DiTommaso-Lubin’s Chicago business trial lawyers have more than two and half decades of experience helping business clients on unraveling complex business fraud and breach of fiduciary duty cases. We work with skilled forensic accountants and certified fraud examiners to help recover monies missappropriated from our clients. Our Chicago business, commercial, and class-action litigation lawyers represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and sucessfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Oak Brook, near Waukegan, and Schaumburg, we serve clients throughout Illinois and the Midwest.
If you’re facing a business or class-action lawsuit, or the possibility of one, and you’d like to discuss how the experienced Illinois business dispute attorneys at DiTommaso-Lubin can help, we would like to hear from you. To set up a consultation with one of our Naperville and Lisle business law attorneys and class action and consumer trial lawyers, please call us toll-free at 1-877-990-4990 or contact us through the Internet.
Fraud Magazine reports on the new changes in federal false claims act. The article states:
A 123-year-old law now has new teeth to better fight today’s tricky fraudsters. Enacted in 1863, the U.S. federal False Claims Act, 31 U.S.C. §§ 3729-3733 (FCA), was designed to fight unscrupulous contractors during the Civil War. The FCA created liability for persons that knowingly submit, or cause another person or entity to submit, false claims for payment of government funds. Today, violators are liable for three times the amount of government damages as well as civil penalties of $5,500 to $11,000 per false claim. …
The U.S. Congress reinvigorated the FCA in 1986 when it changed the law in a number of ways. Among other things, the amendments bolstered the act’s qui tam provisions, provided for treble damages — allowing courts to triple the amount of the actual damages to be awarded — and added an anti-retaliation provision that imposes liability on any employer who takes retaliatory actions against an employee because of the employee’s lawful acts in furtherance of a qui tam action. This ushered in a new era for the FCA because the amendments triggered an increase in the number of qui tam suits: now relators initiate the bulk of cases under the FCA. Also, the amendments shifted the FCA’s focus from fraud involving defense contractors to a wide array of industries — most notably health care. This has led to the federal government’s significant and increasing recoveries under the FCA.
In May 2009, Congress further revamped the FCA by passing the Fraud Enforcement and Recovery Act of 2009 (FERA), which included amendments to the FCA. The amendments made key procedural changes to the FCA and expanded the scope of liability (particularly as it relates to health-care providers). The FERA also set aside $165 million to aid fraud detection and enforcement efforts.
These amendments, coupled with a handful of other legislative changes and administrative actions, are already having a material effect on how the government and private sector are combating fraud.
BY THE NUMBERS: 2010 WAS A GOOD YEAR FOR FRAUD
According to a Nov. 22, 2010, U.S. Department of Justice (DOJ) press release, the DOJ “secured $3 billion in civil settlements and judgments in cases involving fraud against the government in the fiscal year ending Sept. 30, 2010.” Of that sum, $2.3 billion is attributable to cases initiated by whistle-blowers under the FCA relator provisions. This brings the total amount of civil recoveries since the previous major overhaul of the FCA in 1986 to more than $27 billion. This total does not take into account settlements after Sept. 30, 2010, including but not limited to $600 million in civil penalties that were part of a larger $750 settlement with GlaxoSmithKline involving the manufacture and sale of adulterated drug products and three settlements announced in December 2010: 1) $102 million in civil penalties that were part of a $203.5 million global settlement with Elan Corporation resolving off-label marketing allegations, 2) a $421 million settlement stemming from Average Wholesale Price violations by Abbott Laboratories Inc. and Roxanne Laboratories Inc. and 3) a $280 million settlement with Dey, Inc. to resolve marketing spread allegations.
The article goes on to describe what lead the government to beef up the qui tam and whistle blower laws. You can read the full article by clicking here.
Barry Minkow, who, while still in high school, founded ZZZZ Best, a carpet cleaning and restoration company that turned out to be a massive Ponzi scheme, talks about one of the many ways he manipulated auditors.
Our Illinois consumer protection attorneys were pleased to see a recent victory in an Illinois appeals court for consumers concerned about the effects of mandatory binding arbitration. In Artisan Design Build, Inc. v. Bilstrom, No. 2-08-0855 (Ill. 2nd Sept. 22, 2009), David and Jody Bilstrom of Hinsdale, Ill., hired Artisan Design Build of Wisconsin to remodel their home. Their contract provided, among other things, an arbitration clause saying disputes “shall be subject to and decided by mediation or arbitration.” The repairs required eight changes to the original contract, significantly increasing the overall price of the work. The Bilstroms paid the first six bills, but refused to pay the seventh despite multiple requests. On Sept. 20, 2006, they locked Artisan out of the project and told it they had hired someone else to finish the job. Artisan claimed they owed $208,695.69.
In April of 2008, Artisan sued the Bilstroms to foreclose its mechanic’s lien; for breach of contract; and for unjust enrichment. The Bilstroms filed a motion to dismiss, claiming Artisan had violated the Illinois Home Repair and Remodeling Act by failing to finish its work within the contracted time; failing to carry insurance; and failing to provide them with a consumer rights pamphlet. The parties continued the case several times while they tried without success to reach a settlement. When that proved fruitless, Artisan filed a complaint with the American Arbitration Association. The Bilstroms moved to stay the arbitration, saying Artisan had voided that part of the contract by suing first, and by violating the Home Repair and Remodeling Act. The trial court agreed with them, prompting an amended complaint from Artisan. The trial court dismissed that and Artisan appealed, arguing that it did not violate the Act or waive the arbitration clause.
On appeal, the Second District first considered whether Artisan had violated the Act by failing to furnish a consumer rights pamphlet. The Bilstroms had argued that the Act’s language makes any violation an unlawful act that nullifies the contract. Artisan countered that the Act does not require courts to dismiss an otherwise valid claim just because a contractor fails to provide the pamphlet. The appeals court agreed, finding that the plain language of the Act provides no remedy other than a Consumer Fraud Act lawsuit. Furthermore, the court wrote, the legislature could not possibly have intended to allow consumers to void contracts for failure to provide the pamphlet, because allowing this would allow consumers to essentially steal from contractors. Thus, the appeals court found that the trial court was wrong to dismiss Artisan’s amended complaint.
Artisan had less luck on the question of whether it had waived its right to arbitration by filing a lawsuit first. Section 15.1 of the Act also requires contractors to advise clients of binding arbitration and waiver of jury trial clauses, which consumers should be able to reject or accept.
Failure to advise, or to obtain acceptance, explicitly voids the clause. Artisan clearly failed to do so in this case, the Second District wrote, because there are no signatures or “accept” or “reject” notations in the appropriate place on the contract. This argument does not reach the issue of whether Artisan waived its right to binding arbitration, the court said, but it can affirm on any grounds in the record. It did affirm the trial court’s decision on the arbitration clause, and remanded the case for further proceedings on Artisan’s amended complaint.
Our Chicago alternative dispute resolution lawyers noted a recent Fifth District Court of Appeal ruling upholding an arbitration agreement but severing its class-action waiver. In Keefe v. Allied Home Mortgage Corporation, No. 5-07-0463 (Ill. 5th 2009) (PDF), Rosemary Keefe was the lead plaintiff in a proposed class action against her mortgage broker. She refinanced through Allied Home Mortgage Capital Corp. in 1999, and as part of that deal, she signed a rider requiring binding arbitration of most disputes. Five years later, she filed a proposed class action against Allied, accusing it of consumer fraud and other torts for charging third-party fees (such as credit check fees) in excess of their actual cost and failing to disclose this. Allied moved to compel arbitration. Without an evidentiary hearing, the trial court ruled that the arbitration agreement was illusory and procedurally and substantively unconscionable, and Allied filed an interlocutory appeal.
The Fifth District started by examining de novo whether the agreement was indeed illusory. An illusory promise is something that appears to be a promise but holds out no performance, or only an optional performance. The Fifth found that it was not illusory, because the arbitration rider specified that the borrower may request arbitration in any judicial proceeding started by Allied. Furthermore, it noted, the rest of the contract may be considered part of the consideration granted to the plaintiff.
It next looked at the finding that the agreement was both procedurally and substantively unconscionable. A contract is procedurally unconscionable when some impropriety during the signing of the contract — such as language that is difficult to find or understand — robs the signer of a reasonable choice. That was not the case here, the court said. The arbitration rider was not hidden by fine print, it wrote, nor was it difficult to read or understand. Rather, the arbitration rider “conspicuously” used bold capital letters to notify the plaintiff that she was signing a contract that gave away her right to a jury trial. Nor did she need to sign it to obtain the refinancing.
The court also rejected the plaintiff’s argument that the rider was unconscionable because it failed to notify her of the cost of arbitration. The Fifth noted that the arbitration rider did contain a provision notifying the plaintiff that she can get copies of rules and forms related to arbitration at any National Arbitration Forum office or by mail order. Under Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1, 22, 857 N.E.2d 250, 264 (2006), this is not enough by itself to render the contract unconscionable, the court wrote, but it may be considered along with findings on substantive unconscionability.
Finally, the Fifth looked at whether the arbitration rider was substantively unconscionable. A contract is substantively unconscionable when the contract terms are unfair, one-sided or create a large imbalance between price and cost. The plaintiff first argued that the rider is cost-prohibitive because it specifies that no claim may be brought by class action. The Fifth found some merit in this. In Kinkel, the Illinois Supreme Court found that class-action waivers are not per se unconscionable, but courts should look at their fairness as well as the cost of bringing an individual claim relative to the damages. Once again following that decision, the Fifth found the cost of pursuing an individual claim was high relative to the potential damages, especially including arbitration and attorney fees. Taking into account Allied’s failure to reveal the cost of arbitration, the court ruled that the class-action waiver was unconscionable. But rather than declare the entire contract unconscionable, the court simply severed the class-action clause, reversed the rest of the trial court’s decision and remanded the case with directions to enforce the remainder.
Our Chicago consumer rights private law firm handles individual and class action unfair debt collection and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocates, the National Consumer Law Center, and local law school consumer programs. DiTommaso-Lubin is proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.
Our Hinsdale, Wheaton, Naperville, Batavia and Oak Brook consumer lawyers provide assistance in fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases we have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Chicago consumer protection lawyers who can assist in lemon law, unfair debt collection, wage claims, unpaid overtime and other consumer, consumer fraud or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.
The online magazine of the Association of Certified Fraud Examiners is a great resouce for tips on uncovering the varying forms of business fraud. You can click here to view it.
A recent issue of the magazine had a very informative article about how certain types of documents are susceptible to employee forgies and other frauds . The article had this to say about fax invoices: