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  • U.S. announces charges and guilty plea stemming from Malaysian development fund scheme

    Financial Crimes

    The DOJ unsealed two indictments and a guilty plea related to the sprawling Malaysian development fund fraud on November 1 in the Eastern District of New York. A Malaysian financier and a former banker were charged with conspiring to launder billions of dollars embezzled from the investment development fund, and conspiracy to violate the anti-bribery provisions of the FCPA. The former banker was also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a U.S. financial institution, which underwrote $6 billion in bonds issued by the fund. He was a managing director at the bank. Another former banker at the same financial institution, pleaded guilty to the same charges. He has been ordered to forfeit $43.7 million.

    These three and others allegedly conspired to bribe Malaysian and Abu Dhabi officials to obtain business for the financial institution, including the fund's bond deals. They also allegedly conspired to launder the proceeds through purchasing luxury New York real estate, artwork, and financing major Hollywood films, such as The Wolf of Wall Street.

    For prior coverage of the fund's scheme, please see here.

    Financial Crimes Anti-Money Laundering Bribery FCPA

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  • CEO of Haitian development and reconstruction company charged in bribery scheme

    Financial Crimes

    On October 30, the DOJ charged a dual U.S.-Haitian citizen with conspiracy to violate the FCPA, commit money laundering, and violate the Travel Act, as well as substantive Travel Act violations. The individual is a licensed attorney and the CEO of a Haitian development and reconstruction company. The indictment is part of an ongoing case against a retired U.S. Army colonel who was indicted in 2017 related to an alleged plan to solicit bribes from potential investors for infrastructure projects in Haiti. (For prior coverage of the charges against the colonel, please see here.) According to the indictment, at a meeting in 2015, the citizen and retired colonel met with undercover FBI agents posing as potential investors in the development project, and allegedly asked the agents to invest $84 million in the project. The colonel told them that 5 percent of that total would be paid to Haitian officials to secure approval for the project. The colonel allegedly planned to disguise the funds through a non-profit he controlled. The FBI then wired money to the non-profit.

    Financial Crimes Bribery FCPA Anti-Money Laundering Travel Act

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  • SEC enforcement director gives remarks on FCPA compliance

    Financial Crimes

    On October 3, 2018, Steven Peiken, Co-Director of the SEC’s Division of Enforcement, offered remarks at a white collar crime conference in New York City, discussing a range of issues related to FCPA compliance and enforcement. For example, likely responding to increasing criticism about the relatively few enforcement cases that have been brought by the SEC in recent years, Peiken addressed questions regarding the Enforcement Division’s effectiveness and efficiency metrics, noting that the Division is moving away from quantitative measurements of success to more qualitative metrics, such as whether retail investors are adequately protected and whether the agency is “keeping pace with technological change.”

    In addition, Peiken addressed the impact of the Supreme Court’s decision in Kokesh v. SEC, which held that disgorgement awards are punitive in nature and subject to a five year statute of limitations under 28 U.S.C. § 2462. Peiken stated: “The impact of Kokesh has been felt across our enforcement program. A few months ago, we calculated that Kokesh led us to forego seeking approximately $800 million in potential disgorgement in filed and settled cases. That number continues to rise.”

    Peikin concluded his remarks by noting that the Enforcement Division cannot continue to rely upon quantitative metrics to determine success, such as the size of awards and penalties. Instead, the Division must adopt “a nuanced and qualitative evaluation of our overall impact on achieving our investor and market integrity protection mission.” These remarks suggest that the rate of new actions and investigations filed by SEC’s Enforcement Division may not keep pace with recent years, and that the Division may instead be relying on impact cases or those that satisfy the more qualitative metrics Peikin described, when measuring success going forward.

    Financial Crimes SEC FCPA

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  • DOJ provides further guidance on FCPA Corporate Enforcement Policy in speech

    Financial Crimes

    On September 27, Deputy Assistant Attorney General Matthew Miner gave a speech that provided clarification of DOJ enforcement policies, continuing to emphasize voluntary disclosure and underscoring the notion that companies should view DOJ “as partners, not adversaries.” In his speech, Miner announced that DOJ’s FCPA Corporate Enforcement Policy is not limited to just FCPA violations, and that DOJ “will also look to these principles in the context of mergers and acquisitions that uncover other types of potential wrongdoing,” encouraging companies that discover such wrongdoing to voluntarily disclose it. Miner also pointed to recent published declinations, and noted that declinations under DOJ’s Policy can still be appropriate even when “aggravating circumstances” are present. Miner also referenced the increase in “global enforcement and cooperation with foreign authorities” and emphasized DOJ’s “Anti-Piling On Policy.”

    Financial Crimes FCPA DOJ Corporate Enforcement Policy

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  • Oil services company CEO and executive sentenced to prison for conspiracy to bribe foreign officials

    Financial Crimes

    On September 28, the DOJ announced that a former CEO and a former executive of an oil services company had been sentenced to prison and fined for their roles in a scheme to bribe foreign government officials in Brazil, Angola, and Equatorial Guinea in exchange for oil-services contracts. In November 2017, the former CEO of the company and a former sales and marketing executive at the company each had pleaded guilty to one count of conspiracy to violate the FCPA. The former CEO was sentenced to 36 months in prison and a fine of $150,000 for authorizing payments in furtherance of the bribery scheme, and the former executive was sentenced to 30 months in prison and a fine of $50,000 for using a third-party sales agent to pay bribes to Brazil officials.

    The company itself entered into a $238 million three-year deferred prosecution agreement and its subsidiary pleaded guilty to one count of conspiracy to violate the FCPA.

    Prior Scorecard coverage of the company can be found here.

    Financial Crimes Bribery FCPA DOJ

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  • DOJ reportedly investigating professional baseball organization for potential FCPA violations

    Financial Crimes

    Based on media reports, DOJ’s Fraud Section is reportedly investigating some part of a professional baseball organization for possible FCPA violations related to recruitment of international players, particularly related to immigration issues for players from Latin America. Reports indicate that the investigation was initiated when a whistleblower provided the FBI with information and documents last year during spring training. Since then, several witnesses have reportedly already been subpoenaed and testified before a federal grand jury in connection with the investigation.

    A spokesperson for the organization stated that they had not been contacted by federal authorities regarding an investigation, and the two franchises that appear to be most at issue declined to comment to the media on the matter.

    Financial Crimes FCPA Whistleblower DOJ

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  • SEC settles FCPA charges with former CEO of Chilean mining company

    Financial Crimes

    On September 25, 2018, the SEC announced a settlement of FCPA charges against the former CEO of a Chilean-based chemical and mining company for $125,000. According to the SEC, over the course of seven years, the company’s then-CEO “caused the company to make nearly $15 million in improper payments to Chilean political figures and others connected to them.” The former CEO agreed to the settlement without admitting the findings in the SEC’s order. According to the SEC’s order, the former CEO signed false certifications related to financial reporting in the United States.

    Last year, the company agreed to pay $30 million to settle parallel DOJ and SEC charges against the company. That settlement demonstrated the jurisdictional reach of U.S. government enforcement of the FCPA – while the company is a Chilean company with no U.S. operations, it is registered with the SEC as a foreign private issuer.

    Financial Crimes SEC FCPA

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  • Brazilian oil company settles FCPA violations for $853 million to U.S. and Brazil

    Financial Crimes

    On September 27, 2018, the DOJ announced that a Brazilian state-owned oil company had entered into a Non-Prosecution Agreement with the DOJ, as well as settlement agreements with the SEC and Brazilian authorities, and agreed to pay a total $853.2 million in penalties to all jurisdictions. Under the terms of the settlement, DOJ and SEC will each receive 10 percent of the penalty amount, with Brazilian authorities receiving the remaining 80 percent.

    As part of the settlement, the company admitted that its Executive Board members “were involved in facilitating and directing millions of dollars in corrupt payments to politicians and political parties in Brazil,” while directors were “involved in facilitating bribes that a major contractor of the company was paying to Brazilian politicians.” The conduct included bribes related to several refineries, as well as shipyard and drillship contracts, as well as payments to “stop a parliamentary inquiry into the company's contracts.”

    The company's penalty reflects a 25 percent discount off the low end of the applicable U.S. Sentencing Guidelines due to its cooperation and remediation. While the company did not voluntary disclose its conduct, it cooperated with authorities by disclosing the findings of its internal investigation, providing document discovery, and facilitating the interview of foreign witnesses. It also took remedial measures by replacing its Board of Directors and Executive Board, as well as implementing reforms in its policies and procedures.

    In addition to the criminal penalty, the SEC announced that the company agreed to an administrative order requiring it to pay almost $1 billion in disgorgement and prejudgment interest. However, the company received full credit for payments it already made to resolve a class action for $2.95 billion earlier this year. The net result is that the company will not have to pay any additional funds to the SEC in the separate disgorgement action.

    Prior ScoreCard coverage of the company and related investigations can be found here.

    Financial Crimes FCPA DOJ SEC

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  • Financial advisor pleads guilty to money laundering in Ecuadorian energy company case

    Financial Crimes

    On September 11, a Miami-based financial advisor pleaded guilty to one count of conspiracy to commit money laundering in connection with his role in making corrupt payments to officials of an Ecuador state-owned and state-controlled energy company. He is scheduled to be sentenced on Nov. 14 in the Southern District of Florida.

    He is the fourth individual, including two former officials of the company, to plead guilty in this case, which concerns efforts by an oil services contractor to make payments to the company's officials in an effort to retain existing contracts and win new business with the company. Another individual who was charged in the same indictment as him, has pleaded not guilty and is currently set to go to trial on October 15. His charges include one count of conspiring to violate the FCPA and one count of violating the FCPA.

    Financial Crimes Anti-Money Laundering Anti-Corruption FCPA

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  • Aircraft manufacturing company settles FCPA charges with SEC

    Financial Crimes

    On September 12, the SEC announced that an aircraft manufacturing company agreed to pay $13.9 million to settle FCPA charges related to payments made through a subsidiary in connection with the sales of elevator and airline equipment in Azerbaijan and China. According the SEC’s Order, from 2012 through 2014, the Connecticut-based company, through its wholly owned subsidiary, made illicit payments to Azerbaijani officials to facilitate the sales of elevator equipment.

    The Order also included other conduct that both the DOJ and SEC have focused on in recent years, including the use of agents and gifts and entertainment. For example, the Order detailed conduct by the company and a joint venture partner from 2009 to 2013 in which an agent in China received improper commissions totaling $55 million in connection with the company’s attempt to win airline business in China. The Order also found that the company, from 2009 through 2015, improperly “provided trips and gifts to various foreign officials in China, Kuwait, South Korea, Pakistan, Thailand, and Indonesia” in order to obtain business. The company consented to the SEC’s order without admitting or denying the findings that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA.

    Financial Crimes SEC DOJ FCPA

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