Tag: Fraud

Berkshire Hathaway Says Blue Chip Law Firm Aided Fraud

FRANKFURT — Berkshire Hathaway may have found a way to get back some of the hundreds of millions of dollars it lost after buying a seemingly solid German pipe maker that turned out to be on the verge of going bust.

The conglomerate, led by Warren E. Buffett, is suing Jones Day, the law firm that represented the owners of the pipe maker when it was sold to a Berkshire Hathaway subsidiary in 2017. The lawsuit, filed late last month, accuses Jones Day of helping to trick Berkshire Hathaway into paying five times what the German company was worth.

There is not much chance that Berkshire Hathaway will recover any money from the sellers of the pipe maker, Wilhelm Schulz, which was named for its founder. The shareholders have declared bankruptcy and are facing a criminal investigation in Germany. But Jones Day is a prominent international law firm with deeper pockets.

The attempt to collect damages from Jones Day is an unexpected twist in the saga of Wilhelm Schulz, which is based in Krefeld, a city north of Düsseldorf. If the suit is successful, it will be at least a small consolation to Berkshire Hathaway shareholders after the company lost $23.3 billion in the first half of 2020. (Profits rebounded in the later part of the period, however.)

“The fraudulent transaction would never have occurred without Jones Day’s substantial assistance,” according to the lawsuit, filed in U.S. District Court in Houston on behalf of Precision Castparts, a Berkshire Hathaway subsidiary that makes components for aircraft. The lawsuit accuses Jones Day of withholding documents that would have exposed Wilhelm Schulz’s perilous financial state and calls the firm a “co-conspirator” in a “massive fraud.”

Ulrich Brauer, the partner in charge of Jones Day’s office in Düsseldorf, said the firm would not comment on a pending case.

Jones Day lawyers in Houston and Düsseldorf handled the sale of Wilhelm Schulz, which specializes in pipes for the oil and gas industries. Jones Day also represented the owners, who included Wolfgang Schulz, the son of the founder, when the case went before an arbitration panel in New York.

The panel found in April that Mr. Schulz and other managers had used false sales invoices, computer hacks and phantom customers to make Wilhelm Schulz look healthier than it was and hoodwink Precision Castparts into paying a grossly inflated price. The deal was a rare misstep for the organization run by Mr. Buffett, who is considered one of the savviest investors in the world.

The arbitrators awarded 643 million euros ($756 million) in damages to Precision Castparts, which is based in Portland, Ore. That is the difference between the €800 million that Precision Castparts paid for Wilhelm Schulz and its estimated true value of €157 million. The arbitrators’ decision was upheld in July by the U.S. District Court for the Southern District of New York.

Because the holding company controlled by Mr. Schulz is in insolvency proceedings, “it is unclear if it will pay even a fraction

Continue reading

The Law Offices of Frank R. Cruz Files Securities Fraud Lawsuit Against LOOP Industries, Inc.

The Law Offices of Frank R. Cruz announces that it has filed a class action lawsuit in the United States District Court for the Southern District of New York captioned Tremblay v. Loop Industries, Inc., et al., (Case No. 1:20-cv-08538) on behalf of persons and entities that purchased or otherwise acquired Loop Industries, Inc. (“Loop” or the “Company”) (NASDAQ: LOOP) securities between September 24, 2018 and October 12, 2020, inclusive (the “Class Period”). Plaintiff pursues claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).

If you are a shareholder who suffered a loss, click here to participate.

Loop is a technology company that purports to own proprietary technology that depolymerizes no- and low-waste PET plastic and polyester fiber. The resulting material is used to create PET resin for food-grade packaging.

On October 13, 2020, Hindenburg Research published a report alleging, among other things, that “Loop’s scientists, under pressure from CEO Daniel Solomita, were tacitly encouraged to lie about the results of the company’s process internally.” The report also stated that “Loop’s previous claims of breaking PET down to its base chemicals at a recovery rate of 100% were ‘technically and industrially impossible,’” according to a former employee. Moreover, the report alleged that “Executives from a division of key partner Thyssenkrupp, who Loop entered into a ‘global alliance agreement’ with in December 2018, told us their partnership is on ‘indefinite’ hold and that Loop ‘underestimated’ both costs and complexities of its process.”

On this news, the Company’s share price fell $3.78, or over 32%, to close at $7.83 per share on October 13, 2020, thereby damaging investors.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Loop scientists were encouraged to misrepresent the results of Loop’s purportedly proprietary process; (2) that Loop did not have the technology to break PET down to its base chemicals at a recovery rate of 100%; (3) that, as a result, the Company was unlikely to realize the purported benefits of Loop’s announced partnerships with Indorama and Thyssenkrupp; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

Follow us for updates on Twitter: twitter.com/FRC_LAW.

If you purchased Loop securities during the Class Period, you may move the Court no later than 60 days from the date of this notice to ask the Court to appoint you as lead plaintiff.  To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class.  If you purchased Mesoblast securities, have information or would like to learn more about these claims,

Continue reading

Man Gets 16 Months in Prison Over Stolen Valor Government Fraud Scheme

A 43-year-old California man named James Stiles has been sentenced to 16 months in federal prison and ordered to pay $167,234 in restitution for pretending to be a Marine wounded in battle just to obtain medical and housing benefits.

Stiles continued his “stolen valor” scheme, the phrase for when someone pretends to be a military veteran, for four years before he was caught.

Stiles was found guilty of seven counts of government fraud including $194,526 in medical visits and $3,771 in housing payments that he received from Veterans Affairs (VA) by claiming to have served in the military from 1995 to 2005. He told VA officials that he had served on a combat tour in March 2005 and won two Purple Heart medals for being injured in the line of duty, according to the Marine Corps Times.

He first applied for healthcare benefits in November 2012. Over the next four years, he received 692 outpatient treatments at the Tibor Rubin VA Medical Center in Long Beach, California, including emergency care for a life-threatening grand mal seizure.

In December 2015, Stiles also applied to the Department of Housing and Urban Development (HUD)-Veterans Affairs Supporting Housing program, according to The Press-Enterprise. After being approved for the program, the HUD’s local housing partner, the Orange County Housing Authority, began giving Stiles’ landlord monthly vouchers to help cover his rent from February 2016 onward.

James Stiles marine healthcare fraud Veterans Affairs
A 43-year-old named James Stiles has been sentenced to federal prison for receiving nearly $195,00 in medical care and nearly $4,000 in housing vouchers by pretending to have been a Marine veteran who was awarded two purple hearts.
Scott Peterson/Getty

When the VA confronted Stiles about his record in April 2016, he admitted that he had never served in the military and had lied about his past in order to access medical benefits.

Stiles pleaded guilty on June 18 to charges of making false statements, theft of government property, healthcare fraud and committing an offense against the government.

During court proceedings, prosecutors played a March 2016 recording in which Stiles falsely claimed that he “was a captain in the Marine Corps, that he served for 10 years, that he was simultaneously shot in the head by a 5-year-old ‘kid’ and in the back by a sniper, that he was subsequently in a coma for approximately two years, and that he still lives with the bullet in his head,” according to a sentencing memorandum cited by PE.com.

Stiles’ lawyer, Charles Farris, said that his client needed the medical care he obtained and added that mental issues and drug problems contributed to Stiles’ actions.

“Mr. Stiles acknowledges that this care that he received was an intended benefit for members of the armed forces, and as such, he committed fraud and ‘stole,’ so to speak,” Farris wrote. “Mr. Stiles asks the Court to consider that he was desperate to begin fighting his mental health and substance abuse issues that have caused him problems his entire life.”

Newsweek contacted the VA for comment.

Continue reading

The Law Offices of Frank R. Cruz Files Securities Fraud Lawsuit Against Mesoblast Limited (MESO)

The Law Offices of Frank R. Cruz announces that it has filed a class action lawsuit in the United States District Court for the Southern District of New York, captioned Kristal v. Mesoblast Limited, et al., (Case No. 1:20-cv-08430), on behalf of persons and entities that purchased or otherwise acquired Mesoblast Limited (“Mesoblast” or the “Company”) (NASDAQ: MESO) securities between April 16, 2019 and October 1, 2020, inclusive (the “Class Period”). Plaintiff pursues under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”)

If you are a shareholder who suffered a loss, click here to participate.

Mesoblast develops allogeneic cellular medicines using its proprietary mesenchymal lineage cell therapy platform. Its lead product candidate, RYONCIL (remestemcel-L), is an investigational therapy comprising mesenchymal stem cells derived from bone marrow. In February 2018, the Company announced that remestemcel-L met its primary endpoint in a Phase 3 trial to treat children with steroid refractory acute graft versus host disease (“aGVHD”).

In early 2020, Mesoblast completed its rolling submission of its Biologics License Application (“BLA”) with the FDA to secure marketing authorization to commercialize remestemcel-L for children with steroid refractory aGVHD.

On August 11, 2020, the FDA released briefing materials for its Oncologic Drugs Advisory Committee (“ODAC”) meeting to be held on August 13, 2020. Therein, the FDA stated that Mesoblast provided post hoc analyses of other studies “to further establish the appropriateness of 45% as the null Day-28 ORR” for its primary endpoint. The briefing materials stated that, due to design differences between these historical studies and Mesoblast’s submitted study, “it is unclear that these study results are relevant to the proposed indication.”

On this news, the Company’s share price fell $6.09, or approximately 35%, to close at $11.33 per share on August 11, 2020, on unusually heavy trading volume.

On October 1, 2020, Mesoblast disclosed that it had received a Complete Response Letter (“CRL”) from the FDA regarding its marketing application for remestemcel-L for treatment of SR-aGVHD in pediatric patients. According to the CRL, the FDA recommended that the Company “conduct at least one additional randomized, controlled study in adults and/or children to provide further evidence of the effectiveness of remestemcel-L for SR-aGVHD.” The CRL also “identified a need for further scientific rationale to demonstrate the relationship of potency measurements to the product’s biologic activity.”

On this news, the Company’s stock fell $6.56, or 35%, to close at $12.03 per share on October 2, 2020, on unusually heavy trading volume.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that comparative analyses between Mesoblast’s Phase 3 trial and three historical studies did not support the effectiveness of remestemcel-L for steroid refractory aGVHD due to design differences between the four studies; (2) that, as a result, the FDA was reasonably likely

Continue reading