Chelsea Clinton Sits on Board of Company Accused of Defrauding Investors

Clover Health under DOJ, SEC investigation

Alana Goodman • June 24, 2021 4:00 pm

Chelsea Clinton is a board director at a health insurance company that has been accused of defrauding investors.

Clover Health has been slapped with numerous investor lawsuits that claim the company and its leadership failed to disclose that it was under investigation by the Department of Justice for allegedly offering illegal kickbacks to health care providers in exchange for patient referrals.

Several of the lawsuits were consolidated in April into a class action case, which accused Clover Health and its CEO Vivek Garipalli of “employ[ing] devices, schemes, and artifices to defraud” investors.

Clinton’s involvement with Clover Health, where she has served on the board since 2017 and in which she also holds a significant financial stake, could complicate the former first daughter’s effort to position herself as a global health expert and commentator.

In addition to sitting on Clover Health’s seven-person board of directors, Clinton also serves on its committees that oversee corporate governance and compensation.

According to SEC records filed on Monday, Clinton owns 536,648 shares of Clover Health Class B Common Stock, which was worth just under $7 million as of Wednesday.

Clinton has promoted Clover Health’s work on social media. “Thanks to the team at @Clover_health for collecting amazingly (sad) stats on how many have received the #flushot this year,” she wrote on Nov. 16, 2018, urging readers to get the flu shot and linking to the Clover Health website.

Clinton, an adjunct assistant professor at Columbia University’s Mailman School of Public Health, recently launched a medical-focused podcast called “In Fact with Chelsea Clinton,” which aims to “open up the world of public health through conversations with experts, advocates, celebrities, and more,” according to a press release.

Clinton’s office did not respond to a request for comment.

Clover Health’s legal woes have attracted criticism from prominent investors, including Starwood Capital Group CEO Barry Sternlicht, who called the company “basically a fraud” at Bloomberg’s Qatar Economic Forum on Wednesday.

Pomerantz LLP attorney Brian Calandra, who is representing the consolidated plaintiffs, declined to comment on the case but said he plans to file an amended complaint in the case next Monday.

A spokesman for Clover Health directed the Washington Free Beacon to a Medium post from February where Garipalli responded to many of the allegations. Garipalli said that, after consulting with legal counsel, the company “concluded that the fact of DOJ’s request for information was not material and was not required to be specifically disclosed in our SEC filings.”

The DOJ probe of Clover Health was first reported by the investigative firm Hindenburg Research in February. The firm also reported that Clover Health had failed to disclose its ownership of a subsidiary company that billed itself as an independent Medicare adviser for seniors, and had allegedly handed out gift cards and other incentives to doctors who helped steer business to Clover Health.

The SEC launched an investigation into Clover Health after the Hindenburg Research report was published.

Hindenburg Research also revealed that the Centers for Medicare & Medicaid Services fined Clover Health $106,095 for misleading marketing practices in 2016, a sign the company has been on the federal radar for several years.

A spokesman for the DOJ declined to comment. The SEC did not respond to a request for comment.