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Romney’s Education Plan

Privatize education and open up the floodgates to education fraud.  That is what Mitt Romney wants to do.  It is bad enough that Education Secretary Arne Duncan has allowed billions to be spent on charter schools and loans for dubious online degrees; now the Republican presidential candidate has made this a cornerstone of his education plan.

The truth is that government lacks the oversight ability to ensure that basic education — let alone academic excellence — is being provided by charter schools and online providers.  At least in the case of online providers, accreditation has been privatized and there are no regulations which regulate the accreditors who provide the green light for the flow of government backed student loans that allow customers to pay their bills.

Before any candidate lays down plans to send taxpayer dollars to the private sector, one thing is clear; there needs to be a clear regulatory and compliance enforcement system to provide standards and sanctions against those that violate them.  These days federal dollars are too scarce to waste and the nation’s future depends on a substantive education system.

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Is Apple Serious?

After years of representing to shareholders that it properly monitors its supply chain for compliance with foreign laws, Apple now admits a serious history of derelictions.

CEO Tim Cook, whose 2011 income of about 300 million dollars is likely more than what Apple’s China based I-pod workforce makes in a year, says he wants to clean things up.  He says he understands what it is like to work in a factory because of his working class Alabama roots.  Really?

Apple engaged the Fair Labor Association to monitor its supply chain and the FLA found that some Chinese employees worked more than 60 hours a week and that many were exposed to hazards.  But is this just the tip of the iceberg?  What is the FLA and who runs it?  Is it the industry’s own watchdog or a truly independent monitor?  These are the questions the press needs to ask.

Now as to Mr. Cook’s take-home pay.  No one faults Mr. Cook for making a boatload of money — at least I do not — but if he is seriously bothered by Apple’s past conduct, maybe he needs to think about returning some of his bonus money since he now knows that the products that produced the bonus were not made in accordance with the law.

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Did Fed Ex Get a Deal?

It turns out that Fed Ex will pay a sum of less than 5 million dollars to settle allegations of pervasive employment discrimination. The settlement was announced by the Department of Labor and touted as a victory. But is it really? Seriously?

The DOL investigation surfaced allegations impacting several thousand employees. For a mulit-billion dollar company this seems like a small fee to pay where there may have been thousands of job applicants who were not given a fair opportunity.

Now it is Congress’ turn to ask some hard questions about what happened here.

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Civil Penalties on Trial?

On Valentine’s Day, the United States District Court for the Eastern District of Virginia issued an opinion in a False Claims Act case, U.S. ex rel. Bunk v. The Pasha Group et al. denying a request to impose civil penalties upon a Defendant that had been found to violate the False Claims Act.

The Bunk case involved Government contracts for the transportation of military household goods owned by U.S. military personnel and their families moving between the U.S. and numerous European cities. Because of the magnitude of money involved — at least $50 million in penalties – this case will be appealed. It would appear that the real issue on appeal is whether the 8th Amendment entitles a Defendant to a bulk discount for penalties associated with 9,136 false claims. As the Opinion notes, “the Court has (previously) concluded that the evidence was sufficient to sustain the jury’s verdict as to the Defendants’ liability on the DPM claim and that as a matter of law, each of the 9,136 invoices constituted a false claim.” Indeed the parties stipulated that the Defendant had submitted 9,136 invoices.

Rather than looking at each of these civil penalties as a separate attempt to break the law, the court’s analysis focused on aggregating them as one penalty in applying an 8th Amendment analysis. By analogy, it may be a lot of money for a driver to pay $20,000 for 200 speeding tickets. But the 8th Amendment does not give wrongdoers a bulk discount when they repeatedly break the law. Here the court could have found a handful of false claims and yet it did not. It found over 9,000!

Curiously, the Court downplays its own finding that the claims were false. (“Rather, they are deemed to be false as a matter of law based on judicial construction of the FCA. For this reason, the number of invoices, in and of themselves, is not reflective of Defendants’ level of culpability. . . .”)

In this case, the Defendant received a bulk discount rather than be required to pay some penalties. Civil penalties must be imposed if the FCA is to have deterrent value, otherwise corporations will be incentivized to repeatedly submit false and fraudulent claims to the Government.

Click here for a copy of the opinion.

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