SOKOLOFF SENTENCED IN SUPERIOR COURT

(Wilmington, DE): The Attorney General’s Medicaid Fraud Control Unit announced that earlier today Dr. Keith Sokoloff was sentenced to prison for his role in illegally distributing Schedule II Narcotic drugs¬†” including oxycontin and roxicodone¬†” in exchange for money. Sokoloff, who pled guilty in May, 2006 to Felony Health Care Fraud, Delivery of a Schedule II Controlled Substance, and Felony Conspiracy, was sentenced by Delaware Superior Judge William C. Carpenter to six months in jail, followed by six months of home confinement, followed by several years of probation. Sokoloff, who has asserted that he was having mental health and substance abuse problems during the crime spree, was also ordered to undergo both substance abuse and mental health evaluations. After his release from prison, Sokoloff will be required to perform 1,000 hours of community service.

The arrest, conviction and sentencing came after an investigation led by the Delaware Medicaid Fraud Control Unit which lasted approximately two years, and which also resulted in the arrest and prosecution of numerous other individuals who were involved in the prescription drug ring which Sokoloff was responsible for supplying. Investigators and prosecutors from the Attorney General’s Office worked with various other agencies during the investigation, including the Delaware State Police and the U. S. Drug Enforcement Agency (DEA).

Regarding the sentence, Deputy Attorney General Daniel R. Miller stated The pills that we calculated were over 6,000 pills that he put on the street, so we feel the conduct is outrageous in nature and clearly warranted a jail sentence.

Individuals who have information regarding the unlawful distribution of prescription narcotics should contact Special Investigator Allen Ruth at (302) 739-4211.

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Social Worker Arrested

(Wilmington): Sachin Karnik, a licensed clinical social worker who owns and operates Comprehensive Counseling Services located at 1601 Milltown Road, Wilmington, was arrested Tuesday afternoon by the Delaware Medicaid Fraud Control Unit for one count of Felony Health Care Fraud and one count of Felony Identity Theft. Karnik is alleged to have engaged in a pattern of presenting fraudulent health care claims between November 1, 2005 and May 31, 2006 by submitting bills for counseling services not rendered. He was released on $5,000 unsecured bond and is pending a preliminary hearing in the New Castle County Court of Common Pleas.

If anyone has any additional information regarding Karnik, they are asked to contact John Miller at (302) 577-8938.

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Attorney General Carl C. Danberg Announces Lawsuit Against DRAM Manufacturers

(Wilmington): On Friday, July 14, Attorney General Carl C. Danberg filed a lawsuit against seven computer memory chip manufacturers alleging the firms violated antitrust laws by conspiring to fix prices they charged for dynamic random access memory (DRAM) chips. DRAM is a widely used form of computer memory that is found in personal computers, servers and other electronic devices.

Delaware and 33 other states filed the lawsuit on Friday in the United States District Court for the Northern District of California. The defendants in the lawsuit include Elpida, Hynix, Infineon, Micron, Mosel-Vitelic, Nanya, and NEC.

In June 2002, the U.S. Department of Justice launched a criminal investigation into what officials have called “one of the largest cartels ever discovered.” Micron agreed to cooperate with investigators in exchange for amnesty from federal criminal charges. Several defendants and twelve individuals have since pleaded guilty to criminal price-fixing and collectively paid more than $730 million in fines.

The states’ complaint lays out details of the conspiracy, including an agreement by industry leaders to trim production in order to artificially raise prices. In this case, the Attorney General is representing Delaware’s state and local governmental entities that purchased DRAM and DRAM containing products affected by the alleged DRAM price-fixing conspiracy.

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DELAWARE RECEIVES $246,500 IN SETTLEMENT WITH WACHOVIA CAPITAL MARKETS, LLC

(Wilmington, DE) Attorney General Carl Danberg announced today that under the terms of a settlement between the Securities Division of the Attorney General’s office and Wachovia Capital Markets, LLC, the Delaware Investor Protection Fund will receive $246,500 in fines resulting from a multi-state investigation of securities analyst research practices. The investigation focused on allegations of conflicts of interest at Wachovia, and other securities firms, occurring when research analysts recommended stocks as a result of improper influence from their investment banking colleagues.

This settlement agreement was announced following a 28-month investigation by a multi-state task force of state securities regulators. Pursuant to the terms of the agreement, all 50 settling agencies will receive a total settlement amount of $25 million dollars.

The allegations in the settlement, which Wachovia neither admits nor denies, include the following:

‘ State investigators determined that Wachovia Capital Markets failed to supervise its employees in connection with potential conflicts of interest between equity research and investment banking as evidenced by research analysts participation in certain presentations with potential investment banking clients. In addition, research analysts evaluations sought information regarding their interaction with investment banking and regarding the investment banking activity in their sector. Moreover, on occasion, Wachovia Capital Markets considered whether companies were potential clients in determining to provide research coverage on those companies.

‘ Wachovia did not keep certain electronic communications as required by state securities laws. Wachovia Capital Markets e-mail system and procedures were inadequate in ensuring that all electronic mail communications were retained and readily accessible. As a result, 20 percent of the e-mail folders requested in November 2002 could not be produced and 42 percent of the e-mail folders requested in January 2003 were not produced promptly. Wachovia Capital Markets also failed to maintain a system that allowed it to locate and retrieve back-up tapes for its e-mail system.

The multi-state settlement is related to the April 2003 Global Settlement that 12 other investment banks have reached with the state, federal and industry regulators. Under the terms of the settlement, Wachovia Capital Markets will pay a total of $25 million, including: $20 million in penalties for failing to supervise its employees in connection with potential conflicts of interest between equity research and investment banking; $1.65 million in penalties for failing to preserve required books and records; $3 million to be used for investor education, as designated by the Board of Directors of the North American Securities Administrators Association, Inc. (NASAA); and $350,000 for costs associated with the investigation, which will be paid to NASAA. Delaware’s portion of the settlement, $246,500, will be directed to the Delaware Investor Protection Fund which, by statute, is designated for training, investor education projects and prosecution of securities fraud cases.

Attorney General Carl Danberg said, “This settlement is part of an ongoing effort by state regulators to restore investor confidence in the integrity of our markets and the persons who are employed in those markets. Investors are entitled to full disclosure and fair dealing when they work with registered investment professionals.”

Delaware Securities Commissioner, James B. Ropp, stated that, “this and the other security analyst cases furthers the principle that the average investor is entitled to accurate research untainted by undisclosed conflicts of interest.
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