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Clover Health stock drops on allegations it’s facing DOJ probe

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Clover Health stock drops on allegations it’s facing DOJ probe

The King of SPACs is under fire from a short-seller gunning for a crown of his own.

Shares in Clover Health were down more than 12 percent on Thursday after an excoriating report from an up-and-coming short seller that raised serious questions about billionaire Chamath Palihapitiya’s deal to take the online health insurance company public, including claims that Clover has failed to let investors know that it’s under investigation by the Department of Justice.

The explosive report by Hindenburg Research goes after numerous aspects of Clover’s business model, which involves selling and managing Medicare insurance in “low-income and often overlooked communities.”

Hindenburg calls the veracity of that model into question and claims that the DOJ is currently investigating a dozen issues involving Clover, including potential kickbacks.

“This Civil Investigative Demand and the corresponding investigation present a potential existential risk for a company that derives almost all of its revenue from Medicare,” reads Hindenburg’s report. “Our research indicates that the investigation has merit.

Clover declined to comment except to say it planned to issue a statement “to address the claims presented by Hindenburg.” No statement was provided as of press time.

The report is the latest in a string of eyebrow-raising reports by Hindenburg and its founder Nate Anderson, the most notable being its expose of electric carmaker Nikola in September, which led to the electric vehicle maker’s founder stepping down from his role as executive chairman.

The DOJ did not respond to a request for comment.

The timing of Clover’s alleged legal problems, which were not confirmed by The Post, is also of interest to Hindenburg as the firm claims that Palihapitiya either hid the investigations from his investors or failed to do proper due diligence when taking the company public via a $3.7 billion deal with his SPAC in January.

A representative for Palihapitiya did not respond to a request for comment.

The billionaire investor has become the face of SPAC deals in the last few months, launching five in just over a year. And he made a hefty profit already on Clover’s listing, paying $25,000 to invest in what has become a $290 million stake.

“Given that investors are paying over a quarter billion dollars for Chamath’s due diligence,” Hindenberg said, “we think they deserve to know whether Chamath knew of these issues and concealed them, or whether he simply failed to notice them at all.”

The “Reddit rally” has put short-sellers in the hot seat with notable names like Citron Research founder Andrew Left announcing on Friday that his company would no longer publish short reports. But Anderson, who says he has no position in Clover stock, defended his right to question companies on Thursday.

“Short sellers have exposed almost every major market fraud in the past several decades, yet there have been recent questions about whether short-sellers and critical researchers play an important role in a healthy, functioning market,” he writes. “We hope our research today serves as a timely reminder that they do.”

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Nevada Gov. Steve Sisolak wants to build crypto-run private desert cities

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Nevada Gov. Steve Sisolak wants to build crypto-run private desert cities

Nevada, the state of legalized gambling, prostitution and marijuana, is about to add another layer to its Wild West reputation: Desert cities formed by companies and run entirely on blockchain technology.

Nevada Gov. Steve Sisolak held a press conference on Friday to lay out his futuristic plan to open “Innovation Zones” on thousands of acres of privately owned desert that would allow private corporations specializing in emerging technology to form local governments complete with the right to impose taxes and create school districts or even courts.

It was Sisolak’s most detailed discussion of the plan, which has not yet been introduced to the legislature. He said the cities would be run entirely on blockchain technology, the digital ledger primarily used to transfer cryptocurrencies, allowing residents to buy goods, pay bills, transfer property deeds and obtain marriage licenses all using cyber coins. 

One big winner would be Jeffrey Berns, the founder and CEO Blockchains LLC, who purchased almost 70,000 acres of Nevada desert east of Reno in 2018 and said he wants to found a blockchain-based community.

Elon Musk’s massive Tesla battery gigafactory is also located in the same county as Berns’ recent landgrab. While there’s no indication billionaire electric car tycoon wants in on the plan, he would seem to be an ideal candidate given Tesla’s surprise and market-moving $1.5 billion investment in Bitcoin earlier this month.

Of course, for Tesla to build its own autonomous zone, Musk would need to add almost 48,000 acres to meet the 50,000 acres of contiguous, uninhabited land required for a company to meet the rules of the proposed legislation. The rules would also require a $1 billion investment over 10 years.

During a Friday afternoon press conference addressing the plan, Sissolak said Nevada needs a bold new vision to recover from the ravages of the pandemic on the state’s tourism-centric economy.

“This is different than anything that’s ever been proposed before,” he said, hammering home the vision of interconnected modern communities bringing jobs and commerce to unused land. “Companies can collaborate on a future together that would make Nevada not just a national but global leader in Blockchain technology.

While short on some details, like how a so-called Stablecoin would be designed to facilitate a fully Blockchain economy within a US state, and who would pay for roads in and out of what would be essentially private cities, the governor asked Nevadans to think big.

“There’s gonna be a lot of naysayers,” he said at the end of the presser. “I get that, but take a moment to look at the proposal.”

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United Airlines to pay $49.5M to settle mail contract probe

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United Airlines to pay $49.5M to settle mail contract probe

United Airlines agreed to pay $49.5 million to resolve criminal charges and civil claims relating to fraud on Postal Service contracts for transportation of international mail, the US Justice Department said Friday.

“United defrauded the US Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars of payments to which the company was not entitled,” the Justice Department’s acting criminal division chief Nicholas L. McQuaid said.

United did not immediately comment.

The Justice Department said between 2012 and 2015, United defrauded the US Postal Service (USPS) by submitting false delivery scan data. The government said United submitted automated delivery scans based on aspirational delivery times. The government said some individuals at United sought “to hide the automation practices included efforts to revise the falsified delivery times to make the automated scans appear less suspicious to USPS.”

United agreed to strengthen its compliance program and to submit yearly reports to the Justice Department detailing the status of remediation and implementation of United’s compliance program and internal controls.

The government cited United’s prior history, including a 2016 non-prosecution agreement relating to potential criminal bribery violations arising out of United’s establishment and operation of a non-stop route between NJ’s Newark Liberty International Airport and Columbia Metropolitan Airport in South Carolina.

In 2019, American Airlines, paid $22.1 million to settle claims it falsely reported the times it transferred possession of US mail to foreign postal administrations or other intended recipients, the Justice Department said.

USPS contracted with American to take possession of receptacles of US mail at six locations and then deliver it to numerous international and domestic destinations. The settlement resolves claims American Airlines falsely reported the times it transferred possession of the mail. American did not immediately comment.

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Bill Ackman tells investors to follow him on Twitter

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Bill Ackman tells investors to follow him on Twitter

Billionaire Bill Ackman appears to be taking a page from Elon Musk with plans to start announcing market-moving news on Twitter.

The billionaire investor’s blank check company, Pershing Square Tontine Holdings, issued a press release on Friday highlighting Ackman’s Twitter feed and saying it may be used as a venue for official announcements.

“Investors should follow this account for information about the company,” the release said.

Ackman’s #FollowFriday campaign comes as retail traders wage their second campaign on “meme stocks” like GameStop, prizing sentiment and social media posts over fundamentals and pumping so-called “stonks” unloved by mainstream Wall Street investors.

Ackman was up late Thursday night engaging with Twitter users who asked him about a second Pershing Square blank check company, aslo known as a SPAC. His terse answers thrilled some followers who seemed to read into the ambiguous responses.

When asked if investors in the first SPAC could be given priority to invest in the second, Ackman tweeted “We have the technology” leading users on Twitter and Reddit to proclaim that Ackman was about to acquire payment platforms Stripe, Plaid, or even trading app Robinhood, with dozens of users posting that Ackman’s tweets indicate he would announce a merger on Friday, on Twitter.

Despite Ackman appearing to have gained more than 1,000 new followers in a matter of hours, shares in Pershing Square Tontine were trading slightly down at midday after spiking in early trading.

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