Attorney General’s office joins lawsuits against pharmaceutical manufacturer for

The Delaware Attorney General’s Office announced today that it is joining the
federal government, 14 states, and the District of Columbia in two whistleblower lawsuits in federal
district court against the drug manufacturer Wyeth. The suits allege that Wyeth knowingly failed to
report accurate pricing for its drugs Protonix Oral and Protonix IV and avoided paying hundreds of
millions of dollars in rebates due to the Medicaid Program.

Congress created the Medicaid Drug Rebate Program in order to ensure that Medicaid received
the benefit of the same discounts offered by drug manufacturers to large commercial customers in the
marketplace. Under the program, drug manufacturers of branded drugs are required to report certain
drug pricing information to the government, including the “Best Price” offered for their drugs, and to
pay rebates to state Medicaid programs based on those reported prices. The Medicaid Program is one
of the largest purchasers of drugs in the United States and the nation’s provider of health insurance to
the poor and the disabled.

Between 2000 and 2006, Wyeth offered steep discounts to thousands of hospitals nationwide
for Protonix Oral and Protonix IV, which belong to a class of drugs known as proton pump inhibitors
and are used to suppress stomach acid. These discounts were offered to hospitals under a bundled
pricing arrangement known as the Protonix Performance Agreement in order to gain access to the
lucrative retail outpatient market. Under the Protonix Performance Agreement, hospitals that placed
both products on their formularies and attained certain market share requirements were entitled to up to
a 94% discount off the list price of Protonix Oral and up to 80% off the list price of Protonix IV.

Although Wyeth was required under the Medicaid Drug Rebate Program to determine the effective
prices paid by hospitals under this arrangement and to pass along the lowest prices to state Medicaid
programs, it failed to do so and therefore avoided paying hundreds of millions of dollars to Medicaid in
rebates.

The Delaware Medicaid Fraud Control Unit played a significant role in the investigation of the
allegations, including subpoenaing hundreds of thousands of documents from Wyeth and coordinating
the review of those documents. Delawareans are urged to report suspected Medicaid fraud to the
Attorney General’s Medicaid Fraud Control Unit at (302) 577-5000.
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Attorney General’s Office takes action to fight home improvement fraud

The Delaware Attorney General’s Office is warning consumers to be aware of
home improvement fraud and announced criminal sentencings in two construction fraud cases:
From June to August 2007, Wilbert C. Saunders, age 53 of Newark, received over $11,000 in
payments for home renovations which were never completed. Saunders pled guilty on February
18, 2009 in New Castle County Superior Court to Home Improvement Fraud by False Pretense
and Theft by False Promise over $1,000. He was sentenced on April 24, 2009 to 3 years and 6
months in prison, followed by 18 months probation, and was ordered to pay $11,169 restitution
to his victims.

During July and August 2007, Keith Tracey, age 41 of Wyoming, and Deana Irwin, age 43 of
Camden, collected $8,316 as a down payment for deck construction and never completed the
work. Tracey pled guilty on April 28, 2009 in Kent County Superior Court to Felony Home
Improvement Fraud and was sentenced to 6 months in prison, followed by 18 months of
probation, in addition to paying restitution to the victims. Irwin pled guilty on April 30, 2009
in Kent County Superior Court to Misdemeanor Home Improvement Fraud and was sentenced
to 12 months of probation in addition to paying restitution to the victims.

“Protect yourself against contractor fraud by being an informed consumer,” stated Timothy
Mullaney, Director of the Attorney General’s Fraud and Consumer Protection Division. “Shop around,
check references, and never pay the full price in advance. By following these basic rules you’ll go a
long way to avoiding many common home construction scams. And if you or a loved one has become
a victim, contact the Attorney General’s office for help.”

The Attorney General’s Office recommends using the following checklist to help protect
yourself against home improvement fraud:
Home Improvement Checklist – What to do before you hire a contractor
1. Know what work you want to have completed. Make a specific list. This will allow you to
easily negotiate with contractors
2. Know what permits are needed. Even though a qualified contractor should be aware of necessary permits and inspections, you should know them too. Check with your local building and codes office before beginning a project.
3. Shop around. Meet with multiple contractors, obtain written quotes for the work you want done, and compare. Think carefully before making a decision.
4. Get references and check them. Ask friends and neighbors which contractors they used for home improvement projects and whether or not they were satisfied with the results. Ask contractors for references and speak to former customers.
5. Get a Timeline. Find out the proposed timeline for when a contractor will start and complete the project.
6. Never pay the full price in advance. Establish a payment schedule and stick to it. This may include an initial down payment, followed by additional incremental payments until the work is completed.
7. Put it in writing. The contractor should provide a written contract which includes a timeline for work to be completed, a payment schedule and as many specifics as possible about the project, such as types or brands of materials. Do not be induced into signing a contract by high-pressure sales tactics.
Consumers who are aware of home improvement fraud and/or who have questions are encouraged to call the Attorney General’s Consumer Hotline at 1-800-220-5424.
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Wachovia and Citigroup to pay $618,000 for misleading investors

Community News
April 10, 2009
Wachovia and Citigroup will each pay a $309,000 fine to the State of Delaware for misleading investors about the safety of the auction rate securities market, the Delaware Department of Justice announced on April 9.

The fines will be paid into the Delaware Investor Protection Fund, used by the Department of Justice to enforce investment laws.

Eleven firms were ordered to pay fines in November following a multi-state investigation into the auction rate securities market.

The firms agreed to repurchase more than $60 billion of auction rate securities and were required to notify investors of the repurchase offer. In Delaware, Wachovia sold more than $60 million in auction rate securities and Citigroup sold more than $92 million.

Auction rate securities are long-term financial instruments with interest rates that are reset through weekly or monthly auctions.

When auctions run properly, investors who hold auction rate securities can buy or sell them on a regular basis, but when there are not enough buyers for every security being offered for sale, investors are forced to hold their securities until the next auction.

Since early 2008, many investors have been unable to sell their frozen auction rate securities.

“These agreements send a clear message to investment firms that we will hold them accountable for misleading investors about the sale of these supposedly safe and liquid investment products,” said James Ropp, Delaware Securities Commissioner.

Delaware investors can call (302) 577-8424 for information about the repurchase of Auction Rate Securities.

Story posted online at: http://www.communitypub.com/business/x1098996441/Wachovia-and-Citigroup-to-pay-618-000-for-misleading-investors


Wachovia and Citigroup to Pay $618,000 Fine to Delaware for Sale of Auction Rate Securities

The Delaware Department of Justice announced today that it has reached
agreements with Wachovia Securities, LLC and Wachovia Capital Markets, LLC and Citigroup Global
Markets Inc. following an investigation into their marketing and sale of auction rate securities (ARS).
Each firm will pay a fine of more than $309,000 to the State of Delaware for misleading investors
about the safety of the ARS market. Fines collected from these investment firms will be paid to the
Delaware Investor Protection Fund.

In November 2008, following a multi-state investigation into the failure of the ARS market,
settlements were reached between state and federal securities regulators and eleven investment firms
who offered these products for sale. The firms agreed to repurchase more than $60 billion of auction
rate securities from investors nationwide and were required to notify investors of the repurchase offer.
In Delaware alone, Wachovia sold more than $60 million in auction rate securities and Citigroup sold
more than $92 million in auction rate securities.

“These agreements send a clear message to investment firms that we will hold them
accountable for misleading investors about the sale of these supposedly safe and liquid investment
products,” stated James Ropp, Delaware Securities Commissioner. “We encourage Delaware investors
to contact us at (302) 577-8424 if they have questions about the repurchase of Auction Rate Securities
by these or other investment firms.”

Auction rate securities, also referred to as ARPS, short term paper, 7 day paper, or floaters, are
long-term financial instruments with interest rates that are reset through weekly or monthly auctions.
When auctions run properly, investors who hold these securities can buy and sell them on a regular
basis. However, when there are not enough buyers for every ARS being offered for sale, auctions
“fail” and investors are forced to hold their ARS until the next successful auction. Since early 2008,
the majority of these auctions have failed and many investors have been unable to sell their frozen
ARS holdings.

In response to investor complaints, state-led investigations into possible violations of securities
laws in connection with the sale of ARS began in April 2008. The North American Securities
Administrators Association formed a multi-state Task Force, comprised of securities regulators in 12
states, to investigate whether Wall Street firms had systematically misled investors who purchased
these securities. The Delaware Department of Justice Securities Unit is a Task Force member.
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State Securities Regulators Urge Congress to Provide Greater Resources to Fight Investment Fraud

Ropp: “State securities regulators have the determination, willpower and experience to pursue perpetrators of financial crime.”

WASHINGTON (March 20, 2009) – Drawing from their experience on the front lines of investor protection, two state securities regulators offered the House Financial Services Committee concrete proposals to enhance the states’ ability to pursue and prosecute perpetrators of financial crimes.

Delaware Securities Commissioner James Ropp and Massachusetts Secretary of the Commonwealth William Galvin appeared before the House Financial Services Committee on Friday, March 20. The hearing, led by Committee Chairman Barney Frank (D-MA), brought together federal and state securities regulators and law enforcement officials to discuss the enforcement of investor protection laws at the federal and state levels.

Testifying on behalf of the North American Securities Administrators Association (NASAA), Commissioner Ropp urged Congress to support the valuable contributions of state securities regulators through federal grants. “State securities regulators have the determination, willpower and experience to pursue perpetrators of financial crime,” Ropp said. “We’ve learned how to accomplish more with less. However, there’s little doubt that additional resources would enhance our ability to uncover and prosecute securities fraud during this economic downturn, which has resulted in vulnerable investors looking to recover their losses.”

Ropp also suggested deputizing state securities attorneys to serve as special prosecutors for complex securities cases; allowing states to review securities offerings currently exempt from state oversight under Rule 506 of Regulation D; including representatives from the state banking, insurance and securities regulatory agencies on the President’s Working Group on Financial Markets; toughening civil and criminal penalties for those who commit financial crimes, especially those who target senior investors; and increasing opportunities for victims of fraud to seek private actions.

Ropp, who serves as the chair of NASAA’s Enforcement Section, also outlined the states’ impressive enforcement record. As the closest regulator to investors, state securities regulators are often first to identify new investment scams and to bring enforcement actions to halt and remedy a wide variety of investment-related violations.

“During our three most recent reporting periods, covering a period between 2004 and 2007, state securities regulators conducted more than 8,300 enforcement actions, which led to $178 million in monetary fines and penalties and more than $1.8 billion ordered returned to investors,” Ropp said. “And, we are responsible for sending fraudsters away for a total of more than 2,700 years in prison.”

Secretary Galvin, the top securities official in Massachusetts, urged the committee to “give the states the tools we need to maintain and enhance our ability to regulate effectively and protect investors.” Galvin also asked Congress to require that brokerages be in a fiduciary relationship to their individual retail customers. Under current law, broker-dealer firms deal with their customers on an arm’s-length basis, subject to an obligation of fair dealing. This means that customers cannot rely on their brokers to meet fiduciary obligations of loyalty, care and competence. In contrast to brokers, investment advisers work solely for their customers and have an acknowledged fiduciary duty to them.

“The Securities Division has seen examples of brokerages dealing unfairly and improperly with customers. Unfortunately, we have also witnessed customers who recover little or nothing for their losses due to the pro-industry arbitration system, and due to the fact that brokers are not considered fiduciaries. This system must be changed,” Galvin testified.

The complete testimony and additional information on the strong investor protection efforts of state securities regulators are available on the NASAA website.

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada and Mexico.

DOWNLOADS

Ropp Testimony >> download
Galvin Testimony >> download
Chart: States at the Forefront of Investor Protection >> download

For more information:
Bob Webster, Director of Communications
202-737-0900