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23Jun/100

Foot Dragging on the Gulf Spill

This post was written by Josh

It remains to be seen whether the Gulf oil spill will become Obama's Katrina. A recent New York Times/CBS News poll indicates that at the very least, some people believe that Obama is not doing enough to fix things in the Gulf. The poll found that 59% of respondents do not believe that the President has a clear plan for cleaning up the spill. In addition, the majority of respondents believe that more regulation of offshore drilling is needed. Interestingly, at the same time, the majority of those polled also indicated that they believed that the accident was a result of a failure on the part of the federal government to enforce regulations rather than inadequate regulation.

Criticism continues to be heaped on the federal agency responsible for ''regulating'' off-shore drilling, the Minerals Management Service (MMS), and rightly so. A new report, also in the New York Times, finds yet another maddening instance of MMS' appalling failure to fulfill its mandate. A device known as a blind shear ram was in place at the Deepwater Horizon well, and was supposed to be the last line of defense in preventing a blow-out. Of course, it failed. What is particularly infuriating is that MMS ignored its own experts as to how the risk of blind shear ram failure could be minimized.

There have been some major changes at MMS, so hopefully it won't be business as usual once the country forgets about off-shore drilling again. The new director of MMS is Michael R. Bromwich, who used to be an inspector general over at DOJ (the same guys will intervene in your qui tam case, if you're lucky!). The new agency will have a quick-response, SWAT team-like unit that will supposedly be able to respond with alacrity to allegations of crooked officials or misbehaving companies. The new investigative unit will have its work cut out for it. The old MMS could not be described by any stretch of the imagination as ''ethical.'' Doing crystal meth and then going out to do inspections? Why not? Going huntin' and fishin with on the oil company's dime? Yup. Inspecting drilling platforms of the oil company with which you're simultaneously negotiating for a job? Why the heck not? (Don't forget the crystal meth!).

This is all to say that the level of corruption in this agency is absurdly hilarious, and it will likely be very difficult both to root it out and prevent it from re-occurring, fungus-like, in the future.

This article is brought to you by the QTT, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.

Tagged as: government, Mining, Natural resources, qui tam No Comments

14Jun/100

Why is the IRS Sitting on its Hands?

This post was written by Josh

It has been more than three years since UBS whistleblower extraordinaire Bradley Birkenfeld approached the DOJ, IRS, and SEC with information about potential tax evasion by U.S. clients facilitated by UBS AG. Since then, the IRS appears to have been sitting on its haunches and not making the most effective use of the information Birkenfeld provided. Whistleblower booster Senator Chuck Grassley (R-Iowa) has contacted the IRS, demanding an accounting of what, exactly, the agency has done with the seemingly incredible gift Birkenfeld gave it. Keep in mind that the only reward Birkenfeld has received so far for coming forward is jail time.

The main reason for Senator Grassley's concerns is that the Swiss Parliament this week rejected a deal made with the U.S. last August to hand over banking information on more than 4,000 wealthy American UBS clients suspected of tax evasion. In his letter to the IRS, Senator Grassley argues that the agency should not be sitting around waiting for treaties to be ratified. The agency has the information in its hands now, and Senator Grassley is concerned that it is wasting time while the Swiss government unravels its agreements with the DOJ. (Banking secrecy has until recently been ironclad in Switzerland, so the parliament may be rattling its legislative sabers a bit in an effort to shore up the nation's reputation).

If the entire Swiss parliament does not approve the deal with DOJ by June 18th, things could get really ugly for UBS. DOJ could revive a lawsuit to turn over 52,00 names (way, way beyond the 4,450 stipulated in the original agreement). If UBS failed to turn over the 52,000 names, it could end up facing fines amounting to millions of dollars per day of refusal. Furthermore, if UBS fails to turn over any of these names, it could face indictment.

Either way, the skies look rather stormy for UBS right now. This still doesn't explain why the IRS is not taking advantage of the leads Birkenfeld provided. Perhaps Senator Grassley's letter will be enough to get a few accountants' motors running!

Tagged as: corporate fraud, government, IRS, Tax, whistleblower No Comments

10Jun/100

A New Flavor: Ambulance Fraud

This post was written by Josh

There is fraud at all stages of the health care delivery process, and as a settlement in a district court case in the Eastern District of New York emphasizes, even ambulance companies are trying to get a bigger piece of that Federal pie, courtesy of you the taxpayer.

The case is

United States ex rel. Kaplan v. Metropolitan Ambulance & First-Aid Corp. et al., Civil Action No. 00-3010 (E.D.N.Y.).

According to allegations in a qui tam suit by the former CFO of one of the companies, Metropolitan Ambulance & First Aid Corp. (now known as SEZ Metro Corp.), Metro North Ambulance Corp. (now known as SEZ North Corp.) and Big Apple Ambulance Service Inc. (formerly known as United Ambulance), and the president of the companies, Steve Zakheim, used falsified records to appeal a Medicare refund demand. The situation is a bit convoluted, but what the companies were doing essentially consisted of the old health-care fraud standby: taking patients on unnecessary and expensive ambulance trips, and billing Medicare for the services. The government determined that these trips were in fact unnecessary and demanded a refund of the tens of millions of (tax payer) dollars that had been paid out. As is customary, an extensive appeals process was available.

However, Zakheim and his ambulance armada apparently didn't have the required proof to back-up their case on appeal, so they allegedly doubled their fun/fraud by submitting hundreds of forged letters verifying that the ambulance trips were medically necessary! The ROI was not so good here: Zakheim and the companies must pay $2.5 million in settlement money, not to mention the millions of dollars to be refunded. Vigilant whistleblower Larry Kaplan will pocket $618,450.

One has to ask: was it really worth it to engage in the fraud in the first place? This is yet another case in which the business logic behind some of the decisions seems to have been seriously lacking. The next time you see an ambulance speeding along (possibly with a bunch of cash flying out the windows) keep in mind that it might be following the road to fraud!