In this edition of Litigation Roundup, a San Francisco-based research and data company gets two qui tam wins in the Northern District of Texas, and an Irving man settles insider trading allegations lodged by the U.S. Securities and Exchange Commission.
The Litigation Roundup is a weekly feature highlighting the work Texas lawyers are doing inside and outside the state. Have a development we should include next week? Please let us know at tlblitigation@texaslawbook.net.
Southern District of Texas
Houston Jury Convicts Pharmacist in $20M Kickback Scheme
On Tuesday, after deliberating for about a day, a jury determined a 54-year-old licensed pharmacist from Spring was guilty of conspiracy to pay health care kickbacks.
Attorneys representing Tronown Thomas had told the jury he was paying for legitimate marketing services. But the government alleged he paid millions to the owner of a Houston clinic in exchange for referrals of patients who had insurance through the Department of Labor’s Office of Workers’ Compensation Programs and had been prescribed compounded medications that had a high reimbursement rate.
Thomas was indicted in April 2022.
Between November 2015 and September 2017, jurors heard, Thomas and his Rayford ACP Pharmacy received more than $20 million in reimbursements from the government. The jury heard five days of testimony before beginning deliberations.
U.S. District Judge Alfred Bennett presided over the case and has scheduled Thomas’ sentencing for November. Thomas faces up to five years in prison.
Thomas is represented by Dan Cogdell, Aisha Dennis and James Osso of Cogdell Law Firm.
The government is represented by Alexander Alum and Kathryn Olson of the Department of Justice.
The case number is 4:22-cr-00212.
Northern District of Texas
Dallas Bus Companies Reach $3.9M PPP Settlement
Dallas-based bus companies Tornado Bus Company and El Expreso Group will pay the government $3.9 million to settle allegations the companies misrepresented the number of employees they had in order to receive Small Business Administration Paycheck Protection Program funds.
Blockquote Inc., a San Francisco company that specializes in research and data mining, initiated the lawsuit in November and the government intervened for purposes of settlement in July. As a whistleblower, Blockquote will receive $390,000 of the settlement funds.
Senior U.S. District Judge David Godbey signed off on the deal and entered an order dismissing the case Aug. 10.
The federal government is represented by Najib Gazi and Amber Perez of the Department of Justice
Blockquote is represented by Caitlyn Silhan and Charles Siegel of Waters & Kraus and Jason Marcus of Bracker & Marcus.
As of Monday, many documents in the case remained under seal. It was not immediately clear who served as counsel for Tornado Bus Company or El Expreso Group.
The case number is 3:25-cv-03101.
SEC, Irving Man Settle Insider Trading Claims
Settled insider trading charges were filed last week against an Irving man who was accused of using information received from a romantic partner to illegally profit off news of an acquisition.
Benjamin Tesfaye was accused of illegally trading Calliditas Therapeutics AB securities in advance of a May 2024 announcement from Asahi Kasei that it tendered an offer to acquire Calliditas.
Tesfaye’s then-partner worked for a subsidiary of Asahi and worked on assessing Calliditas’ compliance program during the pending acquisition. Tesfaye is accused of buying Calliditas securities two days before the announcement. The value of the shares increased about 70 percent after the acquisition was announced, generating about $18,600 in profits, according to the U.S. Securities and Exchange Commission.
The case was assigned to U.S. District Judge Ed Kinkeade.
The SEC is represented by its own Geoffrey Gettinger and Keefe Bernstein.
Tesfaye is represented by Trey Lavespere of League City.
The case number is 3:26-cv-02660.
Physician Staffing Co. Agrees to $3.5M PPP Settlement
Integrative Emergency Services Physician Group, a Dallas company that offers physician staffing and emergency services, has reached a deal to pay the government $3.5 million in order to bring an end to False Claims Act allegations involving Paycheck Protection Program loans.
The government alleged the company had lied about the number of employees it had when applying for two PPP loans through the Small Business Administration during the pandemic. The qui tam litigation was initiated by Blockquote Inc., which will receive $350,000 as part of the settlement.
The federal government is represented by Javan Porter and Amber Perez of the Department of Justice.
Blockquote is represented by Jason Marcus of Bracker & Marcus.
As of Monday, many documents in the case remained under seal. It was not immediately clear who served as counsel for Integrative Emergency Services Physician Group.
Senior U.S. District Judge Jane Boyle signed off on the settlement and dismissed the case Aug. 5.
The case number is 3:25-cv-01246.
U.S. District Court, Colorado
Frisco Man Cops to $43M Tax Shelter Fraud
A 69-year-old man from Frisco told the government last week he was guilty of defrauding the government out of about $43 million via a fraudulent tax shelter scheme that sheltered about $156 million in income.
Larry Conner was indicted in September 2023 and entered a not guilty plea the following month. But at a hearing Wednesday, Conner changed his plea to guilty to one count of defrauding the IRS by promoting and selling a fraudulent tax shelter.
The government alleged Conner would promote the trust tax shelter to clients at in-person seminars under the name The Business Solutions Group and would sell the trusts and foundations used in the tax shelter for a fee between $25,000 and $50,000.
In pleading guilty, Conner admitted to using the tax shelter between 2016 and 2021 to evade paying taxes on about $5.2 million of his personal income. His sentencing is set for January and he faces a maximum prison sentence of five years.
The case has been assigned to U.S. District Judge Regina M. Rodriguez.
Conner is represented by Cari LaSala and Michael Villa Jr. of Meadows Collier Reed Cousins Crouch & Ungerman.
The government is represented by Amanda Scott, Lauren Pope, Corey Smith and John Burns of the Department of Justice.
The case number is 1:23-cr-00390.
Fifth Court of Appeals, Dallas
City Files Accelerated Appeal in Bid to End White Rock Boathouse Suit
The city of Dallas intends to ask an appellate court to bring an end to a lawsuit brought by the nonprofit White Rock Boathouse Inc. accusing certain city officials of pursuing an agenda to take control of the 26,500-square-foot boathouse it fundraised $2.7 million to construct.
Dallas County District Judge Veretta Frazier entered an order denying Dallas’ plea to the jurisdiction July 21. Last week, the city filed notice of its accelerated appeal of that ruling. As of Monday, no briefs had been filed in the appeal. White Rock Boathouse has told the court it filed suit to protect its rights under two long-term lease agreements with the city.
White Rock Boathouse filed a second amended complaint in the case Aug. 5, explaining that in addition to the initial fundraising dollars, since 2018 it has invested more than $740,000 in maintenance and upkeep of the properties and has paid more than $500,000 into Dallas’ improvement fund for the property.
“Because of WRB’s efforts and stewardship, these city-owned properties are glorious additions to the White Rock Lake community, assets that the citizens of Dallas can use and enjoy, and a model for what can be accomplished through a positive and productive public-private partnership,” the petition reads. “Now, that partnership between WRB and the city is in jeopardy, due to certain actors in and outside of the City Park and Recreation Department, and the politicization of these White Rock Lake assets, without regard to WRB’s contributions and contract rights.”
The lawsuit accuses City Council Member Paula Blackmon of using the parks department “as her instrument against WRB, aided and influenced by her pack of powerful supporters who have launched a smear campaign against WRB to drive their agenda of taking control of the assets for themselves.”
Dallas is represented by its own Ryan Crocker, Stacy Rodriguez, Andrew Spaniol and Bertram Vandenberg.
White Rock Boathouse is represented by Karen Hart, Kartik Singapura and Naomie Kweyu of Bell Nunnally & Martin
The case number on appeal is 05-26-01113-CV. The case number in the trial court is DC-25-18261.
U.S. Court of Appeals for the Ninth Circuit
Panel OKs $2B International Arbitration Win
In a case that made it to the U.S. Supreme Court, a panel of judges recently affirmed a trial court’s decision to confirm a $562.5 million international arbitration award in favor of Devas Multimedia Private in a case against India-owned Antrix Corp.
The first time the dispute made it to the Ninth Circuit, the court determined that under the Foreign Sovereign Immunities Act’s personal jurisdiction provision, Antrix lacked sufficient contacts with the United States for the award to be confirmed here. The U.S. Supreme Court reversed that decision, holding the panel misinterpreted the minimum contacts requirements under the FSIA.
According to the opinion, issued Aug. 12, Antrix acts as the commercial arm and corporate front of the Indian Department of Space and the Indian Space Research Organisation. Devas is an Indian corporation that provides telecommunications services.
The parties entered an agreement in January 2005 under which Antrix was to build, launch and operate two satellites and lease Devas a portion of India’s S-band radio frequency spectrum. Devas, under the deal, was to pay for the construction of the satellites and leasing fees for the spectrum.
But in February 2011 Antrix terminated the agreement citing a “policy decision not to provide orbital slot in S-band” for commercial activities. Devas took the dispute to arbitration in July 2011 and in September 2015 a tribunal found Antrix wrongfully terminated the agreement and owed $562.5 million.
With accrued interest, that award is now valued at more than $2 billion.
“We hold that the FSIA’s arbitration exception to foreign sovereign immunity supplies subject matter jurisdiction. We further hold that, even assuming Antrix is a ‘person’ entitled to the protections of the Fifth Amendment and assuming that a reasonableness assessment is required under the Fifth Amendment, the exercise of personal jurisdiction over Antrix is reasonable and therefore comports with the Fifth Amendment,” the panel wrote in a 27-page opinion. “Finally, we hold that forum non conveniens does not apply in an action to confirm a foreign arbitral award under the New York Convention and, in any event, did not require dismissal here.”
Judges Eric D. Miller, Lucy H. Koh and Donald W. Molloy sat on the panel.
Devas Multimedia is represented by Aaron Streett and Christopher Tutunjian of Baker Botts and Arka Gupta, Nicholas Mecsas-Faxon and Amy Upshaw of King & Spalding. Tutunjian, an associate in Houston and former Ninth Circuit clerk, argued the case.
“The ruling sets an important precedent that will promote US enforcement of awards resulting from agreements to engage in international arbitration,” Streett said in a statement. “The Court correctly rejected various impediments to enforcement that had no basis in the Foreign Sovereign Immunities Act or the New York Convention.”
Antrix is represented by Amanda Berman, Thomas Guiffre, Jennifer Romano and Nicholas Roberti of Crowell & Moring, Carter Phillips and Kwaku Akowuah of Sidley Austin, Brian Free and Louis Peterson of Hillis Clark Martin & Peterson, and Marwa Farag, Kevin Meehan, Joseph Pizzurro and Juan Perla of Curtis, Mallet-Prevost, Colt & Mosle.
The case number is 20-36024.
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