Monday, April 23, 2012

CFTC announces $14 million penalty in oil manipulation case

The Commodity Futures Trading Commission has announced that Optiver Holding BV, a Dutch company, two U.S. subsidiaries and several officers will pay $14 million to settle allegations of manipulating the oil market.
The CFTC's complaint had charged Optiver with engaging in a practice called "banging the close": attempting to manipulate the price of futures contracts by taking large positions just ahead of the close of trading.
President Obama has proposed more aggressive measures to prevent oil-market manipulation, including increasing fines to $10 million per violation and putting "more cops on the beat". 
These proposals are in addition to those provided in the Dodd-Frank Act.  Regulators are now required to prove only that traders acted "recklessly"; previously  they had to prove that they intended to manipulate prices.
The Wall St. Journal reports that the CFTC has one major oil-market manipulation case remaining.  That suit alleges that Swiss commodities trading firm Arcadia Petroleum Ltdunlawfully manipulated and attempted to manipulate New York Mercantile Exchange (NYMEX) crude oil futures prices from January 2008 to April 2008.

Monday, April 02, 2012

Are we teaching that fraud pays?

In a recent Forbes blog post, Phillips & Cohen attorney Erika Kelton tells of students who did an off-the-cuff cost/benefit analysis of Medicaid fraud and decided it might be a good way to get rich quick.

Deterring corporate fraud can be particularly challenging. Excluding a pharmaceutical company from participating in Medicare and Medicaid may be impossible: benficiaries need those drugs. Holding individual corporate officers criminally liable has been difficult for prosecutors who can't always prove intent.

Kelton suggests increasing the cost relative to the benefit. Tailoring exclusion to a particular company division and using clawbacks to recoup executive bonuses linked to fraudulent practices could make fraud less attractive.

Washington state now has a Medicaid false claims act

Washington State Governor Christine Gregoire has signed a Medicaid fraud false claims act.

The act includes a qui tam provision, which will allow private citizens who discover fraud involving the state's heath care services to bring suit on behalf of the government. The bill notes that states with false claims acts recovered over five billion dollars between 1996 and 2009, primarily from suits relating to billing fraud, off-label marketing and withholding safety information.

The governor's signing statement recognizes that the Deficit Reduction Act of 2005 provides that the federal government will give states ten percent of any funds recovered as part of Medicaid enforcement actions brought under a state law comparable to the federal False Claims Act. The state laws are reviewed the the U.S. Dept. of Health & Human Services Office of the Inspector General to determine if they qualify for the increase.

The Washington State Medicaid Fraud False Claims Act will enter into effect on June 7, 2012.