The U.S. Court of Appeals for the Second Circuit recently affirmed an order of restitution by the U.S. District Court for the Eastern District of New York, denying a request by the defendant (Roy Ageloff) to release some of the funds that had been held by the Court pending his resentencing. U.S. v. Catoggio, No. 11-3474, slip op. (2nd Cir., October 10, 2012).
Ageloff and his partner, Robert Catoggio, engaged in a significant “pump-and-dump” securities fraud scheme from 1991 to 1998. Eventually, Mr. Ageloff entered a plea of guilty to one count of racketeering and stipulated to a sentence enhancement of 18 levels for a fraud that amounted to losses exceeding $80 million. His original sentence, which included $80 million in restitution under the Mandatory Victim’s Restitution Act (“MVRA”), 18 U.S.C. 3663(A), was reversed and remanded based on a finding that the order of restitution had been issued without first identifying the victims and their losses. See, U.S. v. Catoggio, 326 F.3d 323, 324 (2nd Cir. 2003).
On remand, the government submitted a report prepared by the National Association of Securities Dealers (“NASD”) that documented an estimated $190 million in losses suffered by more than 9,000 victims. Prior to the resentencing, Ageloff had requested access to portions of the $536,000 that he had deposited with the court prior to his initial sentencing so that he could secure counsel of his choice. The district court denied this request.
Mr. Ageloff was not resentenced until 2011 due to a variety of factors, including a separate prosecution of Mr. Ageloff in Florida. Ultimately, after reviewing Ageloff’s objections to the NASD report, the district court issued a new restitution order on resentencing, ordering Ageloff to pay just over $190 million. On resentencing, the district court affirmed its rejection of Ageloff’s request for access to any of those previously deposited funds. Read More
PITTSBURGH, PA- Pietragallo Gordon Alfano Bosick & Raspanti, LLP just completed its third year as a founding flagship sponsor of the American Cancer Society’s Making Strides Against Breast Cancer of Greater Pittsburgh 5K walk. Team Pietragallo held many successful fundraising events to help raise money for the cause. The firm would like to thank all the supporters who helped make it possible.
The American Cancer Society has been Making Strides Against Breast Cancer for over 20 years by uniting communities across the country to raise awareness of the disease, raise money for research and to honor survivors. This program gives the world the opportunity to celebrate more birthdays each and every year. Read More
Background
On September 5, 2012, the Second Circuit issued its decision in U.S. ex rel. Feldman v. Van Gorp., 2012 U.S. App. LEXIS 18667 (2nd Cir. Sept. 5, 2012), a case with important implications for the “materiality” standard under the False Claims Act (“FCA”) as well as the issue of how to properly calculate FCA damages.
This case, brought under the qui tam provisions of the False Claims Act, involved false statements allegedly made on National Institute of Health (“NIH”) grant renewal applications by Dr. Wilfred Van Gorp and Cornell University Medical College. According to the complaint, Dr. Van Gorp and Cornell University Medical College (“Defendants”) initially applied for and received, a grant for a fellowship program to study the neurophsycology of HIV/AIDS from NIH in 1997. As part of the application, Defendants allegedly described the structure of the program including the “key” faculty involved in the fellowship program, the curriculum used, and the training and evaluation of fellows in HIV/AIDS research. According to the terms of the grant, Defendants allegedly were required to immediately notify NIH of any developments that would have a significant impact on the research program. Additionally, Defendants allegedly were required to file renewal applications each year in order to continue receiving grant funds.
In 2003, Daniel Feldman, a former fellow in Cornell’s HIV/AIDS fellowship, filed a suit against Defendants. Feldman alleged that Defendants falsely claimed in their renewal applications that no changes were made to the fellowship program, when in fact the fellowships’ resources, curriculum, faculty and training were much different than what was initially described in the initial grant application.
The case was eventually unsealed and went to trial in the Southern District of New York. In 2010, a jury found that Defendants were liable under the FCA for making false statements in three of their renewal applications and awarded damages of $855,714. Read More
Joseph D. Mancano will present, “Understanding Bank Agreements” and “Legal Pitfalls in Treasury,” at the University of North Carolina Treasury Management Series held at the Univserity of North Carolina in Chapel Hill, NC on October 2, 2012.
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On August 17, 2012, the federal district court for the Western District of Pennsylvania denied a claim by two former security officers to certify a class action under the Fair Labor Standards Act (“FLSA”) against the firm’s client, Guardsmark, LLC. In Hall and McCombs v. Guardsmark, No. 11-213, 2012 WL 3580086 (W.D. Pa. August 17, 2012), Judge Mitchell held the Plaintiffs failed to satisfy the “modest factual showing” standard necessary to obtain conditional certification of the proposed collective action. The Plaintiffs claimed that they had been required to work “off the clock” without being paid, and that they were entitled to be paid for maintaining their uniforms. (Guardsmark had successfully convinced the Plaintiffs to withdraw an earlier claim regarding meal breaks.) Because so many employers are facing FLSA suits, the reasoning from the Court’s decision will be helpful to other employers defending these claims.
First, the Court ruled that Plaintiffs could not make a “modest factual” showing that they were similarly situated to other potential class members because the named Plaintiffs had been terminated more than three years before the motion to certify the class had even been filed. One of the factors in determining whether the plaintiffs are similarly situated is whether the claimed discrimination occurred during different time periods and by different decision makers. Hall and McCombs left their employment with Guardsmark in July, 2009. Since notice would not have been sent until August, 2012, at the earliest, the proposed class would consist of security officers “asserting FLSA violations beginning August 2009 and thereafter.” Stated slightly differently, the proposed class would not have included the named Plaintiffs. Therefore, the court found any opt-ins would not be similarly situated because they were not within the same temporal time frame.
Second, the Court found it significant, although not determinative, that the Plaintiffs had not submitted any affidavits from any other potential opt-in members. Read More
Marc S. Raspanti will serve on the FCA Whistleblower Counsel Panel, “Candid Observations and Insights by Experienced Counsel,” at the AHLA/HCAA Fraud & Compliance Forum on October 1, 2012 in Baltimore, MD.
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In 1993, Ninth Circuit Judge Alex Kozinski co-authored an article for the Yale Law Journal, wherein the authors explained the term “Chutzpah.” See Alex Kozinski and Eugene Volokh, Lawsuit Shmawsuit, 103 Yale L.J. 463 (1993). Although the authors offered no formal definition for the term, as demonstrated in the opinion of a panel of the Ninth Circuit, one of the co-authors, knows it when he sees it. In United States v. Leal-Del Carmen 2012 W.L. 4040253 (C.A. 9 Cal.), now Chief Judge Kozinski saw it clearly in the government’s deportation of a material witness favorable to the defendant. and he and the rest of the panel did not approve.
In Leal-Del Carmen, the Ninth Circuit reversed the conviction of Jonathan Leal-Del Carmen on charges of bringing in illegal aliens without presentation in violation of 8 U.S.C. §1324(a)(2)(B)(iii). In doing so, the court ruled that the government had undermined the defendant’s opportunity to present a complete defense, in violation of the Fifth and Sixth Amendments, by deporting a witness that the government knew could give exculpatory evidence. The court further found that the district court abused its discretion first by refusing to admit a video or transcript of the deported witness’ testimony, and denying a missing-witness instruction.
Jonathan Leal-Del Carmen was arrested by border patrol agents after a group of 12 illegal aliens had been detained along the United States-Mexico border. Following his arrest, border patrol agents interviewed at least 4 of the aliens about Leal-Del Carmen and another individual who had been arrested. One of those witnesses, Anna Maria Garcia-Garcia, identified Leal-Del Carmen in a photo spread. When a border agent asked if Leal-Del Carmen gave orders to the rest of the group, she answered, “No, he didn’t give orders.” After the officer said, “Pardon me?” she again stated, “He did not give orders.” Read More
On September 24, 2012, DOJ announced the resolution of its prosecution of a subsidiary of TYCO International Ltd. (TYCO) under the Foreign Corrupt Practices Act (FCPA). In accordance with the agreement, TYCO Valves & Controls Middle East, Inc. (TVC ME) entered a plea of guilty in the U.S. District Court for the Eastern District of Virginia to a one count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA in its sale and marketing of valves and other industrial equipment throughout the Middle East. According to the criminal information, TVC ME paid bribes to officials employed by Saudi Aramco, an oil and gas company controlled and managed by the government of the Kingdom of Saudi Arabia, in order to obtain contracts with Saudi Aramco. At the conclusion of the plea proceeding, the Court sentenced TVC ME to pay a $2.1 million fine. The fine was part of a $13.68 million penalty paid by TYCO for falsifying books and records in connection with payments by its subsidiaries to government officials. TYCO paid the fine as part of a non-prosecution agreement (NPA) that it entered into with DOJ.
As part of TVC ME’s plea agreement and TYCO’s NPA, the companies agreed to cooperate with DOJ and report periodically concerning the company’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. DOJ’s decision to allow a subsidiary to enter a plea of guilty and the parent company (TYCO) to enter into an NPA was apparently based on DOJ’s recognition of TYCO’s timely, voluntary and complete disclosure, which included a global internal investigation concerning bribery and related misconduct, as well as follow on remediation of the noted problems. DOJ cited TYCO’s remediation efforts, which included the implementation of an enhanced compliance program, the termination of employees responsible for the improper payments and falsification of books and records, the severing of contracts with responsible third-party agents and closing of subsidiaries due to compliance failures. Read More
