The State AG Report Weekly Update December 7, 2017

AG Elections

Democrat Chris Mattei Announces Campaign for Connecticut Attorney General

  • Democrat Chris Mattei announced his candidacy for Connecticut AG in 2018, switching statewide races and forgoing a previously declared bid for Governor.
  • Mattei is currently an attorney in private practice and previously served as Director of the Connecticut Public Corruption Task Force and as Chief of the Financial Fraud and Public Corruption Unit for the U.S. Attorney’s Office in Connecticut.
  • Mattei is the first Democrat to announce a bid for AG. Democrat state House Representative William Tong is expected to formally enter the race. As previously reported, the sole Republican candidate to announce is John Shaban.

Republican Gary Grasso Files to Run for Illinois Attorney General

Charities

Ohio Attorney General Sues Charity and Telemarketer for Allegedly Defrauding Donors

  • Ohio AG Mike DeWine filed a lawsuit against 501(c)(3) charity Cops for Kids Inc. (“Cops for Kids”), its co-founders, and its professional solicitor Telcom Enterprises of Ohio, Inc. (“Telcom”) for allegedly violating the Ohio Charitable Trust Act and the Ohio Organizations Act.
  • According to the AG’s office, Cops for Kids allegedly collected over $4.2 million in donations between 2005 and 2015 through Telcom, their professional solicitor, by claiming that their contributions would be used for charitable purposes when, in reality, less than 2% of donations were spent on charitable programming. The AG’s office also alleges that Telcom violated two previous Assurances of Discontinuance regarding their history of fraudulent solicitation activity.
  • The lawsuit seeks a permanent injunction preventing Cops for Kids, its co-founders, and Telcom from engaging in solicitations for charitable purposes, restitution, and civil penalties of $10,000 for each violation of the Ohio Organizations Act.

Consumer Protection

Virginia Attorney General Settles with Internet Lender Over Allegedly Illegal Loans

  • Virginia AG Mark Herring secured an Assurance of Voluntary Compliance (“AVC”) with internet lender Opportunity Financial, LLC (“Opportunity Financial”) to resolve allegations that it violated the state’s Consumer Protection Act by imposing illegal fees and misleading consumers about its lending licenses in Virginia.
  • According to the AG’s office, Opportunity Financial allegedly charged borrowers a $50 origination fee during finance-charge-free grace periods required by statute and misrepresented that it was licensed to conduct lending activity in Virginia.
  • Under the AVC, Opportunity Financial must refund $267,000 in origination fees and $42,000 in interest to consumers, provide $3.1 million in interest forgiveness, pay $30,000 in civil penalties and attorneys’ fees, and permanently cease representing that it is licensed to conduct lending activity in Virginia.

Dietary Supplements

Maine Attorney General, FTC Reach Settlement with Supplement Company for Allegedly Deceptive Advertising

  • Maine AG Janet Mills and the Federal Trade Commission (“FTC”) reached a settlement with supplement seller Health Research Laboratories, LLC (“HRL”) and its owner for allegedly violating the Maine Unfair Trade Practices Act, the Federal Trade Commission Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, the FTC Telemarketing Sales Rule, and the Electronic Fund Transfer Act.
  • According to AG Mills and the FTC’s complaint, HRL allegedly marketed its dietary supplement BioTherapex and its brain supplement NeuroPlus by using a variety of false and unsupported claims and engaged in deceptive marketing practices by misrepresenting the terms of its “risk free” trial period, enrolling consumers in auto-renewal plans without adequate permission, and obtaining and charging consumers’ debit card numbers without proper authorization, among other things.
  • The stipulated final judgment prohibits HRL from deceptive marketing of its product or misrepresenting its terms of sale, requires HRL to obtain consumer consent for certain payment options, and imposes a judgment of $3.7 million, which will be suspended upon payment of $800,000 in restitution.

Employment

California Attorney General Files Lawsuit Against Janitorial Subcontracting Company Over Alleged Wage Theft, Tax Law Violations

  • California AG Xavier Becerra filed a lawsuit against janitorial subcontracting company One Source Facility Solution, Inc. (“One Source”) and its Chief Executive Officer over alleged violations of California’s Unfair Competition Law.
  • According to the AG’s office, One Source allegedly failed to pay the minimum wage, failed to maintain detailed payroll records showing the hours worked by and the wages paid to their employees, failed to pay all State Unemployment Fund contributions, and knowingly made false or fraudulent statements of fact material to the determination of a workers’ compensation insurance premium.
  • The lawsuit seeks restitution of at least $1 million to workers, civil penalties of at least $500,000, and a permanent injunction prohibiting One Source from engaging in unfair competition.

For-Profit Colleges

California Attorney General Sues For-Profit University Over Allegedly Unlawful Business Practices

  • California AG Becerra filed a lawsuit against online for-profit school Ashford University, LLC and its parent company Bridgepoint Education, Inc. (collectively “Ashford University”) for allegedly violating the state’s Unfair Competition Law, Business and Professions Code, and Fair Advertising Law.
  • According to the AG’s office, Ashford University allegedly used misleading statements regarding financial aid and alumni statistics, among other things.
  • Addressing the allegations, Bridgepoint Education, Inc. responded that “Bridgepoint’s institutions serve as a model for how online education can better the lives of people who did not, or who were unable to, pursue more traditional avenues to degrees. Thousands upon thousands of our current students and graduates can attest to the educational value provided by our undergraduate and graduate programs that have bettered their lives.”

Pharmaceuticals

Montana Attorney General Files Lawsuit Against Opioid Manufacturer

  • Montana AG Tim Fox filed a lawsuit against opioid manufacturer Purdue Pharma L.P., Purdue Pharma, Inc., The Purdue Frederick Company Inc., and Rhodes Pharmaceuticals L.P. (collectively “Purdue Pharma”) for allegedly violating the state’s Unfair Trade Practices and Consumer Protection Act and False Claims Act through deceptive marketing practices promoting prescription opioids, such as its product OxyContin.
  • According to the AG’s office, Purdue Pharma allegedly misrepresented to consumers the risks of addiction and harmful side effects caused by long-term opioid use, falsely claimed long-term use was safe and effective without evidence, marketed “abuse-deterrence” opioids that Purdue Pharma knew were readily abused, and falsely claimed that opioids were safer than alternative, non-narcotic treatments.
  • The lawsuit seeks an injunction against Purdue Pharma’s allegedly deceptive marketing practices, treble damages for the state’s costs incurred by opioids and their adverse effects through the Montana Medicaid Program and the Montana Healthcare Plan, punitive damages, disgorgement of unjustified profit, and maximum civil penalties for each violation of the law.
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