to stop cheaters,  says attorney and partner Joel Androphy. California and other tax states should follow.

The new law targets only wealthy individuals because qui tam lawsuits can only be filed against those defendants who make more $1 million in net income a year. In addition, suits can only be filed when the damage against the government is more than $350,000.

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The Tax Relief Act of 2006 Increased Incentives For Whistleblowers

Just over four years ago, Congress passed the Extension of Tax Relief Act of 2006, which contained a whistleblower reform provision. These amendments authorized the IRS to create a Whistleblower Office to process tips received from individuals who spot tax problems in their workplace, while conducting day-to-day personal business, or anywhere else they may be encountered.

As a result, the IRS is now currently authorized to pay such sums as deemed necessary for detecting underpayments of tax, and detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving of the same.

As expected, the Tax Relief Act of 2006 significantly increased incentives for whistleblowers since Section 406 now provides for a recovery of at least 15%, but not more than 30%, of the collected proceeds. However, if the action is based upon the results from a judicial or administrative hearing, from a government report, hearing, audit, or investigation, or from the news media, the whistleblowers recovery is limited to no more than 10% of the collected proceeds unless the whistleblower is an original source. Unlike the definition of original source in the FCA, Section 406 simply states that the reduction based upon public disclosure will not apply if the information was originally provided by the whistleblower.

A whistleblowers share will also be reduced if the whistleblower planned and initiated the violations. Furthermore, if the whistleblower is convicted of criminal conduct arising from planning and initiating of the violations, he is not entitled to any share of the recovery. A whistleblower has 30 days from the determination to appeal an award determined by the Tax Court .

Critics of the tax whistleblower statute feel it infringes on the rights of taxpayers by allowing informants to allege wrongdoing with little or no evidence and they suggest that the statute raises serious privacy concerns. The most significant of these concerns is that private citizens will profit by disclosing taxpayer information and recklessly expose the information to persons not authorized by statute to receive such information. Under existing law, informants and qui tam plaintiffs must turn their information over to the government agencies that are authorized to receive tax-related information. Furthermore, any privacy concerns should probably be balanced against public policies that encourage private persons to expose tax-related fraud.

Below are examples of tax fraud schemes showing the type of activities whistleblowers can file a claim under the IRS whistleblower law:

  1. Backdating/postdating earnings or losses to move income into a different tax year.
  2. Altering grant and/or exercise dates on stock options.
  3. Questionable tax shelter schemes and false deductions.
  4. Parent corporation manipulation of subsidiary relationships to conceal profits or create improper losses.
  5. Under-reporting revenue or over-claiming losses
  6. Foreign companies that fail to pay U.S. taxes for domestic operations.
  7. U.S. companies and wealthy individual citizens who conceal earnings made from transactions on foreign stock and commodity exchanges, and from other foreign transactions
  8. Non-filing of a federal tax return

If you are aware of tax fraud by a corporation or wealthy individual tax payer, you may be able to recover significant rewards through the IRS whistleblower laws.  The attorneys at Berg and Androphy are trial lawyers prosecuting IRS Tax fraud cases resulting in the recovery of hundreds of millions for the government and whistleblowers.”

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IRS Plans to Improve the Timeliness and Quality of Decisions in the Whistleblower Program

In a memorandum released on June 20, 2012, IRS Deputy Commissioner for Services and Enforcement, Steven T. Miller, stated, My office is working with the Whistleblower Office and with internal and external stakeholders on a comprehensive review of operating guidelines and procedures. The objective of the review is to improve the timeliness and quality of decisions as the Service evaluates and acts on whistleblower information.

The new guidelines establish the following timelines:

  • The Whistleblower Office must initially evaluate claims within 90 days of receipt.
  • The Operating Division and Criminal Investigation must have subject matter experts review the claims within 90 days of receipt.
  • The Whistleblower Office must notify whistleblowers of an award decision within 90 days of when collected proceeds can be finally determined.

The new guidelines are a step in the right direction and may help rid the IRS Whistleblower Program of its reputation for failing to timely respond to claims and not paying awards to whistleblowers who report suspected tax compliance issues.

View IRS’ June 20, 2012 Memorandum
Learn more about the IRS Whistleblower Program

Posted in Tax Fraud, Whistle Blowers, Whistleblower AwardNo Comments

Yet Again, Home Health Care Fraud

“On September 13, 2012, the Department of Justice announced that 4 people: one physician, two clinic owners and one nurse, were indicted for their participation in a Medicare fraud scheme involving home health services.

The four individuals worked together at Angle’s Touch Home Health Center, LLC, a home health agency located in Taylor, Michigan.  The four defendants worked together to submit a total of more than $1.6 million in fraudulent claims to Medicare for services that were medically unnecessary and/or never provided.”

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Home Health Care Fraud – This Time in Detroit, Michigan

“In yet another case involving the home health care industry, the Department of Justice announced Tuesday, May 8, 2012, another successful criminal indictment of owners of home health agencies in the Detroit, Michigan area.  The co-conspirators, owners and operators of four home health agencies and a visiting physician organization, participated in a $13.8 million Medicare fraud  and money laundering scheme.

Between July 2008, and September 2011, Zahir Yousafzai, co-owner of First Care Home Health, LLC and Moonlite Home Care, Inc,. Dr. Dwight Smith, owner of Smith Medical Center and Phoenix Visiting Physicians PLLC, and owners of Physician Choice Home Health Care, LLC and Quantum Home Care, Inc. billed Medicare for services that were never provided.  Of the $13.8 million fraudulent home health care claims submitted by the four home health agencies, Medicare paid more than $4 million to First Care and Moonlite Home Care.

Mr Yousafzai admitted to paying and/or directing payment to doctors, nurses and other health care providers in order to create fictitious patient files that documented the home health services that were never provided.  Mr. Yousafzai also paid patient recruiters for Medicare beneficiary information in order to use the information to submit claims for services that were not provided.

Dr. Smith’s involvement in the scheme began in September 2009, when he started referring patients to Physicians Choice Home Health Care, LLC and Quantum Home Care, Inc.  Smith owned and controlled Supreme Medical Associates PLLC d/b/a Smith Medical Center.  In May  2010, Dr. Smith incorporated Phoenix Visiting Physician PLLC.  These two entities employed people who were never licensed in Michigan to perform any type of medical services.  Yet these individuals routinely examined patients and referred them for home health services.  These persons referred the ineligible patients to Physician Choice, First Care and Quantum home health agencies.  The patients, who did not qualify for the home health services, were paid to sign patient visit forms but did not receive any of the purported services.  From approximately, September 2009 to September 2011, Medicare paid $6.5 million for the services on claims that were submitted by the home health agencies.

In addition to the Medicare fraud allegations, Mr. Yousafzai also pleaded guilty to money laundering.  He incorporated a shell company, A-1 Nursing and Rehab Inc. for the purpose of laundering the proceeds he gained from Medicare through the submission of the false and fraudulent claims for home health services.

Posted in Fraud, Healthcare Fraud, Medicare Whistleblower, Whistle BlowersNo Comments

Joel Androphy on ABC News

A nurse in a small Texas town blew the whistle on a doctor who she believed was improperly performing surgeries and mis-prescribing drugs. See what whistleblower attorney Joel Androphy has to say in this short video clip from ABC:


Posted in Fraud, Health Care Reform, Healthcare Fraud, Medicaid Fraud, Medical Billing Fraud, Medicare Fraud, Medicare Whistleblower, Whistle BlowersNo Comments

New Sentencing in Florida Health Care Fraud Case

In the Department of Justice’s ongoing case against American Therapeutic Corporation (ATC) and American Sleep Institute (ASI), a company related to ATC, the Department announced on Friday, March 9, 2012, the sentencing of a co-conspirator in ATC and ASI’s Medicare billing fraud scheme.

Barry Nash, the owner and operator of Starter House, a halfway house located in Broward County, Florida, was sentenced to 24 months in prison, and three years of supervised release for one count of conspiracy to commit health care fraud.

Mr. Nash admitted that in exchange for kickbacks in the form of monetary payments, he agreed to refer Medicare beneficiaries staying at Starter Home to ATC and ASI.  Mr. Nash admitted that he knew ATC and ASI were fraudulently billing Medicare for partial hospitalization program services and sleep treatment when he made the referrals.  He would deliver the patients to ATC and ASI in exchange for payments. Sometimes the patients received a portion of the kickbacks.

Overall, the Department of Justice estimates that ATC and ASI fraudulently billed Medicare for $200 million in medically unnecessary services.  Mr. Nash’s participation resulted in almost $1 million in fraudulent billing.

The next set of defendants related to this scheme are set for trial April, 9, 2012.

Posted in Medicaid Fraud, Medical Billing Fraud, Medicare Fraud, Whistle BlowersNo Comments

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