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  • Latest conviction in Venezuelan oil company bribery case

    Financial Crimes

    On July 16, 2018, a dual U.S.-Venezuelan citizen pleaded guilty to one count of conspiracy to violate the FCPA and one count of conspiracy to commit money laundering. The citizen’s convictions relate to allegations that he bribed officials at Venezuela’s state-owned oil company and laundered money for bribes to other company employees. FCPA Scorecard provided earlier coverage of this case here.

    The citizen admitted to soliciting and directing bribes from two U.S. citizens in exchange for securing payment priority for their companies from the oil company and for awards of the company's contracts. The citizen also admitted to conspiring with these individuals to launder and conceal the proceeds of the scheme through a series of financial transactions, including wire transfers to offshore accounts. Sentencing is scheduled for September 24.

    His conviction underscores how wide investigations can become as the DOJ continues pulling threads and obtaining guilty pleas. The DOJ has charged 15 defendants in the company's cases, 12 of whom have pleaded guilty to date, including the citizen. The DOJ also credited the assistance of the Swiss Federal Office of Justice and the Spanish Guardia Civil.

    Financial Crimes DOJ FCPA Anti-Money Laundering Bribery

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  • DOJ announces task force on market integrity and consumer fraud

    Federal Issues

    On July 11, the Deputy Attorney General, Rod Rosenstein, announced the establishment of a new task force on market integrity and consumer fraud pursuant to an Executive Order (EO) issued by President Trump on the same day. The task force, led by Rosenstein, will provide guidance for the investigation and prosecution of cases involving fraud on the government, financial markets, and consumers. The announcement lists a wide range of fraudulent activities, including (i) cyber-fraud; (ii) fraud targeting older Americans and service members; (iii) securities and commodities fraud; and (iv) corporate fraud affecting the general public, such as money laundering and other financial crimes. Rosenstein emphasized that the task force will work to achieve “more effective and efficient outcomes” to identify and stop fraud “on a wider scale than any one agency acting alone.”

    While the EO requests senior officials from numerous federal agencies be invited by the DOJ to participate in the task force, Rosenstein was joined by acting Director of the CFPB, Mick Mulvaney; Chairman of the SEC, Jay Clayton; and Chairman of the FTC, Joe Simons in the announcement. Mulvaney stated, “[t]he Bureau takes its mandate to enforce the law seriously, and the Bureau will continue to apply the law to achieve this end of combatting fraud against Americans…. This task force is an example of the growing cooperation of the Bureau’s work with other federal and state authorities to combat a multitude of bad actors out there today.”

    Federal Issues Fraud Consumer Finance Anti-Money Laundering Financial Crimes DOJ SEC FTC CFPB

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  • Global bank pays $76.7 million to settle hiring practices case

    Financial Crimes

    A global bank and its Hong Kong subsidiary reached a settlement with the DOJ and the SEC related to its alleged practice of “awarding employment to friends and family of Chinese officials” to win business. The subsidiary agreed to pay a $47 million criminal penalty as part of a non-prosecution agreement with the DOJ. It also agreed to continue to cooperate in any ongoing investigations. The DOJ noted that the subsidiary had not self-reported the conduct or properly disciplined the employees involved, although it did receive partial credit for cooperating with the investigation once it began. 

    The parent bank agreed to disgorge nearly $30 million in profits and prejudgment interest in an SEC administrative proceeding. The SEC noted the criminal fine imposed by the DOJ in deciding not to impose a civil penalty. 

    For prior coverage of the sons and daughters investigations into hiring practices in Asia, please see here

    Financial Crimes DOJ FCPA Sons and Daughters

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  • Native American tribes to forfeit $3 million in profits made from payday lending scheme

    Federal Issues

    On June 26, the Department of Justice (DOJ) filed two forfeiture complaints, which cover agreements with two Native American tribes to forfeit a combined $3 million in profits made from their involvement in an allegedly fraudulent payday lending scheme (see here and here). As previously covered by InfoBytes, in October 2016, the FTC required a Kansas-based operation and its owner to pay more than $1.3 billion for allegedly violating Section 5(a) of the FTC Act by making false and misleading representations about costs and payment of the loans. The business owner and his attorney were subsequently found guilty in October 2017 of operating a criminal payday loan empire. As part of the agreements, the two tribes admit that representatives filed affidavits containing false statements in the legal actions against the payday loan scheme. If the tribes comply with agreement requirements, the DOJ will not pursue criminal action for the specified violations.

    In February, multiple federal agencies entered into a $613 million deferred prosecution agreement over Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance program deficiencies with a national bank, which included allegations that the bank was on notice of the owner’s use of the bank to launder proceeds from his fraudulent payday lending scheme. (Previously covered by InfoBytes here.)

    Federal Issues DOJ Payday Lending FTC Consumer Finance Bank Secrecy Act Anti-Money Laundering FTC Act

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  • Aruban telecom official sentenced for money laundering conspiracy involving FCPA violations

    Financial Crimes

    On June 27, Judge Frederico Moreno of the United States District Court of the Southern District of Florida sentenced an Aruban telecom official to 36 months in prison following his guilty plea for money laundering charges in connection with a scheme to arrange and receive corrupt payments to influence the awarding of contracts in Aruba. According to the DOJ’s press release, the official, between 2005 and 2016, used his position as the company’s product manager to influence the awarding of lucrative mobile phone and accessory contracts with the Aruban state-owned telecommunications company. He also admitted to providing favored vendors with confidential company information in exchange for more than $1.3 million in corrupt payments. The official was ordered to pay over $1.3 million in restitution and to serve three years of supervised release following his prison term.

    Previous Scorecard coverage of this matter can be found here.

    Financial Crimes DOJ Anti-Money Laundering FCPA

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  • Global bank settles FCPA allegations concerning “sons and daughters” investigation into hiring practices

    Financial Crimes

    On June 6, a global bank announced it had entered into a non-prosecution agreement with the DOJ to resolve an FCPA investigation into hiring practices in the Asia Pacific region between 2007 and 2013. As part of the agreement, the bank agreed to pay a $46 million penalty to the DOJ. According to the bank, it has already provisioned for the penalty and expects the payment to have “no material impact” on its second quarter financial results. The bank further stated that it has implemented multiple enhancements to its compliance and control functions since 2013. 

    U.S. authorities have investigated several other financial services institutions over their hiring practices in Asia, which have become known as the “sons and daughters” investigations because of the allegations that banks widely hired the children of elite Chinese political families to secure an advantage in obtaining business. Prior Scorecard coverage of those investigations can be found here.

    Financial Crimes DOJ FCPA Sons and Daughters

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  • Baltimore-based investment management firm settles FCPA allegations with DOJ

    Financial Crimes

    On June 4, the DOJ announced that a Baltimore-based investment management firm, had entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve FCPA allegations in connection with the firm’s involvement in Libya through a London-based fund purchased by the firm. Between 2004 and 2010, Permal, subsidiary of the Baltimore firm, partnered with a Paris-based multinational bank, “to solicit business from state-owned financial institutions in Libya.” As admitted by the bank in its own resolution with the DOJ, the bank paid bribes of over $90 million through the use of a Libyan broker with respect to 14 investments made by Libyan state-owned financial institutions. For seven of the transactions, the bank made payments to the Libyan broker to benefit the firm, through its subsidiary. The subsidiary managed the investments and earned profits of approximately $31 million.

    The firm’s resolution includes a penalty of $32.625 million and disgorgement of $31.617 million. As part of the agreement, the firm agreed to continue to cooperate with the DOJ in related investigations and prosecutions, as well as to enhance its compliance program. According to the DOJ, the resolution is based on factors including the firm’s cooperation in the investigation, as well as the fact that the company “did not voluntarily and timely disclose the conduct at issue.” The DOJ also found that the misconduct was “not pervasive throughout the firm or its subsidiary,” but rather that the bank was responsible for running the scheme, noting that the firm and its subsidiary earned less than one-tenth of the profits earned by the bank.

    As FCPA Scorecard previously reported, the firm had announced the near completion of the agreement in a recent SEC filing.

    Financial Crimes DOJ FCPA

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  • Paris-based multinational bank settles FCPA allegations concerning bribery of Libyan officials

    Financial Crimes

    On June 4, the DOJ announced that a Paris-based multinational bank and its wholly owned subsidiary agreed to pay $585 million to resolve charges in the United States and France involving bribes to Libyan officials. According to the DOJ, the bank will enter into a deferred prosecution agreement related to charges of conspiracy to violate the FCPA’s anti-bribery provisions. The bank’s subsidiary will also plead guilty in the Eastern District of New York to similar charges. Almost $293 million of the resolution will be paid to France and credited by the U.S. This is the first coordinated anti-bribery enforcement action by the DOJ and French authorities. 

    The bank admitted that it had paid over $90 million in bribes through a Libyan broker in connection with 14 investments made by state-owned financial institutions in Libya. For each transaction, the bank paid the Libyan broker a commission, some of which the Libyan broker then paid to high ranking Libyan officials to secure the investments for the bank from the state institutions. This scheme resulted in the bank obtaining 13 investments and one restructuring from the Libyan state institutions, and earning approximately $523 million in profits. The scheme also involved payments for the benefit of a a Baltimore-based investment management firm subsidiary; the firm resolved its FCPA issues with the DOJ on the same day.

    As part of the same deferred prosecution agreement, the bank also agreed to pay $275 million to resolve charges arising from manipulation of U.S.-dollar and Japanese yen LIBOR.

    Financial Crimes DOJ Bribery

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  • Baltimore-based investment management firm preparing for FCPA settlement

    Financial Crimes

    On May 30, a Baltimore-based investment management firm, announced in a 10-K SEC filing that it will soon complete negotiations with the DOJ and SEC to resolve FCPA allegations stemming from how a London-based fund purchased by the firm in 2005, managed assets of Libyan governmental entities in 2005-2007. The firm reserved $67 million for the settlement, which reflects, in part, the net revenues of approximately $31 million earned by the fund for managing the assets.

    Financial Crimes DOJ SEC FCPA

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  • Superior Court rules phone calls, email are not alternatives to an ADA-compliant website

    Courts

    On May 21, a California Superior Court granted summary judgment to a visually-impaired plaintiff, ruling that “auxiliary aids” in the form of phone calls or email replies do not meet the Americans with Disabilities Act’s (ADA) burden of providing “full and equal enjoyment of…any place of public accommodation.” According to the order, the defendants, who operate a restaurant and website, argued in part that the plaintiff could have called or emailed the restaurant to obtain information from the website. However, the judge ruled that “email and telephone options do not provide effective communication ‘in a timely manner’ nor do they protect the independence of the visually impaired” because they force a wait for a call back or reply email. As to whether the defendants’ website qualified as a “place of public accommodation within the meaning of the ADA,” the judge ruled that—while courts are split about whether “public accommodations” are limited to physical spaces—the defendants’ restaurant website fell within the category of a public accommodation under a “plain reading” of the statute, and the DOJ’s interpretation of websites under Title III of the ADA. In addition to awarding $4,000 in statutory damages, the court issued an injunction to the defendants, ordering them to comply with Web Content Accessibility Guidelines 2.0 AA to ensure their website is ADA compliant.

    Courts Americans with Disabilities Act State Issues DOJ

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