Yesterday, in a shocking twist to the way things normally happen in court, a successful lawyer who “led 20 major fraud investigations” as an attorney in Obama‘s Justice Department admitted guilt in a San Francisco federal court. Jeffrey Wertkin was charged with obstruction of justice and interstate transportation of stolen goods.
Wertkin specialized in whistleblower lawsuits. He had the privilege of acting as lead counsel at the “first-ever False Claims Act suit filed by the Justice Department.” These cases are handled differently than most. They are filed under seal and kept tightly under wraps until the Justice Department smells the perfect moment, to jump out of the bushes and yell, “gotcha!“
One day in November of 2016, he picked the name “Dan” and then picked up the phone. On the other end was a manager of a “California-based security company” who had no idea they were subjected to a sealed investigation. Dan explained how a sneak peek at evidence could be a valuable heads up to “get out ahead of the investigation.”
The Sunnyvale based executive dropped a dime to the FBI. After that, all of Wertkin’s calls were caught on tape. They made a deal to swap the information for a “consulting fee” of $300,000 in bitcoin. Negotiations ensued. Wertkin was willing to back down on his insistence to be paid in untraceable digital currency but added 10k to his price “to cover his travel expenses.”
A hotel in Cupertino was chosen for the exchange. The company representative in the deal was supposedly one of the firm’s other executives, “Bill,” in charge of the money. He was to sit in the lobby on the chair with a folded newspaper. “When you walk into the lobby, there is a water station on your left. Just past the water is a chair with a newspaper on it. Please sit in that chair and I will come meet you,” Wertkin texted on his way to the meet.
Wertkin walked into the Hilton Garden Inn wearing a wig and simply handed the man the envelope full of lawsuit copies. He was supposed to get “a duffel bag full of money.” Instead, his contact showed his badge. That is when he found out the company rep was really with the FBI. “My life is over,” Wertkin gasped.
Fraudulently billing the government or overcharging on invoices is a violation of the federal False Claims Act. Unhappy employees often rat on their bosses, especially if they get the boot for something. By snitching to the feds, they can be rewarded with a cut of the take after the government shakes the company back down.
According to court records in the case, the paperwork Wertkin got busted trying to market “was filed under seal in January 2016.” It was only one of “several whistleblower complaints” Wertkin removed “without permission for his personal use.” Each worth hundreds of thousands in his mind.
Before he was arrested, the charging complaint states he tried to peddle a second sealed action to a company based in Oregon, which is how the federal court in San Francisco ended up with jurisdiction, covering both California and Oregon.
One of the high profile cases he worked on at the Justice Department illustrates how the process works and how inside information can be a big plus.
AseraCare is a medical giant that specializes in providing “hospice” care to those facing terminal illness. Wertkin led the 2015 prosecution before a federal court in Birmingham. The company was accused by a whistleblowing employee of illegally billing “Medicare millions of dollars for patients who were not really on the verge of dying.”
Wertkin put a $200 million dollar price tag on the case, to cover “reimbursement, fines, and fees.” The Chief U.S. District Court Judge, Karon Bowdre presided. In the first phase of the trial, the jury found “AseraCare had filed false claims in 104 of 121 patient cases.” The judge wasn’t happy though. She “tossed out the verdict and ordered a new trial” over technical defects.
Then, in March of 2016, Judge Bowdre tossed the rest of the suit out too. It turns out that “the government’s claims that AseraCare had filed false claims to Medicare were based on the opinion of one doctor.” Things that throw monkey wrenches into litigation heavy enough to kill the case are valuable to know indeed.
“Jeff had a long career as a lawyer doing good work,” his attorney Cristina Arguedas insists. “He made a terrible mistake, for which he is extremely sorry, and is now working to make amends.” Jeff made a mistake alright, he got caught. Sentencing is scheduled for March until then, he is free on $750,000 bond.