Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • SEC settles with Texas offshore drilling company for violations of FCPA internal controls provision

    Financial Crimes

    On November 19, the SEC announced a settlement with a Texas offshore drilling company based on the improper activities of the company’s predecessor in connection with a Brazilian oil company bribery scheme. The Administrative Order found that the offshore drilling company had “failed to devise a system of internal accounting controls with regard to [its] transactions with [its] former outside director, largest shareholder, and only supplier of drilling assets . . . and failed to properly implement internal accounting controls related to its use of third-party marketing agents,” noting the company’s “ineffective anticorruption compliance program.” According to the Order, these failures permitted payments that “created a risk that [it] was providing or reimbursing funds that [a director] intended to use to make improper payments to" the Brazilian company at the center of a massive FCPA scheme.

    The settlement with the SEC concludes the company’s involvement in the Brazilian company's investigations. According to the drilling company, they received a cooperation letter from the DOJ last year confirming the company’s full cooperation in the Brazilian company's investigation, and that the DOJ would not move forward with any actions against the drilling company.

    Further coverage of the Brazilian oil company matter is available here.

    Financial Crimes DOJ Bribery SEC

    Share page with AddThis
  • Co-conspirators sentenced in Venezuelan bribery scheme involving Venezuelan TV mogul

    Financial Crimes

    Two co-conspirators of a billionaire news network owner were sentenced this week as part of the DOJ’s recently unsealed prosecution of a bribery scheme involving over $1 billion paid in bribes to members of the Venezuelan government. According to the DOJ, the owner was indicted under seal in August for conspiracy to violate the FCPA, conspiracy to commit money laundering, and nine counts of money laundering. Two co-conspirators, Florida resident and former Venezuelan National Treasurer, and Chicago resident and former owner of a Dominican Republic bank, each pleaded guilty under seal to one count of conspiracy to commit money laundering, and were sentenced in federal court earlier this week.

    According to the owner’s indictment, he allegedly bribed members of the Venezuelan government—including former Venezuelan National Treasurer—in exchange for the right to handle the government’s foreign currency exchange transactions, and then acquired a bank in order to launder the bribe money and other illicit proceeds. To do so, the owner allegedly moved money from Switzerland to accounts in Florida and New York and used it to purchase luxury items such as “jets, a yacht, multiple champion horses, and numerous high-end watches.”

    In December 2017, the former Venezuelan National Treasurer pleaded guilty to one count of conspiracy to commit money laundering, admitting to taking bribes in exchange for helping his co-conspirators—including the owner—by choosing them to conduct currency exchanges at favorable rates to the Venezuelan government. As part of his plea, the former Venezuelan National Treasurer agreed to cooperate and pay a forfeiture money judgment of $1 billion through the forfeiture of “real estate, vehicles, horses, watches, aircraft, and bank accounts.” On November 27, 2018, U.S. Southern District of Florida Judge Robin L. Rosenberg sentenced the former Venezuelan National Treasurer to 10 years in prison, the maximum under his plea deal.

    In March 2018, Chicago resident and former owner of a Dominican Republic bank took a similar plea deal, pleading guilty to one count of conspiracy to commit money laundering, admitting to helping the owner and others acquire and then launder money through the bank. On November 29, 2018, he was sentenced to 3 years in prison.

    The Miami Herald has also reported that the owner's personal banker was sentenced last month for his role in another money laundering scheme involving a Venezuelan state-owned oil company. Coverage of the company's prosecutions is available here.

    Financial Crimes DOJ Anti-Money Laundering Bribery

    Share page with AddThis
  • 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

    Share page with AddThis
  • Swiss banker sentenced to 10 years in Venezuelan state-owned oil company embezzlement and bribery scheme; official pleads guilty in same scheme

    Financial Crimes

    On October 29, a former banker was sentenced to serve 10 years in prison for his role in a scheme to launder funds embezzled from a Venezuelan state-owned oil company. The banker had pleaded guilty to one count of conspiracy to commit money laundering on August 22, 2018. He admitted to using his position at the bank to attract clients from Venezuela. He helped some of those clients launder proceeds from the company's foreign-exchange embezzlement scheme using false-investment schemes and Miami real estate. The PDVSA money was originally obtained through bribery and fraud. 

    Two days later, on October 31, a former executive director of financial planning at the Venezuelan state-owned oil company pleaded guilty to charges related to his role in the same scheme. He admitted to accepting $5 million in bribes to give priority loan status to a French company and Russian bank. The former executive was paid with the proceeds of the same foreign-exchange embezzlement scheme. He admitted that he ultimately received $12 million in bribes for his participation in the embezzlement scheme and laundered that money with a co-defendant through a false-investment scheme. He is expected to be sentenced on January 9, 2019.

    Financial Crimes Bribery Anti-Money Laundering

    Share page with AddThis
  • 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

    Share page with AddThis
  • International police organization chief detained in China on bribery allegations

    Financial Crimes

    In late September, the chief of an international police organization at the time and a former vice minister of China’s national police, reportedly went missing during a trip home to China. According to his wife, his last known communication was a text message to her containing a knife emoji and an instruction to “wait for my call.” According to reports, after his wife, French authorities, and the organization issued public pleas, Chinese authorities disclosed this week that he has been detained pursuant to a government investigation into bribery and other allegations. He abruptly resigned his post at the organization and has not been available for comment.

    His detention is notable due to his international stature as the organization's chief, however, he is just the latest in a string of high-ranking Chinese officials to reportedly have been swept up in widespread graft investigations by the Governing Communist Party under President Xi Jingping. A release from the Ministry of Public Security reportedly claims that his arrest demonstrates that “there is no privilege and no exception before the law.” It goes on to state: “Anyone who violates the law must be severely punished. We must resolutely uphold the authority and dignity of the law, bearing in mind that the red line of the law cannot be overstepped. . . It is necessary to make the legal system a ‘high-voltage line’ of electricity.”

    Financial Crimes Bribery

    Share page with AddThis
  • 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

    Share page with AddThis
  • Class certification granted to hedge fund investors

    Financial Crimes

    On September 14, a New York federal district court granted class certification to a group of shareholder investors suing an American hedge fund management firm and two of its senior executives on the grounds that the investors were misled about a government investigation into the company’s activities in Africa. In finding that the proposed class met all the requirements for certification, the court certified a class of investors that held some of the more than 100 million outstanding shares between February 2012 and August 2014, the time period in which the firm allegedly violated the Securities Exchange Act. Plaintiffs claim that the firm told investors it was not under any pending judicial or administrative proceeding that might have a material impact on the firm, when in fact it was under DOJ and SEC investigation over allegations that its employees were bribing government officials in Africa. The allegations against the firm were made public in 2014 media reports detailing government scrutiny into its dealings in Africa.

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

    Financial Crimes DOJ SEC Securities Exchange Act Bribery

    Share page with AddThis
  • Real estate broker and nephew of former UN Secretary-General sentenced for trying to bribe a foreign official

    Financial Crimes

    On September 6, U.S. District Judge Edgardo Ramos of the Southern District of New York reportedly sentenced a real estate broker to six months in prison for trying to pay $2.5 million in bribes to a Qatari official in connection with a sale of a high rise building complex in Vietnam. The New York Times reported that Judge Ramos stated that he believed the broker deserved a lenient sentence. Law360 reported that Judge Ramos cited, among other factors, the consequences of a longer sentence on the broker’s immigration status. The sentence was ultimately far below what the government had requested.

    As FCPA Scorecard previously reported, the broker pleaded guilty in January 2018 to one count of conspiracy to violate the FCPA and one count of violating the FCPA. He is a nephew of a former UN Secretary-General.

    Additionally, on September 6, the SEC announced that the broker had agreed to pay $225,000 in disgorgement to settle civil FCPA violations arising from his conduct. The SEC’s order concluded that he violated the anti-bribery and books and records provisions of the FCPA.

    See previous FCPA Scorecard coverage here.

    Financial Crimes FCPA Bribery

    Share page with AddThis
  • 2nd Circuit rules that FCPA does not reach foreign individuals without their own ties to U.S.

    Financial Crimes

    On August 24, the 2nd Circuit rejected the government’s argument for a broad interpretation of personal jurisdiction in FCPA cases, ruling that a non-resident foreign national lacking sufficient ties to a U.S. entity cannot be charged with conspiracy to violate the FCPA or with aiding and abetting an FCPA violation. The three-judge panel upheld the lower court’s finding that a British national and former French multinational rail transportation company executive (defendant-appellee), could not be charged with conspiring or aiding and abetting something he could not be directly charged with because he was “not an agent, employee, officer, director or shareholder of an American issuer or domestic concern” within the scope of the FCPA’s jurisdictional provision and had not himself taken actions insider the U.S. 

    The defendant-appellee was an employee of the French company’s UK subsidiary and worked for a French subsidiary. The government alleged that he was “one of the people responsible for approving the selection of, and authorizing payments to,” consultants used by the French company’s U.S. subsidiary to bribe Indonesian officials related to a power contract. The government alleged numerous U.S. acts in furtherance of the bribery (including e-mails and calls by the defendant-appellee to the U.S.), although the defendant-appellee himself never traveled to the U.S. during the scheme. The defendant-appellee was one of four executives charged in 2013 in connection with the bribes; the other three executives—all of whom worked for the U.S.-based subsidiary—a power generation equipment manufacturer (which entered into a deferred prosecution agreement)—entered guilty pleas. The company pleaded guilty in December 2014 and paid a fine of $772 million.

    The charges against the defendant-appellee included a FCPA conspiracy count as well as substantive FCPA bribery violations and related money laundering charges. The District Court granted the defendant-appellee’s motion to dismiss part of the conspiracy count, ruling that if he was not alleged in that count to be a covered person under the FCPA, then the government could not impose accomplice liability either. Similarly, where the government had not alleged that the defendant-appellee ever traveled to the U.S. during the bribery scheme, then he could not be accused of conspiring to violate the provision proscribing acts by foreign nationals taken within the U.S. The District Court allowed the count to move forward where it separately alleged that the defendant-appellee was also an agent of the U.S. subsidiary, which would bring him within the FCPA’s defined reach.

    The 2nd Circuit agreed with the District Court that if the defendant-appellee was not an agent of the French company’s U.S. subsidiary (something the court assumed for the purpose of the appeal only), and therefore himself covered under the FCPA, then he could not be charged with conspiracy or complicity liability. The court relied primarily on the idea that Congress enacted an “affirmative legislative policy” in the FCPA that was intended to punish some categories of defendants, taking into account considerations of extraterritoriality, while intentionally omitting others. Secondarily, the court also held that there was no “‘clearly expressed congressional intent to’ allow conspiracy and complicity liability to broaden the extraterritorial reach of the statute.” The court summed up its ruling as requiring that the government demonstrate that the defendant-appellee “falls within [a category enumerated in the FCPA] or acted illegally on American soil.”

    The court did reverse the District Court’s second ruling that unless the defendant-appellee traveled to the U.S. during the bribery scheme, he could not be charged with conspiring to violate the FCPA provision covering acts by foreign nationals within the U.S. The government had indicated that it still intended, at trial on the other counts, to prove that he was an agent of the U.S. subsidiary, thereby bringing him back within the categories explicitly covered by the FCPA. (The substantive FCPA counts remaining did allege that the defendant-appellee was acting as an agent).

    See previous FCPA Scorecard coverage here, here, and here.

    Financial Crimes DOJ International Bribery FCPA

    Share page with AddThis

Pages