CVS Pharmacy Cleared of $121M Charges in Class
Action Fraud Suit
On June 23, 2021, CVS Pharmacy Inc. was cleared of claims of overcharging drug purchasers by more than $121 million for general drugs. This verdict comes after a week-long trial in the Northern District of California beginning June 7, 2021. The jury deliberated for less than a day and unanimously cleared CVS of the alleged violations of six state consumer protection statutes.
A group of 11 single-state classes of insured patients brought this consumer putative class lawsuit alleging nineteen causes of action for fraud, constructive fraud, negligent misrepresentation, unjust enrichment, and violation of consumer protection laws in twelve states and the District of Columbia. Plaintiffs alleged that CVS misrepresented the “usual and customary” prices of certain generic drugs by failing to report the lower prices CVS charged to members of its “Health Savings Pass” program to third-party insurance providers and pharmacy benefit managers. Pharmacy benefit manager executives testified that their contracts with CVS did not require CVS to report discounts under the Health Savings Pass program.
The case is Corcoran et al v. CVS Health Corporation, Case Number 4:15-cv-03504, in the Northern District of California.
Cayman Islands-Based Fund Charged With $106M Fraud
On June 21, 2021, the U.S. Securities and Exchange Commission filed a complaint in the Southern District of New York against a Cayman Islands-based mutual fund and its founders, alleging that they moved $102 million into shell companies for personal use. The complaint also alleges that the founders of the fund refused to honor redemption demands of investors of approximately $106 million, and instead misappropriated those assets into an inaccessible brokerage account.
According to the complaint, the individual defendants and the fund misappropriated investor funds through fraudulent conduct, including creating shell companies, diverting assets to the shell companies in uncollateralized loan transactions violating the requirements of the fund prospectus, and submitting false statements of material fact to investors to cover their alleged misconduct.
The individual defendants and the fund were charged with four counts of wire fraud and violations of the Securities and Exchange Act for the alleged conduct. As the individual exercising control over the fund, one defendant was also charged with a claim for control-persons liability.
The case is Securities and Exchange Commission v. Abarbanel et al. and the complaint can be found here.
Televangelist’s COVID Cure Claims Cost $156K in Restitution
On June 23, 2021, Missouri Attorney General Eric Schmitt announced a consent judgment against a televangelist and his company Morningside Church Productions Inc. requiring up to $156,000 in restitution. The consent judgment resolves claims that the defendant marketed “Silver Solution” as a cure for Covid-19 in violation of the Missouri Merchandising Practices Act, which prohibits false or misleading claims in connection with the offer or sale of merchandise.
In March of 2020, the Missouri Attorney General’s Office filed suit against Bakker and Morningside Church Productions, after seeing an advertisement from Bakker’s show claiming that the “Silver Solution” product was able to cure Covid-19. Under the consent judgment, Bakker cannot sell or advertise “Silver Solution” as a way to diagnose, treat, or cure any disease or illness. Bakker will pay up to $115,766 to Missouri residents who purchased the product, and if less than that sum is paid, the difference between the refunds and $90,000 must be paid to the Merchandising Practices Revolving Fund. Between all required payments, the total will be up to $156,000.
The Attorney General’s press release can be found here, and the consent judgment can be found here.