1. Emerging areas for combatting fraud Taxpayers Against Fraud EDUCATION Fund Annual Conference October 2, Washington, DC
Michael Allen
Relman, Dane & Colfax, PLLC
th St NW # 600 Washington, DC 20036
(202)
Zac Arbitman
Youman & Caputo, LLC
1635 Market Street, Suite 1600
Philadelphia, PA 19103
(215)
Suzanne E. Durrell
Whistleblower Law Collaborative LLC
20 Park Plaza, Suite 438
Boston, MA
(617)
Anna C. Haac
Tycko & Zavareei LLP
1828 L Street N.W. #1000
Washington, DC 20036
(202)

2. Using the False Claims Act to Enforce CUSTOMS Laws by ANNA c. HAAC

3. Contact Information
Anna Haac
Partner
Tycko & Zavareei
1828 L Street, N.W.
Washington, D.C.  20036
(202) , ext. 105
Website:

4. CUSTOMS FRAUD
Customs duties = 2nd largest revenue source for U.S. Government (1st is taxes)
Only 2% of Imports are inspected by CBP (and priority is security and drugs)

5. What are relevant agencies?
What are Customs Duties?
Tariffs
Countervailing & Antidumping Duties
Marking Duties
What are relevant agencies?
U.S. Customs and Border Protection Agency (“CBP”)
19 U.S.C. § 1592 Penalties
U.S. Department of Commerce
AD/CV Orders and Scope Rulings

6. CUSTOMS CASES
Government-Intervened Settlements Ranging from $275,000 to $45 million
Largest $$ settlements involve AD/CV Duties
Undervaluing, Misclassifying, or Dividing imports for purposes of calculating duties
Evasion of marking duties

7. Any Failure to Pay  FCA Liability
Reverse False Claim Liability
Customs Duties = Established Duties
Give rise to “Obligation”
Any Failure to Pay  FCA Liability
False Statement: CBP Form 7501
Knowing Concealment, Avoidance, or Decreasing of Customs Duties Owed

8. Form 7501 Instructions: https://www. cbp
Country of Origin
HTSUS Number/Rate
AD/CVD Rate
Value of Goods
“Other Fee”
Duty Paid
Declaration

9. Using the False Claims Act to Enforce ANTITRUST Laws by ZAC ARBITMAN

10. CONTACT INFORMATION
Zac Arbitman
Youman & Caputo, LLC
1635 Market Street, Suite 1600
Philadelphia, Pennsylvania 19103
(215)

11. Antitrust Sherman Antitrust Act, 15 U.S.C. §§ 1-7
Clayton Act, 15 U.S.C. §§ 12-27

12. US ex rel. Doe v. SK Energy Co. Ltd., et al.
DOJ settles with three South Korea- based companies accused of rigging bids for fuel-supply contracts with the DOD
Record-breaking recovery

13. US ex rel. Doe v. SK Energy Co. Ltd., et al.
Criminal guilty pleas and a total of $236 million in criminal fines and civil damages for antitrust and False Claims Act violations
Whistleblower-driven

14. LOOKING FORWARD
Assistant Attorney General Makan Delrahim’s remarks at the American Bar Association Section of Antitrust Law's Fall Forum
Partnership between the Antitrust and Civil Divisions
Alternative Remedies

15. EMERGING PRACTICE AREAS Using the False Claims Act to Enforce Civil Rights Laws by Michael Allen, Relman, Dane & Colfax, PLLC Taxpayers Against Fraud Annual Conference October 2, 2019

16. Contact Information
Michael Allen
Relman, Dane & Colfax, PLLC
th Street, N.W., Suite 600
Washington, D.C. 
202/ , ext. 114
FAX:  202/
Website:

17. All Federal Funds Come with Strings Attached
Program Requirements
Performance Standards
Certifications of Fair Dealing
Anti-Lobbying Restrictions
Certifications of Compliance with Laws
Civil Rights Certifications

18. No Certification, No Money
Federal grant/contract programs could not operate without the use of certifications because the Government does not have the resources to do the policing
“Trust but verify”: Most money goes out the door quickly, based on certifications, subject to back-end fraud remedies, including the FCA.

19. Civil Rights Requirements That Come with Federal Funding
Title VI of Civil Rights Act
Section 503 and Section 504
ADA
Fair Housing Act
Others….

20. FCA Purpose
Congress enacted the FCA’s qui tam provision to allow private persons, termed “relators,” to “aid the rooting out of fraud,” and “serve as a posse of ad hoc deputies to uncover and prosecute frauds against the government.”
U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 184 (5th Cir. 2009).

21. Westchester Litigation No. 06-CV-2860 (S.D.N.Y)
County received $52 million+ in HUD Block Grant funds from
Receipt of funds required repeated certifications of compliance with Civil Rights Act, Fair Housing Act and “affirmatively furthering fair housing” (AFFH)
Litigation brought under the False Claims Act: AFFH certifications were false because County did not consider race-based impediments to fair housing choice

22. Social Justice Organization as Relator
Anti-Discrimination Center:
Motivation: Enforce County’s obligations under the Civil Rights Act of 1964 and the Fair Housing Act to undo racial segregation and combat racial discrimination in one of the most prosperous (and segregated) counties in the country

24. “No Certification, No Money”
42 U.S.C. §5304(b)(2): “Any grant under [the CDBG program] shall be made only if the grantee certifies to the satisfaction of the Secretary that … the grant will be conducted and administered in conformity with the Civil Rights Act of 1964 [42 U.S.C. 2000a et seq.] and the Fair Housing Act [42 U.S.C et seq.], and the grantee will affirmatively further fair housing.”

25. AFFH Statutory Authority
FHA requires HUD to “administer [housing] programs…in a manner affirmatively to further the policies of [the Fair Housing Act],” including the general policy to “provide, within constitutional limits, for fair housing throughout the United States.”
42 USC §3608(e)(5).

26. CDBG/Con Plan AFFH Regs
A grantee is “required to submit a certification that it will affirmatively further fair housing, which means that it will (1) conduct an analysis to identify impediments to fair housing choice within the jurisdiction; (2) take appropriate actions to overcome the effects of any impediments identified through that analysis; and (3) maintain records reflecting the analysis and actions in this regard.”
24 C.F.R. § (a)(2)
24 CFR § (a).

27. Urban County Cooperation Agreement

28. Westchester AI
2000 and 2004 Analyses of Impediments (“AIs”): “The [Fair Housing Plan] describes the housing needs of handicapped persons, larger/smaller families [and] extended families….”
AIs do not identify any impediments on the basis of race, color, national origin or any other protected class, even though County is part of one of the most segregated regions in the country
No mention of housing discrimination or residential segregation

29. Allegations of the Complaint
As a matter of policy, County refused to monitor the efforts of participating municipalities to further fair housing and did not inform them that Westchester might withhold federal funds if the municipality did not take steps to further fair housing.
Throughout the false claims period, Westchester never required a participating municipality to take any steps to increase the availability of affordable housing or otherwise affirmatively further fair housing.

30. County’s Defense
Nowhere in the statute itself or in the implementing regulations is race mentioned specifically as an impediment to fair housing that grantees were required to consider
Westchester states that “income is arguably a better proxy for determining need than race when distributing housing funds.”
Race is “not among the most challenging impediments” to fair housing

31. MTD Denied—June 2007
“In the face of the clear legislative purpose of the Fair Housing Act, enacted pursuant to Congress's power under the Thirteenth Amendment as Title VIII of the Civil Rights Act of 1968, to combat racial segregation and discrimination in housing, an interpretation of ‘affirmatively further fair housing’ that excludes consideration of race would be an absurd result.”
Westchester, 495 F.Supp.2d 375, (S.D.N.Y 2007)

32. Summary Judgment for Relator February 2009
“[T]he central goal of the obligation to AFFH [is] to end housing discrimination and segregation.” U.S. ex rel. Anti-Discrimination Center v. Westchester County, 668 F.Supp.2d 548, 564 (S.D.N.Y. Feb. 24, 2009).
“[A] determination that affordable housing is the greatest impediment does not absolve the County from its requirement to analyze race- based impediments to fair housing.” Id. at 562.

33. Summary Judgment for Relator February 2009
“As a matter of logic, providing more affordable housing for a low income racial minority will improve its housing stock but may do little to change any pattern of discrimination or segregation. Addressing that pattern would at a minimum necessitate an analysis of where the additional housing is placed. Id. at 564.

34. Intervention—August 2009
“Pursuant to the False Claims Act, 31 U.S.C. § 3730(c)(3), and Rule 24(b) of the Federal Rules of Civil Procedure, the United States of America (the “United States” or “Government”) notifies the Court of its intention to intervene and proceed with this action. The United States simultaneously herewith presents its Complaint-in-Intervention. The United States intends to enter into a settlement agreement with the defendant.”

35. Settlement Terms with Civil Rights Remedy--August 2009
County required to ensure development of 750 affordable housing units, within 7 years, in the whitest neighborhoods
660 units must be built in municipalities with African- American population of less than 3% and Latino population of less than 7%
Additional integrative criteria at the census block group level

36. Settlement Terms with Civil Rights Remedy--August 2009
County Returns $30 Million to HUD
$21.6 Million to Fund Integrative Units
$7.5 Million to Pay “Relator’s Share” for Ferreting Out False Claims
County Must Supply an Additional $30 Million for Integrative Units
County Pays $2.5 Million in Attorneys’ Fees and Costs

37. ABLE v. U.S. Bank No. 15-3654 (6th Circuit)
U.S. Bank participated in HUD/FHA guaranteed single-family mortgage program
If borrowers fall behind, lender required to undertake 7 specific forms of loss mitigation (to allow borrower to come into compliance and to safeguard the insurance fund)
If unsuccessful, insurance fund makes bank whole
U.S. Bank certified compliance with loss mitigation requirements in multiple ways

38. Social Justice Organization as Relator
Advocates for Basic Legal Equality (ABLE):
Motivation: “ABLE works on Foreclosure and Predatory Lending issues in order to keep poor and low-income working families in their homes.”
Discovered U.S. Bank “shortcuts”

39. Allegations
U.S. Bank received at least $2,365,601,626 in FHA insurance proceeds as a result of at least 22,586 conveyance-based claims paid by HUD between 2001 and 2010.
In 2010 alone, HUD paid U.S. Bank $564,108, in FHA funds pursuant to 4,550 of these conveyance-based claims.
Failing to comply with loss mitigation requirements, U.S. Bank submitted insurance claims.

40. The Achilles Heel of Public Disclosure
2011 consent order with OCC concerning non-FHA loans: Bank required to implement a wide variety of loss mitigation and foreclosure prevention reforms.
2011 foreclosure practices review concerning non-FHA loans: Various banks, including U.S. Bank, failed to take a variety of loss mitigation efforts.

41. Procedural History Filed under seal: April 1, 2013
Declination: April 1, 2014
MTD granted: May 12, 2015
Affirmed by 6th Circuit: March 14, 2016
Cert petition denied: May 22, 2017

42. City of LA Litigation No. 2:11-cv-00974 (C.D. Cal.)
City received nearly $1 billion in HUD Block Grant funds from ; more since
Receipt of funds required repeated certifications of compliance with Rehabilitation Act, Fair Housing Act and AFFH
Litigation brought under the False Claims Act: Certifications were false because 70,000+ affordable housing units were built without compliance with heightened accessibility standards

43. Social Justice Organization as Relator
Fair Housing Council of San Fernando Valley
Motivation: In the course of representing individual clients with disabilities, found that many buildings that received federal funds lacked the accessibility features needed by clients with more pronounced disabilities.
City agencies told relator it did not know what it was talking about.

44. Allegations (supported by parallel litigation)
City of LA annually certified compliance with accessibility and AFFH obligations
In fact, funds distributed to private developers with no oversight of compliance with those obligations
As a result of inaccessibility, thousands of PWDs stranded in nursing homes, homeless shelters and inaccessible housing

45. Procedural History Filed: February 1, 2011
Parallel federal litigation filed January 13, 2012 to enforce compliance with accessibility requirements of federal law
Parallel case settled: September 2016 (significant injunctive relief)
DOJ intervention: August 1, 2017
MTD granted (with leave): July 25, 2018
MTD denied: July 15, 2019

46. Resources
Michael Allen’s Emory U. Presentation on AFFH: 1KcuAQ
Gurian and Allen, Making Real the Desegregating Promise of the Fair Housing Act: "Affirmatively Furthering Fair Housing" Comes of Age, in Clearinghouse Review: house_Article_on_Westchester.pdf

47. Resources
Allen, No Certification, No Money: The Revival of Civil Rights Obligations in HUD Funding Programs, in Planning Commissioners Journal: terArticle.pdf
Information about Westchester litigation:
Injunctive Relief in Los Angeles: ability-rights-california-and-disability-groups- obtain-4250-accessible-affordable

48. CYBERSECURITY CLAIMS UNDER THE FALSE CLAIMS ACT by Suzanne e. durrell

49. Contact Information
Suzanne E. Durrell, Managing Member
WHISTLEBLOWER LAW COLLABORATIVE LLC
20 Park Plaza, Suite 438
Boston, MA
(617) direct
Website: whistleblowerllc.com

50. Government contracts incorporate laws requiring various cybersecurity measures
Recent developments in two recent FCA cases highlight cybersecurity as an emerging area

51. United States and States ex rel. Glenn v. Cisco Systems, Inc.
Complaint filed in 2011 (WD NY)--kept under seal until settlement and dismissal 7/31/19.
Relator, a computer security expert, alleged that one of Cisco’s products, a video surveillance manager, had critical security flaws that violated mandatory cybersecurity requirements for any government computer system.
Cisco agreed to settle the case for $8.6 million.
NY AG press release: million-cisco-systems-multistate-settlement
Relator press:
cybersecurity-issues-with-product/  

52. 2. United States ex rel. Markus v. Aerojet Rocketdyne Holdings Inc.
Complaint pending in ED CA.
Relator is Aerojet’s former senior director of cybersecurity, compliance and controls.
Alleges Aerojet did not satisfy all NIST SP security controls as required by the federal acquisition regulations incorporated into the government contracts, and under reported the extent of its noncompliance.
DOJ declined to intervene.

53. May 2019, the court denied, in part, a motion to dismiss the action, finding that the complaint plausibly pled that Aerojet’s “alleged failure to fully disclose its noncompliance was material to the [g]overnment’s decision to enter into and pay on the relevant contracts,” as required to establish FCA liability. United States ex rel. Markus v. Aerojet Rocketdyne Holdings, Inc., 381 F. Supp.3d 1240 (E.D. CA 2019).

54. Whistleblower and Defense Bar Recognizing Cybersecurity as an Emerging Area
whistleblower-rewards/
whistleblower-case-infosecurity/
notes/posts/2019/05/fca-claim-based-on-inadequate-cybersecurity
(Government Contracting’s Organic Cybersecurity Evolution August 21, 2019))
false-claims-act-litigation-around-cybersecurity/?slreturn=

55. Other areas? Reverse False Claim Liability as the New Frontier
Audience?

56. Interplay with other claims
Class Actions
Lanham Act Claims