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Judge Harassed Women at LA Courthouse, Reports Judicial Panel

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LOS ANGELES (ABC7) — A state judicial panel has found extensive testimony that a California Appeal Court judge sexually harassed numerous women at the Los Angeles courthouse.

The panel’s report followed 17 days of hearings with more than 100 witnesses, including Justice Jeffrey Johnson.

If the Commission on Judicial Performance upholds the panel’s findings, Johnson could be removed from […]

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Business

Wells Fargo Fined $3B for Millions of Unauthorized Accounts

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LOS ANGELES – Wells Fargo & Co. and its subsidiary, Wells Fargo Bank, N.A., have agreed to pay $3 billion to resolve three separate matters stemming from a years-long practice of pressuring employees to meet unrealistic sales goals – which led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities, according to the Department of Justice.

As part of the agreements with the United States Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Justice Department’s Civil Division, and the Securities and Exchange Commission, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers’ sensitive personal information.

“This case illustrates a complete failure of leadership at multiple levels within the bank. Simply put, Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way,” said United States Attorney Nick Hanna. “We are hopeful that this $3 billion penalty, along with the personnel and structural changes at the bank, will ensure that such conduct will not reoccur.”

The criminal investigation into false bank records and identity theft is being resolved with a deferred prosecution agreement in which Wells Fargo will not be prosecuted during the three-year term of the agreement if it abides by certain conditions, including continuing to cooperate with ongoing investigations.

Wells Fargo also entered a civil settlement agreement under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) based on Wells Fargo’s creation of false bank records. Wells Fargo also agreed to the SEC instituting a cease-and-desist proceeding finding violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The $3 billion payment resolves all three matters, and includes a $500 million civil penalty to be distributed by the SEC to investors.

 “When companies cheat to compete, they harm customers and other competitors,” said Deputy Assistant Attorney General Michael D. Granston of the Department of Justice’s Civil Division. “This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers’ private information. The Civil Division will continue to use all available tools to protect the American public from fraud and abuse, including misconduct by or against their financial institutions.”

 “Our settlement with Wells Fargo, and the $3 billion monetary penalty imposed on the bank, go far beyond ‘the cost of doing business.’ They are appropriate given the staggering size, scope and duration of Wells Fargo’s illicit conduct, which spanned well over a decade,” said Andrew Murray, the United States Attorney for the Western District of North Carolina. “When a reputable institution like Wells Fargo caves to the pernicious forces of greed, and puts its own interests ahead of those of the customers it claims to serve, my office will not sit idle. Today’s announcement should serve as a stark reminder that no institution is too big, too powerful, or too well known to be held accountable and face enforcement action for its wrongdoings.”

Beginning in 1998, Wells Fargo increased its focus on sales volume and reliance on annual sales growth. A core part of this sales model was the “cross-sell strategy” to sell existing customers additional financial products. It was “the foundation of our business model,” according to Wells Fargo. In its 2012 Vision and Values statement, Wells Fargo stated: “We start with what the customer needs – not with what we want to sell them.”

 But, in contrast to Wells Fargo’s public statements and disclosures about needs-based selling, the Community Bank implemented a volume-based sales model in which employees were directed and pressured to sell large volumes of products to existing customers, often with little regard to actual customer need or expected use. The Community Bank’s onerous sales goals and accompanying management pressure led thousands of its employees to engage in unlawful conduct – including fraud, identity theft and the falsification of bank records – and unethical practices to sell products of no or little value to the customer.

Many of these practices were referred to within Wells Fargo as “gaming.” Gaming strategies varied widely, but included using existing customers’ identities – without their consent – to open checking and savings, debit card, credit card, bill pay and global remittance accounts.

From 2002 to 2016, gaming practices included forging customer signatures to open accounts without authorization, creating PINs to activate unauthorized debit cards, moving money from millions of customer accounts to unauthorized accounts in a practice known internally as “simulated funding,” opening credit cards and bill pay products without authorization, altering customers’ true contact information to prevent customers from learning of unauthorized accounts and prevent Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted or needed.

The top managers of the Community Bank were aware of the unlawful and unethical gaming practices as early as 2002, and they knew that the conduct was increasing due to onerous sales goals and pressure from management to meet these goals. One internal investigator in 2004 called the problem a “growing plague.”

The following year, another internal investigator said the problem was “spiraling out of control.” Even after senior managers in the Community Bank directly called into question the implementation of the cross-sell strategy, Community Bank senior leadership refused to alter the sales model, which contained unrealistic sales goals and a focus on low-quality secondary accounts.

Despite knowledge of the illegal sales practices, Community Bank senior leadership failed to take sufficient action to prevent and reduce the incidence of such practices. Senior leadership of the Community Bank minimized the problems to Wells Fargo management and its board of directors, by casting the problem as driven by individual misconduct instead of the sales model itself. Community Bank senior leadership viewed negative sales quality and integrity as a necessary byproduct of the increased sales and as merely the cost of doing business.

“Today’s multi-billion-dollar penalty holds Wells Fargo accountable for its unlawful sales practices and pressure tactics in which it deceived millions of clients, thus causing substantial hardship for the very individuals who placed their trust in the institution,” said Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation. “The FDIC Office of Inspector General is committed to working with our law enforcement partners in order to investigate such financial crimes that harm customers and investors, and undermine the integrity of the banking sector.”

 “Since 2016, FBI San Francisco has prioritized our criminal investigation into the unlawful practices by Wells Fargo.  Trust in our banks and financial institutions is fundamental to the security and stability of the U.S. economy,” said FBI San Francisco Special Agent in Charge John F. Bennett.  “The FBI has dedicated significant resources to uncovering the truth and ensuring the protection of American consumers.” 

 “The United States Postal Inspection Service has a long history of successfully investigating complex fraud cases,” stated San Francisco Division Inspector in Charge Rafael E. Nuñez. “Anyone or any organization engaging in deceptive practices should know they will not go undetected and will be held accountable. The collaborative investigative work on this case conducted by Postal Inspectors, our law enforcement partners, and the United States Attorney’s Offices illustrates our efforts to protect consumers.”

 The government’s decision to enter into the deferred prosecution agreement and civil settlement took into account a number of factors, including Wells Fargo’s extensive cooperation and substantial assistance with the government’s investigations; Wells Fargo’s admission of wrongdoing; its continued cooperation with investigators; its prior settlements in a series of regulatory and civil actions; and remedial actions, including significant changes in Wells Fargo’s management and its board of directors, an enhanced compliance program, and significant work to identify and compensate customers who may have been victims. The deferred prosecution agreement will be in effect for three years.

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California

Santa Monica Man Arrested for Cyberattacks on Congressional Candidate

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LOS ANGELES – FBI agents this morning arrested a Santa Monica man on federal charges stemming from a series of distributed denial-of-service – or DDoS – attacks on a website for a candidate who was campaigning for a California congressional seat.

Arthur Jan Dam, 32, was taken into custody pursuant to a criminal complaint filed Wednesday that charges him with one count of intentionally damaging and attempting to damage a protected computer.

According to Buzzfeed news, the attack was on an opponent to Katie Hill. “Hill, who flipped a Republican-held seat in California two years ago, resigned from Congress last year after nude photos of her were released without her consent. While she was a candidate in 2018, the website of one of her Democratic rivals — Bryan Caforio — was hacked.”

Dam allegedly staged four cyberattacks in April and May of 2018 that took down the candidate’s website for a total of 21 hours. “The victim reported suffering losses, including website downtime, a reduction in campaign donations, and time spent by campaign staff and others conducting critical incident response,” according to the affidavit in support of the criminal complaint.

The victim further reported spending $27,000 to $30,000 to respond to the attacks, and the candidate believes the attacks contributed to the loss in the primary election in June 2018.

 “Law enforcement at all levels has pledged to ensure the integrity of every election,” said United States Attorney Nick Hanna. “We will not tolerate interference with computer systems associated with candidates or voting. Cases like this demonstrate our commitment to preserving our democratic system.”

“The arrest shows the FBI’s commitment to hold accountable anyone who interferes with an American’s right to vote or who deprives a candidate the right to compete fairly in an election,” said Paul Delacourt, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “As part of our mission to defend the democratic process, the FBI is equipped with the expertise to respond to allegations of election interference; whether by fraud, intimidation or – as in this case – cyber intrusions.”

The investigation outlined in the affidavit found that the cyberattacks all originated from one Amazon Web Services (AWS) account, which Dam controlled, and the four attacks corresponded to logins into that AWS account from either Dam’s residence or his workplace. Furthermore, Dam had conducted “extensive research” on both the victim and cyberattacks, the complaint alleges.

 DDoS attacks typically are accomplished by flooding the targeted computer with superfluous requests in an attempt to overload systems and prevent some or all legitimate requests from being fulfilled. After the third cyberattack, the victim increased cybersecurity measures and retained a website security company, but that was not enough to prevent a final disruption to the campaign’s website just one week before the primary election.

 Dam was married to a woman who was employed by another candidate – and the eventual winner – in the congressional race, according to the complaint. The FBI has not uncovered any evidence that the winning candidate or Dam’s wife orchestrated or were involved in the series of cyberattacks.

Dam was arrested after surrendering to FBI agents at the United States Courthouse in downtown Los Angeles. Dam is expected to make his initial court appearance this afternoon.

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Prosecutions

Urologist Sentenced for Dicking Around with Medicare Billings

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LOS ANGELES – A urologist was sentenced today to 71 months in federal prison for submitting fraudulent billings totaling more than $700,000 to Medicare for medically unnecessary and nonexistent treatments, sometimes billing for purported patient visits miles apart and occurring at the exact same time.

Mark Wilfred Tamarin, 65, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay nearly $345,000 in restitution.

After a seven-day trial in July 2019, a jury found Tamarin guilty of six counts of wire fraud and one count of attempted health care fraud. He has been in federal custody since the trial’s conclusion.

According to the evidence presented at trial, from 1987 until 2014, Tamarin was a partner Advanced Urology Medical Offices (AUMO), which had offices in Torrance and West Los Angeles.

From January 2009 until January 2013, at AUMO, where the majority of the patients were covered by Medicare, Tamarin billed Medicare for services he did not and could not have performed and also ordered medically unnecessary tests. Tamarin covered Kindred Hospital, a sub-acute medical center in Ladera Heights, for AUMO. Kindred is a facility designed for patients with serious medical problems and in need of long-term care, but for whom a traditional hospital setting is unnecessary. There, he billed for numerous patient visits that never happened and for services he never provided. The evidence presented at trial showed that on multiple occasions between 2009 and 2013, Tamarin purportedly was in two places miles apart at the same time he was treating patients in both locations.

At his office at AUMO, Tamarin ordered medically unnecessary tests for his patients. In particular, he ordered two to three times the number of post-void residual (PVR) tests and renal ultrasounds for urology patients in comparison to his three medical partners. Tamarin ordered so many PVRs that the office’s medical assistants suggested that the office purchase a second PVR machine. Tamarin ordered these tests before speaking with or seeing a patient despite the fact that the tests themselves only were appropriate in limited medical circumstances.

In total, Tamarin caused more than $700,000 in fraudulent claims to be billed to Medicare, of which Medicare paid approximately $219,934 in fraudulent Kindred claims and $124,802 in medically unnecessary PVR and renal ultrasound claims.

This matter was investigated by the FBI and U.S. Department of Health and Human Services Office of Inspector General.

This case was prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.

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