Qui tam news stories

Other types of fraud

Qui tam lawsuits have been used to expose many types of fraud besides Medicare fraud and defense contractor fraud. Below is a selective list of whistleblower cases that were brought by Phillips & Cohen attorneys and involve fraud other than healthcare and defense contractor fraud.

• Wall Street investment banking firms
• James Jones Co., Watts Industries Inc., Tyco International (US) Inc. and the Mueller Co.
• CSX Transportation Inc.
• NYSERNet.Org, Inc., AppliedTheory Communications, Inc. and Applied Theory Corp,. Inc.
• Los Angeles Department of Water and Power
• Ball, Ball & Brosamer Inc.

Wall Street investment banking firms.: More than 20 investment banks paid the federal government over $200 million total to settle a whistleblower lawsuit that charged they had defrauded the federal government by overpricing securities sold in connection with certain municipal bond transactions — a practice known as “yield burning.”  Goldman Sachs & Co., PaineWebber Inc., Prudential Securities Inc. and Salomon Smith Barney Inc. were part of the settlement. Investment banks are said to “burn the yield” on bond transactions made on behalf of municipalities when they pocket proceeds that should have gone to the federal government.

• “Four firms settle yield-burning suit; Sakura case unveiled,” Lynn Hume, Bond Buyer, 11/1/00.
• “Securities firms expected to settle yield-burning case,” John Connor, The Wall Street Journal, 10/31/00.
• “Dain to pay $12.9 million to settle muni bond abuses,” Jill J. Barshay, Star Tribune, April 7, 2000.
• “Brokers settle pricing charges,” Helen Huntley, St. Petersburg Times,” April 7, 2000.
• “First Union to pay $7.7 million; securities fraud settlement reaches $140 million for investment banks,” Carol Hazard, Richmond Times-Dispatch, April 7, 2000.
• “Settlement reported in bond-pricing case,” Patrick McGeehan, The New York Times, April 6, 2000.
• “U.S., 17 securities firms reach accord on scandal-tainted municipal bonds,” Charles Gasparino and John Connor, The Wall Street Journal, April 6, 2000.
• “BT Alex. Brown agrees to pay $15.3 million in bond case,” David Barboza, The New York Times, 11/18/99.
• “U.S. near sweeping pact on ‘yield burning,’” Charles Gasparino and John Connor, The Wall Street Journal, 11/18/99.
• “Alex. Brown overcharge case settled,” Bill Atkinson, Baltimore Sun, 11/18/99.
• “Broker to pay for Pa. markups,” Tom Cahill, The Philadelphia Inquirer, 11/18/99.
• “SEC fines, censures lawyer, two investment firms for gouging state,” Ken Zapinski and Frank Reeves, Pittsburgh Post-Gazette, 11/18/99.
• “Lazard to pay $11 million to settle federal charges,” Joseph B. Treaster, The New York Times, 4/23/99.
• “Lazard to pay $11 million in settlement with the U.S. in ‘yield-burning’ case,” Charles Gasparino and John Connor, The Wall Street Journal, 4/23/99.
• “Bond price-gouging accord reached,” Pamela A. MacLean, Daily Journal, 4/23/99.
• “Big payday for a whistleblower,” Charles Gasparino and John Connor, The Wall Street Journal, 4/4/99.
• “LAMTA’s law firm says Lissack strategy will be a replay," Andrea Figler, Bond Buyer, 9/30/98.
• "Lazard to pay $9 million in yield‑burning suit," David Barboza, The New York Times, 9/29/98.
• "Lazard pact is approved in ‘yield‑burning’ case," The Wall Street Journal, 9/29/98.
• "MTA, securities firm hold talks over dispute," Los Angeles Times, 9/24/98.
• "Lazard is said to settle suit on bond sales," David Barboza, The New York     Times, 9/24/98.
• "Lazard, Los Angeles agency discuss settlement of yield‑burning lawsuit," Charles Gasparino and John Connor, The Wall Street Journal, 9/22/98.
• “CoreStates settles whistleblower suit that municipal bond issuers were overcharged,” Federal Contracts Report, 4/27/98.
• “CoreStates settles bond case with U.S. for $3.7 million,” David Barboza, The New York Times, 4/24/98.
• “CoreStates settles in muni tax fraud case,” Thomas S. Mulligan, Los Angeles Times, 4/24/98.
• “CoreStates pays $3.7 million to end yield-burning case,” Lynn Stevens Hume, The Bond Buyer, 4/24/98.
• “First joint ‘yield burn’ case is seen,” John Connor and Charles Gasparino, The Wall Street Journal, 4/23/98.
• “Feeling burned by Wall Street; firms accused of bilking government in securities deals,” David Barboza, The New York Times, 12/31/97.
• “L.A. authority study shows rampant yield burning abuse,” Michael Stanton, The Bond Buyer, 4/22/97.
• “Municipal bond dealers face scrutiny,” Peter Truell, The New York Times, 12/17/96.
• “The big sleaze in muni bonds,” Terence P. Pare, Fortune, 8/7/95.
• “About whistleblowing and bridge-burning,” Michael R. Lissack, The New York Times, 7/16/95.
• “Wall St. firms overcharged it, MTA says,” Scot J. Paltrow, Los Angeles Times, 7/11/95.
• “Accuser in the muni bond industry,” Michael Quint, The New York Times, 3/3/95.

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James Jones Co., Watts Industries Inc., Tyco International (US) Inc. and the Mueller Co.: A qui tam lawsuit brought on behalf of a whistleblower by Phillip, Cohen under the California False Claims Act charged that James Jones Co. sold hundreds of municipalities and municipal water districts in California hundreds of thousands of shut-off valves and fittings for water supply systems made from substandard metal. Also named as defendants in the qui tam case are Watts, the former parent company of James Jones; Tyco, which bought the company from Watts; and the Mueller Co., a wholly owned subsidiary of Tyco under which James Jones operated. So far, the companies have paid a total of $20.8 million in settlement awards: $7.8 million to settle claims with the Los Angeles Department of Water and Power and $13.8 million to settle claims involving water systems in San Francisco, Santa Monica and East Bay Municipal Utility District.

• “Water-system gear suit draws attention,” Andy Pasztor, The Wall Street Journal, 12/22/98.

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CSX Transportation Inc.: CSX paid $5.9 million in September 1995 to settle a whistleblower lawsuit that said the company had inflated labor and equipment charges for work done to maintain and repair highway railroad crossings for the government.

• “CSX will pay whistleblower $1.18 million,” Barry Meier, The New York Times, 9/30/95.
• “CSX to settle $5.9 million claim,” Charles Slack, Richmond Times-Dispatch, 9/30/95.
• “CSX unit to settle ex-employee’s suit for $5.9 million,” Daniel Machalaba, The Wall Street Journal, 10/2/95.
• “Deals and suits: United States ex rel. Nelson v. CSX Transportation Inc.,” Jonathan Groner, Legal Times, 10/9/95.

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NYSERNet.Net Inc., AppliedTheory Communications Inc. and Applied Theory Corp. Inc.: NYSERNet, a non-profit consortium of New York universities, paid the federal government $1.4 million to settle a whistleblower lawsuit that charged it misused millions of dollars from federal grants and program income. The qui tam lawsuit and the government alleged that NYSERNet funneled grant money from the National Science Foundation to AppliedTheory Communications, a related for-profit corporation, and defrauded the government in other ways.

• “Web firm settles U.S. grant case,” Gary Craig, Democrat and Chronicle, 3/31/03.
• “New York consortium agrees to pay $1.4 million in federal lawsuit alleging fraud,” Will Potter, Chronicle of Higher Education, 3/27/03.
• “Salina nonprofit settles lawsuit,” Tim Knauss, The Post-Standard, 3/27/03.
• “Nonprofit provider of research networks pays penalty,” National Journal’s Technology Daily, 3/27/03.
• “NYSERNet agrees to pay $1.4 million to settle whistleblower lawsuit,” Associated Press, 3/26/03.

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Los Angeles Department of Water and Power (DWP): Los Angeles County, Los Angeles Unified School District and other county entities joined a whistleblower lawsuit to sue the Los Angeles DWP for deliberately overcharging them for electricity for more than a decade, costing them hundreds of millions of dollars.

• “Bill may shield utilities from claim; state assembly passes measure after public agencies sue, saying they have been gouged,” Carl Ingram, Los Angeles Times, 5/26/03.
• “California agencies sue DWP on overcharges,” The Electricity Daily, 4/4/02.
• “Four local agencies claim DWP overcharges of $200 million,” Tina Daunt, Los Angeles Times, 4/2/02.
• “Southland public agencies sue DWP,” Beth Barrett, The Daily News of Los Angeles, 4/2/02.
• “A judge unseals the False Claims Act suit against the Department of Water and Power, filed in 2000,” Dennis Pfaff, Daily Journal, 4/2/02.

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Ball, Ball & Brosamer Inc.: The federal government joined a qui tam lawsuit brought by two whistleblowers that alleged Ball, Ball & Brosamer used inferior concrete to pave the runways at airports in Orange County, California, and Denver.

• "DIA concrete diluted, suit says," Kevin Flynn, Rocky Mountain News, 11/26/98.
• "Airport contractor is sued; concrete provider at DIA accused of diluting product," Mike McPhee, Denver Post, 11/26/98.
• "U.S. joins lawsuit over John Wayne Airport taxiways," Jeff Gottleib, Los Angeles Times, 11/26/98.
• "U.S. joins suit over concrete at JWA," John McDonald, The Orange County Register, 11/26/98.

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