Other Types of Fraud 
 

Here is a list of articles about some of the qui tam cases brought by John R. Phillips, Mary Louise Cohen and the firm that involve fraud other than defense and health care fraud. The whistleblower lawsuits discussed were brought against:

First Union Securities Inc. (as successor to Everen Securities), Kidder Peabody & Co., Donaldson Lufkin Jenrette Securities Corp. and Bear Stearns & Co. Inc.: The four investment banks agreed in October 2000 to pay the federal government a total of $14.4 million to settle federal yield-burning claims, including a whistleblower lawsuit brought by former investment banker Michael Lissack. At the same time, Lissack’s claims against Sakura Global Capital Inc. — made in the "qui tam" lawsuit — were unsealed. The lawsuit charged that Sakura cheated the federal government out of tens of millions of dollars through its fraudulent pricing of investment contracts, known as "forward supply agreements," that are often used in connection with advance refunding refinancings of tax-exempt municipal bonds.

  • "Four firms settle yield-burning suit; Sakura case unveiled," Lynn Hume, Bond Buyer, 11/1/00.
  • "Securities firms expected to settle yield-burning case," John Connor, The Wall Street Journal, 10/31/00.

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John Nuveen & Co., Banc One Capital Markets Inc., et. al.: John Nuveen, Banc One Capital Markets and several regional investment banks paid the federal government a total of more than $13 million in August 2000 to settle federal charges and a qui tam lawsuit alleging that they engaged in "yield-burning" by overcharging municipalities for Treasury securities.

  • "Securities firms to settle charges of yield-burning," John Connor, The Wall Street Journal," 8/7/00.
  • "Nuveen, Bank One pay securities fraud penalty," Melissa Allison, Chicago Tribune, 8/6/00.
  • "Firms in $13.5 million settlement of U.S. ‘yield-burning’ charges," The New York Times," 8/5/00.

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Salomon Smith Barney Inc., PaineWebber Inc., Goldman, Sachs & Co., et. al.: Seventeen investment banks paid about $140 million to the federal government in April 2000 to settle charges that they defrauded the federal government by overpricing securities sold in connection with certain municipal bond transactions, a practice known as "yield burning." The settlement covered a "qui tam" lawsuit brought by former investment banker Michael Lissack and a separate qui tam lawsuit brought by Joseph Mooney, a public finance banker in Florida.

  • "Dain to pay $12.9 million to settle muni bond abuses," Jill J. Barshay, Star Tribune, 4/7/00.
  • "Brokers settle pricing charges," Helen Huntley, St. Petersburg Times," 4/7/00.
  • "First Union to pay $7.7 million; securities fraud settlement reaches $140 million for investment banks," Carol Hazard, Richmond Times-Dispatch, 4/7/00.
  • "Settlement reported in bond-pricing case," Patrick McGeehan, The New York Times, 4/6/00.
  • "U.S., 17 securities firms reach accord on scandal-tainted municipal bonds," Charles Gasparino and John Connor, The Wall Street Journal, 4/6/00.

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Deutsche Banc Alex. Brown Inc.: Investment bank Deutsche Banc Alex. Brown Inc. agreed in November 1999 to pay more than $15.3 million to settle a qui tam lawsuit and federal charges that it had defrauded the federal government in the municipal bond market through a practice known as "yield burning." The qui tam case was brought by Michael Lissack, a former managing director of Smith Barney.

  • "BT Alex. Brown agrees to pay $15.3 million in bond case," David Barboza, The New York Times, 11/18/99.
  • "U.S. near sweeping pact on ‘yield burning,’" Charles Gasparino and John Connor, The Wall Street Journal, 11/18/99.
  • "Alex. Brown overcharge case settled," Bill Atkinson, Baltimore Sun, 11/18/99.
  • "Broker to pay for Pa. markups," Tom Cahill, The Philadelphia Inquirer, 11/18/99.
  • "SEC fines, censures lawyer, two investment firms for gouging state," Ken Zapinski and Frank Reeves, Pittsburgh Post-Gazette, 11/18/99.

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Lazard Freres & Co.: Lazard paid a total of $20 million to settle two qui tam lawsuits that were brought by Michael Lissack, a former managing director of Smith Barney. Lazard paid the federal government $11 million in April 1999. And it paid the Los Angeles Metropolitan Transportation Authority (LAMTA) $9 million in September 1998 to settle a qui tam lawsuit involving one municipal bond refunding transaction. That lawsuit, filed under California law, charged that Lazard secretly and illegally overcharged the LAMTA for securities it sold to the authority as part of a the refunding transaction in 1993. The lawsuit also alleged that Lazard breached its fiduciary obligations by defrauding LAMTA, its financial advisory client.

  • "Lazard to pay $11 million to settle federal charges," Joseph B. Treaster, The New York Times, 4/23/99.
  • "Lazard to pay $11 million in settlement with the U.S. in ‘yield-burning’ case," Charles Gasparino and John Connor, The Wall Street Journal, 4/23/99.
  • "11M Lazard hit for muni fraud," Amy Feldman, New York Daily News, 4/23/99.
  • Lazard to pay $11 million to settle federal charges," Joseph B. Treaster, The New York Times, 4/23/99.
  • "Lazard to pay $11 million in settlement with the U.S. in ‘yield-burning’ case," Charles Gasparino and John Connor, The Wall Street Journal, 4/23/99.
  • "11M Lazard hit for muni fraud," Amy Feldman, New York Daily News, 4/23/99.
  • "LAMTA's law firm says Lissack strategy will be a replay," Andrea Figler, Bond Buyer, 9/30/98.

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James Jones Co.: The Los Angeles Department of Water and Power (DWP) in December 1998 joined a whistleblower lawsuit that charged the James Jones Co. ("Jones"), a southern California company, deliberately provided inferior valves and other parts for water supply systems that could cost Los Angeles alone $150 million to replace. The price tag for San Francisco and more than a dozen other California municipalities could be significantly higher.

  • "Water-system gear suit draws attention," Andy Pasztor, The Wall Street Journal, 12/22/98.

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Ball, Ball & Brosamer Inc.: The federal government joined in November 1998 a whistleblower lawsuit alleging that Ball, Ball & Brosamer (BBB) used inferior concrete to pave the runways and taxiways at airports in Orange County, California, and Denver. The "qui tam" case, filed by two officials with a BBB subcontractor on the Denver airport project, alleged that the California company used watered-down concrete to reduce its costs and boost its profits.

  • "DIA concrete diluted, suit says," Kevin Flynn, Rocky Mountain News, 11/26/98.
  • "Airport contractor is sued; concrete provider at DIA accused of diluting product," Mike McPhee, Denver Post, 11/26/98.
  • "U.S. joins lawsuit over John Wayne Airport taxiways," Jeff Gottleib, Los Angeles Times, 11/26/98.
  • "U.S. joins suit over concrete at JWA," John McDonald, The Orange County Register, 11/26/98.

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CoreStates Financial Corp.: CoreStates paid the federal government $3.7 million in April 1998 to settle a whistleblower lawsuit that charged Meridian Securities, which CoreStates had acquired, defrauded the federal government through "yield-burning." Investment banks are said to "burn the yield" on bond transactions made on behalf of municipalities when they pocket proceeds that should have gone to the federal government.

  • "CoreStates settles whistleblower suit that municipal bond issuers were overcharged," Federal Contracts Report, 4/27/98.
  • "CoreStates settles bond case with U.S. for $3.7 million," David Barboza, The New York Times, 4/24/98.
  • "CoreStates settles in muni tax fraud case," Thomas S. Mulligan, Los Angeles Times, 4/24/98.
  • "CoreStates pays $3.7 million to end yield-burning case," Lynn Stevens Hume, The Bond Buyer, 4/24/98.
  • "First joint ‘yield burn’ case is seen," John Connor and Charles Gasparino, The Wall Street Journal, 4/23/98.

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W.R. Grace, Baker &Taylor: W.R. Grace & Co. and its former book division, Baker & Taylor Inc., paid a total of $18.5 million in 1999 and 2000 to settle charges that they defrauded libraries, schools and government offices across the country by deliberately overcharging them for millions of books. Two whistleblowers brought the scheme to the government’s attention by filing a "qui tam" lawsuit in 1995. The Justice Department and the state of California joined the lawsuit, and seventeen other states subsequently were granted court permission to intervene

  • "W.R. Grace, subsidiary to pay $15.5 million to settle charges of book overpricing," Federal Contracts Report, 8/8/00.
  • "Grace, former unit to pay $15.5 million in book-sale accord," Wall Street Journal, 8/3/00.
  • "Bookseller settles overcharging case with state libraries," San Jose Mercury News, 8/3/00.
  • "Book vendors settle claims of defrauding government," San Francisco Chronicle, 8/3/00.
  • "Texas to get share of $15.5 million," Kathy Walt, Houston Chronicle, 8/3/00.
  • "Arkansas due $95,972 from suit over high price of books," Arkansas Democrat-Gazette, 8/3/00.
  • "State gets over $800,000 in settlement on book prices," Milwaukee Journal Sentinel, 8/3/2000.
  • "Book publisher to pay N.M. $247,424," Wrenn Propp, Albuquerque Journal, 8/3/00.
  • "Book wholesaler charged with fraud," Julie L. Nicklin, The Chronicle of Higher Education," 2/14/97.
  • "Whistleblower suit claims B&T cheats libraries," Calvin Reid, Publishers Weekly, 2/10/97.
  • "Justice Dept. joins suit against book wholesaler," David Streitfeld and David Segal, The Washington Post, 2/4/97.
  • "U.S. joins suit against book wholesaler," Timothy L. O’Brien, The Wall Street Journal, 2/4/97.
  • "Firm inflated book prices, suit alleges," Seth Rosenfeld, San Francisco Examiner, 2/4/97.
  • "Book merchant accused of giant fraud," Tori Minton, San Francisco Chronicle, 2/4/97.

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CSX Transportation Inc.: CSX paid $5.9 million in September 1995 to settle a whistleblower lawsuit that said the company had inflated labor and equipment charges for work done to maintain and repair highway railroad crossings for the government.

  • "CSX will pay whistleblower $1.18 million," Barry Meier, The New York Times, 9/30/95.
  • "CSX to settle $5.9 million claim," Charles Slack, Richmond Times-Dispatch, 9/30/95.
  • "CSX unit to settle ex-employee’s suit for $5.9 million," Daniel Machalaba, The Wall Street Journal, 10/2/95.
  • "Deals and suits: United States ex rel. Nelson v. CSX Transportation Inc.," Jonathan Groner, Legal Times, 10/9/95.

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