In response to a Wall Street Journal article describing a national coalition of Attorneys General investigating whether manufacturers have engaged in unlawful or deceptive practices in the marketing and sale of opioids, Attorney General Denn confirmed Thursday that the Delaware Department of Justice is actively participating in this investigation.

Attorney General Denn also announced that his office will issue an invitation to private law firms to submit competitive bids to be appointed as special counsel for the Department of Justice to conduct further investigation regarding opioid manufacturers for violation of Delaware state law in the sale and marketing of opioids. The detailed Request for Proposal requires that the work be done on a contingency fee basis so it would not involve the use of state funds.

The national coalition of Attorneys General is examining what role manufacturers of opioid drugs may have played in creating or prolonging the nation’s opioid epidemic. The coalition of Attorneys General is using its investigative tools, including subpoenas for documents and testimony, to determine the appropriate course of action. The national coalition of state Attorneys General is not disclosing the specific companies that are the current subjects of its investigation, which has been underway for some time.

The Request for Proposal for private firms to investigate possible claims may result, if the facts and law provided a legal basis, in a separate lawsuit brought by and in Delaware. The RFP contains detailed provisions to ensure fairness, competitiveness, and transparency in the retention of a law firm, and appropriate state control over any decision to initiate litigation and the conduct of any litigation that is initiated. The RFP is expected to be posted at bids.delaware.gov and attorneygeneral.delaware.gov by the end of next week.

“These efforts to hold manufacturers of opioids financially responsible where the law allows are an important part of our overall effort to improve prevention and treatment of substance abuse,” Attorney General Denn said. “If our investigations reveal that the manufacturers of these products violated Delaware law, we will seek to have them help pay for the fight to end the epidemic.”

Also, Medicaid Fraud unit prosecutes two health care workers in separate cases.

The former athletic director at McKean High School in the Red Clay School District, Brian Budd, 34, of Columbus, NJ, has pled guilty to Sexual Solicitation of a Child. In July 2016, Budd solicited a 16-year-old student to allow him to engage in prohibited sexual acts. Budd faces up to 15 years in prison when sentenced in Superior Court later this year. Deputy Attorney General Jenna Milecki secured the plea.

Deputy Attorney General Matthew Frawley secured a 15-year prison sentence for 36-year-old Richard Ferry of New Castle for burglarizing a home in July 2016. Ferry broke into a home in the 700 block of Wildel Avenue in Minquadale and stole a firearm. Ferry pled guilty to Burglary Third Degree, Theft of a Firearm, and Possession of a Firearm by a Person Prohibited. Ferry is barred from having a gun because of several previous felony convictions including drug, burglary and identity theft charges. Due to the previous felony convictions, a Superior Court judge sentenced Ferry as a habitual offender on the firearm possession charge and sentenced him to a minimum mandatory 15 years in prison.

A second man involved in a March 2016 Wilmington shooting will spend 9 years in prison. In March 2016, Keenan Mitchell, 22, of Wilmington, was armed and displayed a weapon during an argument he initiated with another man, Michael Boyd, in the 600 block of Jefferson Street in Wilmington. During the course of the argument, Boyd retrieved a firearm from his girlfriend and he and Mitchell exchanged gunfire. Boyd’s girlfriend was struck in the arm as a result. Mitchell pled guilty in December to Assault First Degree and two counts of Possession of a Firearm During the Commission of a Felony. Mitchell was sentenced in Superior Court to 9 years in prison including the completion of the KEY-CREST Program. Deputy Attorney General Phillip Casale secured the sentence against Mitchell. The other man, Boyd, pled guilty in December to Possession of a Firearm by a Person Prohibited, and Possession of Ammunition by a Person Prohibited and was immediately sentenced to 5 years in prison, followed by 6 months of either home confinement or work release, then 18 months of probation.

James Norwalt, 35, Wilmington will go to prison for a home break-in. In August 2016, Norwalt forced his way into a home in the unit block of Gail Road in New Castle. When the woman inside forced him out, Norwalt damaged property by banging on the front door and broke the storm door. Norwalt also threatened to hit the victim and her father with a glass bottle. Norwalt pled guilty in Superior Court to Burglary Second Degree and Menacing in the case prosecuted by Marc Petrucci. Due to several previous felony convictions including assault, burglary, and conspiracy, Norwalt was declared a habitual offender and sentenced to 8 years in prison followed by 6 months of probation. Deputy Attorney General Christina Kontis secured a prison sentence

A 46-year-old Dover woman became the first person convicted for violating the Delaware Prescription Monitoring Act. Michele Staats, former nursing director of Kent Sussex Community Services, was found guilty after a five-day Superior Court bench trial of three felony counts of Unauthorized Access of Prescription Monitoring Information, and one felony count of Making a False Statement. For a 16-month period beginning in January of 2014, Staats, using the login credentials of her employer, accessed the Prescription Monitoring Program information of three people who were not her patients. Staats also made several false statements denying her responsibility to investigators. Established by the legislature in 2010, the goal of the Delaware Prescription Monitoring Act is to help reduce the misuse and diversion of controlled substances while promoting improved professional practice and patient care. Deputy Attorneys General Tiphanie Miller and Laura Najemy prosecuted the case for the DOJ Medicaid Fraud Control Unit.The case was primarily investigated by Agent Ray Hancock of the Delaware State Police Drug Diversion Unit, with assistance from Special Investigators James Armstrong and Patrick Corcoran of the MFCU. Staats will be sentenced in June.

A former personal care attendant with JEVS Human Services pled guilty in Superior Court in relation to improper billing for patient care. Jacqueline Pauls, 63, of Wilmington pled guilty to Misdemeanor Theft. The client Pauls cared for was hospitalized in September 2015, but Pauls continued to submit time sheets detailing work she said she performed for the client for the next seven weeks. Pauls was ordered to pay $1,505 in restitution, to have no contact with JEVS and was sentenced to one year of probation. Special Investigator Paul Reutter investigated the case and Deputy Attorney General Lisa Barchi secured the plea and sentence for the Medicaid Fraud Control Unit.

The Delaware Department of Justice Investor Protection Unit has obtained an indictment against Matthew A. Krimm, 35, of Abington, MD. The 25-count indictment includes charges of Racketeering and Securities Fraud. A Sussex County Grand Jury indicted Krimm, formerly of Rehoboth Beach, following a year-long investigation.

The indictment charges Krimm with soliciting and selling investments in his company that purportedly owned and operated a mortgage origination business. The indictment alleges that Krimm’s companies did not in fact engage in any mortgage origination business. Instead, it is alleged that Krimm was running a Ponzi scheme, whereby he repaid his early investors with funds from later investors.

In addition to Racketeering, the indictment charges Krimm with eight counts of Felony Theft, eight counts of Securities Fraud, and eight counts of Selling Unregistered Securities. Delaware law prohibits misrepresentations in the sale of securities and requires that securities for sale in Delaware be registered with the State. Additionally, the federal Securities and Exchange Commission filed suit against Krimm, alleging civil violations of the federal anti-fraud and securities registration laws.

DOJ, through its Investor Protection Unit, enforces the Delaware Securities Act, which regulates the sale of investment products and the activities of investment professionals in Delaware. The unit investigates and prosecutes securities fraud and other violations of the securities act. Delaware investors are encouraged to report suspected incidents of investment crime and fraud by calling the Attorney General’s Investor Hotline at (302) 577-8424.

Deputy Attorney General William Green and Special Investigator Lester Johnson are handling this case for the Investor Protection Unit.

An indictment is merely an allegation and is not evidence of guilt. In all cases, defendants are presumed innocent until and unless proven guilty.

With tax season here, the Fraud and Consumer Protection Division of Attorney General Matt Denn’s office warns Delaware consumers and employers to be on guard against fake IRS phone call scams and IRS Form W-2 email phishing scams that are targeting employers, including retail businesses, school districts, nonprofit organizations, and law firms.

IRS Phone Call Scam

In a typical IRS phone scam, a caller pretends to work for the Internal Revenue Service (or sometimes the U.S. Treasury Department), and tells the intended victim that the IRS will imminently be filing suit against the victim, or threatens the intended victim with arrest or some other kind of punishment, and the only way to avoid the lawsuit or arrest is to immediately pay a sum of money, usually via a pre-paid debit card or a money order, or even an iTunes gift card.

Scammers claim that the person answering the call has unpaid taxes that must be paid immediately to avoid a lawsuit or arrest. They use aggressive language and threaten dire consequences—such as jail time, loss of employment, or deportation—if the victim doesn’t immediately pay up.

The Internal Revenue Service says that these scammers often spoof the telephone number to disguise where they are calling from, and they sometimes manipulate the caller ID information so it seems like the call is coming from the IRS. They may even give out a fake IRS badge number, and may even know the last four digits of a victim’s Social Security number and try to use that information to gain a victim’s trust.

As a reminder, the IRS will never reach out to a taxpayer with an initial contact by telephone, email, text message, or social media. The IRS also will never demand credit or debit card payment over the telephone, nor will the IRS demand that you pay a tax bill in a specific manner.

Attorney General Denn urges consumers to ignore these calls and not return voicemail messages. Consumers should instead do the following:

• If you are worried that the call might be real, because you owe federal taxes, or think you might owe federal taxes, hang up and call the IRS directly at 1-800-829-1040. IRS workers there will be able to help you with any payment questions.
• Report the scam to federal authorities: fill out the “IRS Impersonation scam” form on TIGTA’s website,  or call TIGTA at 800-366-4484, and also consider filing a complaint with the Federal Trade Commission (add “IRS Telephone Scam” to the comments in your complaint).

IRS Form W-2 Phishing Scam

Attorney General Denn’s Fraud Division also warns Delawareans about a dangerous email scam that has been circulating nationwide and is targeting a wide variety of public and private-sector employers, including retail businesses, universities, secondary school districts, nonprofit organizations, hospitals, and law firms. The scam first appeared last year and has been making its way across the country again in 2017.

Typically, the scammer sends a “spoofing” email posing as an internal executive or official within the organization, requesting employee payroll data, including IRS W-2 forms that contain Social Security numbers and other personally identifiable information. If these cybercriminals are successful in tricking payroll and human resource officials into disclosing that data, they can use the data to file fraudulent tax returns for refunds and commit other forms of identity theft.

According to the IRS, these are examples of the details that may be contained in some of these emails:

• “Kindly send me the individual 2016 W-2 (PDF) and earnings summary of all W-2 of our company staff for a quick review.”
• “Can you send me the updated list of employees with full details (Name, Social Security Number, Date of Birth, Home Address, Salary).”
• “I want you to send me the list of W-2 copy of employee wage and tax statement for 2016, I need them in PDF file type, you can send it as an attachment. Kindly prepare the lists and email them to me ASAP.”

The IRS has also established a process that will allow employers and payroll service providers to quickly report any data losses related to this W-2 scam. According to the IRS, if notified in time it can take steps to prevent employees from being victimized by identity thieves filing fraudulent returns in their names. There is also information about how to report receiving the scam email even if an employer did not fall victim to the scam.

The AG’s Office also reminds employers that if they are victimized by this scam, they have suffered a data breach and may need to give notice to affected individuals under Delaware’s data breach notification law (Title 6, Chapter 12B of the Delaware Code), and may also need to give notice under other applicable state or federal law. Employers who suffer a data breach should consult with legal counsel to ensure compliance with all applicable data breach notification laws.

Delaware will receive $1.45 million for environmental projects as a result of an additional settlement between 10 states and Volkswagen, Porsche and Audi over the company’s use of “defeat devices” on the emissions controls of diesel vehicles.

The settlement filed Thursday is in addition to a federal and multi-state settlement last year that obtained payments and remediation for vehicle owners (https://news.delaware.gov/2016/06/28/vw/) as well as penalties, and also in addition to a federal environmental trust established with payments from Volkswagen into a national environmental trust to fund air-quality related initiatives (https://news.delaware.gov/2017/03/20/dnrec-seeks-public-input-on-improving-states-air-quality-using-settlement-funds-from-volkswagen-lawsuits/).

The latest settlement involves 10 states known as “Section 177” states that have adopted California’s stringent vehicle emission standards. It marks the first time states have secured environmental penalties from an automobile manufacturer under their own state auto emissions laws. Historically, enforcing vehicle emission standards has been done primarily by the federal government.
The settlement states the funds are to be used for an “environmentally beneficial purpose” and DOJ will work with the Department of Natural Resources and Environmental Control on appropriate plans for the funds.

“This latest settlement continues to hold Volkswagen accountable for its egregious violation of the public trust and the harm to our state’s and country’s air quality as a result of manipulating diesel vehicles to falsify emissions test results and pollute more than allowed,” Attorney General Matt Denn said.

“Pollution from cars contributes significantly to Delaware’s air quality and Volkswagen’s unlawful actions caused excess nitrogen oxides emissions which frustrates our efforts to clean the air in our communities.” said DNREC Secretary Shawn Garvin. “This settlement requires VW to pay an additional $1.45 million penalty and to advance the sales of zero-emission vehicles in the states involved in the settlement. DNREC recently held a public workshop to gather public input of Delaware’s proposed VW Environmental Mitigation Work Plan following an earlier $9 million settlement. Public comments are being accepted until April 3 on the work plan.”

The others states involved in the settlement are Connecticut, Massachusetts, Maine, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington.

The settlement document can be found here.