White-Collar Crime

  • May 8, 2012
    Guest Post

    By Reuben Guttman and Traci Buschner. Mr. Guttman is a Senior Fellow and Adjunct Professor at the Emory Law School Center for Advocacy and Dispute Resolution, and a partner at the firm of Grant & Eisenhofer where he heads the firm's whistleblower practice. He is a founder of the website, Whistleblowerlaws. Ms. Buschner is a Senior Counsel with Grant & Eisenhofer. Mr. Guttman and Ms. Buschner were lead counsel for the lead whistleblower, Meredith McCoyd, in U.S. ex rel. McCoyd v. Abbott Labs.


    Abbott Labs has agreed to pay $1.6 billion dollars to settle criminal and civil allegations that it engaged in the unlawful marketing of its anti-epileptic drug Depakote.

    The settlement arose out of a False Claims Act (FCA) case filed in the fall of 2007.  Whistleblower or "Relator" Meredith McCoyd, alleged that the company marketed Depakote to elderly nursing home patients and to children for purposes that had not been approved by the Food and Drug Administration (FDA).  Ms. McCoyd also alleged that Abbott made misrepresentations about the safety and efficacy of the drug and paid kickbacks to doctors and others.

    This case was not just about lost government dollars. It was about a company that placed money over medicine by marketing unlawfully to vulnerable patient populations. And we still don't know what the long-term consequences are for those patients who took Depakote as a result of marketing improprieties.

    Unfortunately, Abbott is not the first pharmaceutical company to face allegations of unlawful marketing tactics. Astra Zeneca, Johnson & Johnson and Pfizer have all paid hefty fines following allegations of marketing derelictions.

  • October 19, 2011

    by Jeremy Leaming

    The U.S. Chamber of Commerce, the nation’s leading lobbyist for corporate America, is feverishly working to alter a federal law that has, as noted in a recent report published by the Open Society Foundations, helped spur a global effort to fight corrupt business practices.

    In “Busting Bribery: Sustaining the Global Momentum of the Foreign Corrupt Practices Act,” scholars David Kennedy and Dan Danielsen write that the United States “has been a global leader in the fight against corruption,” citing the enactment in 1977 of the FCPA.

    Early in the report Kennedy, a Harvard Law School professor, and Danielsen, a Northeastern University School of Law professor, note that the U.S. took the lead in fighting corrupt business practices overseas because its leaders realized that far-reaching “corruption abroad imposes enormous costs on American business, damages the global business environment and undermines the integrity and effectiveness of governments. A culture of corruption raises the costs of penetrating foreign markets and undermines predictability and business confidence. It imposes particular hardships on small and medium sized American enterprises seeking to participate in the global economy.”

    Government and businesses had joined together to work to end corrupt business practices, which hobble efforts of smaller corporations to engage the global market. The passage of the FCPA, the authors write, “represented an alliance between the government and the American business community, driven by a shared recognition of the harms inflicted on American business by foreign corruption. The Act raised the cost of corruption and encouraged sound business practice. By criminalizing the payment of bribes abroad, the FCPA strengthened the hand of American business in refusing the demands of foreign officials. By requiring that listed companies maintain records and file reports, the FCPA encouraged internal vigilance by leading business actors.”

  • July 11, 2011

    Not long after the U.S. Supreme Court limited securities fraud lawsuits against a mutual fund’s investment adviser in its June 5 – 4 opinion in Janus Capital Group v. First Derivative Traders, Howard A. Fischer wrote that the decision may have left another avenue open to pressing a securities fraud claim.

    Fischer, a senior trial counsel in the New York Regional Office of the Securities and Exchange Commission (SEC), wrote for Thomson Reuters Accelus that the Janus opinion may have opened the door for actionable claims to be lodged pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO).”

    The New York Law Journal reports, however, that at least one federal appeals circuit has “rebuffed” an attempt by investors harmed by the Bernard Madoff Ponzi scheme to use a RICO action to recover some of their loses.

    The U.S. Court of Appeals for the Second Circuit, Mark Hamblett for the Journal reports, held that the “RICO claim was precluded by § 107 of the Private Securities Litigation Reform Act, 18 U.S.C. § 1964, as the court adopted a restrictive analysis on the bar against RICO actions in securities cases.”

    The Journal notes that Circuit Judge Robert D. Sack “said the scope of that bar is unsettled in the circuit, so the question was whether it bars all RICO claims involving the purchase or sale of securities “or only RICO claims in cases where that plaintiff could have asserted a fraud claim against the named defendant.”    

  • June 29, 2011

    The Supreme Court in a decision issued earlier this month may have blocked one route for stockholders to challenge corporate fraud, but in doing so, may have “inadvertently left open a far more dangerous path for the plaintiffs’ bar: claims under the Racketeer Influenced and Corrupt Organizations Act, or RICO,” writes Howard A. Fischer for Thomson Reuters Accelus.

    Fischer, a senior trial counsel in the New York Regional Office of the Securities and Exchange Commission, analyzes the 5-4 decision in Janus Capital Group, Inc. v. First Derivative Traders, and concludes that the high court majority led by Justice Clarence Thomas may have unwittingly provided “the plaintiffs’ bar with a potential weapon far more powerful than the one it takes away. The Supreme Court appears to have ignored the warning of George Santayana that those who cannot learn from history are doomed to repeat it.”

  • May 20, 2011

    Large, crafty American corporations helped cause the nation’s Great Recession, and then many of them got bailed out by taxpayers. Very few of those corporations – think Goldman Sachs – have been held accountable for their actions. So maybe it’s not surprising that corporations and their lobbyists are quickly back to their tired machinations of doing everything to solidify the status quo, which means free reign to make gobs of money by bilking consumers and hobbling the rights workers while remaining above the law.

    Take for example the hue-and-cry emanating from rightwing lawmakers and pundits over the National Labor Relations Board’s (NLRB) recent decision to lodge a complaint against Boeing for appearing to retaliate against workers at its Washington State plant once they announced plans to strike. Part of the complaint accuses of Boeing of establishing a nonunion production outfit in South Carolina to retaliate against the unionized workers in Washington State.

    The NLRB is an independent agency charged with enforcing the National Labor Relations Act (NLRA), which makes it illegal for corporations to retaliate or discriminate against workers who engage in lawful activity, such as striking. A trial before an Administration Law Judge is set for June. But the rightwing and its enablers in Congress have launched a tirade against the NLRB, including threats to demolish the agency.

    American Rights at Work Executive Director Kimberly Freeman Brown notes in this post for The Hill’s Congress Blog, “Regardless of the facts, GOP legislators are using the case as an excuse to advance their ongoing attack on the NLRB. Politicians like Rep. Phil Roe (R-Tenn.), Rep. Tom Price (R-Ga.), and Sen. Lindsey Graham (R-S.C.) have made repeated attempts to defund and dismantle the agency, and this is just the latest opportunity to do the work of their corporate donors by tearing down protections for workers.”

    The Boeing case is yet another effort of rightwing policymakers to trample obstacles in the way of corporations from expanding their power at the expense of consumers and workers. As Rolling Stone’s Matt Taibbi notes in a recent article, “The People vs. Goldman Sachs,” a comprehensive report from Sen. Carl Levin and a subcommittee lays out the brutal facts: Goldman Sachs stole “more money than most people can rationally conceive of, from their own customers,” and then went before the Senate “took an oath before Congress, and lied about it.”

    In a recent editorial, The New York Times said the NLRB’s action against Boeing “is a welcome effort to defend workers’ rights to collective bargaining.”

    “At the very least,” the editorial concluded, “this case will shed light on the business strategies employed by a powerful company to resist unionization.”