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  • Former Malaysia Prime Minister charged with money laundering

    Financial Crimes

    On August 8, Malaysia’s former Prime Minister pleaded not guilty to money laundering charges filed against him in Malaysia in connection with the ongoing investigation of a Malaysian strategic development company. He had previously pleaded not guilty to three charges of criminal breach of trust and one charge of abuse of power. The money laundering charges relate to approximately $10 million that was allegedly deposited into the former Prime Minister’s personal bank account. That is a small portion of the total funds under investigation as misappropriated from the state fund.

    The day before, a $250 million super yacht was returned to Malaysia after it was previously seized in Indonesia following claims by the U.S. Department of Justice that is was purchased with funds misappropriated from the company. Back in July 2016, DOJ filed civil forfeiture complaints seeking recovery of more than $1 billion in assets associated with the alleged “international conspiracy to launder funds misappropriated from [the company].” In June 2017, DOJ filed additional civil forfeiture complaints to recover another $540 million in assets. The investigation into assets linked to the company continues with DOJ alleging that more than $3.5 billion in total funds were misappropriated from the company from 2009 through 2015.

    Financial Crimes DOJ Anti-Money Laundering

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  • Former Barbados Minister of Industry charged with money laundering

    Financial Crimes

    On August 6, the Department of Justice announced the arrest and first court appearance of a former Minister of Industry of Barbados who DOJ has charged with “laundering bribes that he allegedly received from a Barbadian insurance company in exchange for official actions he took to secure government contracts for the insurance company.” The indictment, which was initially issued under seal on March 15, charges him with one count of conspiracy to launder money and two counts of money laundering. It also seeks forfeiture of the funds he received as alleged bribes. The indictment alleges that as Minister of Industry, he caused an agency of the Barbados Government to renew two contracts with the Barbadian insurance company. In return, the insurance company purportedly paid him approximately $36,000, routing the payments through a dental company and its bank account located in New York. The indictment also references as co-conspirator, but does not name, the CEO of the dental company, a United States citizen and resident of Tampa, Florida. He is also a lawful permanent resident of Tampa, Florida.

    Financial Crimes DOJ Anti-Money Laundering

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  • Another executive arrested in Venezuelan energy company bribery case

    Financial Crimes

    On August 1, DOJ announced the arrest of a dual U.S.-Venezuelan citizen on foreign bribery charges for making and conspiring to make corrupt payments to an official of a Venezuela’s state-owned energy company. He was arrested at Miami International Airport on an arrest warrant based on a criminal complaint in the Southern District of Texas, which was unsealed on July 31. He made an initial appearance before a magistrate judge in the Southern District of Florida.

    According to the criminal complaint, the citizen and a co-conspirator paid at least $629,000 in bribes to a former company official in exchange for favorable business treatment for his companies, including: (1) directing company contracts to his companies, (2) giving his companies priority over other vendors to receive payments, and (3) awarding his companies contracts in U.S. dollars rather than Venezuelan bolivars.

    DOJ has announced charges against 17 individuals, including the citizen, as part of its investigation into bribery at the company. 12 individuals have pleaded guilty.

    Financial Crimes DOJ FCPA Bribery

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  • National bank settles with DOJ for $2.09 billion over RMBS misrepresentations

    Federal Issues

    On August 1, the Department of Justice (DOJ) announced a settlement with a national bank and several of its affiliates (bank) for allegedly misrepresenting the quality of certain loans originated by the bank that were packaged and sold in residential mortgage-backed securities (RMBS). The alleged representations related to debt-to-income ratios for stated income loans sold to investors and in which a significant number of borrowers misstated income information on the applications. The settlement agreement states that the bank “sold at least 73,529 stated income loans in RMBS during [2005-2007], and nearly half of those loans defaulted.” The bank, without admitting liability or wrongdoing, agreed to pay $2.09 billion in a civil money penalty under the Financial Institutions Reform, Recovery, and Enforcement Act, and the DOJ agreed to release the bank from any civil claims arising under several other laws, including: (i) the False Claims Act; (ii) the Program Fraud Civil Remedies Act; (iii) the Racketeer Influenced and Corrupt Organizations Act; and (iv) the Injunctions Against Fraud Act.

    Federal Issues DOJ RMBS Settlement Loan Origination Mortgages

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  • DOJ supervisor over fraud section addresses Global Forum on Anti-Corruption Compliance

    Financial Crimes

    On July 25, Deputy Assistant Attorney General Matthew Miner, who oversees the Fraud Section as well as other parts of the Criminal Division, spoke at ACI’s 9th Global Forum on Anti-Corruption Compliance in High Risk Markets. His speech focused on the DOJ’s efforts to combat global corruption, with a focus on merger and acquisition activity. Miner emphasized, among other things, the efforts the Department was taking to reduce global corruption, highlighting in particular the DOJ’s permanent enshrinement of the FCPA self-disclosure program. He pointed to a recent success of that program, the DOJ’s declination of prosecution against a commercial data company for hiring-related misconduct by its recently acquired China subsidiaries, previously discussed here. Miner also discussed the Department's recent “anti-piling on policy,” under which it gives credit for penalties paid to other enforcement authorities for the same misconduct. As an example of this policy, he noted how the Department credited 50 percent of the fine a French multinational banking and financial services company paid to French authorities for FCPA-related misconduct in a recent enforcement action.

    Miner asserted that the Department would like to do a better job providing guidance to companies facing FCPA risk through mergers and acquisitions, particularly when such activity is in high-risk industries and markets. He quoted from the DOJ’s 2012 Resource Guide, noting that in an acquisition, “a successor company’s voluntary disclosure, appropriate due diligence, and implementation of an effective compliance program may also decrease the likelihood of an enforcement action regarding an acquired company’s post-acquisition conduct when pre-acquisition due diligence is not possible.” Addressing pre-acquisition diligence, Miner stated that when an acquiring company encounters corruption issues during the diligence process, it should come to the Department for guidance through its FCPA Opinion Procedures before moving forward. Miner stated that not enough companies are taking advantage of this “tremendous resource.”

    Miner commented overall that with these policies and procedures, the Department hopes “to incentivize companies to invest in effective compliance programs and robust control systems to prevent misconduct and, in the event of a detected violation, to take full advantage of [the DOJ’s] enforcement approach.”

    Financial Crimes DOJ FCPA Anti-Corruption

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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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