DocGo faces class-action lawsuit filed on behalf of jilted investors

 Investors have filed a class-action lawsuit against DocGo after the mobile health care company's stock tumbled following reports of government investigations into its handling of a $432 million migrant services contract and the resignation of its CEO, which was prompted by an admission he lied about his professional biography. 

The lawsuit alleges DocGo’s top officials engaged in a fraudulent scheme and a “reckless disregard for the truth,” which artificially inflated the publicly traded company’s value.

The plaintiffs, investors in the company from November 2022 to September, are seeking to recoup their financial losses on DocGo’s stock. The lawsuit details news reports that coincided with the company's declining value, with its most substantial loss following a Times Union story revealing that the company’s CEO, Anthony Capone, falsified his professional biography and repeatedly lied about details on his resume. Following the newspaper's report, Capone resigned. 

The complaint was filed in the U.S. District Court in the Southern District of New York on Friday.

Capone took over as CEO on Nov. 8, 2022 and resigned on Sept. 15. He stepped down after New York City Comptroller Brad Lander announced his office would conduct an atypical “real-time audit” of the company’s $432 million contract. As the controversies mounted, DocGo’s stock fell by more than a third of its value, or more than $3 per share. 

The contract with New York City’s Department of Housing Preservation and Development has led to DocGo overseeing the care of thousands of migrants, about half of whom are scattered throughout hotels upstate. 

DocGo is required to provide housing, casework, food, access to medical care, security and other services typically offered at a homeless shelter. New York City is required by a 1981 consent decree to provide shelter to anyone in the city in need of those services. 

DocGo, a mobile health care company that had provided New York City with assistance in distributing COVID-19 tests and vaccines, has not previously provided wide scale humanitarian shelter services.  

The lawsuit was filed by the law firms Pomertantz LLP, of Manhattan, and Portnoy Law Firm, of California. Both firms previously issued news releases announcing they were investigating filing a class-action lawsuit on behalf of what they said were investors wronged by DocGo. 

The lead plaintiff is Joe Naclerio, who possessed 500 shares of DocGo that were purchased between November 2022 and March. The lawsuit alleges there may be hundreds of thousands of other investors who have been financially harmed and would qualify to have their interests represented in the class-action case. 

The lawsuit alleges DocGo senior leadership had “knowledge of the details of DocGo’s internal affairs.” The defendants had “both the motive and opportunity to commit fraud,” according to the complaint. 

“They also had actual knowledge of the misleading nature of the statements they made, or acted in reckless disregard of the true information known to them at the time,” the lawsuit alleges. 

The lawsuit details multiple reports from the Times Union, along with a report from the New York Times and actions initiated by the New York City comptroller and state Attorney General Letitia James.

Last month, the Times Union reported that the company’s CEO had not attended the graduate university he stated he went to or earned a master’s degree, as he told investors. The institution where he previously said he earned his undergraduate degree also could not confirm he graduated from there, although Capone said he does have a degree from an accredited university. 

Capone told investors at an August conference about his alleged graduate degree in artificial intelligence when discussing his prior role as the company’s chief technology officer. He had touted how DocGo’s artificial intelligence technology set it apart from its peers. 

“I’ve been with the company since pretty much the beginning,” Capone said at the Aug. 9 conference. “But the most important thing to understand is why all of that works — why we can scale so rapidly, 30, 40 percent growth year-over-year, why we can deliver care to some of the most difficult, challenged populations, why we can do so with a high degrees of efficiency and generating good returns for the investors that have taken risks on DocGo is because of our technology.”

“And that’s where I really came in originally,” Capone continued. “We started the company, I was our chief technology officer. My graduate degree is in computational learning theory, which is a subset of artificial intelligence.”

Capone’s comments at the conference included other misrepresentations, which the newspaper previously reported. 

Despite his assertion the company was bidding for a $4 billion contract for medical services at the southern border, multiple sources familiar with the contract, including a spokeswoman for the U.S. Customs and Border Protection, said the contract was for about half of that value. 

A spokesman for the company contended the contract was worth $4 billion but refused to provide evidence to support that claim. “These are facts,” spokesman Michael Padovano had said, but added he was not “at liberty” to share further information. 

Capone also described a health insurance plan in which “we have already signed up over 3,000 asylum seekers onto New York state Medicaid through UnitedHealthcare.” Padovano said the company does not enroll anyone onto health insurance. 

After the newspaper reported his falsified professional biography — misrepresenations that were on the company’s website, a resume Capone attached to a COVID-19 services procurement document with New Jersey and in a filing with the U.S. Security Exchange Commission — DocGo announced that he had stepped down and would be replaced as CEO. 

Capone has since been brought back to work at the company through March as a consultant for about $225,000, according to a public filing by the company earlier this month. 

The company recently provided investors with a letter from the state Office of Temporary Disability and Assistance, dated Oct. 10, which indicates the upstate shelters DocGo is running from hotels are generally providing the assistance they are required. The Times Union found the report to had several holes, including whether it accurately assessed the hotel rooms where bedbugs have been reported. The letter was released by the company a day after migrants protested living conditions at a shelter hotel in Rotterdam.

https://www.timesunion.com/state/article/docgo-faces-class-action-lawsuit-financial-18455457.php