Regenerative Medicine to Grow to a $20 Billion Industry in 15 Years

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Regenerative medicine involves the use of tissues, cells (including stem cells), laboratory-made compounds, and artificial organs to treat injuries and diseases. This approach helps repair specific areas of the body, often without the need for traditional, invasive surgery. For example, research is being conducted to use stem cells to replace cardiac tissue in patients with congestive heart failure. Currently, bone morphogenetic proteins, or BMP, which are genetically modified human proteins that spur bone growth, are being used to help vertebrae fuse back together after certain spine surgeries.

The science and technology of regenerative medicine is expanding at a rapid pace. The current market for regenerative medicine technologies now stands at $1.6 billion, but experts predict that this market could swell to $15-20 billion by 2025. Regenerative medicine is growing so rapidly because it is more efficient and effective for both physicians and patients who will undergo fewer steps in surgery and other medical procedures. Regenerative medicine is growing around the world, with the top five producers of regenerative medicine research coming from the United States, Japan, Germany, United Kingdom, and China. China, specifically, has seen a jump in regenerative medicine from 50 publications in the year 2000 to over 1,000 in 2008.

Virtually every sector of the medical and biotechnology industries stand to expand alongside the worldwide market for regenerative medicine. For instance, the medical device industry will benefit from and aid in regenerative medicine with the development of “delivery systems” for these cellular and other therapies. The delivery systems, such as catheters and similar devices, would allow physicians to repair specific areas of the body with site specific implantation of tissues, cells, or other tissue or cellular-based products. In addition to the domestic demand for delivery systems, this worldwide growth provides a global market for domestic medical device manufactures who can export their devices to meet the needs of foreign regenerative medicine markets.

Fuerst Ittleman, PL has experience with stem cell and other regenerative therapies compliance. We also assist medical device and biotechnology companies with regulatory compliance and export requirements. Please feel free to contact us at contact@fidjlaw.com to see how we can help your company move forward with regenerative medicine therapies.

Miami Medicare Fraud Ring Linked to Check Cashing Stores

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Casual news-watchers may have missed the significance of the seemingly unrelated stories, but the legal and regulatory compliance professionals at FHI clearly saw the connection.As we reported previously, federal law enforcement agencies have increased their enforcement focus on Medicare fraud in the Miami area in a significant way. Under this program, on June 23, 2009, Federal officials in Miami announced that eight defendants were charged in an elaborate Medicare fraud that spanned five states, used 29 fake storefronts, and attempted to steal $100 million from Medicare and Medicare Advantage.

The indictments allege that Michel De Jesus Huarte and the defendants fronted their scam through more than a dozen phony medical clinics throughout the Southeast United States. In many cases, the storefronts were simply post office boxes.

They would submit fraudulent invoices to the government, then use check cashing stores to launder the reimbursements; money is harder to track through these stores than through conventional banks. The fraud group owned two check cashing stores in the Miami area and netted between $30,000 and $80,000 in cash several times a week.

According to government court filings, Huarte paid the fake store owners in cash “with the understanding that (they) would flee to Cuba to avoid law enforcement detection or capture.” Two of the defendants and approximately $30 million are still missing.

This fraud ring is similar to a scheme run through the La Bamba Check Cashing store. In that case, the Benitez brothers were accused of laundering $24 million in Medicare fraud money by using shell companies to cash checks at a local chain of stores. As we reported in our blog, Juan Rene Caro, owner of La Bamba, was recently sentenced in Federal court for using the check cashing store to launder funds from a construction fraud ring involving violations of the Bank Secrecy Act. You can read about the harsh sentence handed down to Mr. Caro here.

Viewed through a single lens, these indictments and convictions mean that the Federal government is not only going after those who perpetrate Medicare fraud, but those who move and launder the funds from these schemes as well. The implications are clear: if you are involved in Medicare fraud activities in any way, the government will be coming for you.

Let Fuerst Ittleman assist your health care company with its regulatory compliance to help protect you against fraud and other illegal activities. Please contact us at 305-350-5690 or contact@fidjlaw.com.

Harsh Sentence for Miami Check-Cashing Store Owner

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The owner of Miami, Florida’s La Bamba Check Cashing store, Juan Rene Caro was sentenced in Federal court on June 23, 2009 to serve 216 months in prison, pay a $250,000 penalty, and forfeit $11 million in assets for his conviction on conspiracy and fraud charges in violation of the Bank Secrecy Act.Caro’s now-defunct store offered illegal check-cashing services to construction companies and other business people seeking to mask the identity of the true recipients of the funds. A company would engage La Bamba to cash a check in the name of a shell corporation, but the real company’s owner would take cash. Most of these companies were local construction companies and subcontractors.

Under the Bank Secrecy Act, financial institutions – including check-cashing stores – are required to file currency transaction reports (CTRs), a notification to the U.S. Department of Treasury, disclosing the identity of parties to a transaction when amounts greater than $10,000 are involved. The financial institution must also verify and record the identity, social security number, or taxpayer ID number of the person benefiting from the transaction.

The companies using La Bamba’s services evaded taxation on an amalgamated total of $132 million. La Bamba profited from the filing of false CTRs by taking a fee of between 3% and 5% for performing such transactions.

U.S. Department of Justice enforcement of CTR requirements has ramped up recently with charges against small and big-time players alike. For example, Newport Beach, California, financier Danny Pang was accused this Spring of structuring transactions to avoid filing CTRs, as were the owners of a small machine shop in Rhode Island who similarly avoided CTRs in order to conceal business receipts and thereby evade taxation.

Although Caro’s attorney called the sentence unfair, comments from the Department of Justice and the Judge Joan Lenard’s hefty sentence indicate broad acceptance of a zero-tolerance attitude towards fraud and financial crimes that harm the American taxpayer. It should also be noted that the prosecution sought a longer prison term and more assets than those ordered to be forfeited by Judge Lenard.

Read the Department of Justice’s posting of the indictment against Mr. Caro for a detailed description of the mechanics of Caro’s crime as well as a list of the assets sought by the government.

For insight and strategies on maintaining compliance with state and federal regulation of financial services, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.

U.S.-Swiss Tax Treaty Amendments: Stricter Cooperation and Enforcement on the Horizon

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The U.S. Department of the Treasury issued a press release on June 19, 2009 to mark the successful conclusion of treaty negotiations on a plan to share tax information between the United States and Switzerland. 

From the American perspective, the treaty revisions embody an Obama Administration policy goal:  to edge closer to full enforcement of the tax-code by eliminating havens for tax evasion.  From a global perspective, the treaty revisions mark a broader campaign to meet the requirements of Article 26 of the Organization for Economic Co-operation and Development’s (OECD) Model Tax Convention on Income and Capital.  IRS Commissioner Douglas Shulman indicated participation in this global shift only a month ago at the Forum on Tax Administration, warning those “who hide assets overseas [to] expect an increasing number of revenue bodies to cooperate and share information.”

OECD summarizes Article 26 as a tool for eliminating bank secrecy in the face of warranted searches for financial information outside of signatory nations’ borders.  Several countries that historically manage large amounts of foreign capital have indicated a transition to adherence to Article 26.  Some of these jurisdictions include Hong Kong, Singapore, Austria, and Liechtenstein.  OECD’s Secretary General called these developments “a fundamental change and an important moment in the history of international tax cooperation” and characterized tax enforcement as a critical part of recovery from the global economic crisis.

Negotiations took place over about two months to revise the current treaty on tax information sharing between the two countries.  The Treasury Department expects official signing of the treaty within months.  So far in 2009, the U.S. has come to agreement on similar revisions with France and Luxembourg.

For the complete text of the IRS press release on the U.S.-Swiss tax treaty amendments, please click here.

Our professionals at FHI will be tracking this issue as it develops and the Obama Administration – in Treasury Secretary Tim Geithner’s words – carries out its “commit[ment] to reducing off shore tax evasion to help ensure that all U.S. taxpayers are playing by the same rules.”

For assistance with navigating the changing waters of international taxation and enforcement, please contact Fuerst Ittleman at 305-350-5690 or contact@fidjlaw.com.

Fuerst Ittleman Assists Clients and Earns a “Thank You”

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Bio-Nucleonics, Inc., a leading Florida company specializing in radiopharmaceuticals, medical devices and imaging agents, gave a hearty “Thanks” to Fuerst Ittleman in its most recent issue of BioBulletin, the companys newsletter.

Fuerst Ittleman recently assisted Bio-Nucleonics with gaining FDA approval for the companys new Doral, Florida product manufacturing facility. The FDAs approval certifies that Bio-Nucleonics uses “current Good Manufacturing Practice” (cGMP) in all its production at this state-of-the art facility.

The FDA also gave approval to Bio-Nucleonics for its proposed release criteria and timeframes for specific lot release tests to be completed prior to shipment of finished drug products. The importance of this ruling is that no material is lost to radioactive decay and each dose can be shipped immediately to the customer.

FHI assisted Bio-Nucleonics with both of these efforts. We found it such a pleasure to work with clients who were as knowledgeable, dedicated, and thorough as the team at Bio-Nucleonics, and were glad that they liked working with us, too.

Let Fuerst Ittleman help guide your company to its next success. For more information, contact us today at 305.350.5690 or contact@fidjlaw.com

IRS Considers Oversight of Tax Return Preparers

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On June 4, 2009, the IRS announced plans for a comprehensive program aimed at tax return preparers.  According to IRS Commissioner Doug Shulman, the recommendations of the Service will “better leverage the tax return preparer community with the twin goals of increasing taxpayer compliance and ensuring uniform and high ethical standards of conduct for tax preparers.”

 

Recognizing that “tax return preparers help Americans with one of their biggest financial transactions each year,” Mr. Shulman announced that the IRS “must ensure that all preparers are ethical, provide good service and are qualified.”  Certainly, the need for such recommendations from the IRS is great.  A recent study by the Treasury Inspector General for Tax Administration found that 61% of tax returns completed by unlicensed paid preparers contained errors.

 

Moreover, the tax return preparation industry is enormous and getting bigger.  According to IRS estimates, over 80% of taxpayers either hire a tax preparer or use tax-preparation software.  And while enrolled agents, certified public accountants and licensed tax attorneys must register with the IRS and meet minimum training requirements, other, unregulated tax return preparers can work on tax returns without such safeguards.  “Right now, there is no clear national standard regulation of paid tax-return preparers,” said Mr. Shulman.

 

Although still in formation, the IRS reports that the potential recommendations could focus on:

  • a new model for the regulation of tax return preparers
  • service and outreach for return preparers
  • education and training of return preparers
  • enforcement related to return preparer misconduct.

The process will begin with information gathering from agents, lawyers and accountants as well as unlicensed tax preparers and software vendors.  The agency reported that it will also seek the input of consumer groups and taxpayers, and will open “a transparent and open dialogue about the issues,” according to Mr. Shulman.  “At this early and critical stage of the process, we need to hear from the broadest possible range of stakeholders.”

 

Fuerst Ittleman will continue to monitor this evolving effort by the IRS, both for how it will affect our clients and friends, but also to remain actively involved in developing the recommendations with the agency.

 

For more information, contact Fuerst Ittleman today at 305.350.5690 or contact@fidjlaw.com.

Foreign Bank Accounts and the IRS

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Original Article: Mitchell S. Fuerst: Foreign Bank Accounts and the IRS [pdf]

The IRS Targets Taxpayers Hiding Assets in Offshore Bank Accounts

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Voluntary Disclosure Guidelines Give Taxpayers Until September 23rd to Reveal Offshore Assets

According to a statement on Offshore Income given by IRS Commissioner Doug Shulman, U.S. Taxpayers and entities that are currently hiding assets in offshore accounts have a limited voluntary disclosure period until September 23rd , of 2009 to reveal those accounts before the IRS takes the offensive. After the voluntary disclosure period, the IRS plans to aggressively pursue both civil and criminal penalties for taxpayers that fail to take advantage of the voluntary disclosure initiative. Furthermore, the IRS revealed that they are actively tracking entities and individuals attempting to clean up their act through “quiet disclosures,” the practice of Taxpayers declaring a prior increase of income through amended tax returns.

The IRS stated, “Those taxpayers making ‘quiet’ disclosures should be aware of the risk of being examined and potentially criminally prosecuted for all applicable years.”

It seems that the IRS has decided to take an aggressive position here. In a statement given by the IRS regarding the penalties for the 52,000 holders of undeclared UBS bank accounts, the IRS only mentioned a “reduction of penalties,” for those that took advantage of the voluntary disclosure practice.

Under the new IRS guidance, the quiet disclosure practice is no longer a safe measure to make amends to the IRS. President Obama recently mentioned the appointment of congressional authority to hire an additional 800 IRS agents assigned to track down and pursue illegal tax evasion and the use of undeclared offshore accounts. Though it is legal for Americans to have offshore accounts, the U.S. Treasury Department requires any account containing more than $10,000 to report the existence of the account, and taxes paid on the income as well.

Orthopedic Implant Companies Out of Fed Oversight

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Four primary orthopedic implant companies that have been accused of violations to the federal anti-kickback laws are no longer the subject of the U.S. Attorneys offices federal oversight and have also been dismissed from criminal allegations that surgeons had received enormous sums of money as incentives to use their devices.

To avoid prosecution, the companies had agreed to accepting rigorous regulatory compliance procedures and a monitoring program by the federal government. Those agreements drew a great deal of criticism to U.S. Attorney Christopher Christie, when it was revealed that the former Attorney General, John Ashcroft, was appointed by Christie to a monitoring program contract estimated to be worth up to $52 million. Christie, the Republican gubernatorial nominee hopeful, faced some tough questions about his relationship to, and the appointment of federal monitoring program supervisor – former federal Judge Herbert J. Stern. Judge Stern and his law firm were responsible for contributions of more than $20,000 to Christies campaign fund.

When asked about the current relationship in light of the circumstances, Christie simply dismissed the matter as, “typical political stuff …”

After federal prosecutors discovered incidents where orthopedic surgeons had received consultation fees upwards of $200,000 a year for the promotion of products from orthopedic implant companies, the U.S. Attorneys office pursued formal criminal charges alleging the actions were a violation of federal anti-kickback laws that govern Medicare provisioned hospitals and healthcare professionals.

According to the federal prosecutors, the medical device companies were using the consulting agreements as a cover-up for payoffs to use specific implant products for artificial hip or knee replacement operations. Furthermore, the U.S. Attorneys office claim that these payments and fees are commonplace in the industry and may also be accompanied by luxurious gifts, and extravagant trips.

The investigators found evidence that the physicians had actually performed very little to no consulting work whatsoever and had received funds from the orthopedic companies solely for the use of their products, and failed to keep accurate reports disclosing their relationship with the medical device companies to the patients that received the surgery or the hospitals where the surgeries were performed.

Biomet Orthopedics Inc., Zimmer Inc., Smith & Nephew Inc., and DePuy Orthopeadics Inc., agreed to paying $311 million in a civil settlement agreement and accepted a deferred prosecution agreement which would expire should the companies agree to an extended monitoring program and implement stringent reforms.

The appointee to the monitoring of Zimmer Inc., was John Ashcroft. Zimmer Inc., was not willing to disclose the amount that was paid to Ashcrofts law firm. However, according to the firms spokesperson, the payments were around $6 to $9 million dollars a quarter.

Madoff Investors Getting Some Relief from IRS

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Madoff Ponzi Scheme Victims may be able to receive tax relief and refunds by the new IRS guidelines.

Douglas Shulman, Commissioner of the IRS, announced to Congress that the relief is intended for those who incurred losses by Ponzi Schemes such as the one at issue in the Madoff Ponzi Scandal.

If Madoff investors reported and paid taxes on the earnings from their Madoff investment, they may be due a refund on those taxes because the profits reported were never actually realized.

At a Senate Finance Committee hearing, Shulman stated that the investors in some of the cases were actually entitled to a theft loss deduction which is not subject to limits placed on traditional capital losses.

Mr. Shulman continued to state that theft loss deductions may be taken for the year in which the fraud was discovered, except when the investor may have a “reasonable prospect” in recovering the capital loss.

Shulman went on to say that identifying the actual amounts and times of the losses from Ponzi schemes may be “factually difficult” and could take a considerable amount of time to identify the prospects of the lost money.

Shulman, in his testimony to the Senate, continued:

“Some taxpayers have argued that they should be permitted to amend tax returns for years prior to the discovery of the theft to exclude the phantom income and receive a refund of tax in those years The new IRS guidelines do not address that argument.”

From the time that the Madoff scandal was made public, roughly $1 billion in assets have been identified for Madoffs victims. That figure, however, is only a fraction of the $65 billion that Madoff claimed he had possession of. Some have estimated that the Madoff Ponzi Scheme may have cost the IRS as much as $17 billion in lost tax revenues from investors that had earned fictitious profits.

Securities Investor Protection Corp., an organization that backs failed brokerage firms, has already started sending out checks to the victims of the Madoff Ponzi Scheme. Madoffs victims are eligible for up to $500,000 up until July of 09 from the SIPC. Furthermore, Mr. Shulman stated that investors should be aware that they need to deduct the amount they receive from the SIPC from their Madoff investment based “theft loss” deduction.

According to Shulman, the financial statements which were provided to Madoff Ponzi Scheme investors, should be sufficient documentation enough to establish losses for filing tax claims.

Do you need to speak with an attorney about IRS tax relief?
Contact us for a consultation about fraud-related tax losses.