Headlines that Matter for Companies and Executives in Regulated Industries
Briefing Regarding FCA Circuit Split Continues Before The Supreme Court
In response to a recent DOJ filing, a hospice whistleblower claimed that the DOJ failed to substantiate its claim that circuit courts have similar standards for specificity in FCA complaints. Specifically, the whistleblower criticized the DOJ for failing to provide any credible basis for its claim that the differences among the circuits are based on case-specific factual issues, rather than any true legal difference. The case is Johnson et al. v. Bethany Hospice and Palliative Care LLC, No. 21-462.
The arguments made by the whistleblower come after a number of FCA petitions involving Rule 9(b)’s requirement that fraud is pled with “particularity.” In May, the Supreme Court invited the U.S. solicitor general to opine on the long-standing circuit split. The solicitor general’s response is forthcoming. The DOJ has downplayed the circuit split in its filings, as summarized here and here.
Another Juror Dismissed In Balwani Trial
Another juror has been dismissed after testing positive for Covid-19 in the trial of Ramesh “Sunny” Balwani, the ex-Theranos executive and former boyfriend of former Theranos CEO Elizabeth Holmes. This is the third juror who has been excused after testing positive for Covid-19, leaving only two alternative jurors remaining. News reports indicate that Balwani’s trial strategy has been to distance himself from Holmes and highlight that he joined Theranos after its launch and that he was also an investor in the company. Prosecutors recently announced that they do not plan to call Holmes as a witness.
Holmes was convicted in January 2022 and is scheduled to be sentenced this September.
A link to DOJ’s website containing information about the case can be found here.
Reality TV Stars Todd and Julie Chrisley Found Guilty of Fraud
Todd and Julie Chrisley from the reality television show “Chrisley Knows Best” were found guilty this week of conspiring to commit bank fraud, bank fraud, conspiracy to defraud the United States, and tax fraud. According to DOJ’s press release, the couple defrauded banks of more than $30 million in personal loans when they, along with their former business partner, submitted false bank statements, audit reports, and personal financial statements to obtain loans from banks located in and around Atlanta, Georgia. The couple allegedly spent the money on travel, real estate, designer clothing, and luxury cars. The DOJ also alleged that after Todd Chrisley filed for bankruptcy, his wife continued to create false financial documents in order to obtain a luxury rental property in Los Angeles, California.
The DOJ’s press release details how the couple operated a loan-out company that they used to receive income from their reality television show and other business ventures. They also opened and kept corporate bank accounts in Julie Chrisley’s name to avoid paying delinquent taxes owed by Todd Chrisley.
The bank accounts were transferred from Julie’s name to Todd Chrisley’s mother, known as “Nanny Faye” on the show, to further conceal Todd’s income after the IRS sought information about bank accounts in Julie’s name. Julie Chrisley was additionally found guilty of obstruction of justice for providing a false document in response to a grand jury subpoena in which she tried to make it appear as though the couple had not lied to the bank when they transferred ownership of the loan-out company’s bank account to Todd Chrisley’s mother.
Peter Tarantino, the couple’s CPA, was also found guilty and convicted of filing two false corporate tax returns for the loan-out company. Specifically, the corporate tax returns falsely claimed that the company earned no money and made no distributions in 2015 and 2016.
All three individuals are scheduled to be sentenced in October.
Read DOJ’s press release here.