SEC Takes Kik To Court Claiming Its ICO Was Required To Register With SEC As A Security Offering

The U.S. Securities and Exchange Commission (SEC) filed a complaint in the United States District Court for the Southern District of New York on June 4 against Kik Interactive Inc. over its 2017 initial coin offering (ICO) for its kin token.  The SEC said Kik violated Section 5 of the Securities Act of 1933, which requires offerings to be registered.

Many eyes will be on this case as there are countless blockchain companies that are being investigated by the SEC for “offering securities” for selling their tokens to the public.  Some companies, like Paragon and Airfox, have been forced to settle with the SEC rather than face exorbitant legal fees defending against the SEC.  Last month, Kik CEO Ted Livingston said the company had already spent $5 million during the SEC investigation alone.

Kik responded to the SEC’s Wells Notice in November 2018 with a fulsome 30-page submission that it published on its website. It also launched  a $5 million “Defend Crypto” crowdfunding campaign to support the defense costs of the expected June 4 lawsuit.

The case is U.S. Securities and Exchange Commission v. Kik Interactive Inc., case number 19-cv-5244 (SDNY)Screen Shot 2019-06-05 at 10.24.35 AM.png.

Contact Andrews DeValerio if you are facing potential enforcement action by the SEC and seeking experienced securities litigators.

Andrews DeValerio Represents Pet Owners in Consumer Class Action Alleging Heavy Metals and BPA in Petfoods

 

Andrews DeValerio filed a proposed class action against the makers of Acana and Orijen brand petfoods alleging that its Acana and Orijen brands of pet food are tainted with mercury, lead and arsenic, despite their marketing of the foods as safe and pure.  The case is Slawsby v. Champion Petfoods USA Inc. et al., case number 1:18-cv-10701 and is pending in  the U.S. District Court for the District of Massachusetts.   

The Complaint alleges that Champion Petfoods markets its pet foods as natural, fit for both human and pet consumption. It also alleges that the company claims that the foods are made from “fresh regional ingredients” consisting of fresh meat, poultry and vegetables when, in addition to the heavy metals, the foods contain the synthetic chemical Bisphenol A.

“Defendants have created a niche in the pet food market by claiming that they make ‘biologically ‘appropriate’ pet food — as close to what animals would eat in nature as possible — and producing it using fresh, natural ingredients,” the Complaint alleges. “They then charge a premium for this purportedly higher-quality food.”

The alleged mercury, lead, arsenic and BPA as well as cadmium in the company’s pet foods are all known to pose health risks to humans and animals.

“As a result of defendants’ misrepresentations and omissions, a reasonable consumer would have no reason to suspect the presence of heavy metals and/or BPA in the contaminated pet foods without conducting his or her own scientific tests, or reviewing third-party scientific testing of these products,” the Complaint said. “However, after reviewing third-party scientific testing, it is clear that the contaminated pet food does in fact contain unsafe levels of both heavy metals and/or BPA.”

Plaintiffs allege that nonprofit Clean Label Project found high levels of the heavy metals in pet foods and told the company about it.

“Defendants spoke with the Clean Label Project by phone regarding its findings and methodology, which showed that Orijen pet foods have high levels of heavy metals compared to other pet foods,” the Complaint said. “The Clean Label Project informed defendants that it compared Orijen pet foods to competitors’ products and gave them a one-star rating, meaning they contained higher levels of contaminants than other products on the market.”

Andrews DeValerio seeks to represent a class of Massachusetts residents who have bought the allegedly contaminated pet foods since April 2012.

BlackRock executive takes on federal government over preferred-traveler rejection

By  –  Senior staff reporter, Boston Business Journal

A senior executive at global investing powerhouse BlackRock Inc. sued the United States Customs and Border Protection service in federal court yesterday, asking a judge to make the agency explain why it refused to grant him privileged traveler status.

Matthew Bernard Botein, of Brookline, states that Customs and Border Protection not only won’t say why it refused to let him into its Global Entry Trusted Traveler Program but won’t even acknowledge his requests for an explanation.

The program, according to Customs and Border Control literature, provides for “expedited clearance for pre-approved, low-risk travelers upon arrival in the United States” and requires a “rigorous background check and interview before enrollment.”

Upon winning Trusted Traveler designation, participants in most cases can use kiosks that scan their U.S. passports and fingerprints to speed entry.

It’s a program that would seem made-to-order for road warrior executives. And Botein, who did not immediately respond to a request for comment, would seem to fit the bill. A graduate of Harvard College and Harvard Business School, he is the chief investment officer for alternatives at BlackRock, according to a Bloomberg biography.

Botein states in his suit that he applied for membership in the Global Entry Trusted Traveler program but was denied without explanation. He then filled a federal Freedom of Information Act, or FOIA, request but got no response, the suit states. Then he wrote and faxed an agency official tasked with responding to FOIA requests but has received no acknowledgment of the requests.

A Customs spokeswoman declined to comment on pending litigation.

Botein, who is represented by attorney Daryl DeValerio Andrews, wants an explanation of his rejection from the government and attorneys’ fees.

 

https://www.bizjournals.com/boston/news/2014/02/25/executives-takes-on-federal-government.html

Medical Practice to Pay Millions to Resolve False Claims Act Exposed by Whistleblower

ANDREWS DEVALERIO Urges Physicians and Medical Professionals Who Can Prove a Medical Practice Group or Healthcare Company Is Gouging Medicare With Needless Medical Tests to Step Forward.

On September 11, 2017, the Department of Justice announced that a South Carolina family medical practice, its co-owner, and its laboratory director agreed to pay the United States $2 million to resolve a False Claims Act lawsuit alleging that they submitted and caused the submission of false claims to the Medicare and TRICARE programs.

Under the whistleblower provisions of the False Claims Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  In this case, the whistleblower relator will receive $340,510.

The settlement resolves allegations that the healthcare company submitted claims to the Medicare Program that violated the physician self-referral prohibition, commonly known as the Stark Law, which is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Stark Law forbids a clinic from billing Medicare for certain services ordered by physicians who have a financial relationship with the entity.  Here, the government alleged that the Stark Law was violated by the healthcare company’s compensation plan that paid their physicians a percentage of the value of laboratory and other diagnostic tests that they personally ordered through the company, which the company then billed to Medicare.

Andrews DeValerio is urging medical doctors or a healthcare managers to call them anytime at 617-999-6473 if they possess proof that a medical practice group or healthcare company is gouging Medicare with needless medical tests. They are also extremely interested in talking to a physician if they have proof that any medical testing companies are giving kickbacks to medical doctors for utilizing, or over-utilizing medical tests. Whistleblowers can receive financial awards for this type of information.

If you are a medical professional, doctor, medical practice manager or nurse, and you can prove a blood testing company, a radiology group, a UA company or any other type of healthcare testing company is bribing physicians to use or overuse their services please call Andrews DeValerio anytime at 617-999-6473. If the  scheme is widespread there could be a significant whistleblower reward involved.  However, to protect any chance for a reward, you should contact experienced counsel before you reveal the fraud to anyone.

 

Beware of Gift Cards that Expire

 

Cycling-fitness company SoulCycle Inc. recently agreed to pay up to $9.2 million to settle a class action suit arising out of its fast-expiring “gift cards.” Plaintiffs alleged that SoulCycle defrauded customers by forcing them to purchase “gift certificates” for classes that were subject to short expiration windows, as opposed to allowing customers to pay for classes with cash or credit. Plaintiffs claimed that this practice resulted in SoulCycle’s ability to keep all unused balances on such certificates. The class action alleged that such practices were in violation of the U.S. Electronic Funds Transfer Act (EFTA) and California’s Unfair Competition Law (UCL).

Plaintiffs recently survived a motion to dismiss the suit, in which SoulCycle argued that it sold packages of classes, which were subject to expiration. SoulCycle argued that classes were not the equivalent of gift cards and should not have been characterized as such. The court was unpersuaded and allowed the case to proceed.

Plaintiffs and SoulCycle have agreed to settle the dispute for up to $9.2 million.  The terms of the settlement allow class members to receive $25 back for two cycling classes, or, alternatively, to have two classes reinstated by the studio chain. SoulCycle also agreed to changes its policies to ensure consumers understand that purchasing a class or series of classes does not constitute the purchase of a gift certificate/card.

Gift card/certificate expiration dates are regulated on both the federal and state level, with some states prohibiting expiration dates altogether.  Contact Andrews DeValerio if you believe that you are the victim of a similar scheme to defraud the public.

 

Andrews DeValerio in Law 360

 

Check out the Article in Law 360 by Cara Salvatore about the start of our firm.

DeValerio Of Berman DeValerio Starts New Firm

Law360, New York (July 20, 2017, 8:33 PM EDT) — Berman DeValeriofounding partner Glen DeValerio has left the firm to start a new one, taking a name synonymous with the securities and antitrust arena into new areas of law, including the trial work he recently found an affinity for.

DeValerio, who co-founded the former Berman DeValerio & Pease LLP in 1982, is once again co-founding a firm, this time with Daryl Andrews, who was at Berman DeValerio for nine years and is DeValerio’s daughter. The two will maintain the securities and antitrust specialty they’ve cultivated but will also make general business litigation part of their foundation, they said. The Boston-based firm, Andrews DeValerio, opened its doors July 14.

“I found myself feeling very stale and doing the same things over again and just getting bored, frankly. And a couple of years ago Daryl and I tried a case together — very different from our prior experiences — and we had a great time,” DeValerio said. “We enjoyed different subject matter. And we kind of started talking.”

Those initial musings morphed into a serious plan this spring, at a time when a number of matters were wrapping up at the same time, particularly a large securities class action against BP PLC, “a major part of my life for the last couple of years,” DeValerio said. “Daryl and I talked about it and said, ‘Well, if we’re going to do it, now’s the time to do it.’”

DeValerio was co-lead counsel in that suit, in which investors reached a $175 million deal with BP last year after accusing it of downplaying the magnitude of the Deepwater Horizon oil spill in the weeks following the 2010 blowout.

In February, U.S. District Judge Keith P. Ellison awarded $20.25 million in attorneys’ fees and $4 million in expenses.

A couple of years ago, the two had the rare chance to work together on a trial in which a recording artist said her career was ruined by record producers, and ended up winning the trial.

“It was an entertainment litigation outside of the general practice that we normally do, and it was really fun,” and it sparked interest in branching out, Andrews said.

DeValerio has represented end payors in an antitrust suit involving Allergan PLC over ulcerative colitis drugs Delzicol and Asacol, as well as end payors in a suit involving Sandoz Inc. and Lupin Ltd. in which they recently agreed to pay a combined $6.7 million to end accusations that they struck a deal with a Valeant Pharmaceuticals Corp. unit to delay launching generic versions of the acne medication Solodyn.

Some of Andrews’ clients are coming along to the new firm, she noted. Andrews happens to be DeValerio’s daughter; her brother Kyle DeValerio will remain at his post as a partner in Berman’s Palm Beach Gardens, Florida, office.

Glen and Kyle worked together representing plaintiffs in an Ohio trucking company’s proposed class action against Eaton Corp., Volvo Truck North America and others over allegedly anti-competitive agreements.

–Additional reporting by Michelle Casady, Brian Amaral, Kat Greene and Matthew Guarnaccia. Editing by Brian Baresch.