Robinhood Trading Platform Investor Loss Recovery Guest Post

Our friends at Chapman Albin have asked us to post about the recent March 2nd crash of Robinhood’s trading platform. Unfortunately, that crash happened on the day of one of the largest stock market recoveries in history. Many people were unable to execute trades and lost money. Some investors lost as much as $500,000 and maybe more.

We spoke with partner Jason Albin yesterday. Even though the crash of Robinhood’s platform just occurred on Monday, the lawyers at Chapman Albin have already heard from investors who lost money.

Today we learned of a class action filed just filed in Florida. In our experience, class actions are not effective if you lost a substantial amount of money. Because investor loss recovery cases are typically handled on a contingent fee basis, it costs you nothing out of pocket to hire your own lawyer to pursue Robinhood.

Here is what Chapman Albin is doing to help Robinhood platform users:

ChapmanAlbin Accepting Investor Loss Claims Against Robinhood

The attorneys at ChapmanAlbin have been contacted by Robinhood investors who lost money during Robinhood’s March 2 trading freeze. Here are some of Robinhood investors’ most common questions:

Why couldn’t I trade or use the Robinhood app on March 2?

Robinhood reported a service outage took down the app for most of the trading day on March 2 during one of the biggest market rebounds in history.

Can I recover my money?

If you lost money on March 2 because you were not able to make a trade or series of trades and you can prove it, then you may have a case. The attorneys at ChapmanAlbin are taking claims involving losses of $50,000 or more.

What should I do if I think I have a case?

Contact the attorneys at ChapmanAlbin at 216-241-8172 for a free consultation. Most consultations only take 15 minutes or less. [Editor’s note: You can also contact them online.]

Is this a class action?

No. We do not intend to file a class action. We intend to file individual or small group actions. We believe recovery potential for investors who lost a substantial amount ($50,000 or more) tends to be greater in individual or group actions versus class actions.

Why won’t you take Robinhood cases with losses less than $50,000?

We believe cases with smaller dollar amounts may be better suited for a class action because the costs and fees associated with litigation can sometimes erode an investor’s potential for recovery to nothing. In cases with smaller dollar amounts, class actions sometimes make more sense.

What are the next steps?

Contact us at 216-241-8172 or online. If we think you have a case worth pursuing, you will retain us to represent you against Robinhood and will begin preparing your claims right away.

How much will this cost me?

We represent most people on a pure contingency fee basis. We advance costs of litigation and our recovery of costs and our attorney fee are “contingent” upon recovery. In other words, we don’t get paid, unless you get paid.

About Mahany Law. We are a full service, national boutique that handles a wide variety of fraud recovery cases including stockbroker fraud. If the case involves Robinhood, we suggest that you contact Chapman Albin directly. For larger fraud cases involving other stockbrokers, investment advisors or financial professionals and a loss of $200,000 or more, Visit our investor fraud recovery page. Ready to see if you have a case? Contact us directly online, by email or by phone at 202-800-9791.

The post Robinhood Investor Loss Recovery appeared first on Mahany Law.

NY Business owner Prosecuted for Relabeling Chinese Goods as Made in USA

Our society is deeply divided these days but one thing we all believe in is our country. Whether you are a Republican business owner or a lifelong union worker, we take pride in goods manufactured here in the U.S.A. Some scam artist, however, want to earn a quick buck by taking foreign made goods and labeling them as made in America. One of those crooks is now facing prison.

Daren Arakelian, age 52, of Rensselaer, NY pled guilty to federal wire fraud charges this week. His crime?  Selling a wide variety of items to the government and claiming they were made in the U.S. The goods actually came from China.

As regular readers of this blog already know, violations of Buy American law are not victimless crimes. Beginning with the Great Depression and continuing through President Trump’s several Buy American, Hire American Executive Orders, the government has a long history of supporting American businesses. These laws help safeguard American jobs.

As we recently learned with the coronavirus, our increasing reliance on foreign sourced goods can lead to shortages of vital goods in the U.S. when a disaster strikes. For example, did you know that most of the antibiotics we take when sick are made in China? What happens when Chineses factories shut down because of a disaster?

Need another reason? When a dishonest company is allowed to get away with passing off less expensive goods but charging full prices, honest businesses are unable to compete and are denied a level playing field.

According to the Justice Department, Ararkelian ran a company called Great 4 Image, Inc. His company contracted with various federal agencies to produce backpacks, duffle bags, cinch bags, hydration packs, t-shirts and other goods. Each of his company’s contracts required Great 4 Image to comply with the Buy American Act and/or the Trade Agreements Act.

In a prepared statement, prosecutors said, “As part of the civil settlement and guilty plea, Arakelian admitted that he devised and implemented a scheme to defraud the federal government by causing Great 4 Image to import goods, including thousands of backpacks and suspension trainers, that were made in China into the United States and then passing them off as compliant with the Buy American Act and the Trade Agreements Act. In carrying out this scheme, Arakelian made various verbal and written statements to federal officials falsely claiming to have domestically manufactured the goods that he knowingly imported from China.”

Arakelian’s criminal complaint says that as part of the fraud, his company purchased products in China and then “disguised and lied about the products’ place of origin.” The contracts required that at least 50% of the cost of the product must be attributable to American made components. (New executive orders from President Trump may increase the percentage to over 90% for certain products.)

Arakelian faces up to 20 years in prison when sentenced later this year. Court records indicate that he cooperated once caught and pled guilty at his initial appearance. Early acceptance of responsibility most likely means he will receive a lighter sentence.

Arakelian also settled civil charges that his company violated the federal False Claims Act, a Civil War era whistleblower statute. That law provides for triple penalties and high fines against individuals and companies that defraud the government.

On behalf of the company, Arakelian will pay civil False Claims Act penalties of $702,000.

False Claims Act, Buy America and Whistleblower Rewards

The civil prosecution of Arakelian was brought under the False Claims Act. That law allows whistleblowers with inside information about fraud to be paid cash rewards. These rewards range between 15% and 30% of whatever the government recovers from the wrongdoer. In this case that means a potential reward of between $105,300 and $210,600.

Rewards are typically only paid to the first person reporting the illegal behavior. That means any delay could cause someone else to receive the reward.

Collecting a reward requires filing a sealed complaint in federal court. The process sounds daunting but lawyers typically handle the investigation and filing of the complaint. Lawyers that handle whistleblower lawsuits typically do so on a contingent fee basis meaning there is no cost to the whistleblower unless there is a recovery.

Chinese Steel and Buy America Violations

As this post is written, tensions are high between the United States and China. For many years, dishonest contractors have attempted to substitute Chinese and other foreign steel in government building projects.

In 2016, the Justice Department intervened in a whistleblower case filed by the Mahany Law whistleblower legal team. Our whistleblower client alleged that Novum Structures concealed foreign made steel components used on a number of federal construction projects. The company paid a $500,000 criminal fine and $2.5 million False Claims Act in civil fines. Our client was awarded $400,000 for stepping up and reporting the illegal conduct.

In announcing the conviction, U.S. Transportation Secretary Anthony Foxx said, “The U.S. Department of Transportation considers compliance with Buy America to be a fundamental requirement when a company is involved in federal projects.  As we work to be good stewards of limited federal resources, the department applauds the Department of Justice and our own Office of Inspector General for the successful prosecution of this case.”

While the complaint is being investigated by the government it remains under seal meaning secret.

Powerful anti-retaliation provisions also protect whistleblowers should the wrongdoer seek to retaliate. Because the cases are under seal, often the wrongdoer doesn’t know the identity of the whistleblower for several years. That is usually plenty of time to secure another job.

The bottom line, Buy America violations can result in cash rewards if prosecuted under the False Claims Act. To learn more, please visit our Buy America whistleblower reward information page.

Ready to see if you qualify for a reward? Please contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. We handle cases across the United States. All inquiries kept strictly confidential.

The post What Happens if You Sell Fake Made in USA Goods to Uncle Sam? appeared first on Mahany Law.

Restaurant Sues to Force Insurance Company to Pay Coronavirus Lost Business Claims (author’s photo of Jackson Square, New Orleans)

On February 5^th, we predicted businesses were in for a rough time ahead. Insurance companies are in survival mode. We pay premiums for years and years and when we finally need coverage, they don’t want to pay. Five weeks later our prediction has come true. A New Orleans restaurant is suing after its insurance carrier to force it to pay claims for losses incurred as the result of coronavirus quarantine measures.

The Oceana Grill, a 500 seat restaurant in the city’s French Quarter, says it is obtained insurance through Lloyd’s of London. That insurance contained both a civil authority clause and business interruption coverage. [More on that below.] After City and State officials clamped down on revelers in the French Quarter and advised people to quarantine in place, the restaurant saw its revenue dry up.

On Monday, March 16^th, New Orleans Mayor LaToya Cantrelll ordered all bars, clubs and casinos to shut down and restaurants to no longer accept dine in guests. “Our rules in New Orleans will in some cases be going further than what the state has announced. We are facing the most widespread impacts from this crisis here in Orleans, and our response must be that much more urgent,” said Mayor Cantrell

With no tourists and no dine in business, restaurant operations ground to a halt. In our experience, insurance companies will often string out the denial of a business interruption claim for months. The unspoken belief is that with no income coming in, the business making the claim will either not have the funds to sue the insurance company or will settle for pennies on the dollar. We are proud of Oceana Grill for not waiting months before suing.

The suit filed by the restaurant seeks a determination by the court that Lloyd’s must cover the losses to the business.

Many businesses have business interruption insurance. The idea is to help businesses recover lost income incurred as the result of loss, damage, or destruction to insured property by a covered “peril”. Hurricanes, floods and fires are the perils we typically imagine but coronavirus is certainly a disaster if you are in the hospitality business. Ditto if you are a manufacturing company and a critical piece of your supply chain is in China.

An example of a business interruption clause in a policy might read:

“This policy insures against loss resulting directly from necessary interruption of business caused by physical loss or damage by a peril not otherwise excluded herein to insured property of the Insured, all subject to the terms and conditions of this policy.”

As in the sample above, the language used in many policies suggests there must be “physical loss or damage” for the coverage to take effect.

Every policy is different and there have been no cases involving coronavirus claims.

Policies often also have a “government authority” provision that offers coverage if an insured is ordered to shut down. What happens, however, if the business is allowed to remain open but loses 95% of its business because of actions taken by the government? Once again, there are no coronavirus cases to establish precedent.

We have been watching industry publications and articles written by lawyers representing the insurance industry. It is obvious that insurance companies are openly looking for  ways to deny coronavirus calims. That is why we are glad to see businesses like the restaurant in New Orleans fighting back.

Bad things happen every day. Accidents, hurricanes and now a global pandemic. We rely on insurance companies to be there when disaster strikes. Now it appears that after years of taking our hard earned money, some insurance companies are poised to turn their backs on us.

If you have business interruption coverage and have suffered a loss from coronavirus, we can help you navigate the complex world of claims, so-called “independent adjusters” and insurance bad faith claims. We are aggressive and not afraid of going toe-to-toe with big insurance companies and their lawyers.

To learn more, visit our coronavirus business interruption claims page. Need help reviewing your policy or pursuing a claim for losses to your business? Contact us online, by email brian@mahanylaw.com or by phone at 202-800-9791. We have lawyers throughout the United States and accept cases nationally.

*The author is a graduate of Tulane University School of Law in New Orleans and a former police officer in the city.

The post Restaurant Sues Over Coronavirus Business Interruption Claim appeared first on Mahany Law.

Coronavirus Insurance Coverage Information for All Hospitality Businesses

Was Your Coronavirus Insurance Claim Denied? We Can Help

Hotels throughout the United States are struggling to survive. Nowhere is that truer than in tourist areas such as Anaheim, Orlando and along America’s beaches. The recent order from Miami Dade County Mayor Carlos Gimenez may be the death knell for some hotels. Similar orders are being issued across the country.

There may be hope for hotels and other hospitality businesses,  however. First, let’s analyze the Miami – Dade order. We choose that order to serve as the starting point of this discussion because it is one of the most comprehensive. In areas of the country where hotels are already empty, these orders might actually be helpful in establishing eligibility for business loss insurance coverage.

Miami Dade Emergency Order 09-20

On March 21^st, Mayor Gimenez issued an order closing all hotels, motels and vacation rentals. There are only a few exceptions including rooms for first responders and people who use motels as transitional living arrangements.

Specifically, the order exempts rooms for the following:

• healthcare professionals,
• first responders,
• national guard members, law enforcement, state or federal government employees,
• airline crewmembers,
• other essential personnel, patients, patients’ families, journalists, and others responding to the COVID-19 emergency,
• displaced residents or visitors, persons unable to return to their home due to exigent circumstances, such as fire or flood,
• persons utilizing hotels as transitional living arrangements,
• persons sheltering in hotels due to domestic violence,
• hotel employees, service providers and contractors,
• or individuals, who, for any reason, are temporarily unable to reside in their home

The Mayor’s order says that municipalities within Dade County can impose even more stringent measures.

While the exceptions to the order may appear numerous, the vast majority of people staying in Miami area hotels are vacationers and business travelers. A previous emergency order issued just two days prior on March 19^th closed most businesses in the county. Even if hotels were allowed to remain open for vacationers and business travelers, we are not sure what those people would do.

Statewide, no such order exists although Florida’s Governor has dissuaded people from traveling and closed restaurants and pools. Even pools at condominiums have been ordered closed.

Coronavirus Insurance Coverage for Hotels and Hospitality Industry Businesses

The Mahany Law hospitality team has long served the legal needs of the hospitality industry, specifically hotels fighting with their lenders or loan servicers. Lately we have been receiving calls from hotels seeking to determine if they have insurance coverage for their lost revenue.

The answer is maybe. Here is what you need to know.

Many insurance policies contain provisions that protect businesses in the event of a loss or disaster causing financial loss of business. These typically provisions fall into four categories, business interruption, contingent business interruption coverage, civil or government authority coverage and contamination / communicable disease coverage. More on each below.

Most policies provide coverage on an “all risk basis”. That means losses are covered unless specifically excluded. Unfortunately, most insurance companies are in business to earn a profit. The industry has a long history of not paying claims whenever possible. That means using obscure and confusing exceptions to deny coverage. More on these exclusions below.

When an insurance company improperly denies a claim, underpays the claim or delays payment, the company is said to be engaged in “bad faith.” Insurance companies can be sued for engaging in bad faith or improperly denying claims.

Mahany Law and Judge, Lang & Katers have teamed up with several other firms to protect our hospitality industry clients and pursue coronavirus insurance claims denials nationwide. (We have accepted cases in 37 jurisdictions. By teaming up with our partners, we can serve the needs of hospitality companies wherever their properties may be located with just one call.)

Insurance Agents Are Not Your Friend

The beginning point of insurance is usually the agent who sold the policy. Most agents are helpful – they make their money on commissions from what they sell. That doesn’t mean they owe you a fiduciary duty. In most states their only duty to you is one of reasonable care. That duty of care may include letting you know when a renewal policy contains coverage changes.

Depending on your state, specific duties may include:

• Adequate Coverage. An agent owes a duty to use reasonable care to obtain adequate insurance to meet your needs.
• Misrepresentation of Coverage. An agent may not misrepresent the coverage provided in a policy.
• Duty to Procure. If you ask your agent for specific coverage, the agent has a duty to diligently search for that coverage and tell you if she can’t locate it.
• Changes in Coverage. An agent should inform you of any changes in coverage in a renewal policy.
• Other Duties. There are typically other duties that agents have that are not applicable to this discussion. These include reminding the insured of renewal deadlines and letting the insured know about the financial viability of the carrier providing the coverage.

In addition to the duties agents have to you, they also have duties to the carrier. That often creates conflicts. For examples, although agents make money from commissions, they also want to keep carriers happy and that means not offering certain types of coverage to keep loss ratios low.

We start with insurance agents because they may have an independent duty to you and can be held financially responsible for your losses if they breached their duty to you.

Business Interruption Coverage

Business interruption insurance (also known as business income insurance) is an insurance product that covers the loss of income that a business suffers after a disaster. Think of a fire or flood at a restaurant. If restaurant owner had business interruption insurance, the loss of income would be covered while repairs were made.

Typically, business loss insurance is not a separate policy. It is an add on to property insurance or sold  as part of a package.

Here are two examples of business interruption clauses in a policy:

“We will pay for the actual loss of business income you sustain due to the necessary suspension of your operations during the period of restoration. The suspension must be caused by the direct physical loss, damage, or destruction to property. The loss or damage must be caused by or result from a covered cause of loss.”

“This policy insures against loss resulting directly from necessary interruption of business caused by physical loss or damage by a peril not otherwise excluded herein to insured property of the Insured, all subject to the terms and conditions of this policy.”

Notice how in both examples, the coverage is triggered by a physical loss. That requirement is typical in most business interruption insurance. Think of a fire at a motel. While repairs are being made you can make a claim for lost revenues.

Is Coronavirus Considered a “Physical Loss” as Required by My Insurance?

We know what the insurance company is likely to say. Absent a fire, wind damage to the roof, flood or collapse, carriers are likely to say there is no physical loss. We disagree.

Although we are learning about coronavirus on a daily basis, we know that the virus can remain on surfaces for days. If you had to close and disinfect the property because a guest tested positive on your cruise ship, the odds of winning an insurance bad faith loss against your insurance carrier are greatly improved.

Assuming your business interruption coverage is tied to physical loss, you may face an uphill battle in getting paid on your claim. Much depends on the actual policy language, however. Courts have said that odors and fumes that render a property uninhabitable constitute a physical loss.

Contingent Business Interruption Coverage

Contingent business interruption coverage protects against lost revenues resulting from damage to the property of a person on whom you depend for business. Here the disruption is to a third party. Typically, this coverage kicks in when a loss to a supplier prevents you from conducting business. An example might be an automaker that produces electric vehicles. If China halts the shipment of lithium batteries, the car company may be forced to stop its production line.

Contingent business interruption insurance often takes many forms and often has what are called “sublimits” meaning damages are capped for a fixed time period or fixed dollar amount.

Civil Authority Coverage (Government Authority Coverage)

Civil authority coverage is sometimes called “public authority” or “government authority” coverage. This coverage pays for lost business income when a government authority blocks access to your property.

Here is an example of civil authority coverage in a policy:

“This policy insures against loss resulting directly from the necessary interruption of business caused by damage to or destruction of the Insured Locations.

“This section is specifically extended to cover a situation when access to the Insured Locations is prohibited by order of civil authority as a direct result of damage to adjacent premises, not exceeding, however, two (2) consecutive weeks…”

Once again there is a suggestion that there must be physical loss although in the example above, the clause merely says, “damage or destruction.” One can certainly argue that the contamination from coronavirus is damage.

In cases where governors or local authorities have issued actual shelter in place orders, quarantines or orders closing hotels, the case for lost income coverage is better. As of this writing, in many jurisdictions, authorities are simply recommending people practice social distancing or avoid gatherings of 10 or more people.

Once again, the actual policy language becomes critical as well as the orders and recommendations from government authorities.

Remember that coronavirus claims are new. We have no direct court precedent to guide us. (We also know that insurance companies are prone to deny claims.) Although we won’t see any COVID-19 rulings for several years, there is plenty of case law involving evacuations from floods and even 9/11 related closures.

After 9/11, many New York City businesses made claims after they were forced to close. Authorities shut down several blocks around the Trade Center for weeks as rescue efforts were underway.

Those affected businesses were generally eligible for compensation because there was physical damage to adjacent structures. United Airlines, however, was denied coverage for loss of business when the Reagan National Airport was closed because the closure was based on fear of future attacks and not on damage to adjacent structures or the airport itself.

The takeaway is that often there must be a direct connection between the claim and a government order. Guidance from the CDC to stay home is much different from Mayor Gimenez’s order closing hotels. As of March 23^rd, USA Today reports mandatory shelter-in-place orders in several jurisdictions:

• Delaware – Order by Gov. John Carney
• Kentucky – Order Gov. Andy Beshear
• Louisiana – Order by Gov. John Bel Edwards
• Ohio – Order by Gov Mike DeWine
• Philadelphia
• St. Louis and Kansas City
• New Orleans
• San Miguel County, Colorado
• Athens-Clarke County, Georgia
• Blaine County, Idaho.

We also add to that list:

• New York – Order by Gov. Andrew Cuomo
• California – Order by Gavin Newsom
• Illinois – Order by Gov. J.B. Pritzker
• Michigan – Order by Gretchen Whitmer
• Miami – Dade County, Florida

The Michigan order was released as this post was being written. Additional orders are likely.

Contamination and Communicable Disease Coverage

After the Ebola scare in 2014, Lloyd’s began offering contamination and communicable disease coverage. Some policies call this “pandemic disease business interruption insurance.” Such coverage is not typical and unless you asked your agent for such coverage, you probably don’t have it.

Speaking of pandemic coverage, we are also asked, “Can I still buy pandemic coverage?” The answer is unfortunately no but you can purchase insurance for future pandemics.

Other Possible Coronavirus Insurance Coverages

We have mostly discussed business interruption insurance, contingent business interruption coverage, and civil authority coverage. Many hospitality businesses may also have event cancellation policies. We are happy to discuss possible claims but that event specific coverage is outside this post.

Beware the Exclusions

We began this post by saying “Most policies provide coverage on an all risk basis. That means losses are covered unless specifically excluded.”  Now it is time to discuss those exclusions.

After the SARS scare in 2002, insurance companies began adding exclusions for SARS and other identified diseases.

In 2006, a leading insurance services company promulgated a standard virus exclusion for business lost income coverages. It says, “We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”

That language probably excludes coronavirus coverage but not all insurance companies have adopted it. In fact, we just read one exclusion that excludes specific viruses and bacteria such as SARS and anthrax. We have also seen general exclusions that appear to be aimed at mold and fungus.

Many policies also have exclusions for pollutants. We think of pollutants as inorganic and not live viruses. Desperate insurance companies may try to use these exclusions to avoid paying coronavirus insurance claims but we think the law is on our side.

Once again, you need trained eyes to determine if your coronavirus related claim is covered or excluded.

My Hotel is Closed – How Do I Determine if I Have Insurance Coverage for My Losses?

The first step is examining the policy. Many business owners have copies of their declaration sheet but not the policy itself. A quick call to your agent should get you a copy of the full policy. (Policies may also be available online too.)

If there is an exclusion that might prevent coverage, we may ask you to obtain copies of your old policies. Remember that your agent has a duty to advise you of changes in coverage. If exclusion wasn’t in your original policy but is in your current policy, the agent could be responsible if she failed to warn you of the changes in the policy.

Next keep accurate records of all expenses and lost revenues associated with coronavirus losses. It is not enough to guess. If you incur expenses in disinfecting between guests, keep track of the additional time spent on cleaning. (Remember, if you have someone with coronavirus in your facility, you probably have actual damage or physical loss under the policy.)

If a labor agreement requires you to give certain advance notice before laying off employees, track those expenses.

Next, when you call to report your loss, keep careful notes. Claims adjusters, like insurance agents, have dual loyalties. In fact, claims adjusters – even those that claim to be “independent adjusters – have a strong loyalty to the insurance companies that pay for their services. It is important to document everything you say and what they say in return. [If you wish, we will also handle the claims process for you.]

Should the adjuster deny the claim, ask him or her to put it in writing along with their reasons. In most states you are entitled to a written denial and the reasons for your denial. Also remember that the denial starts the clock for how much time you have to file a lawsuit against the carrier.

Was Your Coronavirus Insurance Claim Wrongfully Denied?

If your coronavirus business loss insurance claim was wrongfully denied, we can help. We have years of experience in helping hotels and hospitality businesses. Our hospitality industry lawyers can help you navigate the complex world of claims, so-called “independent adjusters” and insurance bad faith claims. We are aggressive and not afraid of going toe-to-toe with big insurance companies and their lawyers.

To learn more, visit our insurance bad faith page. Need help reviewing your policy or pursuing a claim for losses to your business? Contact us online, by email brian@mahanylaw.com or by phone at 202-800-9791. We have lawyers throughout the United States and accept cases nationally.

REPRINT OF THE MIAMI -DATE ORDER REGARDING HOTELS

MIAMI-DADE COUNTY EMERGENCY ORDER 09-20

WHEREAS, section 252.38(3)(a), Florida Statutes, gives political subdivisions the authority to declare and enact a State of Local Emergency for a period of up to seven days, thereby waiving the procedures and formalities otherwise required of the political subdivision by law; and

WHEREAS, on March 1, 2020, the Governor of Florida issued Executive Order Number 20-51, directing the State Health Officer and Surgeon General to declare a Public Health Emergency due to the discovery of COVID-19/novel Coronavirus in Florida; and

WHEREAS, on March 9, 2020, the Governor of Florida issued Executive Order Number 20-52, declaring a State of Emergency for the state of Florida related to COVID-19/novel Coronavirus; and

WHEREAS, on March 12, 2020, the County Mayor declared a State of Emergency for all of Miami-Dade County; and

WHEREAS, COVID-19/novel Coronavirus poses a health risk to Miami-Dade County residents, particularly elderly residents and those who are immunosuppressed or otherwise have high-risk medical conditions; and

WHEREAS, minimization of contact is necessary to avoid risk of COVID-19 infection for the residents of the County; and

WHEREAS, the Centers for Disease Control (CDC) has issued guidance entitled “15 Days to Slow the Spread,” encouraging social distancing and maintaining a 6 foot separation between residents to slow the spread of infection and that events with more than ten attendees either be cancelled or held virtually; and

WHEREAS, the CDC guidelines are based upon the amount of community spread within a community and become more stringent where there is minimal to moderate or substantial community spread; and

WHEREAS, numerous persons have congregated in Miami-Dade County for spring break and other social activities, and are congregating in and around hotels without observing the social distancing guidelines as recommended by  the CDC; and

WHEREAS, it is in the best interests of Miami-Dade County to prevent crowds of people inside and around hotels, as COVID-19 continues to spread through both the local community and throughout the nation; and

WHEREAS, hotels, motels, and short-term vacation rentals and other commercial lodging establishments may serve as shelters or housing options for healthcare professionals, first responders, national guard members, law enforcement, state or federal government employees, airline crewmembers, other essential personnel, patients, patients’ families, journalists, and others responding to the COVID-19 emergency, or displaced residents or visitors, persons unable to return to their home due to exigent circumstances, such as fire or flood, persons utilizing hotels as transitional living arrangements, persons sheltering in hotels due to domestic violence, hotel employees, service providers and contractors, or individuals, who, for any reason, are temporarily unable to reside in their home; and

WHEREAS, some Miami-Dade County residents rely on hotels and motels for weekly and monthly long-term living arrangements and the closure of commercial lodging establishments would negatively affect their living arrangements; and

WHEREAS, section 252.46, Florida Statutes, directs local governments to act consistent with Federal recommendations in responding to emergency situations; and

WHEREAS, sections 8B-7(2)(e) and (o) of the Code of Miami-Dade County (” Code”)authorize the County Mayor to limit the movement of persons inside Miami-Dade County in order to safeguard life and health,

THEREFORE, as County Mayor of Miami-Dade County, I hereby order:

1. To aid the availability of hotel rooms for (1) healthcare professionals, (2) first responders, (3)National Guard members, (4) law enforcement (5) state or federal government employees, (6) airline crewmembers, (7) patients, (8) patients’ families, (9) journalists, (10) others responding to COVID-19, (11) displaced residents or visitors, (12) persons unable to return their home due to COVID-19 impacts on travel, (13) persons who must vacate their homes due to exigent circumstances, such as fire or flood, (14) persons utilizing hotels as transitional living arrangements, (15) persons sheltering in hotels due to domestic violence, (16) hotel employees, service providers, and contractors, or (17) individuals who, for any reason, are temporarily unable to reside in their home (“Essential Lodgers”), the following restrictions shall apply to commercial lodging establishments: (a)Hotels, motels, and other commercial lodging establishments shall not accept new reservations for persons other than Essential Lodgers and (b) Hotels, motels, and other commercial lodging establishments may accept reservations for new Essential Lodgers.
2. Notwithstanding section 33-28(D)(3) of the Code,” the maximum daytime and overnight occupancy for short-term vacation rentals shall be up to a maximum of two persons per bedroom plus two additional persons per property not to exceed a maximum of ten persons. New rental agreements shall not be entered into on a nightly or weekly basis, effective March 23,2020.

2. The provisions of this order shall serve as minimum Municipalities may impose more stringent standards within their jurisdictions.

3. This order shall be effective
4. The County Mayor may amend the provisions of paragraphs 1 or 2 by written notice to the County Clerk.
5. This order shall expire upon the expiration of the existing Miami-Dade County State of Local Emergency, except that if such State of Local Emergency is extended, this order shall also be deemed to extend for the duration of such extension. This order may be cancelled earlier by action of the County
6. This order shall be provided to all appropriate media consistent with the requirements of section *B-7(2)(n) of the Code.

ENACTED by the County Mayor 02/21/2020

The post Order Shutting Hotels May Bolster Coronavirus Insurance Claims appeared first on Mahany Law.

Getting Too Many SPAM Robotexts? Learn How to Fight Back and Get Cash

Almost as annoying as unwanted telemarketing calls are those spam texts. Both are illegal unless you have consented to the calls (there are a few narrow exceptions).  This month Navy Federal Credit Union agreed to pay $9,250,000.00 to settle charges that it violated the Telephone Consumer Protection (TCPA) by sending thousands of unwanted text messages to people who weren’t even credit union customers.

Many people know that the TCPA bans unwanted telemarketing calls but it also applies to unwanted or SPAM text messages.

Ben Hawkins filed his lawsuit in 2019. He says he received almost 500 text messages from Navy Federal Credit Union (NFCU). Ben never consented to the texts, never had an account at the credit union and had never been a customer. He apparently wasn’t alone. NFCU apparently sent texts to as many as 66,000 non-members. (The credit union is the largest credit union in the United States both by number of members and in the amount of assets.)

Ben filled his lawsuit as a class action meaning that if certified, it will apply to all nonmembers who received unwanted text messages between September 15, 2015 and now.

Although it denies wrongdoing, NFCU says it has agreed to pay $9.25 million to settle the charges. No matter how many people opt into the class, the credit union must still pay the entire $9.25 million.

NCFU says it believes texts were sent to 5.9 million cell phones. Most of the numbers belonged to members. (The credit union has 8 million members.) Determining exactly how many nonmembers received texts versus those who were nonmembers would be difficult since NFCU outsourced the text message campaign to a third party, Montise, now known as Fiserv.

The data from the call center that ran the campaign was deleted two weeks before the lawsuit was filed.

Assuming the settlement is approved, a claims administrator court will attempt to send notices to the name and address associated with the 66,000 numbers believed to be nonmembers. Everyone who opts into the settlement will receive a pro rate piece of the $9.25 million settlement. Class members that have proof of multiple texts can receive a larger portion of the settlement depending on how many texts they can prove were received.

Class members that want to opt out and file their own individual lawsuit can do so. In our experience, few do.

TCPA and Robotexts

The Telephone Consumer Protection Act prohibits making non-emergency, autodialed calls and text messages to a cellular telephone number without the called party’s express prior consent.

Violations of the law carries damages between $500 and $1500 per call or text.

Assuming that each of the 66,000 people nonmembers only received one call, that is still penalties of at least $33 million. If everyone received dozens or hundreds of calls like Ben Hawkins, the damages would be in the billions.

Typically class action cases for robotexts settle for pennies on the dollar. The cost of bring 66,000 lawsuits would be astronomical and impractical as would be expecting a credit union to write a billion dollar check. Because consumers are getting much less than the $500 minimum penalty established by Congress, class action settlements must be approved by the court. The law requires the court to find that the settlement is “fair, reasonable and adequate.”

For bringing the action, the class representative is typically paid an additional $5,000.

Navy Federal Credit Union Previously Sued for Unwanted Phone Call

Ben Hawkins filed the lawsuit described in this post over unwanted text messages. NFCU was previously sued, however, just a few years ago over unwanted phone calls. The person bringing that lawsuit, Ronald Munday, says he was called repeatedly and even after asking that he be put on their do not call list. Like Ben Hawkins, he also wasn’t a customer of the credit union.

Hopefully Navy Federal will finely earn their lesson. Credit unions are owned by their members. Having to pay millions in fines can’t be making their members happy.

Mahany Law Investigates Banks, Lenders and Others Sending Robotexts

The consumer protection legal team at Mahany Law has successfully prosecuted claims under the Telephone Consumer Protection Act. No likes robocalls and unwanted text messages. If you receive a call or text, ask the caller to place you on their do-not-call list or follow the instructions on the text message to opt out.\

Technically, unless a wrong number, callers aren’t even allowed one mistake although we typically give everyone the benefit of the doubt BUT JUST ONCE. In our experience the calls and texts just keep rolling in even if you ask the caller to stop. In fact, some really bad actors look at opt-out requests as proof that the number is a working number and will actually increase the number of unwanted calls.

Recent cases show that courts are willing to hold the company behind the calls legally responsible for the fines even if the calls were coming from an independent, third party call center. That is what happened in this case. NFCU contracted out the text message campaign to Fiserv.

Word of Caution

Most telemarketing calls today and many unwanted robotexts come from unscrupulous companies that can’t easily be sued. Often these companies falsely use the name of a legitimate company, operate offshore call centers beyond the reach of U.S. courts or use spoofed phone numbers. Unfortunately, there is little we can do to stop these unwanted calls and texts.

If you get a call from someone offering a work from home job, cheap health insurance, medical devices, student loan relief or ways to lower your credit card interest, we probably can’t help. These are usually scams and not even legitimate businesses.

To learn more, visit our TCPA cornerstone post, How Do I Sue a Telemarketer for Unwanted Calls. Ready to see if you have a case? Contact us online, by email brian@mahanylaw.com or by phone at 202-800-9791. Cases handled nationwide. There is never a fee unless we win.

The post Navy Federal Credit Union Pays $9.25 Million to Settle Robotexts Suit appeared first on Mahany Law.

Below is our latest investor fraud video, this one on GPB Capital. A full transcript follows along with a link to our GPB Capital Loss Recovery information page.

Hi. I am Attorney Brian Mahany. For over 30 years I devoted my life to protecting the public from fraudsters. My career began as a police officer. Later I became a prosecutor and now I am a lawyer representing victims of Ponzi schemes and investment frauds. I traded in a badge and a gun for a briefcase but the work is pretty much the same.

In this short 3 minute video we discuss GPB Capital and whether it is a Ponzi scheme. I think it is and will tell you why and what you can do before it is too late.

All Ponzi schemes ultimately collapse under their own weight and we certainly think that GPB Capital is a Ponzi scheme and that it will collapse in 2020. Let me tell you why.

Using a network of stockbrokers and financial advisors, GPB raised $1.5 billion from thousands of investors. The money was to be used to fund the purchase of auto dealerships and waste-management businesses. Many iIvestors were promised that their investment was safe and would produce an income stream for many years.  Let me be blunt: GPB is not safe; we don’t believe that investor funds were used for their intended purposes and we don’t think many investors will get back their hard earned money.

Don’t take my word for it. For many months GPB has failed to release required financial statements. Their outside auditor quit. A inside whistleblower testified that investor funds were diverted for improper purposes. The FBI, SEC, the Financial Industry Regulatory Authority and state authorities from New York and Massachusetts have all commenced investigations.

Want more? The Justice Department indicted GPB’s Chief Compliance Officer and charged him with obstructing the regulatory investigations.

Despite all these red flags, many investors continue to sit on the fence. Why? Nobody wants to be the victim of a fraud. And the typical GPB Capital investor is financially sophisticated.

To learn more, the URL for our GPB Loss Recovery page appears at the end of this video. Simply pause the video at the end to learn more and for our contact information.

Assuming GPB Capital is a fraud, the way to collect is from the brokers and financial advisers peddling this garbage. Federal law says that these brokers and financial professionals had a duty to conduct proper due diligence into the product and ensure the investment was suitable for their clients.

To learn more, visit our GPB Loss Recovery page or contact us. There is no obligation. The information is on the screen. Thank you for watching. We welcome your calls.

For more information contact attorney Brian Mahany at 202-800-9791 or visit our GPB Capital Loss Recovery page.

The post GPB Capital The Next Billion Dollar Ponzi Scheme? appeared first on Mahany Law.

Beef Processors and Meat Packers Are Hurting America’s Cattle Ranchers – Learn What You Can Do to Help Protect Our Farms and Ranches

I live and work in Texas. This is cattle country. As beef prices soared in supermarkets, the ranchers I spoke with says they are actually getting paid less. So where is all the money going?

There are just two possible answers, the grocery stores or the meat packers… giant agribusiness conglomerates like JBS USA, Tyson Foods and Cargill.

We have all seen meat and many other basics fly off grocery shelves as panicked buyers stock up. In most instances, prices didn’t change. If grocery stores were behind the price gouging all prices would have increased. In fact, the grocery stores have been big advocates for consumers as they are the ones that receive the grief from consumers. As people are losing their jobs and pinching pennies, some prices like that for meat have increased dramatically.

The timing couldn’t be worse and there is no rational explanation except greed.

Key U.S. senators are investigating why some meat packers are making record profits during the pandemic. Iowa Senator Chuck Grassley said, “Beef is flying off grocery shelves but farmers are seeing prices go down. If packers are illegally manipulating markets during crisis, we need USDA & DOJ & CFTC to investigate and help farmers. Four companies control 80% of market & they’re taking advantage.”

Senator Grassley and three other senators from big cattle ranching states have called upon the Justice Department to investigate. The profit margins for the meat packers surged to over $600 per head of cattle while the prices paid to farmers fell. The U.S. Department of Agriculture and the Commodity Futures Trading Commission are also investigating.

Tyson Foods and Cargill, two companies we believe are reaping the rewards of record profits during the pandemic, say they are trying to “help” farmers. Tyson said it was increasing payments to ranchers during the grocery food shortages. Ranchers say the premium offered is just $5 per 100 lbs. According to a New York Times interview, a Nebraska cattle producer said, “They help but they’re not going to make whole the losses we’re taking.”

Who Are America’s Big Meat Packers?

With the except of Tyson foods, most meat packers are not household names. America’s top five beef producers are:

• JBS USA Holdings… 77,000 employees
• Tyson Foods… 122,000 employees
• Cargill… 28,000 employees
• National Beef Packing… 8,100 employees
• OSI Group… 20,000 employees

Some of these big agribusiness conglomerates are no strangers to controversy.

Cargill has racked up $141 million in environmental fines and penalties in recent years. They have also paid almost $8 million in fines for price fixing and anti-trust violations.

Tyson has paid $67 million in environmental fines, $9 million for foreign bribery related charges and $1.5 million for accounting deficiencies.

Since 2000, JBS USA has paid a combined total of $34,709,000 in fines and penalties. National Beef Packing, a Brazil headquartered business and OSI had much smaller penalty numbers.

Price Fixing and CFTC Whistleblower Rewards

Congress has long been wary of the ability of the big beef processors to fix or control cattle prices. There have been several legislative attempts to prevent meat packers from also owning livestock.

Pricing fixing is against the law. Conspiring with other meat packers to fix prices paid to farmers is an antitrust violation. Proving those violations isn’t easy, however. It requires an insider.

Although there are no direct whistleblower reward programs under the antitrust laws, the Commodity Futures Trading Commission (“CFTC”) has a robust (and often overlooked) whistleblower reward program. The CFTC regulates the futures market for beef and certain other meats such as pork and poultry.

Under the CFTC Whistleblower Program, whistleblowers with inside information about violations of the Commodity Exchange Act can receive a monetary reward of between 10% and 30% of whatever the agency collects from wrongdoers. Since the program began in 2014, the agency has paid approximately $100 million in rewards.

To qualify for a reward, there must be a violation of the Commodity Exchange Act and the sanctions ordered must exceed $1 million.

Price fixing, price manipulation and the use of “deceptive devices” to manipulate commodity prices are all actionable under the Commodity Exchange Act. Since the CFTC regulates beef futures, the agency has jurisdiction to investigate and prosecute these cases.

The CFTC Whistleblower Program also has substantial anti-retaliation provisions to protect workers. No employer or manager can impede an individual from communicating directly with the CFTC’s staff about potential violations. It is also illegal to enforce a confidentiality agreement or pre-dispute arbitration agreement regarding such communications. Victims of retaliation are entitled to reinstatement, back pay, court costs, expert witness fees, and attorney’s fees.

If the beef processor is a public company, the SEC could also have jurisdiction. Like the CFTC, the SEC also maintains a whistleblower reward program.

Proving price fixing isn’t easy without an insider. That is where whistleblowers can help. Last year the CFTC announced that 40% of its successful enforcement cases began with a whistleblower tip. With Congress and multiple agencies focused on companies that are gouging consumers during the pandemic, now is the best time ever for whistleblowers with inside information about beef price manipulation to step forward.

Mahany Law Whistleblower Team

The whistleblower lawyers at Mahany Law have helped whistleblowers recover over $100 million in rewards. Our mission is simple, empower whistleblowers to stop fraud and greed, help our clients receive the highest rewards possible and protect them for illegal retaliation.

We have thousands of text searchable posts on our website. If you have a question, we have an answer.

To see if you qualify for a reward, contact us online, by email brian@mahanylaw.com or by phone at 202-800-9791.

We accept CFTC and other whistleblower cases on a contingent fee basis meaning we don’t get paid unless you get paid. All inquiries are protected by the attorney – client privilege and are kept strictly confidential. Cases accepted anywhere in the United States. Foreign bribery cases accepted worldwide.

The post Profiteering in the Beef Industry? Whistleblower Opportunity appeared first on Mahany Law.

Are Uber and Lyft Illegally Depriving Drivers of Sick Pay During Coronavirus Pandemic?

We have long said that Uber and Lyft drivers are employees and not independent contractors. How drivers are classified makes a world of difference. If properly classified as employees, drivers are entitled to guaranteed minimum wages, overtime pay, workers compensation and many other benefits. In California, that could also mean paid sick leave.

Companies, of course, like to classify workers as independent contractors. As contractors, drivers have virtually no rights.

The classification battle between Uber and Lyft and their drivers has been going on for years. Both companies (especially Uber) have spent millions of dollars lobbying to get state legislatures to keep drivers as contractors. They have also included language in their drivers’ agreements that make it difficult for drivers to sue the company or participate in class actions.

The class action waiver language in the drivers’ agreements is especially important because it is nearly impossible to find a lawyer to fight a single case. The costs are simply prohibitive.

Coronavirus and Uber, Lyft

On March 12^th, Lyft driver John Rogers sued Lyft. He claims the company failed to pay him sick days as required under California law. Rogers says that by not paying drivers for sick time, Lyft is endangering passengers who could be exposed to COVID-19 (coronavirus).

The Centers for Disease Control and Prevention (CDC) says that anyone who is feeling ill should self quarantine to stop the spread of the deadly coronavirus. Because Lyft doesn’t acknowledge that their drivers are employees, people like John Rogers may keep driving because they need the pay in order to support their families.

Rogers brought his lawsuit as a class action meaning he is asking the court to provide relief for all California drivers. Rogers lives in North Hollywood and has been driving for Lyft since 2014.

Earlier this year, California Assembly Bill 5 took effect. That law says that ride share drivers should be considered employees. Lyft, however, is challenging that designation. In fact, Lyft and several other companies have pledged $90 million to overturn the law.

In addition to asking that the court extend any relief to all California drivers denied sick leave, Rogers also asked the court for emergency relief. He says sick drivers need help right away.

Lyft is opposing the lawsuit. The company says that Rogers gave up his right to sue when he became a driver and agreed to the terms of Lyft’s driver’s agreement. (Uber has a similar mandatory arbitration clause.)

The most recent form of Lyft’s driver agreement says,

“Lyft’s Terms require individual arbitration of ‘ALL DISPUTES AND CLAIMS BETWEEN US,’ including “any dispute, claim or controversy, whether based on past, present, or future events, arising out of or relating to: this Agreement and prior versions thereof . . . , the Lyft Platform, the Rideshare Services . . . your relationship with Lyft, . . . any payments made or allegedly owed to you . . . any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, expense reimbursement . . . . The Terms also provide that claims may be brought ‘ONLY IN AN INDIVIDUAL CAPACITY’ and the ‘arbitrator may award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual claims.’’”

In other words, Lyft says drivers give up their right to sue the company AND give up their right to participate in a class action.

Does the coronavirus pandemic have any impact on the debate?

Maybe not. John Rogers is a Lyft driver but California Uber drivers have filed a similar claim and have received the same response. It seems that Uber and Lyft would rather endanger the public than follow the law and pay sick workers as required by California law.

The Lyft case is assigned to U.S. District Court Judge Vince Chhabria in San Francisco. Perceived to be sympathetic to drivers, even he is balking at their request.

In a hearing Thursday, he told the parties that he is not sure the driver’s arguments rise to the level of a true emergency. Because ridership is way down, most drivers haven’t worked enough hours to qualify for paid sick leave. There is also the issue of the just enacted federal Families First Coronavirus Response Act which applies to both employees and independent contractors. Drivers probably get paid more under the federal law then other California’s law.

One day after the parties met in court, Judge Chhabria ordered Lyft to explain what it is doing to assist Lyft drivers. Specifically, he asked “First, how is Lyft helping drivers who have symptoms consistent with COVID-19? (This question is not limited to drivers who have been diagnosed.) Second, how is Lyft helping other drivers (regardless of whether they are sick) whose income streams have been decimated as a result of the pandemic? This brief should contain no legal argument—just factual information about what Lyft is doing to alleviate the hardships being suffered by its drivers.”

It is unclear how the court will rule. While we think the drivers will ultimately prevail, the court’s hands are tied by the Federal Arbitration Act and the Supreme Court which says courts should enforce arbitration clauses in contracts. We think the drivers may lose this battle but will ultimately win the war. Of course, we think Uber and Lyft will continue to spend tens of millions of dollars to oppress drivers and keep them as underpaid “servants” with few rights.

The present court fights are about paid sick leave. We worry about drivers even making minimum wage. With nationwide coronavirus “stay at home orders” , drivers have little or no work.

Last week Business Insider interviewed one Uber driver in Hawaii who saw his income plunge from $200 per day to $25. “I currently earn $2.50 per hour, on top of the exposure to riders who possibly carry the virus,” he told Business Insider. “I cannot for my own sanity justify to myself why I would jeopardize the health and well being of other riders and of course my own family’s.”

Another driver reported his income dropped from $1,000 per week to just $16.

[Ed. Note: We once filed similar claims on behalf of thousands of Uber drivers all over the United States. We lost like so many other law firms. Unfortunately, the courts upheld the class action waivers and mandatory arbitration provisions in all of our cases.

We still provide tons of Uber and Lyft content on our website but are no longer representing rideshare drivers*. For more information, visit our Uber Lawsuit settlement page. Although we are no longer accepting new employment claims for rideshare drivers, we wish our driver friends the best. Hopefully political winds will soon change in states other than just California. If they do, we will be ready.

*We continue to represent victims of sexual harassment and sexual assault. Visit our sister site for more information.]

The post New Push by Uber and Lyft Drivers – Coronavirus Update appeared first on Mahany Law.

The FBI arrested a Russian rapper living in Miami for cryptocurrency money laundering. Everyone has heard of money laundering but cryptocurrency laundering is a thing too.

Photos of Maksim Boiko a/k/a Maxim Boyko from FBI Probable Cause Affidavit

Last week Maksim Boiko a/k/a Maxim Boyko a/k/a Gangass was arrested by federal agents in Miami. He had been reportedly in the United States since January. The FBI filed felony money laundering charges on March 27^th.

We obtained from court officials in Pittsburgh, FBI Special Agent Samantha Shelnick’s affidavit detailing the government’s complaint.

S.A. Shelnick says she investigates “computer intrusion and computer-related financial fraud” cases. She says 29 year old Boiko is a Russian rapper who came to the U.S. in January. When he came into the U.S. he was carrying $20,000 in cash. Shelnick says his Instagram account shows him photos holding large amounts of U.S. and foreign currencies.

Although possession of large amounts of cash isn’t illegal, money laundering is. The FBI says Boiko is tied to the email account plinoffical@ me.com. They say that account was used to open an account at BTC-e in 2017. BTC-e was a virtual currency exchange that was seized by the feds in connection with exchange of criminally derived funds. When the feds seized the exchange’s website, they were able to trace deposits of $387,694 into Boiko’s account at BTC-e.

The Plot Thickens – “I Got You Bro!”

The FBI now says that they believe Boiko was “money laundering for a significant cybercriminal known by the online moniker “Moneybooster” by providing Moneybooster with a foreign bank account for the purpose of receiving funds attempted to be stolen from U.S. victims of cybercrime.”

On March 20, 2017, “Moneybooster” had a chat with gangass@ exploit.im believed to be Boiko. Moneybooster asked Boiko for a corporate account “that could receive a wire of about “200-300k.”

Within minutes, Boiko responded by providing the an account registered to a company in Hong Kong and using the Bank of China. “After receiving the information, ‘Moneybooster’… informed gangass [Boiko] that “I’ve sent around 300k.”

Boiko allegedly responded, “[g]ot you, bro!”

That transaction failed but the feds say that a simultaneous transfer was attempted from a victim in California to the same account. The transaction thankfully was stopped by an alert bank employee at Chase who thought the transfer looked suspicious.

In other examples allegedly tied to Boyko, the feds say that in October 2017, a fraudulent wire in the amount of $98,780 was initiated from a New York based religious institution’s Chase bank account to an offshore account . Chase stopped the wire before it left the bank and the church suffered no loss. But in another exchange that month the FBI obtained chats on a phone where one party says, “[h]oly shit you did, you transferred it. You’re like a wizard.”

A Money Laundering Ring for Cybercriminals?

The FBI’s Pittsburgh field office claims it has been investigating a transnational organized crime ring that uses the name QQAAZZ. They say this ring launders money for cybercriminals. Supposedly QQAAZZ maintains “hundreds of bank accounts at financial institutions in numerous countries throughout the world, including the United Kingdom, Portugal, Spain, Germany, Belgium, Turkey and the Netherlands.”

To open corporate bank accounts, QQAAZZ members registered dozens of shell companies that conducted no legitimate business activity. Using the corporate registration documents, QQAAZZ members then opened corporate bank accounts in the names of the shell companies at numerous financial institutions within each country.

The group is so brazen that Agent Shelnick claims it openly advertises its money laundering services, albeit on the dark web. “QQAAZZ advertises its cash-out and money laundering services on exclusive, underground, Russian-speaking, online cybercriminal forums, including Mazafaka and Verified. In one post QQAAZZ advertised, ‘a global, complicit bank drops service.’”

The FBI says cybercriminals use malware to hack into people’s computers. Once there, they use log in information found on computers to wire money. Wires into corporate accounts have less scrutiny. That is where QQAAZZ services come in. The FBI says that the organization will launder the money into offshore shell accounts in exchange for a fee of between 40% and 50% of the proceeds. (**An excerpt of Special Agent Shelnick’s affidavit detailing how the scheme works appears at the end of this post.)

Overall, the FBI says that QQAAZZ has helped launder tens of millions of dollars in stolen funds including money laundering through cryptocurrency exchanges and accounts.

Cryptocurrency Money Laundering, Fraud Recovery and Whistleblower Rewards

Cryptocurrency fraud and cyberhacking are relatively new. The technology used by fraudsters often evolves faster than law enforcement’s response.

The fraud recovery lawyers at Mahany Law concentrate on helping victims of fraud get back their losses from cyberhacking. If your accounts were hacked and money transferred offshore, we probably can’t get it back. But sometimes we can hold third parties responsible for those losses.

We also help whistleblowers with information about phony cryptocurrency ICOs collect rewards for stepping forward and reporting the scam.

To learn more, visit our ICO and cryptocurrency fraud recovery page. We also help with cybersecurity whistleblower rewards.

Ready to speak with someone? We can be reached online, by email brian@mahanylaw.com or by phone at 202-800-9791. Fraud recovery services provided nationwide. Whistleblower cases handled worldwide. All inquiries are protected by the attorney – client privilege and kept strictly confidential.

**Details from the Special Agent Shelnick on how the QQAAZZ scam works:

QQAAZZ’s service generally operated in the following manner:

(a) cybercriminals with unauthorized access to a victim’s bank account contacted QQAAZZ via Jabber, a secure online instant messaging software, seeking a recipient bank account to which the cybercriminal could send the victim’s stolen funds via electronic funds transfer;

(b) QQAAZZ provided the cybercriminal with the details of the specific bank account designated to receive the stolen funds;

(c) the cybercriminal initiated, or attempted to initiate, an electronic funds transfer from the victim’s bank account to the recipient account provided and controlled by QQAAZZ;

(d) QQAAZZ received the stolen funds in its recipient bank account;

(e) QQAAZZ withdrew (i.e., “cashed-out”) the funds, transferred the funds to other QQAAZZ-controlled bank accounts for withdrawal, or transferred the funds to illicit “tumbling” services where the funds were converted to cryptocurrency;

(f) QQAAZZ returned the stolen funds to the cybercriminal minus QQAAZZ’s fee, which was typically between 40 to 50 percent of the total amount of stolen funds.

The post Cryptocurrency Money Laundering? appeared first on Mahany Law.

What Does the Coronavirus Pandemic Have to Do with Monsanto’s Roundup and Thousands of Cancer Claims? NOTHING but Monsanto Wants to Use the Pandemic as an Excuse to Back Out of Settlements

Here is a headline that doesn’t surprise us, “Bayer said to be Reneging on Roundup Settlement Deals as Virus Closes Courthouses.” Many courthouses have temporarily closed their doors to the public but the justice system hasn’t shut down. More cases are being heard by video conferencing while jury trials are put on hold. None of this gives the multi-billion dollar Bayer Monsanto conglomerate the right to not pay cancer patients, especially when if cases have already settled.

Bayer is the parent company of Monsanto, maker of such dubious unsafe products such Roundup, PCB’s and Agent Orange. The company has a disastrous track record of killing consumers and military members. Although the company vigorously denies those allegations, juries have been saying otherwise.

Over the last two years Monsanto lost several high profile cases involving consumers that have developed Non-Hodgkin’s Lymphoma after using their popular weed killer, Roundup. The World Health Organization links the active ingredient in Roundup, glyphosate, to cancer.

The company continuously denies the cancer claims. It cites studies that show the product is safe but there are disturbing allegations that Monsanto secretly funded some of the so-called independent studies. There are also credible claims that the companies hired by Monsanto to do testing were convicted of fraud.

After losing consecutive three trials, Monsanto and Bayer quietly entered into settlement negotiations to settle the estimated 48,000 pending claims against them. We thought there was global resolution. Although not every cancer victim would accept the settlement terms, most would.

It is simply impossible to have 48,000+  trials and the cost for each trial is at least $100,000. It simply makes sense to settle. With losses of between $78 million and $2 billion per case, Monsanto would quickly go bankrupt if every case went to trial and won. The company may be worth billions but it would quickly run out of cash.

The company wisely choose to settle. Now it apparently has changed its mind. U.S. Right to Know reports the company is using the coronavirus pandemic as a way of backing out.

While Bayer’s stock price has certainly been impacted by the pandemic, the company is still worth far more than the estimated $10 billion needed to fund the settlements. In fact, we think the damages should be higher.

The estimated death rate from COVID-19 is between 2 and 4%. Those most at risk are people with compromised immune systems. That certainly means folks suffering from cancer. If anything, Bayer should be putting more money into the settlement.

Like always, Monsanto is in full denial mode. The company says,

“We’ve made progress in the Roundup mediation discussions, but the COVID-19 dynamics, including restrictions imposed in recent weeks, have caused meeting cancellations and delayed this process…  As a result, the mediation process has significantly slowed, and realistically, we expect this will continue to be the case for the immediate future. During this time, we will continue to do whatever we can to help combat the global COVID-19 pandemic, consistent with our vision of ‘health for all, hunger for none.’ We cannot speculate about potential outcomes from the negotiations or timing, given the uncertainties surrounding the pandemic and the confidentiality of this process, but we remain committed to engaging in mediation in good faith.”

Their excuse is pure B.S. Settlement negotiations have not been impacted by the novel coronavirus. Mediations continue throughout the United States. Today they may be handled by phone or video conference but they continue.

In August 2018, former school groundskeeper DeWayne Johnson was awarded $289,000,000.00 after a California jury found that he likely contracted cancer after using Roundup at work. Two years later – and long before the coronavirus pandemic – Johnson still hasn’t been paid a dime. Mr. Johnson is suffering from stage 4 cancer. At the rate Monsanto stalls payments, he and many other cancer suffers will likely die before they receive a penny.

Most recently, the company quietly agreed to pay $39.5 million to settle a class action lawsuit that the company had improper warning labels on its glyphosate weed killer products. In addition to the cash, the company also agreed to beef up its warning labels in the United States.

A few big box stores have pulled Roundup from shelves but the company continues to advertise Roundup heavily.

While it’s true that new jury trials can’t proceed during the pandemic, Bayer Monsanto shouldn’t be allowed to delay payments another day. In fact, given the dangers of coronavirus to those suffering from cancer, the company should be paying even more.

We have over a dozen Roundup posts on our website. Please visit our Roundup lawsuit resources page and our cornerstone page for Roundup Cancer Claims. We have two must see videos that can be accessed from either link above.

Are you presently suffering from Non-Hodgkin’s Lymphoma or did a loved one die from NHL? If yes and if you / they were a user of Roundup you may have a claim. It’s not too late to get a piece of the settlement monies although the statute of limitations (time period to file a claim) varies greatly from state to state. In some states it may already be too late. If you are interested in filing a claim don’t delay.

To speak with a lawyer and learn whether you qualify, contact attorney Brian Mahany online, by email brian@mahanylaw.com or by phone at 202-800-9791. Cases handled nationwide. We do not charge any legal fees unless we are successful in recovering money for you.

The post Bayer Monsanto Welshing on Cancer Settlements? appeared first on Mahany Law.

Were You Illegally Charged Pay by Phone Fees on Your Mortgage?

Is Your Mortgage Company Charging You Illegal Pay by Phone Fees? In Many States, Pay-to-Pay “Convenience Fees” Are Illegal.

Most financial service companies give consumers several options to make their monthly mortgage payments. Some consumers may choose to pay bills by phone using an automated system or speaking with a live customer representative. Others continue to mail their payments each month.

Today many people pay their bills today online or by telephone. Giving consumer the ability to pay bills electronically saves the hassle of writing checks and hoping they are received on time. Some mortgage companies, however, are gouging homeowners with ridiculous online fees, “convenience” charges and telepay service charges. In many states, these fees are illegal.

MahanyLaw is investigating these fraudulent practices. Suing your bank over a $15 fee isn’t practical. It would be nearly impossible to find a lawyer to take such a case and the court fees in most jurisdictions are at least $100.

Banks and loan servicers know that even if their fees and surcharges are illegal, homeowners are virtually powerless to do anything about it. That is why we are seeking to launch several class action cases against banks that gouge their customers.

States Where Phone and Online Convenience Fees Are Illegal

Several states have enacted consumer protection statutes that either limit or prohibit so called convenience fees.

States where pay by phone fees for mortgage payments are restricted include:

• California
• Florida
• Massachusetts
• Michigan
• North Carolina
• Texas
• Washington
• West Virginia

If you were charged pay-to-pay convenience / pay by phone fees in these states, you may be entitled to a refund of those charges.

What Will a Class Action Do for Me?

We believe pay by phone fees for mortgage payments are either forbidden or restricted in the 8 states listed above. It takes about fifty cents (50¢) to process a mortgage payment by phone but some banks and mortgage companies are charging $15. Other lenders have failed to disclose these fees in their loan documents.

We are planning class actions to claw back these surcharges and return the money to borrowers. In some states, borrowers may also be entitled to damages. Hopefully these lawsuits will teach banks a lesson they won’t quickly forget. By calling the court’s attention to these illegal practices, we hope to prevent similar scams in the future.

The CFPB and Phone Convenience Fees

Banks should know better than to charge excessive pay by phone fees. In July 2017, the government’s Consumer Financial Protection Bureau CFPB warned banks about telepay surcharges. The agency’s director Richard Cordray said, “The Bureau is warning companies about tricking consumers into more expensive fees when they pay bills by phone. We are concerned that companies are misleading consumers about pay-by-phone fees or keeping them in the dark about much cheaper or no-cost payment options.”

Did bank’s listen? Unfortunately many did not.

States and Pay That Restrict Phone Fees

The CFPB doesn’t prohibit pay by phone and other convenience fees. They simply want banks to be transparent about their fees and ensure the fees aren’t excessive. At least eight states (California, Florida, Massachusetts, Michigan, North Carolina, Texas, Washington and West Virginia) have even more restrictions.

We are interested in speaking with homeowners in these states that have paid fees or surcharges to pay their mortgage by phone or online. We call these fees “pay-to-pay” because you are forced to pay a fee simply to pay your bills!

My State Isn’t on the List, Can You Help Me?

The eight states listed above have very consumer friendly laws designed to protect consumers against predatory billing practices. That doesn’t mean homeowners in other states aren’t protected, however.

Most home mortgages written in the United States are backed by the Federal Housing Administration (FHA), Fannie Mae or Freddie Mac. These agencies have rules protecting borrowers from undisclosed fees. Even fees that are disclosed, mortgage companies are not allowed to charge for more than the cost of the service. If it costs 50¢ to process a pay-by-phone fee, they shouldn’t be charging $14.95 for the service.

Homeowners Sue Freedom Mortgage

We have long been involved with investigations into Freedom Mortgage. In 2016, Freedom paid $113 million in penalties for violating FHA rules.

In October of last year, Neri and Leonila Urbina filed suit against Freedom Mortgage company in California. The couple own a home in Bakersfield.

The Urbinas elected to make their payments by phone. Each time they did so, they were charged a $15 fee. Over the life of a 30 year mortgage, those fees would add up to $5,400!

When the Urbinas checked their loan documents, they realized that Freedom was limited to only charging fees that were authorized by the FHA. Pay-to-pay fees are not authorized.

The Urbinas case is filed as a class action on behalf of all California residents with home mortgages serviced by Freedom Mortgage.

Freedom denies the charges. They say that phone service charges are common in the industry and cite to similar charges imposed by U.S. Bank, Mr. Cooper and PennyMac. (Do you remember when you were a child trying to explain to your parents that you shouldn’t be punished because other kids were doing the same thing?)

Freedom also argues that the fees charged to the Urbinas were somehow their own fault. “[T]o the extent Plaintiffs incurred any convenience fees, they did so not as a result of any breach by Freedom Mortgage, but as a result of their own voluntary decision to use an optional payment method with a fee, rather than any of the myriad of other payment methods available without convenience fees.”

It’s not up to consumers to search through thousands of pages of complex banking regulations to know what charges are legal and what charges aren’t. That is the bank’s responsibility and they were warned about pay by phone fees.

Who Else Is Being Sued for Pay by Phone Fees?

In addition to the phone surcharge lawsuit against Freedom Mortgage, we are aware of similar allegations against both Flagstar Bank and M&T Bank in California. And let’s not forget perennial serial violator Wells Fargo. We are told that they are doing the same thing in Florida.

I Was Charged Phone Service Fees, How Do We Get Started?

To bring a class action, we need to show these charges are being universally charged by a specific mortgage company. That is where you can help. We need to hear from you. As part of investigation, we need to show what banks are charging these fees.

Why Mahany Law?

Consumers have choices when filing a lawsuit. Few law firms, however, have successfully brought class action lawsuits.

There are several online class action organizations that are actively seeking pay-by-phone cases. One company presently advertising for mortgage pay-to-pay phone fees says, “One of the attorneys working with [name of publication] may then reach out to you directly.” In other words, your name and contact information are being sold to a law firm that isn’t clearly identified.

With Mahany Law, you know who you are dealing with; a law firm that has been successful in bringing claims against mortgage lenders. In fact, we served on the team of lead lawyers in the 2014 case on behalf of the United States against Bank of America; a case that recovered $16.7 billion dollars. The largest successful recovery against a single bank in U.S. history.

To learn more, send us your name, contact information, state where your home is located, the name of your mortgage servicer (company receiving your mortgage payments) and information about the surcharges you are paying. You can contact us online or by email at brian@mahanylaw.com. All inquiries are kept strictly confidential.

Disclaimer. All inquiries are kept confidential. Remember, this is an investigation. We will respond to everyone who contacts us but that doesn’t mean we are your lawyer. If we believe we can help you, we will let you know and discuss next steps.

The post Can My Mortgage Company Charge Online or Pay by Phone Fees? No! appeared first on Mahany Law.

Coronavirus Whistleblower Reward Post

There are two adages I remember about investment fraud. When times are good, we hear the phrase oft used by President John F. Kennedy, “A rising tide lifts all boats.” But when the economy sours, we hear Warren Buffet’s famous quote, “You only find out who is swimming naked when the tide goes out.”

Taken together, those two sayings mean that when the economy is growing, Ponzi scheme artists and swindlers can easily hide their crimes. When the market crashes and everyone wants their money, however, criminals are quickly exposed.

Look at Bernie Madoff. As America entered the Great Recession in 2008, Bernie’s days were numbered. As long as more people were depositing money with Madoff than withdrawing money, his Ponzi scheme stayed afloat. Once the market softened, however, everyone wanted their cash. On December 11, 2008, Madoff was arrested. Prosecutors say his defrauded clients of approximately $64.8 billion.

Since then, America has enjoined the biggest bull market in history. As America entered lockdown in March of 2020, the great bull run came to a screeching halt. We suspect that in the coming months, many new Ponzi schemes, accounting frauds and scandals will be uncovered. All of those represent prime whistleblower opportunities.

Harry Markopolis was the whistleblower in the Madoff case. For 10 years he told the SEC that Madoff was running a Ponzi scheme. No one listened.

Since then, the SEC and other regulatory bodies are determined not to be caught sleeping on the job.

If the fraud involves a publicly traded company, the SEC has the ability to pay cash rewards of between 10% and 30% percent of whatever the Commission recovers from the wrongdoer. Big accounting firms that audit these companies can also be fined.

Luckin Coffee Stock Crashes 80% on Fraud Rumors

One of the first casualties of the COVID-19 market correction is Chinese based Luckin Coffee. Earlier this month its stock (symbol LK) crashed 82% in one day after reports surfaced that the company cooked its books and inflated sales by $300 million.

The longer the coronavirus pandemic lasts, the more stock prices are likely to be battered. While we believe the market will recover, it wont do so before many other frauds and questionable accounting scandals are first uncovered.

Things We Look for in SEC Whistleblower Cases

We are looking for insiders with information about Ponzi schemes and public companies who are misleading investors. Specifically, we are looking for inside information related to:

(1) False financial performance metrics and inflated sales figures,

(2) Materially false financial statements that overstate a company’s financial health or are otherwise unreliable,

(3) Insider trading, and

(4) Ponzi schemes and other frauds

The SEC can also issue rewards for information about companies engaged in the bribery of foreign government officials.

What’s a Couple Trillion Dollars Amongst Friends?

It’s not just some public companies that are about to be outed because of the falling market. Because our economy is teetering on disaster, the government has passed a stimulus bill with a whopping price tag of between $1.76 trillion and $2+ trillion. You know with that much money on the table there will be scams galore.

Because millions of Americans have already lost their jobs, Congress is pushing through these stimulus payments at a record pace. A small business borrower can get up to $10 million with virtually no processing or review requirements. Although these loans are limited to how the money can be used, we know that many will be abused. Ditto for all the other stimulus programs.

There is also billions being spent on ventilators, personal protective equipment and testing. Even Medicare is in on the act. Once again there will be massive amounts of fraud.

Federal prosecutors in Pittsburgh saved Kaiser Permanente from spending $7 million on N95 respirators that didn’t even exist. Prosecutors say it was a phony sale. U.S. Attorney Scott Brady said a Pittsburgh businessman “secured” a deal to deliver 39 million masks. The entire transaction was a fraud. “We believe we disrupted fraud. We are seeing fraud in every variation, but mostly in respect to N95 masks. We have an anxious public, and resources are strained.”

A Georgia man was arrested for trying to trick the VA out of $750 million in exchange for 125 million N95 masks. Prosecutors say he planned to run off with the money. Christopher Parris, age 39, faces 20 years behind bars. If guilty, we hope he serves every day of it.

The scheme was so large that it prompted a statement from Attorney General William Barr, “We will vigorously pursue fraudsters who exploit the COVID-19 pandemic to make money.  As this case demonstrates, even beyond the typical costs associated with unlawful behavior, COVID-19 scams divert government time and resources and risk preventing front-line responders and consumers from obtaining the equipment they need to combat this pandemic.  The Department of Justice will not tolerate this conduct, especially when it involves this kind of egregious attempt to target and defraud our nation’s treasures – our veterans.”

Lest you think these are victimless crimes, taxpayers are directly or indirectly picking up the tab on all these scams.

False Claims Act and Coronavirus Whistleblower Rewards

In addition to the SEC Whistleblower Program discussed earlier, the Federal False Claims Act also pays cash rewards. The Act allows private citizens with inside information about fraud involving a federal program or federal funds to file a complaint on behalf of the United States. Successful whistleblowers can earn a reward of between 15% and 30% of whatever the government collects from the wrongdoers.

Because the Act permits triple damages and huge penalties, the corresponding rewards can also be quite large.

With passage of the CARES Act and other stimulus programs, the government has adopted a “pay now, chase later” model that is ripe for fraud and abuse. We understand why the government needs to get funds into the economy quickly. Unfortunately that allows fraudsters to sneak under the wire. Hopefully many concerned citizens will become whistleblowers.

Mahany Law – America’s COVID 19 Whistleblower Lawyers

Long before the pandemic began, the whistleblower lawyers at Mahany Law have been actively pursuing fraudsters all over the world. In the process, we helped our whistleblower clients recover over $100,000,000.00 in reward monies. Real money for real heroes.

From former prosecutors to former police officers and former senior government officials, our dedicated team of whistleblower lawyers knows how to prosecute fraud cases.

For more information, visit our SEC Whistleblower Program and Government Contract False Claims Act information pages. Ready to see if you qualify for a reward? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. We handle whistleblower cases anywhere in the United States and the world.

The post Swimming with No Bottoms. Welcome to COVID-19 appeared first on Mahany Law.

Were You Victimized by a Bad Accountant or Tax Preparer? Do You Have Information about a Bad Tax Preparer? Keep Reading!

[Updated April 2020] The IRS has identified 10,000 tax return preparers who they say make too many errors. Errors that ultimately cost their clients money.  The IRS plans to visit approximately 2,500 of those preparers over the next several months.

Many people use professional tax preparers for their returns.  Wealthier individuals often use CPAs while folks with relatively simple returns prepare their own return or use a local tax preparation service.  Most services do a great job and several chains, like H.R. Block, have a formal training program.  Unfortunately, anyone can call themselves a “tax preparer” and prepare returns.

Over the last two years the IRS has begun to regulate the industry. There have been repeated calls for minimum competency standards and annual training on tax law changes. Although requiring training will probably increase the cost for some returns, certified public accountants and many larger preparer services already have excellent training programs in place.

Right now, to become a tax preparer one simply needs to register with the IRS and obtain a PTIN (IRS Preparer Tax Identification Number).

Insuring that paid preparers are competent is important. When a preparer makes an error, the taxpayer is left footing the bill. Some preparers will offer to pay penalties but many do not. Either way, the tax payer is left with an expensive audit to defend, the inconvenience and hassle of providing records and often, an unwelcome bill for additional tax, interest and penalties.

While I always recommend using a CPA or a full time tax accounting firm, I also recognize that there are some great preparers out there who are not accountants.  Before you try to save $10 and use the guy who does returns in his kitchen, however, ask what type of training he has and how often he takes refresher courses. (Remember, Congress changes the tax code every year.) Better yet, ask if he or she received one of the 10,000 letters from the IRS. If so, consider a different preparer.

Why Have Your Taxes Prepared by a CPA or Accountant?

The obvious reason is the training accountants and lawyers receive. Accountants have four years of college (7 for lawyers). They also must take a test before they are licensed.

Second, lawyers and accounts can represent you before the IRS if things go wrong. A simple preparer can file your return but represent you before the IRS if audited. (The IRS also allows “Enrolled Agents” who pass an exam to represent taxpayers before the IRS.)

In almost every state, lawyers and CPAs are subject to rigorous annual training requirements. It isn’t enough that an accountant passed an exam when licensed twenty years ago. There are no such annual training requirements for preparers who have a PTIN but nothing else.

Finally. most CPAs and lawyers have malpractice insurance. Anyone can make a mistake. If a mistake happens and you receive penalties assessed by the IRS, you want some assurance that your preparer can pay.

IRS Whistleblower Rewards for Reporting Bad Preparers

The IRS is currently cracking down on bad preparers. They should, they cost the government billions of dollars each year. They also cost their clients billions. Simply because you relied on your preparer’s bad advice doesn’t let you off the hook for what is owed to the IRS.

In 2016, the IRS and Justice Department prosecuted a Brooklyn, New York tax preparer for filing false returns on behalf of clients. Awilda Rosario was sentenced to 36 months in prison following her guilty plea. She owned and operated a tax preparation business called Edujas Multiservices Corporation. Rosario prepared false individual income tax returns that contained false schedules reporting business losses the taxpayers did not incur and attached schedules that reported inflated or phony deductions. She claimed phony fuel tax credits that the taxpayers were not entitled to receive.

It is one thing for a preparer to be sloppy. Some preparers, however, are criminals. They push phony tax schemes or knowingly file false returns. They do this to earn larger fees.

If you have inside information about a preparer knowingly offering phony tax shelters or helping taxpayers evade taxes, you may be eligible for a cash reward.

How much are the rewards? Typically 10% to 30% of whatever the IRS collects from the wrongdoers. Several years ago the IRS paid one whistleblower a $104 million reward! For more information, visit our IRS whistleblower reward page. Ready to see if you qualify for a reward? See our contact information below.

Suing a Tax Preparer for Bad Advice

Many who are reading this post learned the hard way that their preparer made a costly mistake. Can you sue your preparer? Yes.

Tax preparers are responsible for any interest and penalties that you may incur. Despite popular opinion, they are usually not responsible for the additional tax you owe. Why? Because had they not made a mistake, you would have owed this money anyway.

Legal fees and other damages are often recoverable as well.

For more information, visit our sister accounting malpractice site.

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Mahany Law is a full service law firm helping people who were victimized by bad accountants. We also are a whistleblower law firm that helps people with inside information about fraud recover cash rewards.

For preparer malpractice cases, we consider cases where damages are $500,000 or more.

For more information, contact Brian Mahany online, by email brian@mahanylaw.com, or by phone (202) 800-9791. All inquiries are protected by the attorney client privilege.

The post Thinning the Herd: IRS Plans 2,500 Preparer Inspections appeared first on Mahany Law.

Charles Ponzi May Have Originated the Term “Ponzi Scheme” but Today a Bigger Threat is Reloading – Fraudsters that Target Fraud Victims and Pose as White Knights, Private Investigators or Government Agents

[Original post October 2010, post supplemented and republished April 2020] Recently an unemployed woodsman from Washington state was convicted of nine federal offenses including blowing up his own mailbox (destruction of a mail box is a federal crime.) What was he doing? Trying to convince victims of a Ponzi scheme to give him money in exchange for information on where their assets were hidden. Information he never possessed.

While this crook was particularly inept, re-victimizing the victims of Ponzi schemes (commonly called “reloading”) is common.

Kevin Williams of Chehalis, Washington approached victims of an Atlanta based  $90 million dollar Ponzi scheme. Posing as an investigator, he began contacting victims and their attorneys offering information about where the proceeds of the Ponzi scheme were hidden. When no one would pay him, he made a homemade bomb and blew up his own mailbox, apparently to show victims that the information he had was so valuable that the Ponzi scheme fraudsters were trying to kill him. That didn’t work either.

Finally, Williams sent threatening letters to the victims and was subsequently arrested when he showed up in Atlanta for the Ponzi scheme trial armed with explosives and guns.

Williams appears to be a fool and thankfully was caught before he hurt someone or collected any money. Not all victims are so lucky.  I participated in a Ponzi scheme prosecution earlier this year in California in which a private investigator reloaded the victims and collected money from them by posing as federal agent.  He was ultimately convicted earlier this year for conspiracy to falsely impersonate a federal law enforcement officer.

A girlfriend of the original fraudster apparently was also able to raise tens of thousands of dollars, allegedly to “help” the victims “recoup” their losses.

In April 2020, we were approached by a woman in Florida who unknowingly hired a disbarred lawyer to file a lawsuit on behalf of her small business. Not only did the lawyer fail to file her lawsuit (he couldn’t because he didn’t have a law license), his inaction caused her to suffer additional business losses. Of course, the money she paid her “lawyer” was gone. The individual in question allegedly had a drug addiction.

Things went from bad to worse when another “lawyer” heard her story and offered to help go after the first lawyer. Trusting her new lawyer, she paid him what little money she had left. If you think you know the rest of the story, you are probably correct. He had been disbarred as well. Another example of reloading.

She tells us that she now has trouble trusting anyone.

Although these stories sound bizarre, ask any lawyer or investigator familiar with Ponzi schemes and fraud cases and they will tell you that reloading is all too familiar.

In many cases, victims of these economic crimes have lost just about everything. A “white knight” that promises to help them get their money back sounds to good to be true – and it often is. We want to believe in the basic goodness of people and many victims cannot even begin to believe that a person offering to help them could also be a fraudster too.

If the reloader is successful, the victims are usually left completely broke at that point, too broke to hire counsel to pursue their losses. Psychologically, the victims are often too humiliated to report the crime and too traumatized to ever trust anyone again. When the real help does arrive, the victims have already lost all trust and will often fail to cooperate. I know of one victim who had to be hospitalized after suffering a complete mental breakdown from being reloaded.

Even more shocking, in some instances, the original criminal is behind the reloading effort. Why? He already knows the victims vulnerabilities and can use a third party to take whatever money they have left. It also insures that many victims will be too embarrassed to report the crime and have too little trust to seek help in recovering their loss.

Courts are finally beginning to take Ponzi schemes and economic frauds seriously. We believe those criminals that seek to take whatever crumbs are left should suffer even harsher treatment.

A federal appeals court in 1998 did just that. Jeffrey Randall was a “reloader” who was convicted of mail and wire fraud, Federal law allows trial judges to enhance sentences if the victim of a crime is considered vulnerable. That enhancement is usually applied to victims because of their age or mental condition. Randall says it shouldn’t apply in reloading cases. Both the trial judge and appeals court disagreed.

Citing another federal appeals decision, the court said, “The ‘reloading’ scheme at issue here seeks out people who have a track record of falling for fraudulent schemes…Whether these persons are described as gullible, overly trusting, or just naive, their readiness to fall for the telemarketing rip-off, not once but twice demonstrated that their personalities made them vulnerable in a way and to a degree not typical of the general population.”

Reloading in the Digital Age

Now more than ever it is common for people who were scammed once to fall victim again. Today, fraudsters have the technology to spoof email addresses and telephone numbers to make it appear that the white knight is calling from a government agency. We know of one scheme where a victim paid a fee in an offshore sweepstakes scam. He had to pay a fee to claim his million dollar prize. It was a scam.

The man then received a call from someone claiming to be an FBI agent. The caller seemed legit and the caller ID reflected the call was coming from the government. He paid a second fee to collect his prize, this one for “court fees”. Obviously that was also a scam.

Agents tell us that victims that fall prey to telemarketing scams are often placed on a sucker’s list. That list is then sold on the dark web to other fraudsters. The theory is that people who fell for a scam are more susceptible to a reloading scam or future scams.

How to Avoid Reloading Scams

It’s hard for some people to admit that they have fallen victim to a scam. It can happen to anyone. The only thing worse then falling victim to a scam is falling victim a second time.

Rule number one. Never throw good money after bad. Know that you are likely to be approached by an someone claiming to be a private investigator, lawyer or government agent. Think about how that person found you?

Lawyers have strict rules against soliciting clients. Although those rules vary state to state, in most places they can’t pick up the phone and call you. Ditto for emails.

Private investigators? You can always check with the state to see if they are licensed. The better advice is to simply say no thank you. And government agents? Contact the agency at a number you find online (not one that “agent” gives you.) Also remember that the FBI, IRS, Customs and other law enforcement agents don’t ask you to pay fees for their assistance.

No matter how tempting, if you keep your money in your wallet you won’t become a victim again.

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Brian Mahany is a lawyer concentrating in fraud recovery. He is also an advisory board member of the International Association for Asset Recovery.   Brian has helped victims across the United States get back their hard earned money.

If you believe you have been the victim of a fraud or scam, do not be embarrassed to call. Today’s fraudsters are very sophisticated and you are certainly not alone. Our asset recovery lawyers can provide you a no obligation, no nonsense evaluation of your case. In many cases, we will handle your matter on a reduced fee or contingent fee basis.

Need more information? Contact Brian online, by email brian@mahanylaw.com or by phone 202-800-9791. All inquiries are confidential. Our fraud recovery services are mostly confined to cases against stock brokers, oil and gas investment scams. phony welfare benefit plans and tax shelters, nontraded REITs, captive insurance schemes and bad lawyers and accountants (professional malpractice). Minimum loss amount is $500,000 however we consider smaller cases if the fraud was by an insurance agent or stockbroker.

The post Revictimizing the Victims – "Reloading" Common in Ponzi Schemes appeared first on Mahany Law.

Next Wave of Medicare Fraud Will Likely Be Telemedicine Fraud (also Called Telehealth Fraud)

Many hospitals and physicians are now using telemedicine. Doctors hope to reduce the number of sick patients in their waiting areas. Hospitals are now turning to telehealth to keep patients worried that they may have coronavirus from clogging emergency rooms. Unfortunately, newly loosened rules spurred by the coronavirus pandemic have also attracted fraudsters.

Today millions of Americans are turning to telemedicine. (We use telemedicine, telehealth, tele-a-doc interchangeably however our favorite term remains “doc in a box”!) Many patients are using the technology for the first time. Hospitals, physicians and insurance companies love it because it is the best way to maintain social distancing.

To protect both healthcare workers and patients from coronavirus, Medicare and many insurance companies have increased payments for those providers using telemedicine. Previously providers received about half the rates as traditional in-office visits.

So many providers and insurance companies are rushing to promote telehealth that some predict over one billion visits this year.

The federal government also know says that doctors don’t have to be licensed in the same state as the patient if using telemedicine. The federal governments actions only affect Medicare but several states including California and Florida have also relaxed their practice rules.

The new Medicare rules say:

“Medicare has temporarily expanded its coverage of telehealth services to respond to the current Public Health Emergency. During this time, you will be able to receive a specific set of services through telehealth including evaluation and management visits (common office visits), mental health counseling and preventive health screenings without a copayment if you have Original Medicare. This will help ensure you are able to visit with your doctor from your home, without having to go to a doctor’s office or hospital, which puts you and others at risk of exposure to COVID-19.

• You may be able to communicate with your doctors or certain other practitioners without necessarily going to the doctor’s office in person for a full visit. Medicare pays for “virtual check-ins”—brief, virtual services with your physician or certain practitioners where the communication isn’t related to a medical visit within the previous 7 days and doesn’t lead to a medical visit within the next 24 hours (or soonest appointment available).
• You need to consent verbally to using virtual check-ins and your doctor must document that consent in your medical record before you use this service. You pay your usual Medicare coinsurance and deductible for these services.
• Medicare also pays for you to communicate with your doctors using online patient portals without going to the doctor’s office. Like the virtual check-ins, you must initiate these individual communications.
• If you live in a rural area, you may use communication technology to have full visits with your doctors. The law requires that these visits take place at specified sites of service known as telehealth originating sites, and get services using a real-time audio and video communication system at the site to communicate with a remotely located doctor or certain other types of practitioners. Medicare pays for many medical visits through this telehealth benefit.”

Now that several zoo animals and two house cats have tested positive for coronavirus, many veterinarians are also turning to telemedicine.

Will the Rush to Telehealth Mean More Medicare Fraud?

The Inspector General of Health And Human Services is worried that the suddenly relaxed rules will usher in a new wave of Medicare fraud.  (The Inspector General serves as the law enforcement agency for Medicare. Each state also has a Medicaid Fraud Control Unit that investigates Medicaid fraud.)

HHS spokesperson Michael Cohen says, “There are unscrupulous providers out there, and they have much greater reach with telehealth. Just a few can do a whole lot of damage.”

Biggest Telemedicine Fraud Targets?

We think the next wave of Medicare fraud involving telemedicine will involve genetic testing, durable medical equipment, coronavirus “emergency kits” and expensive pain creams by compounding pharmacies. Traditionally, these services or products would be prescribed after a patient visited their physician.

With telehealth, we worry dubious call centers will bombard seniors and others offering “free” products and services. When a patient agrees, a telemedicine doctor 1000 miles away will issue the prescription.

Feds Bust $2 Billion Genetic Testing Fraud Ring

Last September federal law enforcement officers busted a fraud ring responsible for $2.1 billion dollars in losses to Medicare. 35 people were arrested from all over the United States. The common theme was providers that were offering genetic testing. And most of these scams involved corrupt telehealth doctors.

Medicare rarely pays for genetic testing. It considers these tests to be “predictive” or useful for screening, something not covered by Medicare. These tests are reimbursable, however, to predict optimal chemotherapy regimens and to avoid exposing patients to ineffective or overly toxic treatment regimens.

According to the Justice Department, participants in the fraud ring were often not providing test results to the beneficiaries or the results were worthless to their actual doctors.  Some of the defendants allegedly controlled a telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme.

And how did they generate the prescriptions necessary to order these tests? By using corrupt doctors who screened patients via a short phone call if at all (telemedicine fraud). The genetic testing company defendants allegedly paid doctors to prescribe the tests, either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.

An HHS spokesperson said, “Unfortunately, audacious schemes such as those alleged in the indictments are pervasive and exploit the promise of new medical technologies such as genetic testing and telemedicine for financial gain, not patient care.”

Georgia Telemedicine Company Charged in $60 Million Fraud Scheme

Health and Human Services agents teamed up with the Secret Service and FBI in Savannah to lock up a Georgia woman who operated two telemedicine companies, Royal Physician Network, LLC and Envision It Perfect, LLC. Prosecutors say the companies  conspired to pay medical providers, like physicians and nurse practitioners, in exchange for obtaining orders for durable medical equipment (DME).

Durable Medical Equipment scams cost taxpayers billions of dollars each year. Common covered durable medical equipment includes:

• Air purifiers
• Blood sugar monitors and test strips
• Canes, crutches and walkers
• Commode chairs
• Continuous Positive Airway Pressure (CPAP) devices
• Hospital beds
• Infusion pumps & supplies
• Knee, shoulder, wrist and back braces
• Nebulizers & nebulizer medications
• Oxygen equipment & accessories
• Patient lifts
• Pressure-reducing beds, mattresses, and mattress overlays
• Suction pumps
• Traction equipment
• Wheelchairs and scooters (Do you remember the Scooter Store ads?)

You must have a prescription if you need durable medical equipment and want Medicare to pay for it. That’s where doc-in-the-box schemes into play. The DME companies pay doctors and nurse practitioners to spend a few second online or on video chat with patients and then write the necessary prescription.

After the arrest was announced, prosecutors asked anyone with information about other telemedicine fraud schemes to come forward. “This investigation is ongoing. As telemedicine becomes an increasing part of our healthcare system, vigilance in ensuring that fraud and kickbacks do not usurp the legitimate practice of medicine by electronic means is more important than ever.”

How Do I Report Telemedicine Fraud (and Collect a Reward)?

A Civil War era law allows whistleblowers with inside information about fraud involving federal funds or federal programs to collect a reward for reporting the fraud. The federal False Claims Act pays rewards of between 15% and 30% of whatever the government recovers from wrongdoers. Each year the government pays hundreds of millions of dollars in rewards.

The coronavirus pandemic has ushered in a new era of telemedicine. We believe if used appropriately, telehealth makes seeing a doctor safer and easier for many patients. Unfortunately, it is also an invitation for abuse.

As noted earlier we expect most telehealth fraud will be in connection with phony pain creams, durable medical equipment, orthotic braces, genetic testing, and coronavirus testing. We also expect to see a few bad mental health providers engage in classic overbilling schemes. They provide their patient with 15 minutes of counseling but bill for a 60 minute session.

Medicare fraud hurts all taxpayers. Never more in modern history will the United States government be strapped for cash. We will be paying the tab for the coronavirus pandemic response for years. By reporting fraud, you not only earn a reward, you also help fight greed and corruption.

To learn more, visit our Medicare fraud information page. We also invite you to our genetic testing (CGX testing) and DME pages (links above). Ready to see if you have a case? Contact attorney Brian Mahany online, by email brian@mahanylaw.com or by phone, 202-800-9791. Cases accepted nationwide. All inquiries protected by the attorney – client privilege and kept strictly confidential.

The post Telemedicine Fraud – Medicare’s Newest Fraud Frontier appeared first on Mahany Law.

Guest Author & Journalist L. Burke Files Explains How to Conduct Your Own Due Diligence on an Alternative Investment Fund Before Turning Over Your Hard Earned Money

[Ed Note: This guest post on alternative investment fund due diligence was written by our good friend L. Burke Files. We have known and worked with Burke for many years. His resume is impeccable as is his work.

Burke currently serves on the Management Committee of INTERFIMA, Luxembourg, Co-Founder of the International Due Diligence Organization, President of the American Anti-Corruption Institute, and President of his financial investigations business, Financial Examinations & Evaluations, Inc.]

Alternative Investment Fund Due Diligence

What is an Alternative Fund? It is any fund that invests in assets other than listed stock, listed bonds, and cash. Alternative investment Funds can invest in assets such as real estate, timber, shipping, auto leasing, art, or even tulip bulbs. Due Diligence is the process of doing the required research to make fully informed choices about anything, including an investment. Professional Due Diligence is not a noun, it is a verb. Admittedly this a bit of hyperbole.

Why the exaggeration? Because as both a licensed investigator and a Certified Due Diligence Professional, I see the corpses of fund frauds, oversights, and errors, knowing they could have been avoided or prevented.

For The Investors Looking In

Looking on the web and in some books on fund Due Diligence, the first due diligence exercise advocated is rating the fund or looking at the fund’s returns and then conducting an in-depth analysis of the fund’s returns against other funds in its class. This should be, in fact, the last step as you are looking to buy before you even know what you are buying.

The very first step is to check to see if the fund is duly incorporated, registered as a fund, and if the fund manager is licensed. If they are not, then why bother? My company was hired to conduct a comprehensive due diligence assessment on a fund, and we called back in 30 minutes to advise “don’t bother.” Why? The fund was incorporated, but not licensed or registered as a fund, and the fund had been operational for nine months!

The next step is to read the prospectus, the subscription agreements, and the investment manager’s agreement. Sales literature and presentations are about sales. It is perfectly acceptable for the material to possess a level of puffery as well as pretty charts and pictures. However, you are investing in a fund that has structure rules, so set the puffery aside, and read. If you can live within the rules and the terms are acceptable, we go on to the next step.

The directors, auditors, lawyers, custodians, and administrators of the funds also need to read these agreements every year. As a group, it is their collective duty to compare the contents of the documents against the investment choices and proscribed governance standards. One failed fund we looked at was a fund of funds that stated clearly that no more than 10 per cent of funds would be invested with any manager or in any class of funds for diversification and to avoid a concentration of risk. This sounds reasonable and prudent. The post-mortem indicated the cause of death was caused by the manager breaching the governance limitations agreed upon in the prospectus and investing 90 per cent of the fund with a single manager, who was trading just derivatives, not listed equities as required by the prospectus. Thus, in the end, it was the combination of funds extracted from the directors, auditors, lawyers, custodians, and administrators that made investors whole.

As an investor, one must thoroughly check the background of the investment manager and the directors before investing. The research should be updated at least annually. You might think that this is the job of the lawyer, or the auditors, or the administrator or the custodian, right? You might, but more often then not, they do not look into the investment manager’s credentials other than that they are licensed. According to the American Management Association, one in ten resumes contains over claims, exaggerations or outright falsehoods on experience and credentials. Yahoo! CEO Scott Thompson was  red after it was discovered he had lied on his resume. Thompson claimed two 1978 degrees in accounting and computer science from Massachusetts’ Stonehill College. Thompson later admitted he had never earned the degree in computer science.

One licensed investment manager claimed a CFA certification, and while he had taken the first section of the training, he had never finished. Following up a few years later, I looked at his LinkedIn page. He now had an MBA from Wharton. Nope, that did not check out either.

The investment manager had by then over US$1 billion under management. His credentials grew year by year. Even more frightening was a director of a large Wall Street Family of funds who was being sued in three different federal cases for investment fraud totaling some US$75 million. The litigation had been ongoing for three years. Do your homework with annual updates.

Now you have read the documents, checked for licenses and compliance, verified the credentials of the investment manager and the directors, only then is it time to make the substantial investment into analyzing returns.

The duty of the fund’s directors includes ongoing Due Diligence, matters of governance, as well as oversight and supervision. These functions are vital to the purpose and, thus, the duty of outside directors. So what is the first thing you look at as an investor? The directors’ fees. If they are being paid US $5,000 or less and or serve on dozens of boards of directors, there may be an issue. US$5,000 is not enough for providing diligence service to the funds. It is the old Russian parable – “If they pretend to pay me, I’ll pretend to work for them”.

ESG is the new jingoistic term used in describing funds. ESG stands for Environmental, Social, and Governance. I am a bit dismissive of the term of an “ESG fund”; not that it is not important. It is important. It has become important because many governments, pension schemes, and corporations now require some or all of their investments to be in ESG funds. The idea is to do good and do well.

My concern is that in a quick interview of several fund investors, fund managers, administrators, and custodians, not one could give me a cogent definition of what constitutes proper environmental goals, social impacts, and proper governance. The responses were abominably vague such as “We don’t invest in oil”, “We look for state of the art governance” (what is that?), and “sustainability is important to us”. No – the “S” is for social, not sustainability. ESG, for the meantime, seems to be a soft term. So let’s use our due diligence skills to firm up ESG.

Most of the descriptors on environmental impact look to the impact of the companies in which the funds invest. Typically, the target companies discuss the impact on the environment by looking at and disusing their supply chain and weighing environmental impacts through a variety of means such as near sourcing, supplier emissions, etc. While this is important, it is insufficient. The second component that is most often lacking is the pre and post-impact of the investment. Measurements used for impact investment such as the Impact Reporting and Investment Standards (IRIS) and the Global Impact Investing Rating System (GIIRs) are gaining broader acceptance investment and evaluation, including third-party certification. Some investors and more progressive fund managers use their custom methods.

The social impact of investment has an acceptable standard call Social Return On Investment (SROI). Before dollar one is committed, SROI can produce a forward-looking methodology to estimate the value of the social good that is likely to result. Tracking such returns requires diligent impact assessment and measurement. What will be the social impact for every dollar invested? The measures, however broadly accepted, have shortcomings the fund manager must address.

Common problems include a reliable monitoring system to correctly track impact, poorly de ned indicator/outcome assessments, reporting impacts that lack comparability, and the high cost of implementing an SROI approach. These are genuine barriers to an SROI implementation; many fund managers therefore do not adopt the SROI approach or do SROI so poorly that it lacks meaning.

If the social impact is not measured with a stable and recognized metric, how can a fund say, with confidence, that they are making a difference?

Governance is a system of dependable managerial oversight. Poor governance is characterized by arbitrary, haphazard decision making, ad-hoc administration, continued crisis management, and providing the opportunity for the abuse of executive powers.

Good governance and oversight create predictable, open, and enlightened policy-making for a business or a fund that allows for open and transparent direction from management on issues such as investment choices, human resources, the rule of law, compliance, communication with all stakeholders including, regulators, service providers, and shareholders. Good governance also provides, as a benefit, extraordinary efficacy of operations directed toward the strategic goals of the company or fund.

Governance can be tested with a few basic questions asked of the fund manager such as: Who is in charge of governance for the organization? How is your governance aligned with the strategic goals of the organization? What has your risk assessment shown?

What resources have you committed to your governance model? You’ll either get a clear answer, or you will get the outboard motor syndrome. [1]

Fund valuation is also a subject that requires close attention. Alternative investment funds often deal with assets whose valuation is not readily assessable either in its parts or in aggregate. Assets are valued at cost, market, or replacement. The very same asset, for example, a commercial building, can have a significant difference between the cost of purchase, a market estimate, and the cost of replacement. However, assets are to be valued; this must clearly be stated in the prospectus and adhered to.

So what is a patent, a painting, a jet, a truck, a ship, an apartment, a forest, or a collection of mines worth? Valuation, no matter the science used to arrive at a number, is still an opinion market. Everyone has an opinion, some people have several opinions, but the prospectus will have one model for valuation, and the fund must adhere to that model.

If there is a question on the valuation of an irregular asset, obtain a professional third party opinion. Don’t guess.

For The Fund Manager Looking Out

As a fund manager, you need to select competent and experienced professionals that are eficacious. They must be good at what they do at a proper and fair price. The second part of the process for each one of these professionals is their plans for business continuity. Once you have a group of professionals that is both knowledgeable and comfortable with your fund or family of funds, switching to a new professional is always time-consuming and expensive. A subpart of business continuity is the professional’s book of business.

Is the professional’s book of clients more or less risky? There is also the question of business interruption as a result of hurricanes, volcanoes, labour strikes, civil disruption, or epidemics. Investors and regulators honestly do not care one iota if a volcano eruption has grounded a member of your team, or a hurricane has flooded them out of their offices.

A bit of proper KYC and investor due diligence will allow you to keep the money that you have undoubtedly worked hard to raise. KYC and investor Due Diligence is the duty of the fund manager – period.

Depending upon the fund, the size, and the origin of the investment, different levels of inquiry are required. The point is – you have to clearly and convincingly know the ultimate beneficial owner and source of the funds. If you do not have the in-house capability, contract a due diligence professional to support your efforts. Also, KYC is not once and done. You must continuously screen the investors for updates and monitor the inflow and outflow of funds. The penalties, both short term and long term for getting it wrong, are severe. Money laundering with funds is real. Sometimes the money from investors is the problem. Launders, as investors, typically target open-end funds so the money can be invested and withdrawn over a period of time.

Closed-end funds, with longer lock-up times, are excellent for investing and forgetting. The fund becomes an account to hold the dirty money for a few years. The closed-end funds are also targeted as the buyer and seller of assets. Let me explain. A seller is trying to sell a business for €5 million. The fund is not interested in the business until they hear of a buyer looking to buy a similar business for €5.5 million. The sharp fund manager smells a quick half a million profit and middles the transaction. The fund has just laundered €5 million for a €500K fee. This is but one example of the many ways a fund can be used to launder money.

To sum up, good Due Diligence is the prevention of unnecessary risks. Doing your homework before you buy an asset, doing your homework before you accept a subscription, ensuring all of the professionals are competent, capable and with you for the long term, allows you to put aside anxiety and focus in on returns.

Footnotes:

[1]. The outboard motor syndrome is when you ask a question, and the response is “but, but, but, but, but.”

Mahany Law and Fraud Recovery

Our mission as a new law firm over a decade ago was simple. We helped victims of fraud get back their hard earned money. We still adhere to that mission today although we are now more laser focussed.

Our fraud recovery services today include stockbroker fraud, fiduciary fraud, lender liability (suing banks) and professional malpractice. We also bring fraud cases where the United States is the victim (whistleblower cases). To the extent we accept Ponzi scheme cases, it is often to pursue banks and other deep pockets that may have facilitated the fraud.

Some of the specific fraud cases we accept include:

• RICO prosecutions (racketeering and corrupt organizations)
• Ponzi Schemes (actions against banks and others for aiding and abetting)
• REITs Real Estate Investment Trusts (traded REITs or non-traded REITs)
• Limited Partnerships or MLPs Master Limited Partnership
• Abusive Tax Shelters or Tax Avoidance Schemes
• Oil & Gas “deals”
• Tenant in Common TIC or 1031 Real Estate Scams
• Welfare Benefit Plans (419 Plans)
• Captive Insurance Scams
• Stockbroker Fraud
• ERISA Fraud
• Violations of State and Federal Securities Laws
• Gross misrepresentations and omissions in offering documents
• Breach of duty of care,
• Foreign Bribery
• Bank Fraud
• Money Laundering (FIRREA whistleblower rewards)
• False Claims Act cases (whistleblower reward cases where the government is the victim)
• IRS Whistleblower Program Cases (tax fraud against the government)
• Mortgage Underwriting Fraud (on behalf of the government)
• Cybercrime
• ICO and Cryptocurrency Offerings Fraud

The post Alternative Investment Fund Due Diligence – Better Safe Than Sorry appeared first on Mahany Law.

Hotel Operators Say PPP Shouldn’t Jeopardize Old Loans

(57K)

Operators of hotels in several states have asked New York and Florida federal courts to rule that they can participate in the Paycheck Protection Program without fear of triggering a default on prior loans whose terms forbid taking on more debt.

In a pair of complaints filed separately Friday against U.S. Bank NA and Wilmington Trust NA, the hotel operators said they’re desperate for the aid but are concerned about possible repercussions for their existing loans, which are held in commercial mortgage-backed securities trusts that the two banks serve as trustees for.

Although the agreements for those loans prohibit incurring additional indebtedness, the operators noted that PPP loans “potentially are entirely forgivable, like grants.” Yet they said they have been unable to get confirmation on whether their participation in the program will be treated as a default under these prior loan agreements.

“Borrowers have an existing and credible concern that the prohibition on additional indebtedness in the loan agreements may be applied by Defendant to prohibit the Borrowers from participating in the PPP to stay afloat and keep hundreds of individuals employed,” the complaint against Wilmington says. “Such an interpretation is in direct violation of clearly stated public policy.”

The suits were filed against U.S. Bank and Wilmington in their capacities as CMBS trustees, though Wilmington told Law360 it’s the trust servicers that are in charge of providing the consent sought by the hotel operators. Those servicers are Wells Fargo and Rialto Capital Advisors, neither of which is named as a defendant in either suit.

The operators, which are affiliated special-purpose entities that own hotels in Florida, North Dakota and Wisconsin, are seeking declaratory judgments holding that the indebtedness prohibitions from these loans are unenforceable when it comes to PPP funds. They have also moved for temporary restraining orders barring the two banks from declaring a default over their participation in the program.

Created by the Coronavirus Aid, Relief, and Economic Security Act, the PPP allows small businesses to apply for loans of up to $10 million each and receive forgiveness on those loans if they use the money to keep paying their workers amid the widespread shutdowns and disruptions of the COVID-19 pandemic.

The operators, Beechwood Plaza Hotel of Appleton LLC, University Hotel Development LLC, KNK-Plaza Hotel of Green Bay LLC and Beechwood Lakewood Hotel LLC, said these shutdowns have “devastated” their businesses and thrown their continued survival into doubt, prompting them to apply for the relief loan program.

According to court filings, those loan applications were approved last month by federal officials overseeing the PPP, leaving the operators to decide by later this week whether to follow through and take the funds. But while the operators said they would pursue full loan forgiveness if they accept the PPP money, they said they still have not received confirmation on how U.S. Bank and Wilmington would react to their participation in the program in light of the indebtedness restrictions on their prior loans.

That uncertainty comes despite “numerous requests for clarification” to the trust servicers, the operators said, and is a problem because a declaration of default could lead to “disastrous” consequences for them, including loss of their hotels to foreclosure and penalty interest rates and fees running into the hundreds of thousands of dollars.

“The opportunistic and improper behavior of Defendant amid the most significant economic crisis in a generation — and while government efforts to restore liquidity to markets are underway — must be stopped,” the operators said in the complaints.

Beechwood Lakewood Hotel LLC is represented by Mark Arnot of the Arnot Law Offices.

Beechwood Plaza Hotel of Appleton LLC, University Hotel Development LLC and KNK-Plaza Hotel of Green Bay LLC are represented by Joseph P. LaSala of McElroy Deutsch Mulvaney & Carpenter LLP and Christopher P. Katers of MahanyLaw LLC.

Counsel information for U.S. Bank and Wilmington was not immediately available.

The cases are Beechwood Lakeland Hotel LLC v. U.S. Bank NA, case number 8:20-cv-01022, in the U.S. District Court for the Middle District of Florida, and Beechwood Plaza Hotel of Appleton LLC et al. v. Wilmington Trust NA, case number 1:20-cv-03424, in the U.S. District Court for the Southern District of New York.

The post Law360 May 4, 2020 appeared first on Mahany Law.

Your Insurance Company Denied Your Business Interruption Claim? Don’t Despair – Fight Back and Win

You diligently paid insurance premiums for years. Maybe you once had a small claim when a customer slipped or an employee claimed a wrongful termination. Fast forward to the spring of 2020 when our country basically stopped. Unless you were an essential business, you probably had to close your doors. If you kept your doors open, 90% of your revenue was still lost.

Maybe you have a fine dining restaurant. Even if you can still offer takeout, few people are going to pay $80 for three course meal served in Styrofoam. Perhaps you’re a hotel in Orlando. Your doors may be open but occupancy is now below 10%.

Fear not because you have business interruption insurance. First you call your agent to learn how to make a claim. Next you exchange some paperwork. And then comes the denial letter.

Although every claims denial letter (often called a “declination of coverage” letter) is different, most have similar language:

“Dear valued customer: We have reviewed the facts of the loss as presented and the orders of civil authority impacting your business. Based upon this review, Friendly Insurance Company has determined the orders issued by governmental officials impacting your premises were issued to curtail the spread of the COVID-19 virus. There is no information supporting any direct physical loss or damage which would trigger coverage.”

We have been reviewing these claims denial letters at an alarming rate. To date, we haven’t seen a single claimed honored.

How Can My Insurance Company Deny My Business Interruption Claim?

That’s the question everyone is asking.

Let’s start with the bad news. Some policies have a specific virus exclusion. After the SARS scare in the early 2000’s, an insurance industry trade organization developed language in 2006 that some carriers adopted. It says, “We will not pay for loss or damage caused by or resulting from any virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease.”

You have an uphill fight if that provision is in your policy. The good news is that many policies have no such exclusions while others are specific to bacterium. Believe it or not, there is a scientific difference between bacteria and a virus.

There is even more good news. In most states, ambiguous policy language must be interpreted in favor of the insured and not the insurance company.

Assuming you don’t have a virus exception but did purchase business interruption coverage, we bet there is a provision that limits coverage to situations where there is “direct physical loss or damage.”

Simply because we can’t see microscopic viruses doesn’t mean there isn’t physical damage or a loss.

If someone on your premises or staff had COVID-19, chances are there was physical damage. We know that on some hard surfaces, SARS CoV-2 (the virus that causes coronavirus) can survive for days. That is why businesses that have reopened are so focused on constant cleaning with powerful disinfectants. (An article in a prominent environmental journal noted that COVID-19 was identified on multiple surfaces inside the passenger compartments on the Diamond Princess 17 days after the ship was evacuated.)

Most policies say physical damage or loss. The magic word is “or.” Even if there is no damage, we believe there is a loss. Insurance companies are telling claims adjusters that terms physical damage or loss are interchangeable. Look up “loss” in a dictionary, however. Miriam Webster defines “loss” several ways including the act of losing possession (deprivation) and the harm resulting from loss.

If you can’t serve customers or open your doors to the public, we think any reasonable jury would consider that a loss.

Talking about juries is the perfect segue to the next section of this post…

How Do I Sue My Insurance Company for Denial of My Business Interruption Claim?

There are several theories or “causes of action” which may apply to your claim.

First is breach of contract. Your insurance policy is a contract. An insurance company can’t deny a claim simply because they fear the potential of paying out on tens of thousands of claims. That is why most insurance companies purchase reinsurance. If they are hit with a big loss such as an earthquake or hurricane, they have the ability to get the money to pay claims.

Because ambiguities are resolved in favor of insureds, the insurance company shouldn’t be able to redefine the term “loss” to mean whatever they want it to mean.

There may be an additional breach of contract claim if the policy has civil authority coverage. That is a provision of many policies that pays for the loss of business income sustained by the insured and “caused by an action of civil authority that prohibits access to [the insured’s] property.” In most states residents were ordered to stay home and/or non essential travel was curtailed.

Even if a state or city didn’t completely shut down you business, we think insurance companies are breaching their contract if they refuse to pay civil or government authority claims where the public was ordered or instructed to stay home.

In a breach of contract action, the court or jury can award monetary damages. In an insurance case that would be the amount of the policy limits identified for business interruption or civil authority claims.

Another form of relief is called Declaratory Relief. Instead of setting the amount of damages, the court orders the insurance company to honor claims. If the parties can’t agree on the amount of damages then either or both can come back to court.

Insurance Bad Faith – The Big Hammer

Every insurance company owes its insured a duty to act in good faith. This is sometimes called an “implied covenant of good faith and fair dealing.” If a carrier fails to properly investigate a claim or unreasonably denies an otherwise valid claim, the insured may have an additional claim, a bad faith claim.

Simply because an insurance company denies a claim doesn’t mean there is bad faith. Its not enough to say that the insurance company denied the claim. We believe that many insurance companies aren’t even investigating coronavirus related claims, however. They are just rubber stamping claims denial letters.

Bad faith claims vary widely from state to state. One common theme, however, is that many of these laws have attorney’s fees provisions and provide for damages that exceed the policy limits. The idea is to teach bad insurance companies a lesson.

Common insurance bad faith schemes include:

1. Failure of an insurer to pay a claim without a reasonable basis to do so.
2. Failure of an insurer to timely investigate and resolve claims.
3. Failure of the insurer to timely pay a covered claim.
4. Attempting to settle a claim for less than the amount due (“lowballing”)
5. Not acting in good faith or in compliance with industry standards.
6. Demanding excessive or burdensome proofs of loss not necessary to process a claim.
7. Failure of an insurer to provide a reasonable explanation when coverage or claims are denied.
8. Telling an insured not to hire a lawyer.
9. Misrepresenting the statute of limitations (time period to sue) or deliberately delaying payment of a claim until after the statute has run.
10. Altering terms of the policy or endorsements without proper advance notice and / or consent of the insured.
11. Withholding information favorable to the insured when processing claims.
12. Using third parties such as private investigators, claims adjusters or independent medical examiners in a scheme to deny or reduce claims.
13. “Jacking up” premiums or cancelling a policy after a claim that was not the fault of the insured.
14. Engaging in tactics meant to intimidate insureds into not filing claims. This includes misrepresenting facts, creating false facts or misrepresenting the law.

Mahany Law – Insurance Bad Faith Lawyers

If your business interruption or civil authority insurance claim is denied, you need professional assistance. Big insurance companies are relying on the fact that most insureds grumble but don’t take action.

They also know the typical policy limits damages in these claims to a couple hundred thousand dollars. It can be tough to find a lawyer that handles insurance bad faith claims in good times. As a result of the pandemic finding a lawyer could be even more difficult.

Depending on the size of the claim and the limits in the policy, we consider insurance bad faith claims either as a standalone case or as part of a class action. Unlike the typical consumer class action where you might get a check for a couple bucks or a coupon for a free product, we are bringing class actions seeking declaratory actions. That means we are seeking an order from the court requiring a particular insurance company to honor all coronavirus related business interruption claims.

To learn more, visit our coronavirus business interruption claims information page* and our insurance bad faith information page. Ready to see if you have a case? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. We have attorneys and law firm partners across the United States. We fight for the maximum coverage and benefits due our clients and maximum damages when the carrier has wrongfully failed to pay.

Cases can be handled on a contingent fee basis meaning no fees or out-of-pocket costs unless we win. All inquiries are confidential.

*We wrote our coronavirus business interruption page on February 5^th before COVID – 19 even had a name and have been advising on insurance bad faith for years.

The post How to Sue Your Insurance Company (Business Interruption Claim) appeared first on Mahany Law.

Why Did It Take the FDA 8 Years to Recall Belviq?

We first wrote about Belviq in January 2020, weeks before the FDA asked Belviq’s US distributor, Eisai, to voluntarily recall the drug.  In announcing the recall on February 13th, the FDA said,

“FDA has requested that the manufacturer of Belviq, Belviq XR (lorcaserin) voluntarily withdraw the weight-loss drug from the U.S. market because a safety clinical trial shows an increased occurrence of cancer. The drug manufacturer, Eisai Inc,. has submitted a request to voluntarily withdraw the drug.

“When FDA approved lorcaserin in 2012, we required the drug manufacturer to conduct a clinical trial to evaluate the risk of cardiovascular problems. A range of cancer types was reported, with several different types of cancers occurring more frequently in the lorcaserin group, including pancreatic, colorectal, and lung.”

Belviq is the brand name for lorcaserin.

If the FDA approved the drug in 2012, why did it take years before the FDA decided to ask the drug be pulled from shelves?

Great question! The better question might be why the FDA approved the drug in the first place? We will answer both questions below.

Lorcaserin’s Checkered History

When released in 2012, Lorcaserin was the first weight loss drug approved since Fen Phen 15 years earlier. Finally, people suffering obesity had a new drug that might help them.

Whether the drug was any help is questionable. A clinical study by the University of Pennsylvania revealed that lorcaserin and lifestyle changes resulted in an average 20.7 pound loss. Sounds great, BUT…  Participants who took a placebo and made lifestyle changes lost an average of 16.5 lbs.

The difference was only 4 lbs! And Belviq cost about $300 per month. It sounds like lifestyle changes are the better way of losing weight.

Whether or not Belviq actually helped people lose weight, a bigger safety issue was looming. The first time lorcaserin came up for approval by the FDA it was denied because of cancer fears. Europe also refused to approve the drug.

Part of the testing at the time involved lab testing on rats. The results of those studies showed a higher rate of brain and breast cancer. Is losing four or five pounds worth the risk of brain cancer?

According to the FDA, “The non-clinical issues identified by the FDA included diagnostic uncertainty in the classification of mammary masses in female rats, unresolved exposure-response relationship for lorcaserin-emergent mammary adenocarcinoma, and unidentified mode of action and unclear safety margin for lorcaserin-emergent brain astrocytoma.”

Astrocytoma is a form of brain and spinal cord cancer.

The company making the application then was Arena Pharmaceuticals. They went back to the FDA and said there was no correlation between the cancers found in rats and that in humans. (So why test on rats?)

Arena also said the dose given to the rats was much stronger than that taken by humans.

Reluctantly in a split vote the FDA approved the drug. The Europeans didn’t budge. The FDA vote was 18 to 4 in favor of approval.

As part of the approval, the FDA required a much larger, long term clinical trial on humans. Short term trials typically don’t catch cancer because cancer can take years to develop.

This past winter those test results came back. People taking Belviq have a higher risk of cancer than those that don’t. The particular cancers that proved worrisome to the FDA include pancreatic, colorectal, and lung cancer. All are often fatal.

Now eight years later the FDA is saying that the risks of cancer outweigh the benefits of the drug.

Eisai, the company that markets Belviq in the U.S. says its product is safe. The company released a statement saying, “The company’s assessment is that Belviq and Belviq XR continue to have a positive benefit-risk profile in the patient population for which they are indicated.”

Should I Stop Taking Belviq?

As lawyers, we cannot provide medical advice. Our best advice is to always speak to your doctor before discontinuing a medication. In this case, the FDA says, “Patients should stop taking lorcaserin and talk to your health professionals about alternative weight-loss medicines and weight management programs.”

Although the FDA also recommends that you safely dispose of any remaining medications, we suggest that you keep the bottle in case it is needed for a future lawsuit.

Were You Taking Belviq and Diagnosed with Cancer?

The defective drug lawyers at Mahany Law are presently investigating Belviq and its makers. For more information, visit our Belviq lawsuit claims page or watch our Belviq lawsuit video. If you have been diagnosed with cancer, don’t delay in contacting a lawyer. Many states have short time limits in which to file a lawsuit.

Ready to see if you have a case? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. Cases accepted anywhere in the United States. We accept cases on a contingency fee basis meaning no legal fees or costs unless we recover money on your behalf. Any information you provide is protected by the attorney – client privilege and kept confidential.

Every case is different and simply because you have been diagnosed with cancer doesn’t mean that it is connected to Belviq.

Unlike the late night TV commercials, we are a law firm and not a lead generation company. By contacting us doesn’t mean we have become your lawyer. We investigate each case separately. At this time, we are only considering cases involving lung, pancreatic or colorectal cancer. Unfortunately, we cannot consider cancer that started elsewhere in the body and spread to the lungs, pancreas or colon.

The post Belviq Recall – Why Did It Take 8 Years? appeared first on Mahany Law.

Is Your Insurance Company Delaying or Denying Your Business Interruption Claim? You May Have an Insurance Bad Faith Claim

If you watch television commercials, insurance companies are your friends. Take a look at their slogans. “You’re in Good Hands with Allstate”, “Like a Good Neighbor State Farm Is There”, Progressive – “Get the Support and Protection You Need” and Farmer Insurance’s “#SeenItCoveredIt.”  All those taglines sound great. But just see what happens when you go to make a claim for business interruption caused by coronavirus.

For years, many insurance companies have collected billions of dollars in premiums for business interruption insurance. That is a type insurance that is supposed cover that the loss of income that a business suffers after a disaster. For hundreds of thousands of businesses that today means losses from coronavirus.

Although the coronavirus pandemic doesn’t cause physical damage like a tornado, most business interruption policies cover lost income due to physical damage or loss. Ask any hotel owner or shopping center whose has been ordered to close if they have suffered a loss.

After years of faithfully paying premiums, their insurance companies are now coming up with excuse after excuse as to why they don’t have to pay. It’s mostly B.S. (Click on the link to read all about how we help businesses with coronavirus business interruption losses.) Insurance companies are suddenly not acting like “good neighbors.”

We knew that we had a tough road ahead of us and are ready for the challenge. Many of our clients are barely holding on. Last week we were successful getting one hotel owner an emergency hearing with just one days notice. (No small feat even when courts are open).

Win or lose, businesses need help now. If help isn’t coming, they also need to know that as well. This week one policy holder in Pennsylvania asked the court to expedite his case against Erie Insurance. His story and how the insurance industry reacted is quite telling.

Joseph Tambellini operated a fine dining Italian restaurant in Pittsburgh. The restaurant bears his own name. For almost 2 months he has been unable to open his doors. Takeout might work better for a drive through pizza place but revenues are way down for Joe.

Fortunately, he has business interruption insurance. Well, he thought he was fortunate. Like so many other restaurants, his insurance company (Erie Insurance Exchange) denied his claim.  (Erie’s slogan is “We help cover your life better.” They have done a horrible job covering his restaurant.)

With little income coming through the door and his business interruption claimed denied, Joe filed suit against his insurance company. Last week he asked the court to speed up his complaint. Getting a trial years from now is meaningless if his restaurant is long out of business.

Joe says his case presents issues of importance to “all citizens of the Commonwealth who are seeking recompense from their insurers for the losses, damage and expenses caused by the COVID-19 pandemic and the related governmental Orders.”

He also says that his restaurant is one of thousands of Pennsylvania small businesses that are seeking business interruption coverage for income lost because of government restrictions on businesses and safer at home orders. Like many businesses, he needs help from the courts now.

What did Erie say?

They say the case is a simple contractual dispute that should be heard through the normal course. Of course, they conveniently fail to note that the courts aren’t really fully functional right now and his case could take years. Many years if you add in appeals.

More telling, insurance giant American International Group Inc. (AIG) many others including the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies took an unusual step of jumping into the fray to oppose Joseph’s application to speed up his case.

Why would the insurance industry care? The answer is easy. Delays help them. If the business goes under there is ales of chance that they will have to pay.

If ever there was evidence of the insurance industry’s true colors, this is it.

Insurance companies are your friends. They are not good neighbors. As one lawyer put it, “It’s a war out there and only the fittest will survive.”

Fortunately, in most states there are either insurance bad faith laws or caselaw that allow an insured to seek enhanced damages when an insurance company denies a claim without proper cause.

Are you the Victim of Insurance Bad Faith?

You’ve done everything possible can to protect your business. That includes purchasing business interruption or so-called “civil authority” coverage. You have the right  to expect your insurance company will treat you fairly when you make a claim. So, when your business suffers a huge financial loss because of the coronavirus pandemic or some other loss and your insurance company ghosts you, we are here to help.

Every insurance company has an obligation of “good faith and fair dealing. Despite the cute slogans and TV commercials, most insurance companies are more worried about their profits. Their main goal, unfortunately, is to give you the least amount of money possible for your claim.

No matter where you live, if you are denied coverage, we are ready to fight back! Contact an experienced insurance bad faith lawyer. We fight for the maximum coverage and benefits due our clients and maximum damages when the carrier has wrongfully failed to pay.

For more information, contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. We accept cases in all states. Our practice is limited to claims in excess of $1 million. Smaller business interruption claims handled on a class action basis.

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