Nov. 18-29 Filings

Business Blotter is a weekly roundup of white collar complaints and enforcement actions – a police beat feature from Business Blunders. All defendants are presumed innocent until proven guilty.

Headaches? Memory loss? Concentration problems? Irritability? Try wearing a mask next time. (Comic: ChatGPT)

Lowe’s Home Centers on Tuesday agreed to pay $12.5 million after its contractors potentially exposed customers to dangerous lead dust and paint chips, according to the Justice Department and tEnvironmental Protection Agency.

Lead-based paint has been banned in the U.S. since 1978, but when you’re sanding and scrapping down older homes you have to be careful. The agency said Lowes’ contractors repeatedly failed to use certified renovators or lead-safe practices when working on hundreds of older homes.

And there’s no safe level of lead. As part of the sanction, Lowes must implement a revised nationwide compliance program.

“Careless handling of lead paint endangers the health of children and other Americans.” said Principal Deputy Assistant Attorney General Adam Gustafson of the Justice Department’s Environment and Natural Resources Division. “The stiff penalty Lowe’s will pay reflects the importance of using certified firms and contractors in older home renovations.”

SeaWorld faces discrimination probe

The U.S. Justice Department on Nov. 25 opened an investigation into United Parks & Resorts, parent company of SeaWorld Orlando, Busch Gardens Tampa Bay and Aquatica, following complaints that the parks banned rollator-walkers with seats — mobility aids used by disabled guests — potentially violating the Americans with Disabilities Act.

Trader sentenced in loss-hiding scheme

David Smothermon, a former commodities-trading executive, was sentenced Nov. 25 to three years in prison for concealing more than $240 million in trading losses through mis-marked trades and false accounting entries, prosecutors said. He used the inflated results to secure a $15 million bonus before resigning when the losses surfaced. Smotheron, 55, of Houston, must forfeit $11.6 million and pay $19.55 million in restitution.

Sky Lease faked mail delivery times

Air-cargo firm Sky Lease I Inc. on Nov. 25 agreed to pay $1.03 million under the False Claims Act after admitting it submitted false delivery-time records to the U.S. Postal Service for internationally shipped mail.

Michigan pharmacist sentenced for Medicare fraud

Former Dearborn Heights pharmacist Nabil Fakih was sentenced Nov. 24 to 46 months in prison, ordered to pay $4 million in restitution and forfeit real estate after admitting he billed Medicare for prescription drugs that were never dispensed.

New Jersey vape seller accused of using fake FDA letters to lure investors

Mohammad Abuhadba, 42, of Wayne, New Jersey, was charged with wire fraud Nov. 24 after allegedly forging Food and Drug Administration authorization letters to raise money for a vaping-products venture. Investigators say the bogus government approvals helped him raise more than $2 million.

Another defendant added to food-aid fraud ring

Abdirashid Bixi Dool, 36, of Minneapolis, became the latest target in the Feeding Our Future fraud prosecution, accused of diverting federal child-nutrition funds through shell companies. Prosecutors say he claimed to feed thousands of children who never materialized.

Vitamin company CEO convicted in fraud scheme

Jared Wheat, a two-time felon running a Georgia dietary-supplement company called Hi-Tech Pharmaceuticals was convicted on Nov. 24 for wire fraud and money laundering in a scheme that misled customers about manufacturing standards.

PPP-lender co-founder given 10-year prison sentence for COVID-relief fraud

Stephanie Hockridge, co-founder of Blueacorn, was sentenced Nov. 21 to 10 years in prison after prosecutors found she and co-conspirators secured more than $63 million in fraudulent Paycheck Protection Program loans.

U.K. citizen indicted in tele-health fraud scheme

A Florida grand jury indicted Marek Rex Vernon Harrison Nov. 21 for allegedly directing a tele-medicine company that submitted fraudulent Medicare claims — over $2.7 million — for tele-health and genetic-testing services, using falsified documentation to hide ownership.

Michigan pharmacists sentenced in health care fraud case

Brothers Raad Kouza and Ramis Kouza were sentenced Nov. 21 after being convicted of billing Medicare, Medicaid and private insurers for prescription drugs never dispensed — a scheme that defrauded payors of more than $15 million.

Wound-care provider agrees to settlement over alleged medical-billing fraud

Vohra Wound Physicians Management agreed Nov. 21 to pay $45 million to settle allegations it billed Medicare for medically unnecessary surgical wound-care procedures and improperly coded services.

U.K. citizen indicted in telehealth fraud scheme

A federal grand jury in Florida indicted Marek Rex Vernon Harrison Nov. 21 on charges that he ran a telemedicine company that submitted more than $2.7 million in fraudulent Medicare claims for genetic-testing and tele-health services, including falsified enrollment documents to conceal his ownership.

Nevada home health executive sentenced for nurse-wage fraud and company sale deception

On Nov. 21 a federal court sentenced home-health executive Eduardo “Eddie” Lopez to 40 months in prison and ordered $2.5 million restitution plus $10.5 million forfeiture for wage-fixing of nurses and concealing a criminal investigation during the sale of his staffing company.

Regulator sues startup founder for investor fraud

The U.S. Securities and Exchange Commission filed a complaint on Nov. 21 against Shiloh Luckey, the founder of ComplYant App, alleging she raised more than $13 million from investors by exaggerating revenues, misrepresenting her credentials and misusing investor money for personal expenses such as home purchases, a Caribbean wedding and Super Bowl tickets.

Online seller pleads guilty to smuggling infant formula

A company selling European infant formula via LittleBundle.com pleaded guilty Nov. 21 to felony charges for smuggling formula into the U.S. without giving required prior notice to the U.S. Food and Drug Administration (FDA). The firm, Able Groupe Inc. (also doing business as Little Bundle and Huggable, Inc.), admitted it used false commodity descriptions and failed to alert regulators, triggering forfeiture of $304,640 and total government recovery expected around $2.3 million under the plea agreement.

Staffing-company owner indicted in massive tax-fraud scheme

Lorena Padilla, 49, of Villa Park, Calif., and several co-defendants were arrested Nov. 20 on an eight-count federal indictment charging them with executing a $90 million tax-fraud and money-laundering scheme that allegedly withheld and failed to remit employment taxes for temporary workers. The unpaid taxes reportedly funded lavish lifestyles.

Investment-fund managers sanctioned for securities fraud

A federal court in Madison, Wis., ordered Nov. 19 that the managers of a private fund and their related entities pay more than $27.5 million after a jury found them liable for securities fraud. The case centers on fund managers who promoted illiquid mineral- and private-equity investments to clients, misrepresenting returns for the fund run by Bluepoint Investment Counsel, Greenpoint Asset Management II and others.

Insider-trading ring charged across multiple countries

Samy Fadi Khouadja, 45, of Canada, Zhi Ge, 34, of China, and six others were charged on Nov. 18 in a global insider-trading scheme that prosecutors say netted tens of millions in illicit profits by trading ahead of corporate announcements. Authorities allege the group used burner devices and offshore accounts to conceal their positions.

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Getting The Lead Out At Lowes