31 State Attorneys General join international coalition encouraging smartphone manufacturers to protect the safety of consumers

Wilmington – Delaware Attorney General Beau Biden, along with New York Attorney General Eric Schneiderman, led an effort joined by 29 of their fellow state attorneys general in urging three leading smartphone manufacturers to develop more robust anti-theft features that would better protect smartphone users by deterring theft of the devices.

“The growing popularity of smartphones has made them valuable targets for thieves who sell them on black markets across the country and around the world,” Biden said.  “I’m concerned that this thriving black market puts consumers needlessly at risk of theft and violence.  That’s why my fellow Attorneys General have joined together to press the smartphone industry, which can and should do more to develop anti-theft features that reduce or eliminate the value of these devices to criminals.”

In a letter sent today to Google/Motorola, Samsung, and Microsoft, the bipartisan group of 31 attorneys general urged the companies to develop a technological means to protect smartphone users by drying up secondary markets for stolen devices and eliminate the economic incentive for theft.  “While some new anti-theft security features are encouraging, the response from manufacturers needs to be more robust,” the letter stated.  “For example, to the extent these security features have an opt-out component, or require consumers to pay for them, they may not be very effective.”  The Attorneys General pointed to the South Korean requirement that devices be produced with a “kill switch” that would enable stolen devices to be permanently disabled as an example of technology that would protect consumers and discourage theft.

The Attorneys General are members of the Secure Our Smartphones (S.O.S.) Initiative, a coalition of prosecutors, police chiefs, attorneys general, public officials and consumer activists launched earlier this year to combat the rise in violent street crimes involving smartphone thefts.  Coalition members are committed to pressing the industry to find effective solutions to stopping the epidemic known as “Apple Picking” – the theft of popular mobile communications devices such as smartphones and tablets.

Last year in Delaware, 1,894 electronic communication devises were reported stolen to police, and nationally, thefts of smartphones have spiked dramatically.  In the US, one in three thefts involves a mobile communications device, and Consumer Reports estimates that 1.6 million Americans were victimized by smartphone thieves in 2012.  Mobile electronic devices that are stolen across the US help feed the growing international trade in stolen devices.

The states that joined Biden and Schneiderman in today’s letter include: Arizona, Arkansas, Florida, Indiana, Iowa, Kentucky, Maine, Maryland, Michigan, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, New Jersey, North Dakota, Oregon, Pennsylvania, Rhode Island, Utah, and Vermont, as well as the territories of Guam and Puerto Rico. These states join eight current S.O.S. Initiative members: Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Minnesota, Nebraska and New York.

A copy of the letter sent by the attorneys general to smartphone manufacturers is attached.

Final SOS Letter

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Delaware – Attorney General Beau Biden announced today that RBC Capital Markets, LLC has paid the Delaware Department of Justice $33,520.17 as part of a settlement with the Attorney General’s Investor Protection Unit. The settlement concludes a multi-state investigation which found that RBC allowed its client associates to sell securities without being properly registered. State law requires all who sell stocks and securities to Delaware investors to register with the DOJ’s Investor Protection Unit.

“We will continue to ensure that the securities market in Delaware adequately protects investors,” said Attorney General Biden. “This settlement holds RBC accountable for its failures to keep track of its employees who sell investments to Delawareans.”

The states’ investigation found that RBC client associates were able to accept trade orders from clients, an act that requires registration in both the client associate’s home state and the client’s state. The investigation found that not all client associates were properly registered, and that RBC’s systems were not reasonably designed to prevent this from happening.  As part of the settlement, RBC has agreed to establish and maintain systems that require client associates to be properly registered in Delaware and other states.

The multi-state task force investigating this matter consists of state securities regulators from Delaware, Colorado, Missouri, New Hampshire, New Jersey, Texas, and Vermont. State securities regulators, including DOJ’s Investor Protection Unit, continue to investigate similar misconduct by other firms.

The Investor Protection Unit, formerly known as the Securities Division, enforces the Delaware Securities Act and seeks to protect the public from potentially fraudulent, unscrupulous, or overreaching practices of those offering investments or investment services within Delaware. Investors who believe they have been the victims of such practices should immediately contact the Investor Protection Unit Hotline at (302) 577-8841.

Delaware’s participation in the multistate investigation that led to the settlement was handled by Investor Protection Director Owen Lefkon and Assistant Attorney General David Casler.

Nearly $140,000 to be paid to Biden’s office, which will use payment to compensate homeowners; $750,000 previously secured for homeowners following earlier investigations of Odessa National builders

Wilmington – Attorney General Beau Biden today announced that his office has resolved a lawsuit against a Delaware developer for failing to timely complete certain amenities at the Odessa National residential community. Under the terms of a settlement reached last week, the parties will pay $139,900 to the Attorney General’s Consumer Protection Fund.

“This resolution holds the parties accountable to their obligation,” Biden said today.  “We will use the funds we receive to reimburse Odessa National homeowners who were affected.”

Odessa National homeowners are assessed a mandatory $1,200 annual fee for a social membership in the community’s golf course, and multiple homeowners filed complaints that they continued to be charged those fees on a quarterly basis, even though related amenities that were advertised at the time of sale, including a clubhouse, swimming pool, and tennis court, had not been completed.  In August, 2009, Biden’s office reached an Assurance of Voluntary Compliance with Joseph M. Capano and his companies Odessa National Golf Course, LLC and Odessa National Development Company, LLC (the “Odessa National parties”) obligating the Odessa National parties to complete all advertised amenities related to the Odessa National Golf Course by December 31, 2010.  Failure to complete the amenities by that date subjected the Odessa National parties to a financial penalty.  The deadline was later extended to March 31, 2011 due to weather conditions experienced in the winter of 2010.

When the amenities were still not complete by May, 2011, Biden’s office filed a lawsuit against the Odessa National parties for failing to abide by the terms of the August, 2009 agreement.  At the time the lawsuit was filed, of all the amenities advertised to prospective buyers only the golf course had been completed.  The additional amenities were ultimately made available for residents to use later in 2011.

Biden announced today that his office will use the $139,900 payment to provide restitution to over 400 Odessa National homeowners who owned homes at the time the lawsuit was filed.  Each of those homeowners will receive $300 to compensate them for being billed the second quarter of 2011 – the quarter by which the amenities should have been completed.

Biden’s office conducted multiple investigations over several years into complaints filed by Odessa National homeowners.  From 2008 – 2010, the Attorney General’s office investigated complaints against NVR, Inc. which, under the name “Ryan Homes,” built several sections of homes in Odessa National.  In 2008 the Attorney General’s office settled complaints from buyers in the community’s “Legacy” section that they were never told of the fee obligations that came with their properties.  Ryan Homes agreed to assume the $1,200 annual golf club membership fees for 71 homebuyers.  In April 2010 the Attorney General’s office settled a civil consumer fraud lawsuit it filed earlier that year against Ryan Homes following its investigation of homebuyer complaints in the “Tweedsmere” and “Lynemore” sections which it developed.  That agreement provided reimbursement to 44 homeowners who had filed complaints for the period of time when they had been paying for promised amenities, including a golf course, clubhouse, swimming pool, and tennis court, that were not completed.  Ryan Homes cooperated with Biden’s office in its investigations and both cases led to amicable resolutions.  In total, Ryan Homes paid more than $750,000 to consumers and the Attorney General’s office following those previous investigations of homeowner complaints at Odessa National.

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Delaware Attorney General also announces that legislation championed by his office will significantly increase state’s share of future settlements

Dover – Attorney General Beau Biden announced today that the state will be paid $2 million by Johnson & Johnson as part of national settlement to resolve allegations that the New Jersey-based pharmaceutical manufacturer fraudulently marketed the antipsychotic drugs Risperdal and Invega.

Of this payment, secured for Delaware by the Attorney General’s Medicaid Fraud Control Unit (MFCU), the Delaware Medicaid and Medical Assistance program will directly recoup $943,821 in civil restitution and fines.  Since 2008, Biden’s office has been involved in this ongoing litigation, assisting the national team with data retrieval and other investigative and litigation requests.  The successful resolution of this investigation is another example of the efforts by the Delaware MFCU to recover state and federal funds lost to unscrupulous providers who attempt to defraud the state healthcare system.

“Pharmaceutical companies that do not follow the rules and pitch their product to the public for purposes that have not been approved will be held accountable,” Biden said.

Nationwide, Johnson & Johnson and its subsidiary, Janssen Pharmaceuticals, Inc., will pay state and federal governments $1.2 billion over charges that the companies promoted and marketed Risperdal and Invega for uses that were not approved by the Food and Drug Administration and for uses that were not medically indicated, made false and misleading statements about the safety of the two drugs, and paid illegal kickbacks to healthcare professionals and long-term care pharmacy providers to induce them to promote or prescribe Risperdal to children, adolescents and the elderly. The companies faced both civil and criminal charges.  As part of the settlement, Janssen Pharmaceuticals, Inc. will plead guilty in the United States District Court in Pennsylvania to a criminal misdemeanor charge of misbranding Risperdal in violation of the Food, Drug, and Cosmetic Act and pay an additional $400 million fine.

Going forward, Delaware will receive an additional 10 percent bonus in its share of future settlements in cases like this under the Delaware False Claims and Reporting Act thanks to legislation Biden and the Medicaid Fraud Control Unit proposed to the General Assembly and enacted earlier this year – Senate Bill 146, sponsored by Sen. Robert Marshall and Rep. Michael Barbieri.  Earning a 10 percent bonus in shares of future false claims settlements is expected to generate hundreds of thousands of additional dollars in recoveries for Delaware and the Delaware Medicaid and Medical Assistance program.

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Wilmington – Attorney General Beau Biden announced today that UBS Financial Services, Inc. has paid the Delaware Department of Justice $70,077 as a result of a settlement with the Attorney General’s Investor Protection Unit.  The settlement resolves a multi-state investigation which found that UBS failed to ensure that its agents were properly registered in Delaware and other states.

“State law requires those who sell stocks and securities to Delaware investors to be registered with our Investor Protection Unit,” Attorney General Biden said today.  “We’ve acted to hold UBS accountable to Delaware’s Securities Act and ensure UBS agents are registered with us as required so that we can continue to safeguard the investments, pensions, and retirement funds of Delawareans.”

UBS Financial Services, Inc. functions as a broker-dealer in Delaware.  The states’ investigation found that a flaw in UBS’s order entry system allowed agents not registered in Delaware to accept orders from investors in Delaware. The flaw was unrecognized for six years. UBS settled the multi-state investigation, coordinated by the North American Securities Administrators Association and led by the New Jersey Bureau of Securities, by agreeing to pay up to a total of $4.58 million in civil penalties among the 50 states, District of Columbia, Puerto Rico and the U.S. Virgin Islands.  UBS entered into the settlement with the Investor Protection Unit without admitting or denying the findings of fact and conclusions of law. In addition to its payments to the states, UBS revised its client transaction processes and supervisory procedures to address the violations.  Delaware’s payment was made to the Attorney General’s Investor Protection Fund which supports securities fraud investigations and investor education initiatives.

The Attorney General’s Investor Protection Unit, formerly known as the Securities Division, enforces the Delaware Securities Act and seeks to prevent the public from being victimized by fraudulent, unscrupulous or overreaching practices by those offering investments and investment services within the state. Biden urged investors who believe they have been the victims of such practices to immediately contact the Investor Protection Unit Hotline at 302-577-8424.

Delaware’s participation in the multistate investigation that led to the settlement was handled for Delaware by Investor Protection Director Owen Lefkon and Assistant Attorney General David Casler.

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