Securities and Exchange Commission Accuses Life Partners Holdings of Misleading Investors

The Securities and Exchange Commission has filed suit accusing Life Partners Holdings of "systematically and materially" misleading investors about the life expectancy of people whose life insurance policies it traded. According to the SEC's suit filed in federal court in Waco, the alleged scheme inflated the value of the company's stock.  Specifically, the SEC has alleged that "the deception mislead shareholders into thinking the company's revenue model was sutainable when in fact it was illusory."

The SEC is seeking to recover unspecified civil penalites, as well as, the return of stock trade profits and bonuses.

The company and the executives deny the SEC's allegations.

 

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Wyeth Accused of Failing to Pay Medicaid Rebates

The federal government and 16 states have joined whistleblower lawsuits filed against Wyeth that allege the drugmaker failed to pay Medicaid rebates.  According to a report by Bloomberg, the lawsuits against Wyeth allege that the drugmaker failed to pay rebates for its Protonix Oral and Protonix IV medications. The Justice Department alleges Wyeth did not didn’t pay hundreds of millions of dollars in rebates even though it was required to grant the Medicaid program the same discount or “best price” it offered to hospitals.

According to Tony West, an assistant attorney general for the Justice Department, "[b]y offering massive discounts to hospitals, but then hiding that information from the Medicaid program, we believe Wyeth caused Medicaid programs throughout the country to pay much more for these drugs than they should have."

Wyeth has denied the allegations and maintains that its pricing calculations were correct.

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Former Ernst & Young Partner Found Guilty of Fraud

The Wall Street Journal  has reported that, James Gansman, a former Ernst & Young partner, was found guilty of fraud last week in an insider-trading scheme to make improper trades based upon pending corporate takeovers while the accounting firm acted as an advisor.  Gansman was found guilty of six counts of securities fraud.  Gansman faces up to 20 years in prison on each securities fraud count.  Sentencing has been set for October 1.