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).

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

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.

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.

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.

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

DeValerio Of Berman DeValerio Starts New Firm