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  • DOJ Announces Settlement With Mortgage Lender to Resolve Alleged False Claims Act Violations

    Lending

    The DOJ announced a $11.6 million settlement on December 8 with a Louisiana-based direct endorsement mortgage lender and certain affiliates to resolve allegations that the lender violated the False Claims Act by falsely certifying compliance with federal requirements in order to obtain insurance on mortgage loans from the Federal Housing Administration (FHA). According to the DOJ’s press release, between January 2005 and December 2014, the lender (i) certified loans that failed to meet HUD’s underwriting and origination requirements for FHA insurance; (ii) paid incentives to underwriters in violation of the “underwriter commission prohibition,” and continued to make incentive payments even after HUD notified the lender of commission prohibition noncompliance in 2010; and (iii) failed to, in a timely manner, “self-report material violations of HUD requirements” or perform quality reviews. The settlement also fully resolves a False Claims Act qui tam lawsuit that had been pending in the United States District Court for the Eastern District of Arkansas.

    Lending DOJ False Claims Act / FIRREA FHA Settlement HUD Courts

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  • Dutch Oilfield Company Agrees to Pay DOJ $238 Million; Two Former Executives Charged by UK SFO

    Financial Crimes

    On November 29, a Dutch oilfield company entered into a three year deferred prosecution agreement with the DOJ to settle allegations that the company paid bribes to secure contracts in various countries around the world. Under the agreement, the company agreed to pay a total of $238 million, including a $500,000 criminal fine and forfeiture of $13.2 million. The next day, the UK Serious Fraud Office announced that two former company executives had been charged with conspiracy to make corrupt payments in connection with government contracts in Iraq between 2005 and 2011. 

    Earlier this month, two different former executives pleaded guilty in US federal court to paying bribes to government officials in Brazil, Angola, and Equatorial Guinea. Click here for FCPA Scorecard’s prior coverage of these guilty pleas. The company has been involved in a sprawling bribery investigation involving enforcement officials in the United States, the UK, Brazil and the Netherlands. The DOJ closed its investigation in 2014 before reopening it in February of 2016. Click here to view previous FCPA Scorecard coverage of the company's investigation.

    The company’s deferred prosecution agreement states that the company did not receive voluntary disclosure credit even though it voluntarily disclosed the conduct to the DOJ, because the disclosure was untimely as it took place “approximately one year” after the company learned of the information. It also states that the company received full cooperation credit because it conducted a “thorough internal investigation, [made] regular factual presentations” to the DOJ, “voluntarily [made] foreign-based employees available for interviews in the United States, [produced] documents to the United States from foreign countries” and expedited parts of the internal investigation. The deferred prosecution agreement goes on to detail the remedial measures that the company has taken to improve its compliance function, which included hiring a third party to design and implement a new compliance program, reduce the number of third party agents engaged by the company, and terminate relationships with questionable third parties. It goes on to explain that all of these factors weighed in the DOJ’s decision not to seek a guilty plea by the company. This information provides insight into the DOJ’s expectations for receiving disclosure and compliance credit.

    Financial Crimes DOJ UK Serious Fraud Office

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  • Deputy Attorney General Rod Rosenstein Announces Expansion of FCPA Pilot Program

    Financial Crimes

    On November 29, Deputy Attorney General Rod Rosenstein issued remarks announcing that the DOJ’s FCPA Pilot Program will be made permanent and expanded to provide greater incentives for more companies to voluntarily disclose potential FCPA violations. The new program will be formally incorporated into the US Attorney’s Manual. These changes will include greater potential benefits offered to companies that promptly disclose suspected FCPA violations.

    Rosenstein identified three components of what will be called the “FCPA Corporate Enforcement Policy.” First, companies who voluntarily disclose, fully cooperate with the DOJ’s investigation, and undertake “timely and appropriate remediation” will be entitled to a presumption that the matter will be resolved through a declination, which “may be overcome only if there are aggravating circumstances related to the nature and seriousness of the offense, or if the offender is a criminal recidivist.” Second, if the company satisfies all other requirements but there are “aggravating circumstances,” the DOJ “will recommend a 50% reduction off the low end of the Sentencing Guidelines fine range,” although “criminal recidivists may not be eligible for such credit.” And third, the policy will provide details on how the DOJ “evaluates an appropriate compliance program, which will vary depending on the size and resources of a business.”

    The Pilot Program began in April 2016. It was greeted with some skepticism that the benefits of disclosure would outweigh the potential benefits, as Rosenstein noted in his remarks. Click here to view previous FCPA Scorecard coverage of the Pilot Program. 

    Financial Crimes DOJ FCPA Pilot Program FCPA

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  • Legal Battle Begins Over Mulvaney Appointment as Acting Director of CFPB

    Federal Issues

    On November 26, the newly appointed Deputy Director of the CFPB, Leandra English, filed a lawsuit in U.S. District Court for the District of Columbia against President Trump and Mick Mulvaney, the Director of the Office of Management and Budget (OMB), seeking declaratory judgments that English is the Acting Director of the CFPB – and Mulvaney is not – as well as emergency temporary restraining orders preventing the President from appointing anyone other than English as Acting Director and preventing Mulvaney from acting as the Acting Director.

    The legal action results from the November 24 resignation of Richard Cordray as the Director of the CFPB and his naming of English as the Bureau’s Deputy Director (previously covered by a Buckley Sandler Special Alert) citing to section 1011(b)(5) of the Dodd-Frank Act (DFA), which provides that the CFPB’s Director may appoint the Deputy Director who “shall…serve as acting Director in the absence or unavailability of the Director.” Following Cordray’s official resignation, the White House issued an announcement appointing Mulvaney as Acting Director under the Federal Vacancies Reform Act of 1998 (FVRA).

    On November 25, the Department of Justice (DOJ) Office of Legal Counsel released a memorandum in support of the President’s authority to designate Mulvaney as the Acting Director of the Bureau under the FVRA. According to the DOJ, while Congress recognized there would be cases in which FVRA was not the “exclusive means” for succession, Congress did not intend for the FVRA to be “unavailable” when another statute provides an alternative for succession. Accordingly, the DOJ asserts that, notwithstanding the succession provision in the DFA, FVRA gives the President the authority to, “rely upon it in designating an acting official in a manner that differs from the order of succession otherwise provided by an office-specific statute.” In her complaint, English argues that the succession provision in the DFA controls over the FVRA and that the appointment of a White House official is inconsistent with the CFPB’s independent structure.

    Similarly, on November 25, the General Counsel for the CFPB, Mary Mcleod, issued a statement to the senior leaders of the Bureau concurring with the DOJ’s conclusion that “the President may use the [FVRA] to designate an acting official, even when there is a succession statute under which another official may serve as acting.” Mcleod concluded that Mulvaney is the Acting Director of the CFPB and encouraged all Bureau staff to act consistently with that conclusion.

    Oral arguments on English’s emergency motion were held on November 27 by Judge Timothy Kelly, a Trump appointee. Judge Kelly did not rule on the motion and granted the government’s request to file papers responding to English’s arguments.

    Federal Issues Courts CFPB Trump Dodd-Frank DOJ OMB CFPB Succession

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  • DOJ Charges Head of Organization Backed by Chinese Energy Conglomerate and Former Foreign Minister of Senegal With Bribing High-Level Officials in Chad and Uganda

    Financial Crimes

    On November 20, the DOJ unsealed a criminal complaint charging two people (collectively, the “Defendants”) with participating in a multi-year, multimillion-dollar scheme to bribe high-level officials in Chad and Uganda in exchange for business advantages for a Shanghai-based energy conglomerate (the “Energy Company”). One of the Defendants is the head of a non-governmental organization based in Hong Kong and Virginia that holds “Special Consultative Status” with the United Nations Economic and Social Council. The Energy NGO is funded by the Energy Company. The other Defendant is the former Foreign Minister of Senegal and operated an international consulting firm. The DOJ charged the Defendants with (i) conspiring to violate the FCPA, (ii) violating the FCPA, (iii) conspiring to commit international money laundering, and (iv) committing international money laundering. The Defendants have both been arrested and presented before Magistrates. 

    The DOJ alleges that the Defendants conspired to bribe African government officials on behalf of the Energy Company. Specifically, the DOJ alleges that in an effort to secure oil rights from the Chadian government, the Defendants offered a $2 million bribe to the President of Chad – and in return, the Defendants secured exclusive oil rights without competition. The Defendants allegedly wired almost a million dollars through New York’s banking system in furtherance of their scheme. One of the Defendants also allegedly provided Ugandan officials with gifts and promises to share profits derived from the Energy Company.

    Financial Crimes DOJ Bribery FCPA

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  • Two Former Dutch Oil and Gas Services Company Executives Plead Guilty to FCPA Violations

    Financial Crimes

    The DOJ announced last week that two former executives of a Dutch oil and gas services company pleaded guilty in U.S. District Court for the Southern District of Texas. The company's CEO from 2008 to 2011 and a former U.S.-based sales and marketing executive, admitted their involvement in a scheme to bribe government officials in Brazil, Angola, and Equatorial Guinea. The government’s allegations relate to payments made and kickbacks provided to foreign officials in exchange for their assistance in securing contracts in those countries.

    The former U.S.-based sales and marketing executive is scheduled for sentencing on January 31, 2018, and the company's former CEO is scheduled for sentencing on February 2, 2018.

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

    Financial Crimes DOJ Bribery

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  • American Multinational Retail Corporation Sets Aside $283 Million for Potential Resolution of FCPA Allegations

    Financial Crimes

    On November 16, an American multinational retail corporation disclosed in an SEC filing that it has set aside $283 million for a potential resolution with DOJ and SEC of alleged FCPA violations. The investigation into possible FCPA violations in Mexico was first disclosed in the company’s December 2011 SEC filing and, in subsequent filings, the company stated that the allegations had been expanded to include possible violations in Brazil, China, and India, among others.

    In its November 16 filing, the company reiterated that it has been cooperating with the DOJ and SEC in their investigations, and the discussions with these government agencies has progressed such that the company can reasonably estimate a probable loss of $283 million, although it noted that the company cannot assure that its efforts to resolve these matters will ultimately succeed as anticipated.

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

    Financial Crimes SEC DOJ FCPA

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  • DOJ Announces $5.4 Million in Additional Relief for Servicemembers Impacted by Bank’s Alleged SCRA Violations

    Lending

    On November 14, the DOJ announced it had secured an additional $5.4 million from a major U.S. bank related to a September 2016 settlement (previously covered by InfoBytes) resolving allegations that between January 2008 and July 2015 the bank repossessed vehicles owned by active duty servicemembers without required court orders in violation of the Servicemembers Civil Relief Act. The original consent order with the DOJ required the bank to pay $10,000, plus lost equity, to each of the 413 affected servicemembers whose cars were found to be unlawfully seized and further stipulated the bank could be required to compensate additional servicemembers. Since entering into the 2016 settlement with the DOJ, the bank announced it had uncovered another 450 qualifying servicemembers, bringing the combined affected total to 863, with compensatory payouts of more than $10 million.

    Lending Fair Lending DOJ SCRA Servicemembers Settlement Enforcement

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  • DOJ Sues Washington State Company for Alleged SCRA Violations

    Consumer Finance

    On November 9, the DOJ filed a complaint in the Western District of Washington against a Washington company for allegedly foreclosing on servicemembers’ homes in violation of the Servicemembers Civil Relief Act (SCRA). According to the DOJ’s complaint, its investigation uncovered at least 28 unlawful non-judicial foreclosures. In addition to a declaration that the company violated the SCRA, the DOJ is seeking monetary damages, a civil penalty, and injunctive relief.

    The allegations stem from an investigation the DOJ initiated into the company’s foreclosure practices following the same court’s dismissal of a private SCRA action brought by a veteran on the ground that it was time-barred. Prior to the DOJ initiating the investigation, the veteran appealed the dismissal to the Ninth Circuit Court of Appeals. The DOJ filed an amicus brief in that appeal, arguing that private SCRA suits are governed by the four-year federal catch-all statute of limitations.

    Consumer Finance DOJ SCRA Foreclosure Mortgages

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  • DOJ Charges Five Individuals With FCPA Violations Involving a British Luxury Car Company

    Financial Crimes

    On November 7, the DOJ unsealed FCPA charges against five individuals for their alleged participation in a foreign bribery scheme involving a British luxury car company and its U.S. subsidiary. Of the five individuals, one was indicted while the remaining four pleaded guilty for their roles in an alleged scheme to pay bribes to a Kazakhstan official in order to secure a supply contract for a gas pipeline from Kazakhstan to China. The charges and guilty pleas were unsealed in Ohio federal district court. 

    These charges follow on the heels of the company’s January 2017 settlement with DOJ in which the company agreed to a three-year deferred prosecution agreement and agreed to pay $170 million to resolve charges that it conspired to violate the anti-bribery provisions of the FCPA around the world. As part of the DOJ settlement, the company agreed to continue to cooperate fully with the DOJ’s investigation, including its investigation of individuals. The DOJ settlement comprised just a fraction of the $800 million total penalty the company agreed to pay as part of a global resolution related to the corrupt conduct. 

    Of the four guilty pleas, three individuals (a former executive of the company, a former employee of the company, and an executive at an international engineering consulting firm) pleaded guilty to one count of conspiracy to violate the FCPA. The fourth individual (a former senior executive of the company) also pleaded guilty to one count of violating the FCPA in addition to conspiracy. The indicted individual, a former CEO of the company's intermediary, was charged with one count of conspiracy to violate the FCPA and seven counts of violating the FCPA, along with various money laundering charges. 

    The DOJ’s announcement noted the “significant cooperation and assistance” from the UK SFO and Brazil law enforcement. This continues the increased trend of DOJ receiving and then highlighting cooperation efforts by its international counterparts.

    Financial Crimes DOJ FCPA UK Serious Fraud Office

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