Lumber Liquidators Guilty Plea Costs Them $13 Million

According to the Department of Justice-Virginia-based hardwood flooring retailer Lumber Liquidators Inc. pleaded guilty today in federal court in Norfolk, Virginia, to environmental crimes related to its illegal importation of hardwood flooring, much of which was manufactured in China from timber that had been illegally logged in far eastern Russia, in the habitat of the last remaining Siberian tigers and Amur leopards in the world, announced the Department of Justice.

Lumber Liquidators was charged earlier this month in the Eastern District of Virginia with one felony count of importing goods through false statements and four misdemeanor violations of the Lacey Act, which makes it a crime to import timber that was taken in violation of the laws of a foreign country and to transport falsely-labeled timber across international borders into the United States.  The charges describe Lumber Liquidators’ use of timber that was illegally logged in Far East Russia.  This is the first felony conviction related to the import or use of illegal timber and the largest criminal fine ever under the Lacey Act.

“Lumber Liquidators’ race to profit resulted in the plundering of forests and wildlife habitat that, if continued, could spell the end of the Siberian tiger,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “Lumber Liquidators knew it had a duty to follow the law, and instead it flouted the letter and spirit of the Lacey Act, ignoring its own red flags that its products likely came from illegally harvested timber, all at the expense of law abiding competitors. Under this plea agreement, Lumber Liquidators will pay a multi-million dollar penalty, forfeit millions in assets, and must adhere to a rigorous compliance program.  We hope this sends a strong message that we will not tolerate such abuses of U.S. laws that protect and preserve the world’s endangered plant and animal species.”

According to a joint statement of facts filed with the court, from 2010 to 2013, Lumber Liquidators repeatedly failed to follow its own internal procedures and failed to take action on self-identified “red flags.”  Those red flags included imports from high risk countries, imports of high risk species, imports from suppliers who were unable to provide documentation of legal harvest and imports from suppliers who provided false information about their products.  Despite internal warnings of risk and non-compliance, very little changed at Lumber Liquidators.

On other occasions, Lumber Liquidators falsely reported the species or harvest country of timber when it was imported into the United States.  In 2013, Lumber Liquidators imported Mongolian oak from Far East Russia which it declared to be Welsh oak and imported merpauh from Myanmar which it declared to be mahogany from Indonesia. 

The illegal cutting of Mongolian oak in far eastern Russia is of particular concern because those forests are home to the last 450 wild Siberian tigers, Panthera tigris altaica.  Illegal logging is considered the primary risk to the tigers’ survival, because they are dependent on intact forests for hunting and because Mongolian oak acorns are a chief food source for the tigers’ prey species.  Mongolian oak forests are also home to the highly endangered Amur leopard Panthera pardus orientalis, of which fewer than 50 remain in the wild.  In June 2014, in response to illegal logging and the decline in tiger populations, Mongolian oak was added to the Convention on the International Trade in Endangered Species.

Under the plea agreement, Lumber Liquidators will pay $13.15 million, including $7.8 million in criminal fines, $969,175 in criminal forfeiture and more than $1.23 million in community service payments.  Lumber Liquidators has also agreed to a five year term of organizational probation and mandatory implementation of a government-approved environmental compliance plan and independent audits.  In addition, the company will pay more than $3.15 million in cash through a related civil forfeiture.  The more than $13.15 million dollar penalty is the largest financial penalty for timber trafficking under the Lacey Act and one of the largest Lacey Act penalties ever.  The company is scheduled to be sentenced on Feb. 1, 2016.

 

Pfizer to pay $400 Million for Off Label Drug Marketing

According to the Jere Beasely Report a New York federal judge has granted final approval of a $400 million settlement that ends a class action accusing Pfizer Inc. of misleading investors about illegal off-label drug marketing. However, some investors may not get very much, with a recovery rate of 15 cents per share. U.S. District Judge Alvin K. Hellerstein had granted early approval of the settlement in mid-March after lawyers revised notices to class members clarifying details about the litigation.

The case, because of the settlement, has now been dismissed with prejudice. The recovery rate of 15 cents per share is far less than the $1.26 per share a damages expert for the Plaintiffs had estimated.

Pfizer put the damage per share at nothing because, the company disclosed a dividend cut to fund its purchase of Wyeth on the day of the January 2009 stock drop that was central to the lawsuit. Both sides noted in February that if fewer people claim, the recovery for claimants will grow, and institutional investors will be active, claiming most of the potential recovery.

The Plaintiffs filed their claims in 2010 after Pfizer pled guilty to illegally marketing the anti-inflammatory drug Bextra and reaching a $2.3 billion settlement with the federal government in 2009. Investors alleged that the company misled them about marketing that drug, as well as Godon, Lyrica and Zyvox, and that Pfizer concealed a kickback scheme involving payments to doctors in exchange for promotion of those drugs.

Geico Surrenders $517,000 to Settle Allegations

 

According to Top Class Actions GEICO has agreed to a $517,000 class action settlement over allegations that the insurance provider received reimbursement from a third party without first obtaining a judicial determination or an agreement with car accident victims that they were “made whole” by their settlement.

Lead plaintiff Lisa Stokes filed the GEICO class action lawsuit claiming that GEICO should have waited to obtain a “made whole” statement from insured customers before they sought reimbursement of Med Pay/PIP payments.

According to the GEICO class action, in the absence of a “made whole” agreement or judicial determination, GEICO should not have received subrogation payments.

GEICO denies any liability to Stokes and Class Members on the claims asserted in the class action lawsuit. However, the insurance company agreed to settle in order to avoid the expense and uncertainty of continued litigation.

Who’s Eligible

Class Members include individuals who received medical treatment as a result of an automobile accident and (a) who were insured under an automobile insurance policy that was issued in Arkansas by GEICO and pursuant to which GEICO made a Med Pay/PIP payment to a medical provider on behalf of the insured; and (b) who settled a bodily injury claim with a third party arising out of the automobile accident “pro se” and without the assistance of an attorney; and (c) as a result of that settlement, GEICO received a subrogation payment as reimbursement for a Med Pay/PIP payment between the dates of Nov. 1, 2008 and April 3, 2015.

Potential Award Varies.

Class Members who file a valid Claim Form will receive a payment not to exceed 100% of the amount GEICO received in Med Pay/PIP subrogation on their claim. If the number of eligible claims exceeds the amount available in the class action settlement fund, distributions will be made on a pro rata basis.

To see if you qualify go to http://topclassactions.com/lawsuit-settlements/open-lawsuit-settlements/170747-geico-auto-insurance-class-action-settlement/

Walter Investment Management Corp. Must Pay More than $29 Million

 

The Justice Department announced today that Walter Investment Management Corp. WIMC has agreed to pay $29.63 million to resolve allegations that WIMC, through its subsidiaries, Reverse Mortgage Solution Inc., REO Management Solutions LLC and RMS Asset Management Solutions LLC, violated the False Claims Act in connection with their participation in the Department of Housing and Urban Development’s Home Equity Conversion Mortgages program, which insures “reverse” mortgage loans.  WIMC, through subsidiaries such as RMS and Green Tree Servicing LLC, provides business support to the residential mortgage industry, including servicing of reverse or forward mortgages on behalf of major financial institutions.*

“The Department of Justice is committed to ensuring that those who service HUD-insured reverse mortgages are held accountable for their knowing failure to comply with important HUD requirements,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Schemes such as these undermine an important tool available to older Americans who wish to use a HUD-insured reverse mortgage loan to age in place.”

Reverse mortgage loans allow elderly people to access the equity in their homes.  To encourage reverse mortgage loans, HUD insures such loans through a program administered by HUD’s Federal Housing Administration.  Under HUD’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first.  The lender is repaid the amount of the loan, including the costs of servicing the loan and interest that accrues, after a loan becomes due and payable.  HUD will reimburse a lender that is unable to recoup the full amount of the loan.  In order to file a claim, the servicer is required to meet a number of requirements and deadlines.  Failure to meet these requirements and deadlines could result in denial of the insurance claim.

The government alleged that, from August 2009 to March 2015, RMS, with the knowledge and support of its corporate parent, WIMC, submitted false claims for debenture interest from HUD by failing to properly disclose that it had not met certain deadlines and, therefore, was not entitled to such interest payments.  In order to obtain such interest, HUD requires lenders and their servicers to obtain appraisals within 30 days of the loan becoming due and payable.  The significance of the 30-day appraisal requirement is, among other things, to establish a mutual understanding between the lender and HUD as to the market value of the property so that a decision can be made as to whether to proceed with foreclosure, engage in a workout with the lender or deal with estate rights issues.

The government also alleged that from July 2010 to October 2014, WIMC, through its subsidiaries, submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them to be lawful sales commissions.  As part of an insurance claim, HUD will reimburse lenders or their servicers for sales commissions paid to real estate agents as part of the liquidation of foreclosed properties.  HUD will not, however, reimburse lenders or their servicers for fees paid for the referral of liquidation business.  According to the government, RMS often used straw companies to liquidate foreclosed properties.  Upon sale of the foreclosed property, the straw companies split the six-percent sales commissions: the real estate agents shared a five-percent sales commission and the companies kept a one-percent referral fee.  These straw companies, in turn, deducted a small fee from the one-percent referral fee and kicked the remainder back to RMS.  Nonetheless, RMS submitted insurance claims to HUD that included payment for the full six-percent sales commission, when, in fact, the payment included a prohibited referral fee.

The settlement resolves allegations filed in a lawsuit by Matthew McDonald, a former executive of RMS, under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case.  Mr. McDonald will receive $5.15 million as his share of the recovery in this case.

This information verified by the Dept. of Justice

Kmart Guilty of False Claims Act Violation

KMART Corp. (Kmart), a discount department store chain that operates approximately 780 in-store pharmacies, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper Medicare beneficiary inducements, the Justice Department announced today. 

 

The settlement resolves allegations that Kmart violated the False Claims Act by providing illegal benefits to beneficiaries of the Medicare program.  The government alleged that from June 2011 to June 2014, Kmart knowingly and improperly influenced the decisions of Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by permitting the Medicare beneficiaries to use drug manufacturer coupons to reduce or eliminate prescription co-pays that they otherwise would be obligated to pay.  Federal law prohibits a person from offering beneficiaries of certain federal health programs, such as Medicare, remuneration that is intended to influence the beneficiary’s choice of provider.  The government alleged that Kmart’s conduct caused the Medicare beneficiaries to seek expensive, brand name drugs in lieu of cheaper generic drugs, which caused the government’s costs to increase without any medical benefit to the beneficiary.  The government also alleged that Kmart improperly encouraged Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by offering them varying levels of discounts on the purchase of gasoline at participating gas stations based on the number of prescriptions that they filled at Kmart pharmacies.

 

The settlement resolves allegations in a lawsuit filed by Joshua Leighr, a former Kmart pharmacist, under the qui tam, or whistleblower provisions of the False Claims Act.  The act authorizes private parties, such as Mr. Leighr, to sue for fraud on behalf of the United States and to share in any recovery.  Mr. Leighr will receive approximately $248,500 of the settlement.   

 

Payday Loan Lending Scheme Uncovered

The operators of a payday lending scheme that allegedly conned millions of dollars from consumers nationwide have agreed to more than $54 million in settlements with the Federal Trade Commission . The settlements, announced on July 7, arise from allegations by the that Timothy Coppinger, Frampton Rowland III and their companies targeted online payday loan applicants – consumers seeking short-term loans to tide them over until they received their next paycheck. Approximately 400,000 consumers were affected by the scheme, and the settlement funds will be used to reimburse them for losses, according to the FTC.

Using information gathered from data brokers and lead generators, the companies allegedly deposited funds in the applicants’ bank accounts without obtaining permission. The companies subsequently withdrew money to pay recurring “finance” charges without using any of the funds to pay the total allegedly owed, the FTC alleged. The companies also allegedly misrepresented the loans’ costs, finance charges, annual percentage rates payment schedule and other data. Consumers who closed their bank accounts in an effort to stop the unauthorized debits discovered that the companies had sold the purported loans to debt-collection companies that harassed them for payment, the FTC alleged. A federal court in Missouri stopped the operation and froze the Defendants’ assets pending resolution of the FTC allegations.

The Coppinger and Frampton limited liability companies involved in the lawsuit include: CWB Services; Orion Services; Sandpoint Capital; Basseterre Capital; Namakan Capital; Anasazi Services; Anasazi Group; Vandelier Group; St. Armands Group; Longboat Group and Oread Group. The settlements, which require federal court approval, erase any consumer debt purportedly owed to the Defendants and bar them from reporting the debts to credit-reporting agencies.

The agreements, according to the FTC, also ban the Defendants “from any aspect of the consumer lending business, including collecting payments, communicating about loans and selling debt.” If approved by the court, the FTC said the settlements will impose a more than $32.1 million consumer redress judgement on the Coppinger companies agreed and a similar judgement of nearly $21.9 million on the Frampton companies. The judgments against Coppinger and Frampton will be suspended upon their surrender of certain assets, according to the FTC.

Construction Boss Fraudulently Gained Control of Condos Homeowners Association

According to the US Dept. of Justice website a former construction boss from Las Vegas was sentenced today to 188 months in prison for his role in a $58,141,275 million scheme to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area to secure construction and other contracts for himself and others.  Forty-two individuals have been convicted of crimes in connection with the scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Office, Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Leon Benzer, 48, pleaded guilty on Jan. 23, 2015, to one count of conspiracy to commit mail and wire fraud, 14 counts of wire fraud, two counts of mail fraud and two counts of tax evasion.  In addition to imposing the prison term, U.S. District Judge James C. Mahan of the District of Nevada ordered Benzer to pay restitution in the amount of $13,294,100.

“Leon Benzer recruited and paid off puppets to serve on homeowners’ boards so that they would steer lucrative contracts to his company and cronies,” said Assistant Attorney General Caldwell.  “Far from enjoying their corrupt proceeds, however, Benzer and his co-conspirators will serve years behind prison bars.”

“When Leon Benzer named his company, Silver Lining Construction, he probably wasn’t aware of the IRS Criminal Investigation Division and the expertise of our special agents when it comes to putting pieces of a puzzle together to build a picture of fraudulent activity,” said Chief Weber.  “Benzer manipulated and bribed HOA boards in order to enrich himself and his co-conspirators at the expense of American taxpayers.  Not only did he try to hide the proceeds of his crimes in order to evade paying taxes, but he failed to pay his employment taxes.  Today, justice was served and the “silver lining” that Benzer anticipated was not realized thanks to the work of IRS-CI and our law enforcement partners.”

In connection with his guilty plea, Benzer admitted that, from approximately August 2003 through February 2009, he and an attorney developed a scheme to control the boards of directors of HOAs in the Las Vegas area.  According to plea documents, Benzer and his co-conspirators recruited straw buyers to purchase condominiums and secure positions on HOAs’ boards of directors.  Benzer admitted that he paid the board members to take actions favorable to his interests, including hiring his co-conspirator’s law firm to handle construction-related litigation and awarding remedial construction contracts to Benzer’s company, Silver Lining Construction.

Pfizer Agrees to $325 Million Settlement for Fraudulant Marketing of Neurontin

Pfizer Inc. and Warner-Lambert Co. LLC have agreed to pay $325 million in settlement of a lawsuit brought by a class of third-party payers. It was alleged that the drug Neurontin had been fraudulently marketed by Pfizer and Warner-Lambert. All of the claims brought by class members arising out of the sale and marketing of Neurontin will be resolved. The Plaintiffs’ motion for preliminary approval of the settlement came just more than a month after Pfizer agreed to settle the remaining claims for attorneys’ fees in Kaiser Foundation Health Plan Inc.’s suit against the drug manufacturer in the multidistrict litigation (MDL).
The class Plaintiffs, which include Harden Manufacturing Corp., Louisiana Blue Cross/Blue Shield and others, were ready to bring the litigation to an end. The members of the class Plaintiffs’ steering committee (PSC) wrote in a memorandum in support of the settlement:
This settlement, which provides significant and long-awaited benefits to class members, exceeds the standard for preliminary approval of a class action settlement.
The settlement came less than a month after Pfizer agreed to settle another suit in the MDL. Pfizer agreed in that settlement to pay Kaiser, a health maintenance organization, an undisclosed amount of attorneys’ fees. Since 2004, payers of Neurontin have accused the Defendants in several suits of fraudulently marketing the drug and causing them economic harm. Those suits were ultimately centralized before the United States District Court for the District of Massachusetts for MDL proceedings.
In the newly settled suit, class Plaintiffs alleged a fraudulent scheme to market and sell Neurontin for a variety of uses not approved by the U.S. Food and Drug Administration (FDA). The defendants sought to market the drug for several off-label uses in a variety of ways, including through false or misleading statements to physicians, according to the suit. The third-party payers involved in the action include insurance companies, health care benefit providers, union health and welfare plans and others. The class Plaintiffs have sought preliminary approval of the settlement and certification of the class for settlement purposes. They have asked for date for a final approval hearing.

Fireman's Insurance To Pay Out $44 Million For False Claims Case

Fireman’s Fund Insurance Company has agreed to pay $44 million to settle allegations under the False Claims Act that it knowingly issued insurance policies that were ineligible under the U.S. Department of Agriculture’s (USDA) federal crop insurance program and falsified documents, the Justice Department announced today.  Fireman’s Fund, an Allianz SE subsidiary headquartered in Novato, California, provides personal and commercial property insurance throughout the United States.

“Federal crop insurance provides vital support for farmers suffering crop losses due to natural disasters,” said Acting Assistant Attorney General Benjamin C. Mizer of the Department’s Civil Division.  “The Department of Justice will continue aggressively to pursue those who abuse this important program.” 

Between 1999 and 2002, Fireman’s Fund operated a crop insurance business and participated in the federal crop insurance program.  Under the program, Fireman’s Fund sold and serviced crop insurance policies that were reinsured by the USDA for a portion of the risks.

The United States alleged that between Jan. 1, 1999, and Dec. 31, 2002, Fireman’s Fund knowingly issued federally reinsured crop insurance policies that were ineligible for federal reinsurance.  Specifically, Fireman’s Fund allegedly backdated policies, forged farmers’ signatures, accepted late and altered documents, whited-out dates and signatures, and signed documents after relevant deadlines.  The policies were issued by Fireman’s Fund offices in Modesto, California; Lambert, Mississippi; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington; and Overland Park, Kansas. 
“Today's announcement shows how working alongside our partners in law enforcement, we will ensure the integrity of the crop insurance program for American taxpayers and producers alike,” said Risk Management Agency Administrator Brandon Willis of the USDA.

Flaxmilk False Advertising Claim. Are You Entitled To A Refund?

 

Flax USA Inc. has reached a class action lawsuit settlement over claims it deceptively labeled its flax milk products as “All Natural.” If you purchased flax milk sold by Flax USA in the United States between Nov. 5, 2009 and Sept. 22, 2014, you may be eligible to claim up to $32.50 from the Flax USA flax milk class action settlement.

The flax milk settlement resolves a class action lawsuit (Madenlian v. Flax USA) that claims consumers were misled into purchasing Flax USA flax milk products based on the misleading statement: “All Natural Dairy Free Beverage.”

Plaintiffs allege the statement is misleading because the products contain the following artificial or synthetic ingredients: Tricalcium Phosphate, Xanthan Gum, Vitamin A Palmitate, Vitamin D2, and Vitamin B12. Had they known Flax USA flax milk products contained these allegedly artificial or synthetic ingredients, they would not have purchased the products, the flax milk class action lawsuit claims.

Flax USA denies the allegations and contends that the statements “All Natural Dairy Free Beverage* / *Added Vitamins & Minerals,” read in combination, do no not represent that the added vitamins and minerals are “all natural.” However, the company has agreed to establish a $260,000 class action settlement fund to avoid the uncertainty of going to trial.

Who’s Eligible

Class Members of the Flax USA flax milk settlement include all persons in the United States who purchased any of the following products from Nov. 5, 2009 to Sept. 22, 2014:

• Flax USA Flax Milk Original

• Flax USA Flax Milk Unsweetened

• Flax USA Flax Milk Vanilla

The products must be aseptic (i.e., shelf-stable, non-refrigerated) flax milk sold in 32-oz size cartons.

Potential Award

$2.50 – $32.50 depending on how many Flax USA flax milk products you purchased and which of the following levels you fall under:

Lower Level:  You may seek reimbursement of $2.50 per carton purchased (up to a maximum of 10 cartons per claimant or address) without identifying the retailer or the retailer’s location where you purchased the product(s).

Higher Level: You may seek reimbursement of $3.25 per carton purchased (up to a maximum of 10 cartons per claimant or address) if you can indicate on the Claim Form both (1) the name of the retailer where you purchased the flax milk and (2) the city and state where that retailer is located.

The amount of money you receive from the Flax USA flax milk class action settlement may be reduced pro rata if the total number of valid claims exceeds the $260,000 settlement fund.

Proof of Purchase

You do not have to provide proof of purchase if you are claiming products under the “Lower Level” tier. However, you must provide the name of the retailer and the retailer’s location if you are submitting a claim under the “Higher Level.” Please see details above under “Potential Award.”

Claim Form

CLICK HERE TO FILE A CLAIM »

Claim Form Deadline

04/28/15

Overseas Fraud Committed by Minebea!

Minebea Co. Ltd., a small sized bearings manufacturer based in Nagano, Japan, has agreed to plead guilty and to pay a $13.5 million criminal fine for its role in a conspiracy to fix prices for small sized ball bearings sold to customers in the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court for the Southern District of Ohio in Cincinnati, Minebea conspired to fix the prices of small sized ball bearings in the United States and elsewhere.  In addition to the criminal fine, Minebea has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval.
According to the charge, Minebea and its co-conspirator discussed and agreed upon prices to be submitted to small sized ball bearings customers.  Minebea’s participation in the conspiracy lasted from at least as early as early-to-mid 2008 and continued until at least October 2011.
“Any agreement that restricts price competition violates the law,” said U.S. Attorney Carter Stewart of Southern District of Ohio.  “We will continue to work to protect consumers’ right to free and open competition.”
Bearings are used in industry in numerous products to reduce friction and help parts roll smoothly past one another; they “bear” the load.  Small sized ball bearings are those ball bearings whose outside diameter is 26 millimeters or less.
Minebea is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Botox and Children Not A Good Combination. Allergan to Pay More Than $600 Million

A federal court jury in Vermont returned a $6.5 million verdict in favor of the parents of a 6-year-old boy with cerebral palsy who suffered seizures after receiving off-label Botox treatment for his mild muscle spasticity. The jury determined that the defendant, Allergan Inc., negligently promoted the off-label use of Botox to treat muscle spasticity in children at unsafe high doses and failed to sufficiently provide the little boy’s parents and his health care providers with information about the drug’s known risks and dangers, such as seizures, side effects and harmful immune responses.

The jury did find, however, that Allergan had not violated the Vermont Consumer Fraud Act by deceptively promoting Botox for its off-label use in children with muscle spasticity. The jury awarded the Drakes $2.5 million in compensatory damages and $4 million in punitive damages. The trial strategy for the plaintiffs was to put the CEO of Allergan and the company’s ethics on trial in this case.

The parents filed suit in 2013 against the pharmaceutical company after their son, who had mild spasticity in his legs, began having seizure-like episodes requiring hospitalization after a Vermont doctor injected him with Botox. The Drakes said: Prior to his Botox injections, J.D. could walk, feed himself, brush his teeth and speak. He had no history of seizures.

Dr. Scott Benjamin injected almost 7 u/kg of Botox into the boy’s calves in April 2010. Two days after the injections, the child’s complained of pain and his walking became more and more unstable. The doctor injected him again in May with almost twice as much Botox. The next day, the boy began vomiting and had trouble breathing and speaking, in addition to having seizure-like symptoms. He was rushed to the emergency room and diagnosed with an allergic reaction to Botox.

Since then, the boy has continued to have seizures and has developed a chronic, life-threatening immune response. The maximum safe dose for Botox, which has never been approved by the U.S. Food and Drug Administration to treat pediatric spasticity, is 8 u/kg. The FDA denied to approve the drug for that indication because Allergan couldn’t show it was effective at safe doses.

Allergan has continued to promote the off-label use of Botox to treat children. The majority of Botox sales are for off-label indications. It was alleged in the complaint:

The FDA made clear to Allergan in 2009 that it was free to warn physicians about the maximum safe dose for children, but to date Allergan has failed to make that information public. Instead of warning, Allergan continues to sponsor ‘medical education’ activities and dosing schedules that encourage physicians to use unsafe doses higher than 8 u/kg.

Allergan pled guilty to off-label promotion of, among other indications, pediatric spasticity, and agreed to pay $600 million in civil and criminal penalties to the United States government in 2010. Allergan never disclosed information about side effects or seizures in warnings, promotional or marketing materials. Instead, it had a corporate plan to illegally promote the off-label use of Botox by physicians. In addition to promoting Botox at doctors’ conferences, Allergan established and funded two organizations for the express purpose of promoting off-label use of Botox. Allergan has publicly stated that Botox is a miracle drug and has often compared it to penicillin. Side effects are rarely mentioned and consistently understated.