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  • Court dismisses SEC allegations against executives of hedge fund management firm as time-barred

    Financial Crimes

    On July 12, Judge Nicholas Garaufis of the Eastern District of New York issued a 32-page memorandum opinion this week dismissing the SEC’s civil suit against two former executives of an American hedge fund management firm (earlier coverage can be found here and here).

    The SEC’s complaint alleged that the executives violated the FCPA between May 2007 and April 2011 by causing the firm “to pay tens of millions of dollars in bribes to government officials on the continent of Africa.” Specifically, the defendants allegedly induced Libyan authorities to invest in firm managed funds, and directed illicit efforts to secure mining deals by bribing government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo. The case against the two executives was the latest in a line of civil and criminal proceedings involving the hedge fund management firm and its employees and executives, and the firm paid $412 million in criminal and civil penalties to settle its FCPA enforcement actions.

    Judge Garaufis, in dismissing the complaint in its entirety with prejudice, found that the claims were barred by the FCPA’s five-year statute of limitations, and he rejected the SEC’s tolling arguments. A cornerstone of this dismissal is the Supreme Court’s ruling last year in Kokesh v. SEC, which held that SEC disgorgement actions are subject to a five-year statute of limitations.

    Financial Crimes SEC FCPA

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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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  • OFAC issues Venezuela General License, updates FAQs

    Financial Crimes

    On July 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License 5 (GL 5) to allow U.S. persons to engage in transactions related to the financing for, and other dealings in the Petroleos de Venezuela SA 2020 8.5 Percent Bond that would otherwise by prohibited by Executive Order 13835 (E.O. 13835). (See previous InfoBytes coverage here.) OFAC also published two additional FAQs to provide additional guidance on the reasons for the issuance of GL 5 as well as answers to whether E.O. 13835 prohibits U.S. persons having a legal judgment against the Government of Venezuela from attaching and executing against Venezuelan government assets, including vessels, properties, or financial assets.

    Visit here for additional InfoBytes coverage on Venezuela sanctions.

    Financial Crimes OFAC Department of Treasury Venezuela International

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  • FinCEN director comments on cooperative efforts to freeze assets belonging to transnational criminal organization

    Financial Crimes

    On July 14, FinCEN Director Kenneth A. Blanco issued a statement regarding recent actions taken by Argentina’s Unidad de Informaciὀn Financiera de la República Argentina (UIF-AR) to freeze assets belonging to Clan Bakarat, a transnational criminal organization with ties to Hezbollah leadership. According to Director Blanco, FinCEN’s cooperative efforts with UIF-AR led to the action against Clan Barakat, which is currently listed with the Treasury Department’s Office of Foreign Assets Control as a Specially Designated Global Terrorist for its suspected involvement with money laundering and terrorist financing among other things.

    Financial Crimes FinCEN International OFAC Department of Treasury Anti-Money Laundering

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  • SEC and broker-dealer settle charges for allegedly failing to report suspicious transactions

    Financial Crimes

    On July 9, the SEC announced it had reached a settlement with a broker-dealer for allegedly failing to file suspicious activity reports (SARs), as required by the Bank Secrecy Act. According to the SEC’s complaint, the broker-dealer allegedly “knew, suspected, or had reason to suspect” that at least 47 advisors previously terminated by the broker-dealer had engaged in suspicious transactions. However, the broker-dealer filed SARs related to only 10 of the advisors—3 of which were filed after the SEC brought an enforcement action against the advisors. Suspicious transactions by the advisors involved (i) engaging in suspicious transfers of funds; (ii) engaging in “cherry-picking” patterns; (iii) charging excessive advisory fees; (iv) improperly accessing customer accounts to make trades; and (v) using the broker-dealer’s custodial platform despite registration lapses. The SEC asserted that the broker-dealer’s failure to file SARs for suspicious transactions violated the Securities Exchange Act. While neither admitting nor denying the allegations, the broker-dealer has agreed to the entry of a permanent injunction and will pay a $2.8 million civil penalty.

    Financial Crimes SARs SEC Securities Bank Secrecy Act

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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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  • SEC settles with alcoholic beverage company for $8.2 million regarding India payments

    Financial Crimes

    On July 2, the SEC settled FCPA allegations with an alcoholic beverage company in an administrative proceeding stemming from alleged FCPA violations from 2006 through 2012. The company neither admitted nor denied any wrongdoing. The SEC alleged that the company’s subsidiary in India made illegal payments to Indian government officials through third-party sales promoters and distributers. The third parties then presented fabricated or inflated invoices to the subsidiary. These invoices and accounting entries were ultimately incorporated into the parent company’s books and records. The SEC also alleged that the company failed to maintain adequate internal controls.

    This is the third case the SEC has pursued related to conduct in India by alcoholic beverage companies, following a British alcoholic beverage company in 2011 and a Belgian alcoholic beverage in 2016.

    Financial Crimes SEC FCPA

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  • OFAC publishes Global Magnitsky Sanctions Regulations

    Financial Crimes

    On June 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of regulations to implement the Global Magnitsky Human Rights Accountability Act, as well as Executive Order 13818, which calls for the blocking of property of certain persons involved in serious human rights abuses or corruption. Among other things, the Global Magnitsky Sanctions Regulations outline certain prohibitions related to: (i) transactions involving blocked property, in addition to expenses pertaining to the maintenance or liquidation of blocked property; (ii) the holding of funds in blocked interest-bearing accounts; and (iii) exempt transactions. OFAC further noted it plans to “supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy.” The regulations took effect June 29.

    Financial Crimes OFAC Sanctions Department of Treasury

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  • OFAC revokes JCPOA-related General Licenses

    Financial Crimes

    On June 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued an announcement revoking Iran-related General Licenses H and I (GL-H and GL-I) following President Trump’s May 8 withdrawal from the Joint Comprehensive Plan of Action. In conjunction with these changes, OFAC amended the Iranian Transactions and Sanctions Regulations to authorize certain wind-down activities through August 6 (GL-I) and November 4 (GL-H) related to, among other things, letters of credit and brokering services. In addition OFAC released updated FAQs related to the May 8 re-imposition of nuclear-related sanctions.

    See here for continuing InfoBytes coverage of actions related to Iran.

    Financial Crimes OFAC Iran Sanctions International

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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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