Target and Visa Work Out a Settlement

Target Corp. and Visa Inc. announced that they had reached a $67 million settlement that would compensate various card issuers for the cost of the now infamous 2013 Target data breach.

According to Target, the data breach settlement applies to a subset of card issuers that represent the majority of Visa cards determined to be at risk because of the Target data breach. These card issuers have reportedly entered into direct settlements with both Target and Visa.

A day prior to this settlement announcement, Visa informed Target that the required subset of card issuers affected by the data breach have entered into settlements to make Target’s agreement feasible. Settlement offers are currently being sent to the remaining group of Visa card issuers that would allow these institutions to receive comparable results as the issuers who have already settled with Visa and Target, the retailer states.

According to Visa, this Target data breach settlement agreement is the companies effort to leave the data breach in the past in order to focus on an industry-wide concern of fending off future breaches. On the same day that the $67 million data breach settlement was announced, a Visa representative stated: “Visa has worked to help Target reach a resolution for the expenses incurred by financial institutions as a result of the 2013 compromise. Nevertheless, the fact remains that data breaches are an unfortunate situation for all parties involved — especially consumers.”

This Visa card issuer settlement is good news for Target, as it comes on the heels of the failed May 2015 $19 million agreement brokered between the popular retailer and MasterCard Inc., that fell apart because both Target and MasterCard failed to convince enough banks to sign into the data breach payoff. This settlement would have resolved a data breach class action lawsuit filed against the companies in Minnesota federal court, which had been part of a larger Target data breach multidistrict litigation that was established following the 2013 data breach.

However, not all is lost in that case, as MasterCard recently stated that the credit card company is working closely with the retailer and that Target has suggested that this same settlement approach be used for the Visa card issuers and similar terms were to be made available to MasterCard issuers. According to MasterCard, “We will now place the revised Target settlement offer in front of our customers for their consideration.”

It is estimated that 110 million Target consumers had their personal and financial information compromised during the 2013 Target data breach, which in turn also affected 40 million credit and debit cards. The Target data breach is one of the largest personal information breaches in U.S. history.

In addition to Target’s data breach settlement agreements with Visa and MasterCard credit and debit card issuers, the retailer has also agreed to settlements with consumers. In March of this year, a $10 million data breach settlement agreement was given preliminary approval by a Minnesota federal judge, which would provide consumers with documentation of their credit or debit card losses up to $10,000 in awards each. This Target data breach settlement with consumers also requires the retailer to increase security for consumer data, which includes appointing a chief information security officer, sustaining a written information security system, and implementing a program to monitor information security events.

How Safe Are Your Prescriptions?

Three California men and a Minnesota company were charged in an indictment today in the Southern District of Ohio for their roles in a massive prescription drug diversion scheme. 

The indictment alleges that David Jess Miller, 50, of Santa Ana, California; Artur Stepanyan, 38, and Mihran Stepanyan, 29, both of Encino, California, and Minnesota Independent Cooperative Inc. (MIC) engaged in a conspiracy to sell prescription drugs from illegal, unlicensed sources to wholesalers and pharmacies throughout the United States.  The 12-count indictment charges the defendants with conspiracy to commit mail and wire fraud, multiple counts of mail fraud, and conspiracy to distribute prescription drugs without a license and to make false statements.   
 
Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Director George M. Karavetsos of the U.S. Food and Drug Administration (FDA)’s Office of Criminal Investigations and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS) announced the charges. 

According to the indictment, from 2007 through April 2014, David Miller and his company, MIC, of Eagan, Minnesota, purchased prescription drugs from a network of illegal and unlicensed sources in New York, Florida and California.  Artur Stepanyan and Mihran Stepanyan, worked together to sell drugs from illegal sources to Miller and MIC.  Artur and Mihran Stepanyan, using a variety of company names, including Panda Capital Group, Red Rock Capital Group, Trans Atlantic Capital Group and GC National Wholesale, were Miller’s largest source of illegal drugs.  During the course of the conspiracy, Miller and MIC paid the Stepanyans approximately $160 million for these prescription drugs. 

“American consumers should be able to rely on the prescription drug supply chain,” said Principal Deputy Assistant Attorney General Mizer.  “Prescription drug diversion schemes like the one charged in this indictment undermine that supply chain and increase the risk that counterfeit, adulterated, misbranded, sub-potent or expired drugs will be sold to patients and consumers.” 

To hide the true, illegal sources of their prescription drugs, David Miller and MIC falsified so-called drug pedigree documents.  Pedigrees are documents required by law that show the source of drugs.  For most of the conspiracy, the fraudulent pedigrees falsely listed B&Y Wholesale, a company located in Puerto Rico and co-owned by co-conspirator Yusef Yassin Gomez (Yassin) as the source of the drugs.  The pedigree documents also falsely stated that Yassin’s company was an authorized distributor of the drugs.  On Feb. 19, 2014, Yassin pleaded guilty in U.S. District Court for the Southern District of Ohio to conspiracy to engage in the wholesale distribution of prescription drugs without a wholesale license.  In connection with his guilty plea, Yassin admitted the he agreed to allow Miller and MIC to use his company’s name on pedigree documents to hide the true drug sources.  In exchange, Miller and MIC paid Yassin a commission on all of the drug sales. 

 “Once a prescription drug is diverted outside of the regulated distribution channels, it becomes difficult, if not impossible, for regulators, law enforcement and end-users to know whether the prescription drug package actually contains the correct drug or the correct dose,” said U.S. Attorney Stewart.  “We will aggressively prosecute individuals and companies that ignore the law and sell illegally diverted prescription drugs to pharmacies, and ultimately, to American consumers.
“We are committed to protecting the integrity of the pharmaceutical supply chain, especially as criminals go to more extreme measures to subvert it,” said FDA’s Office of Criminal Investigations Director Karavetsos. “We will continue to pursue these criminals and work to bring them to justice.”
“The Postal Inspection Service is proud to partner with the FDA Office of Criminal Investigations to bring to bear our mail fraud expertise to help the fight against drug diversion,” said USPIS Assistant Inspector in Charge White.

Throughout the course of the conspiracy charged in the indictment, using these fraudulent pedigree documents, Miller and MIC sold approximately $393 million worth of prescription drugs to wholesalers and retail pharmacies throughout the United States, including to multiple customers in the Southern District of Ohio. 

In addition to Yassin, two of Miller’s other illegal drug suppliers, Peter Kats and Joseph Dallal, previously pleaded guilty to conspiracy to commit mail and wire fraud for their sales of illegally-diverted prescription drugs to Miller and MIC. 

This matter is being investigated by the FDA and USPIS.  Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of the Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are prosecuting this case.

David Miller, Artur Stepanyan, and Mihran Stepanyan were charged amongst 30 other individuals in the Northern District of California in a separate indictment on charges including federal Racketeer Influenced and Corrupt Organizations (RICO) Act; conspiracy to commit identity theft; conspiracy to commit access device fraud; conspiracy to commit mail, wire, and bank fraud; money laundering conspiracy; and conspiracy to distribute prescription drugs without a wholesale license.

This information is according to the Department Of Justice website.

The charges in the indictment are merely allegations, and do not constitute proof of guilt.  Every defendant is presumed to be innocent unless and until proven guilty.