The State AG Report Weekly Update March 3, 2016

Breaking News

New Jersey Governor Names New Acting Attorney General

  • New Jersey Governor Chris Christie appointed Robert Lougy as the state’s acting Attorney General effective March 14. Lougy has served for 10 years in the New Jersey Office of the Attorney General, and currently serves as New Jersey’s First Assistant Attorney General.
  • Lougy is replacing John Hoffman, who recently announced his resignation to take a position with Rutgers University.

Consumer Protection

Florida Attorney General Reaches Multimillion Dollar Settlement with Talent Marketing Company

  • Florida AG Pam Bondi reached a settlement with entities doing business as InterFACE Talent (“InterFACE”), as well as its president and CEO, for alleged violations of Florida’s Deceptive and Unfair Trade Practices Act.
  • According to the complaint, InterFACE allegedly engaged in high-pressure sales practices and charged large up-front fees for false promises that it would help consumers obtain modeling and acting contracts.
  • Under the terms of the consent judgment, InterFACE will pay $22 million in restitution, $3.5 million in civil penalties, and $500,000 in attorney’s fees and costs.

Tennessee Attorney General Settles with Timeshare for Allegedly Unlawful Marketing Practices

  • Tennessee AG Herbert Slatery III reached a settlement with Festiva, a network of vacation and timeshare companies, for alleged violations of federal and state consumer protection laws.
  • According to AG Slatery, Festiva allegedly operated a telemarketing and direct mail enterprise that, among other things, used aggressive and deceptive marketing practices by luring consumers to attend “high-pressured sales presentations” to sell expensive travel club memberships and products.
  • Under the terms of the settlement, Festiva will pay $1,250,000 in consumer restitution, up to $1,000,000 in loan forgiveness for consumers who financed their membership, and will pay $750,000 to the State. Earlier this year, North Carolina AG Roy Cooper settled with Festiva over similar allegations about the company’s marketing practices.

False Claims

Washington Attorney General Obtains $27 Million Judgment Against Wheelchair Company for False Claims

  • Washington AG Bob Ferguson obtained a judgment in bankruptcy court against Wheelchairs Plus, Inc. and its owner Michael Mann, for violations of the state’s Medicaid Fraud False Claims Act and Medicaid Provider Fraudulent Practices law.
  • According to AG Ferguson’s office, Mann received over $550,000 in Medicaid payments he was not entitled to where he provided customers with used wheelchairs, then sought Medicaid reimbursement for “new” wheelchairs which cost thousands of dollars more than used chairs.
  • Under the judgment, Mann has been ordered to pay civil penalties, damages, and prejudgment interest totaling $2.7 million.

For-Profit Colleges

Massachusetts Attorney General Sues Unlicensed For-Profit Nursing School

  • Massachusetts AG Maura Healey filed a complaint against Hosanna College of Health (“Hosanna”) for allegedly violating the state’s consumer protection laws.
  • According to the complaint, Hosanna allegedly operated in the state without a license to offer classes or grant degrees, and misrepresented its nursing programs to prospective students.
  • AG Healey seeks restitution for students, as well as civil penalties and injunctive relief.

Eight Attorneys General Urge the VA to Restore Benefits to Veterans Misled by For-Profit Colleges

  • Eight AGs, led by California AG Kamala Harris, wrote a letter to the U.S. Department of Veterans Affairs (“V.A.”) urging the agency to provide stronger protections and preventative measures for veterans against for profit schools engaged in predatory practices.
  • In the letter, the AGs urge the V.A. to initiate an automatic review to determine whether education and rehabilitation benefits for veteran students should be restored when an AG, State Approving Agency or the U.S. Department of Education has taken a regulatory or enforcement action against a school for deceptive practices.
  • In addition, the AGs urge the V.A. to “flag” schools that are under investigation by AGs and state agencies on their GI Bill Comparison Tool website, and not limit such “flagging” only to investigations by certain federal agencies, as is the current practice.


22 Attorneys General Settle with Two Financial Companies Over Municipal Bond Derivative Transactions

  • 22 AGs, led by Connecticut AG George Jepsen and New York AG Eric Schneiderman, reached settlements with Natixis Funding Corp. and Société Générale to resolve a multistate investigation into allegations that they engaged in fraudulent and anticompetitive conduct in municipal bond derivative transactions with state and local governments and nonprofit entities.
  • According to the settlements, certain Natixis and Société employees and their counterparts at other institutions allegedly rigged bids and submitted noncompetitive courtesy bids and fraudulent certificates of arms-length bidding, which led local and state governments and nonprofit entities to enter into municipal derivatives contracts on less advantageous terms than they would have otherwise.
  • Under the terms of the settlements, as well as a private class action settlement that the financial companies concurrently reached, Natixis and Société will pay a total of $30 million and $26.8 million, respectively. Of those totals, Natixis and Société will pay $1.5 million and $1.3 million, respectively, to the AGs.