Combatting Fraud: Customs Duties and Antitrust Laws

1. Emerging areas for combatting fraudTaxpayers Against Fraud EDUCATION Fund Annual ConferenceOctober 2, 2019 Washington, DC

2. Using the False Claims Act to Enforce CUSTOMS Lawsby ANNA c. HAAC

3. Anna Haac Partner Tycko & Zavareei 1828 L Street, N.W. Washington, D.C.  20036 (202) 973-0900, ext. 105 E-mail: ahaac@tzlegal.com Website: www.tzlegal.com Contact Information

4. Customs duties = 2nd largest revenue source for U.S. Government (1st is taxes) • Only 2% of Imports are inspected by CBP (and priority is security and drugs) CUSTOMS FRAUD

5. What are Customs Duties? • Tariffs • Countervailing & Antidumping Duties • Marking Duties What are relevant agencies? • U.S. Customs and Border Protection Agency (“CBP”) • 19 U.S.C. § 1592 Penalties • U.S. Department of Commerce • AD/CV Orders and Scope Rulings

6. Government-Intervened Settlements Ranging from $275,000 to $45 million • Largest $$ settlements involve AD/CV Duties • Undervaluing, Misclassifying, or Dividing imports for purposes of calculating duties • Evasion of marking duties CUSTOMS CASES

7. Reverse False Claim Liability • Customs Duties = Established Duties • Give rise to “Obligation” Any Failure to Pay  FCA Liability • False Statement: CBP Form 7501 • Knowing Concealment, Avoidance, or Decreasing of Customs Duties Owed

8. Form 7501 Instructions: https://www.cbp.gov/document/forms/form-7501-instructions Country of Origin HTSUS Number/Rate AD/CVD Rate Value of Goods “Other Fee” Duty Paid Declaration

9. Using the False Claims Act to Enforce ANTITRUST Lawsby ZAC ARBITMAN

10. CONTACT INFORMATION Zac Arbitman Youman & Caputo, LLC 1635 Market Street, Suite 1600 Philadelphia, Pennsylvania 19103 (215) 302-1999 zarbitman@youmancaputo.com www.youmancaputo.com

11. Sherman Antitrust Act, 15 U.S.C. §§ 1-7 • Clayton Act, 15 U.S.C. §§ 12-27 Antitrust

12. DOJ settles with three South Korea-based companies accused of rigging bids for fuel-supply contracts with the DOD • Record-breaking recovery US ex rel. Doev. SK Energy Co. Ltd., et al.

13. Criminal guilty pleas and a total of $236 million in criminal fines and civil damages for antitrust and False Claims Act violations • Whistleblower-driven US ex rel. Doev. SK Energy Co. Ltd., et al.

14. Assistant Attorney General MakanDelrahim’s remarks at the American Bar Association Section of Antitrust Law's 2018 Fall Forum • Partnership between the Antitrust and Civil Divisions • Alternative Remedies LOOKING FORWARD

15. EMERGING PRACTICE AREASUsing the False Claims Act to Enforce Civil Rights Lawsby Michael Allen, Relman, Dane & Colfax, PLLCTaxpayers Against Fraud Annual ConferenceOctober 2, 2019

16. Michael Allen Relman, Dane & Colfax, PLLC 1225 19th Street, N.W., Suite 600 Washington, D.C.  20036-2456 202/728-1888, ext. 114 FAX:  202/728-0848 E-mail: mallen@relmanlaw.com Website: www.relmanlaw.com Contact Information

17. Program Requirements • Performance Standards • Certifications of Fair Dealing • Anti-Lobbying Restrictions • Certifications of Compliance with Laws • Civil Rights Certifications All Federal Funds Come with Strings Attached

18. Federal grant/contract programs could not operate without the use of certifications because the Government does not have the resources to do the policing • “Trust but verify”: Most money goes out the door quickly, based on certifications, subject to back-end fraud remedies, including the FCA. No Certification, No Money

19. Title VI of Civil Rights Act • Section 503 and Section 504 • ADA • Fair Housing Act • Others…. Civil Rights Requirements That Come with Federal Funding

20. Congress enacted the FCA’s qui tam provision to allow private persons, termed “relators,” to “aid the rooting out of fraud,” and “serve as a posse of ad hoc deputies to uncover and prosecute frauds against the government.” • U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 184 (5th Cir. 2009). FCA Purpose

21. County received $52 million+ in HUD Block Grant funds from 2000-2006 • Receipt of funds required repeated certifications of compliance with Civil Rights Act, Fair Housing Act and “affirmatively furthering fair housing” (AFFH) • Litigation brought under the False Claims Act: AFFH certifications were false because County did not consider race-based impediments to fair housing choice Westchester LitigationNo. 06-CV-2860 (S.D.N.Y)

22. Anti-Discrimination Center: http://www.antibiaslaw.com/ • Motivation: Enforce County’s obligations under the Civil Rights Act of 1964 and the Fair Housing Act to undo racial segregation and combat racial discrimination in one of the most prosperous (and segregated) counties in the country Social Justice Organization as Relator

24. 42 U.S.C. §5304(b)(2): “Any grant under [the CDBG program] shall be made only if the grantee certifies to the satisfaction of the Secretary that … the grant will be conducted and administered in conformity with the Civil Rights Act of 1964 [42 U.S.C. 2000a et seq.] and the Fair Housing Act [42 U.S.C. 3601 et seq.], and the grantee will affirmatively further fair housing.” “No Certification, No Money”

25. FHA requires HUD to “administer [housing] programs…in a manner affirmatively to further the policies of [the Fair Housing Act],” including the general policy to “provide, within constitutional limits, for fair housing throughout the United States.” • 42 USC §3608(e)(5). AFFH Statutory Authority

26. A grantee is “required to submit a certification that it will affirmatively further fair housing, which means that it will (1) conduct an analysis to identify impediments to fair housing choice within the jurisdiction; (2) take appropriate actions to overcome the effects of any impediments identified through that analysis; and (3) maintain records reflecting the analysis and actions in this regard.” • 24 C.F.R. § 570.601(a)(2) • 24 CFR § 91.225(a). CDBG/Con Plan AFFH Regs

27. Urban County Cooperation Agreement

28. 2000 and 2004 Analyses of Impediments (“AIs”): “The [Fair Housing Plan] describes the housing needs of handicapped persons, larger/smaller families [and] extended families….” • AIs do not identify any impediments on the basis of race, color, national origin or any other protected class, even though County is part of one of the most segregated regions in the country • No mention of housing discrimination or residential segregation Westchester AI

29. As a matter of policy, County refused to monitor the efforts of participating municipalities to further fair housing and did not inform them that Westchester might withhold federal funds if the municipality did not take steps to further fair housing. • Throughout the false claims period, Westchester never required a participating municipality to take any steps to increase the availability of affordable housing or otherwise affirmatively further fair housing. Allegations of the Complaint

30. Nowhere in the statute itself or in the implementing regulations is race mentioned specifically as an impediment to fair housing that grantees were required to consider • Westchester states that “income is arguably a better proxy for determining need than race when distributing housing funds.” • Race is “not among the most challenging impediments” to fair housing County’s Defense

31. “In the face of the clear legislative purpose of the Fair Housing Act, enacted pursuant to Congress's power under the Thirteenth Amendment as Title VIII of the Civil Rights Act of 1968, to combat racial segregation and discrimination in housing, an interpretation of ‘affirmatively further fair housing’ that excludes consideration of race would bean absurd result.” • Westchester, 495 F.Supp.2d 375, 387-88 (S.D.N.Y 2007) MTD Denied—June 2007

32. “[T]he central goal of the obligation to AFFH [is] to end housing discrimination and segregation.” U.S. ex rel. Anti-Discrimination Center v. Westchester County, 668 F.Supp.2d 548, 564 (S.D.N.Y. Feb. 24, 2009). • “[A] determination that affordable housing is the greatest impediment does not absolve the County from its requirement to analyze race-based impediments to fair housing.” Id. at 562. Summary Judgment for Relator February 2009

33. “As a matter of logic, providing more affordable housing for a low income racial minority will improve its housing stock but may do little to change any pattern of discrimination or segregation. Addressing that pattern would at a minimum necessitate an analysis of where the additional housing is placed. Id. at 564. Summary Judgment for Relator February 2009

34. “Pursuant to the False Claims Act, 31 U.S.C. § 3730(c)(3), and Rule 24(b) of the Federal Rules of Civil Procedure, the United States of America (the “United States” or “Government”) notifies the Court of its intention to intervene and proceed with this action. The United States simultaneously herewith presents its Complaint-in-Intervention. The United States intends to enter into a settlement agreement with the defendant.” Intervention—August 2009

35. County required to ensure development of 750 affordable housing units, within 7 years, in the whitest neighborhoods • 660 units must be built in municipalities with African-American population of less than 3% and Latino population of less than 7% • Additional integrative criteria at the census block group level Settlement Terms with Civil Rights Remedy--August 2009

36. County Returns $30 Million to HUD • $21.6 Million to Fund Integrative Units • $7.5 Million to Pay “Relator’s Share” for Ferreting Out False Claims • County Must Supply an Additional $30 Million for Integrative Units • County Pays $2.5 Million in Attorneys’ Fees and Costs Settlement Terms with Civil Rights Remedy--August 2009

37. U.S. Bank participated in HUD/FHA guaranteed single-family mortgage program • If borrowers fall behind, lender required to undertake 7 specific forms of loss mitigation (to allow borrower to come into compliance and to safeguard the insurance fund) • If unsuccessful, insurance fund makes bank whole • U.S. Bank certified compliance with loss mitigation requirements in multiple ways ABLE v. U.S. BankNo. 15-3654 (6th Circuit)

38. Advocates for Basic Legal Equality (ABLE): https://www.ablelaw.org/able-services • Motivation: “ABLE works on Foreclosure and Predatory Lending issues in order to keep poor and low-income working families in their homes.” • Discovered U.S. Bank “shortcuts” Social Justice Organization as Relator

39. U.S. Bank received at least $2,365,601,626 in FHA insurance proceeds as a result of at least 22,586 conveyance-based claims paid by HUD between 2001 and 2010. • In 2010 alone, HUD paid U.S. Bank $564,108,369.55 in FHA funds pursuant to 4,550 of these conveyance-based claims. • Failing to comply with loss mitigation requirements, U.S. Bank submitted insurance claims. Allegations

40. 2011 consent order with OCC concerning non-FHA loans: Bank required to implement a wide variety of loss mitigation and foreclosure prevention reforms. • 2011 foreclosure practices review concerning non-FHA loans: Various banks, including U.S. Bank, failed to take a variety of loss mitigation efforts. The Achilles Heel of Public Disclosure

41. Filed under seal: April 1, 2013 • Declination: April 1, 2014 • MTD granted: May 12, 2015 • Affirmed by 6th Circuit: March 14, 2016 • Cert petition denied: May 22, 2017 Procedural History

42. City received nearly $1 billion in HUD Block Grant funds from 2005-2011; more since • Receipt of funds required repeated certifications of compliance with Rehabilitation Act, Fair Housing Act and AFFH • Litigation brought under the False Claims Act: Certifications were false because 70,000+ affordable housing units were built without compliance with heightened accessibility standards City of LA LitigationNo. 2:11-cv-00974 (C.D. Cal.)

43. Fair Housing Council of San Fernando Valley • Motivation: In the course of representing individual clients with disabilities, found that many buildings that received federal funds lacked the accessibility features needed by clients with more pronounced disabilities. • City agencies told relator it did not know what it was talking about. Social Justice Organization as Relator

44. City of LA annually certified compliance with accessibility and AFFH obligations • In fact, funds distributed to private developers with no oversight of compliance with those obligations • As a result of inaccessibility, thousands of PWDs stranded in nursing homes, homeless shelters and inaccessible housing Allegations (supported by parallel litigation)

45. Filed: February 1, 2011 • Parallel federal litigation filed January 13, 2012 to enforce compliance with accessibility requirements of federal law • Parallel case settled: September 2016 (significant injunctive relief) • DOJ intervention: August 1, 2017 • MTD granted (with leave): July 25, 2018 • MTD denied: July 15, 2019 Procedural History

46. Michael Allen’s Emory U. Presentation on AFFH: http://www.youtube.com/watch?v=yzYSH1KcuAQ • Gurian and Allen, Making Real the Desegregating Promise of the Fair Housing Act: "Affirmatively Furthering Fair Housing" Comes of Age, in Clearinghouse Review: http://www.relmanlaw.com/docs/Clearinghouse_Article_on_Westchester.pdf Resources

47. Allen, No Certification, No Money: The Revival of Civil Rights Obligations in HUD Funding Programs, in Planning Commissioners Journal: http://www.relmanlaw.com/docs/WestchesterArticle.pdf • Information about Westchester litigation: www.antibiaslaw.com/wfc • Injunctive Relief in Los Angeles: https://www.disabilityrightsca.org/stories/disability-rights-california-and-disability-groups-obtain-4250-accessible-affordable Resources

48. CYBERSECURITY CLAIMS UNDER THE FALSE CLAIMS ACTby Suzanne e. durrell

49. Suzanne E. Durrell, Managing Member WHISTLEBLOWER LAW COLLABORATIVE LLC 20 Park Plaza, Suite 438 Boston, MA 02116-4334 (617) 371-0936 direct E-mail: suzanne@thomasdurrell.com Website: whistleblowerllc.com Contact Information

50. Government contracts incorporate laws requiring various cybersecurity measures • Recent developments in two recent FCA cases highlight cybersecurity as an emerging area