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  • DOJ Charges Head of Organization Backed by Chinese Energy Conglomerate and Former Foreign Minister of Senegal with Bribing High-Level Officials in Chad and Uganda

    Financial Crimes

    On November 20, the DOJ unsealed a criminal complaint charging two people (collectively, the “Defendants”) with participating in a multi-year, multimillion-dollar scheme to bribe high-level officials in Chad and Uganda in exchange for business advantages for a Shanghai-based energy conglomerate (the “Energy Company”). One of the Defendants is the head of a non-governmental organization based in Hong Kong and Virginia that holds “Special Consultative Status” with the United Nations Economic and Social Council. The Energy NGO is funded by the Energy Company. The other Defendant is the former Foreign Minister of Senegal and operated an international consulting firm. The DOJ charged the Defendants with (i) conspiring to violate the FCPA, (ii) violating the FCPA, (iii) conspiring to commit international money laundering, and (iv) committing international money laundering. The Defendants have both been arrested and presented before Magistrates. 

    The DOJ alleges that the Defendants conspired to bribe African government officials on behalf of the Energy Company. Specifically, the DOJ alleges that in an effort to secure oil rights from the Chadian government, the Defendants offered a $2 million bribe to the President of Chad – and in return, the Defendants secured exclusive oil rights without competition. The Defendants allegedly wired almost a million dollars through New York’s banking system in furtherance of their scheme. One of the Defendants also allegedly provided Ugandan officials with gifts and promises to share profits derived from the Energy Company.

    Financial Crimes DOJ Bribery FCPA

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  • House Financial Services Committee Passes Bill That Would Pre-empt State Usury Laws

    Federal Issues

    On November 15, the House Financial Services Committee (Committee) announced the passage of H.R. 3299, “Protecting Consumers Access to Credit Act of 2017,” which would amend the “Revised Statues and the Federal Deposit Insurance Act” to explain that bank loans that were valid as to their maximum rate of interest in accordance with federal law at the time the loan was made shall remain valid with respect to that rate, regardless of whether the bank subsequently sells or assigns the loan to a third party. This would have the effect of preempting contrary state usury laws and effectively overturn the 2015 decision in Madden v. Midland Funding, LLC.

    The bill passed Committee 42-17.

    InfoBytes previously covered the bill’s introduction and also, a similar measure introduced in the Senate.

    Federal Issues House Financial Services Committee Usury Lending Federal Legislation

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  • Trump to Select Mulvaney as Interim CFPB Director

    Federal Issues

    According to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. Mulvaney would keep his current position and serve as both the Director of OMB and Acting Director of the CFPB throughout the interim term.

    Federal Issues CFPB OMB Trump

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  • Two Former Dutch Oil and Gas Services Company Executives Plead Guilty to FCPA Violations

    Financial Crimes

    The DOJ announced last week that two former executives of a Dutch oil and gas services company pleaded guilty in U.S. District Court for the Southern District of Texas. The company's CEO from 2008 to 2011 and a former U.S.-based sales and marketing executive, admitted their involvement in a scheme to bribe government officials in Brazil, Angola, and Equatorial Guinea. The government’s allegations relate to payments made and kickbacks provided to foreign officials in exchange for their assistance in securing contracts in those countries.

    The former U.S.-based sales and marketing executive is scheduled for sentencing on January 31, 2018, and the company's former CEO is scheduled for sentencing on February 2, 2018.

    Click here for FCPA Scorecard’s prior coverage of this matter.

    Financial Crimes DOJ Bribery

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  • American Multinational Retail Corporation Sets Aside $283 Million for Potential Resolution of FCPA Allegations

    Financial Crimes

    On November 16, an American multinational retail corporation disclosed in an SEC filing that it has set aside $283 million for a potential resolution with DOJ and SEC of alleged FCPA violations. The investigation into possible FCPA violations in Mexico was first disclosed in the company’s December 2011 SEC filing and, in subsequent filings, the company stated that the allegations had been expanded to include possible violations in Brazil, China, and India, among others.

    In its November 16 filing, the company reiterated that it has been cooperating with the DOJ and SEC in their investigations, and the discussions with these government agencies has progressed such that the company can reasonably estimate a probable loss of $283 million, although it noted that the company cannot assure that its efforts to resolve these matters will ultimately succeed as anticipated.

    Click here for FCPA Scorecard’s prior coverage of this matter.

    Financial Crimes SEC DOJ FCPA

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  • SEC Releases FY 2017 Annual Report on Enforcement Priorities and Results

    Federal Issues

    On November 15, the SEC Division of Enforcement released a report highlighting the division’s priorities for the coming year and summarizing the enforcement actions from FY 2017. Division Co-Directors Stephanie Avakian and Steven Peikin identify and discuss the five core principles that guide their decision making: (i) “Focus on the Main Street Investor”; (ii) “Focus on Individual Accountability”; (iii) “Keep Pace With Technological Change”; (iv) “Impose Sanctions That Most Effectively Further Enforcement Goals”; and (v) “Constantly Assess the Allocation of [the Division’s] Resources.”

    The report highlights the two new initiatives announced in 2017 as key priorities: the Cyber Unit and Retail Strategy Task Force (previously covered by InfoBytes). The report also gives an overview of the 754 FY 2017 enforcement actions, including a summary of the various remedies the Division sought.

    Federal Issues SEC Privacy/Cyber Risk & Data Security Enforcement Financial Crimes

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  • Second Circuit Ruling May Expose Debt Collection Law Firms to Increased FDCPA Claims

    Courts

    On November 14, the U.S. Court of Appeals for the Second Circuit reversed a Southern District of New York dismissal of a lawsuit against a debt collection law firm regarding actions taken during state court collection proceedings. Concluding that the plaintiff had stated a claim against the law firm under two sections of the Fair Debt Collection Practices Act (FDCPA), a three-judge panel vacated the dismissal and remanded for further proceedings consistent with its decision.

    The appeal stems from the law firm’s actions in attempting to collect on a default judgment entered against the plaintiff. After receiving a restraining notice from the law firm, the plaintiff’s bank placed a restraint on his checking account and the law firm told plaintiff that, unless he made a payment, he would have to get a court order to lift the restraint. The plaintiff sought such an order on the grounds that all the money in his checking account was Social Security Retirement Income (SSRI) and, therefore, exempt from restraint. The plaintiff claimed that the law firm’s objection to his request contained false statements in violation of the FDCPA and New York law because the plaintiff had earlier provided the law firm with documents supporting his exemption claim.

    In finding the complaint states a claim under FDCPA section 1692e, the Court rejected, among other arguments made by the law firm, the notion that FDCPA liability cannot be imposed based on conduct in litigation; the opinion contrasts bankruptcy court proceedings—where the Second Circuit has found the filing of false statements of claim does not violate the FDCPA—with those of state courts, “where . . . the consumer, often unfamiliar with the law governing garnishment of bank accounts, has the benefit of neither counsel nor a bankruptcy trustee.” The Court also held that “a debt collector engages in unfair or unconscionable litigation conduct in violation of [FDCPA] section 1692f when . . . it in bad faith unduly prolongs legal proceedings or requires a consumer to appear at an unnecessary hearing.”

    Courts Appellate FDCPA Second Circuit Debt Collection

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  • Missouri AG Announces Investigation Into Tech Company’s Privacy Policies and Use of Consumer Data

    State Issues

    On November 13, Missouri Attorney General Joshua Hawley announced that his office has issued a civil investigative demand (CID) to a major California-based technology company as part of an investigation into suspected violations of the Missouri Merchandising Practices Act and the state’s antitrust laws. The investigation is focused on certain business practices, including, with respect to privacy issues, the company’s collection, use, retention, storage, sale, and dissemination of information and data about its users and their online activities. The CID requests documents and communications related to, among other things, (i) the company’s privacy policies; (ii) the collection and sharing of data that constitutes “personal information” related to the company’s users; (iii) disclosures concerning the collection of consumers’ credit or debit card transactions; (iv) data the company discloses or shares with third parties, and the identification of third-party partners; and (v) how the company tracks users’ online activities. The company has until January 22, 2018 to comply.

    State Issues Privacy/Cyber Risk & Data Security Consumer Data State AG Third-Party

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  • Freddie Mac Announces Guide Bulletin 2017-26 Covering Changes to Eligibility for Certain Mortgage Products

    Lending

    On November 15, Freddie Mac announced the issuance of Guide Bulletin 2017-26 (Bulletin), which, among other things, expands borrower options for mortgage financing, eases certain underwriting requirements, and adds non-discrimination language. Specifically, the Bulletin announces the availability of 5-year ARMs as a newly eligible product under “Home Possible,” “Freddie Mac Relief Refinance,” and “Financed Permanent Buydown” mortgage programs. Freddie Mac is also removing the requirement that all income reported on Home Possible Mortgage applications must be verified. Additionally, effective March 15, 2018, consistent with the FHFA Minority and Women Inclusion Amendments Final Rule, all covered sellers “must not discriminate on the basis of race, color, religion, sex, age, marital status, disability, veteran status, genetic information (including family medical history), pregnancy, parental status, familial status, national origin, ethnicity, sexual orientation, gender identity or other characteristics protected by law.”

    Lending Freddie Mac Mortgages Fair Lending Underwriting

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  • CFPB Initiates Complaint Against Company for Deceptive, Unfair, and Abusive Loan Collection Practices

    Consumer Finance

    On November 15, the CFPB announced it had filed a complaint against a Texas-based service provider, alleging that it had assisted in the collection of loans that were, in whole or in part, void under state law. The complaint filed in the U.S. District Court for the District of Montana alleges that the service provider, which provided services to three tribal lending entities engaged in the business of extending online installment loans and lines of credit, along with two companies responsible for the collection process (collectively defendants), assisted in the collection of loans that consumers were not legally obligated to pay based on identified states’ usury laws or licensing requirements. Although the specific claims vary by defendant, the complaint alleges that the defendants engaged in deceptive, unfair, and abusive acts and practices in violation of the Consumer Financial Protection Act (CFPA) by:

    • misrepresenting that consumers were responsible for money owed on loans that were void in whole or in part, or did not exist, because the loans were void under state licensing or usury laws (voided loans);
    • demanding repayment from consumers on voided loans by issuing “demand letters,” electronically debiting funds from consumer bank accounts, and placing phone calls to consumers;
    • failing to disclose to consumers that defendants had no legal right to collect on certain voided loans and that consumers were not legally obligated to repay the loans;
    • causing injury to consumers by servicing and collecting on the voided loans;
    • taking advantage of consumers’ “lack of understanding” regarding the voided loans; and
    • providing assistance in, or administering, the origination and collection of the voided loans.

    The CFPB is seeking monetary relief, civil money penalties, injunctive relief, and a prohibition of the service provider’s ability to commit future violations of the CFPA.

    Consumer Finance CFPB Debt Collection Installment Loans UDAAP CFPA

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