Monday, January 3, 2022
Theranos Founder Elizabeth Holmes Convicted On 4 Of 11 Counts. And That Will Be Enough.
Here is the CNN story. The jury acquitted Holmes, the former CEO of blood-testing startup Theranos, on all 4 counts related to the alleged defrauding of patients. She was convicted on 4 counts related to defrauding of investors, including a conspiracy count. The jury hung on 3 additional investor fraud counts. There will be no retrial of the counts that the jury could not reach agreement on, because Holmes' ultimate sentence would not be affected by a guilty verdict on those counts. Moreover, under current Supreme Court case law, the trial court can (unfortunately) consider the government's evidence against Holmes on both the acquitted and hung counts in determining her sentence. The SEC long ago settled its case against Holmes without demanding an admission of wrongdoing on her part. Had she made such an admission there would have been no need for a criminal trial.
January 3, 2022 in Current Affairs, Fraud, News, Prosecutions, SEC, Securities, Sentencing, Settlement, Verdict | Permalink | Comments (0)
Wednesday, July 8, 2020
NY Department of Financial Services and Deutsche Bank - Jeffrey Epstein
The NY Department of Financial Services entered into a Consent Order with Deutsche Bank AG (NY Branch) and Deutsche Bank Trust Company America with the Bank agreeing "to pay $150 million in penalties" "for significant compliance failures in connection with the Bank's relationship with Jeffrey Epstein and correspondent banking relationships with Danske Bank Estonia and FBME Bank." The press release notes that "[t]his agreement marks the first enforcement action by a regulator against a financial institution for dealings with Jeffrey Epstein." "
"Superintendent Lacewell said. 'In each of the cases that are being resolved today, Deutsche Bank failed to adequately monitor the activity of customers that the Bank itself deemed to be high risk. In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein’s terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions.'"
It is a fascinating consent decree with details of alleged suspicious banking activities. One item stated in the Consent decree is "[t]he interpretation was exemplified by a later email exchange in March of 2017, when a member of the transaction monitoring team responded to an alert about payments to a Russian model and Russian publicity agent, stating, '[s]ince this type of activity is normal for this client it is not deemed suspicious.'"
In the Consent decree one sees a good number of unnamed individuals (Co-conspirator 1, 2, and 3; US Bank -1; Relationship Manager -1; Executive -1 and 2; AML Officer -1 and 2; Coverage Team Member -1; Accountant -1; AML Compliance Director-1; Attorney -1; Offshore Company -1).
July 8, 2020 in Investigations, Money Laundering, Settlement | Permalink | Comments (0)
Wednesday, July 20, 2016
A Review of the UK Serious Fraud Office's Second DPA
Earlier this month, the UK Serious Fraud Office announced the approval by Lord Justice Leveson of the country's second deferred prosecution agreement. Readers may recall that the implementation of a DPA process is relatively new in the UK (see prior post here). According to the SFO press release in the matter, the company, which remains nameless due to ongoing, related legal proceedings, was subject to an indictment charging "conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977, conspiracy to bribe, contrary to section 1 of the same Act, and failure to prevent bribery, contrary to section 7 of the Bribery Act 2010, all in connection with contracts to supply its products to customers in a number of foreign jurisdictions."
Pursuant to the terms of the DPA, the indictment was suspended and the company agreed to pay a total of 6,553,085 British Pounds. The company also agreed to continue to cooperate with the ongoing SFO investigation and conduct a review of all third party transactions and its existing compliance measures.
The SFO press release went on to state:
In passing the judgment, Lord Justice Leveson said:
“[This conclusion] provides an example of the value of self-report and co-operation along with the introduction of appropriate compliance mechanisms, all of which can only improve corporate attitudes to bribery and corruption.”
SFO Director David Green CB QC said:
“This case raised the issue about how the interests of justice are served in circumstances where the company accused of criminality has limited financial means with which to fulfill the terms of a DPA but demonstrates exemplary co-operation.
“The decision as to whether to force a company into insolvency must be balanced with the level and nature of co-operation and this case provides a clear example to corporates. The judgment sets out the considerations in detail and endorses the approach we took. As with the first DPA with Standard Bank, the judgment provides clear and helpful guidance.”
The suspended charges relate to the period of June 2004 to June 2012, in which a number of the company’s employees and agents was involved in the systematic offer and/or payment of bribes to secure contracts in foreign jurisdictions. The SFO undertook an independent investigation over a period of two years, concluding that of the 74 contracts examined 28 were found to have been procured as a result of bribes.
The SME’s parent company implemented a global compliance programme in late 2011. In August 2012, this compliance programme resulted in concerns being raised within the SME about the way in which a number of contracts had been secured. The SME took immediate action, retaining a law firm that undertook an independent internal investigation. The law firm delivered a report to the SFO on 31 January 2013, after which the SFO conducted its own investigation.
The SFO would like to thank HM Treasury, HM Revenue & Customs and the Department for Business, Innovation & Skills for their assistance in this investigation.
The final redacted judgement in the matter is available here.
This week, WilmerHale released a piece entitled "The UK's second DPA: a hopeful judgment." In the piece, author Lloyd Firth argues that several revelations from the DPA are encouraging as we consider the role the new DPA system will have in the UK. For those interested in the evolving DPA process in the UK, I recommend you give both the final redacted judgment and the WilmerHale piece a read.
July 20, 2016 in Corruption, Deferred Prosecution Agreements, FCPA, International, Prosecutions, Settlement | Permalink | Comments (0)
Monday, January 4, 2016
Here Is Your $547 Million Check From Swiss Santa
Guest Blogger - Dmitriy Kamensky, Fulbright Faculty Development Fellow, Stetson University College of Law; Professor of Law, Berdyansk State University, Ukraine.
On Dec. 30, just as corporate and the rest of America was getting ready to celebrate the New Year, one of the top-tier Swiss banks, Julius Baer Group, announced (see here) that it had reached an agreement in principle with the U.S. Attorney’s Office for the Southern District of New York, related to a long and extensive investigation into aiding American customers to evade millions of tax dollars. The bank said it set aside $ 547 million to settle the matter with the Justice Department and expects to enter a final settlement in the first quarter of 2016.
This final development of the Julius Baer case is the latest of about a dozen Swiss financial institutions that came under DOJ scrutiny for allegedly providing American customers (and taxpayers) with numbered accounts that were protected by Swiss bank-secrecy laws, thus effectively helping U.S. taxpayers underreport their taxes.
In February of 2009, UBS AG, the largest Swiss bank worth over $ 1 trillion in assets, entered into a Deferred Prosecution Agreement (DPA) with the Department of Justice for $780 million (see here). The bank has acknowledged that between 2000 and 2007 it has participated in a cross-border scheme with the purpose of defrauding the United States and the Internal Revenue Service. The scheme was designed to aid American customers in evading federal taxes, by dodging their money to numbered UBS accounts. Under growing pressure from the U.S. authorities, the bank and later the Swiss government agreed to cooperate, by granting access to American accounts and later relaxing bank secrecy laws altogether.
Then in 2014 another larger Swiss lender, Credit Suisse Group AG, moved to settle a similar criminal probe by pleading guilty to conspiracy to aid its American clients in filing false income tax returns with the IRS. The bank agreed to pay $ 2.6 billion in criminal fine, restitution and other penalties (see here).
With the case of Julius Baer outlining the final part of multiyear aggressive probes by DOJ into the Swiss banking industry and tax dodging operations, it becomes clear that bankers across the globe are being given a serious (and quite expensive) warning: do not mess with American tax laws; federal prosecutors and tax agents have long arms.
January 4, 2016 in Deferred Prosecution Agreements, International, Settlement | Permalink | Comments (0)
Monday, November 30, 2015
Britain's First DPA Approved by Court
According to Reuters, a judge approved Britain's first Deferred Prosecution Agreement today. The below is from the Serious Fraud Office's (SFO) press release.
The Serious Fraud Office's first application for a Deferred Prosecution Agreement was today approved by Lord Justice Leveson at Southwark Crown Court, sitting at the Royal Courts of Justice.
The counterparty to the DPA, Standard Bank Plc (now known as ICBC Standard Bank Plc) ("Standard Bank"), was the subject of an indictment alleging failure to prevent bribery contrary to section 7 of the Bribery Act 2010. This indictment, pursuant to DPA proceedings, was immediately suspended. This was also the first use of section 7 of the Bribery Act 2010 by any prosecutor.
As a result of the DPA, Standard Bank will pay financial orders of US$25.2 million and will be required to pay the Government of Tanzania a further US$7 million in compensation. The bank has also agreed to pay the SFO's reasonable costs of £330,000 in relation to the investigation and subsequent resolution of the DPA.
In addition to the financial penalty that has been imposed, Standard Bank has agreed to continue to cooperate fully with the SFO and to be subject to an independent review of its existing anti-bribery and corruption controls, policies and procedures regarding compliance with the Bribery Act 2010 and other applicable anti-corruption laws. It is required to implement recommendations of the independent reviewer (Price Waterhouse Coopers LLP).
DPAs are a new settlement vehicle in the U.K., as discussed in my article International White Collar Crime and Deferred Prosecution Agreements. One should expect that now the first DPA has been approved, U.K. enforcement bodies will begin aggressively using DPAs in the coming years. As the Director of the SFO, David Green, said of the Standard Bank DPA, "This landmark DPA will serve as a template for future agreements."
The press release and links to the Standard Bank DPA are available on the SFO website.
November 30, 2015 in Deferred Prosecution Agreements, FCPA, International, News, Settlement | Permalink | Comments (0)
Monday, February 2, 2015
Judge Rakoff and Professor Garrett on Deferred Prosecution Agreements
Judge Rakoff has authored an interesting article in the New York Review of Books examining Professor Brandon L. Garrett’s book entitled “Too Big to Jail: How Prosecutors Compromise with Corporations.” Professor Garrett’s book looks closely at the use of deferred prosecution agreements by the government and includes a wealth of information and data. While Professor Garrett concludes that deferred prosecution agreements have been “ineffective,” he also proposes a number of steps that might make them more efficient in the future. Along with conducting a nice discussion of Professor Garrett’s book, Judge Rakoff offers his own perspective on these agreements in his review. For those interested in deferred prosecution agreements, both Judge Rakoff’s article and Professor Garrett’s book are must reads.
February 2, 2015 in Books, Deferred Prosecution Agreements, Scholarship, Sentencing, Settlement | Permalink | Comments (0) | TrackBack (0)
Monday, September 8, 2014
Criminalizing the American Company – The Economist
The Economist has an excellent article examining the criminalizing of American companies. The piece, entitled “A Mammoth Guilt Trip,” covers a lot of ground, including many of the most pressing issues in the field of corporate criminal liability today. The article begins by examining some of the incredible financial settlements we’ve seen this year. As the piece notes, while the $5.5 billion the DOJ collected in direct payments in 2013 was impressive, it will certainly be “dwarfed by this year’s tally.” Also examined in the article are issues such as the questionable and opaque ways the government spends settlement funds, the growth in regulatory crimes, the often prohibitive costs of corporate compliance, the inability of many companies to risk proceeding to trial, and, of course, the lack of individual prosecutions following the 2008 financial collapse. Finally, the article contains some great data from Professor Brandon Garrett at the University of Virginia Law School. Professor Garrett maintains a list of government actions against corporations since 2000. In total, the list contains information regarding 2,163 corporate convictions and guilty pleas, along with 313 deferred and non-prosecution agreements. It all makes for a fascinating read.
September 8, 2014 in Deferred Prosecution Agreements, Prosecutions, Settlement | Permalink | Comments (0) | TrackBack (0)
Tuesday, April 8, 2014
NYU Conference - Deterring Corporate Crime: Effective Principles for Corporate Enforcement
I had the privilege of being at an NYU Conference titled, Deterring Corporate Crime: Effective Principles for Corporate Enforcement. Hats off to Professor Jennifer Arlen for bringing together folks with some different perspectives on corporate crime. Individuals presented data, and I heard different positions presented (corporate, government, industry, judicial) on a host of topics. The individual constituent (CEO, CFO, employee) within the corporation was not a key focus, unless it was a discussion of their wrongdoing or prosecution.
From this conversation it was clear that deterring corporate wrongdoing is not easy. Penalties have increased, yet we continute to see corporate criminality. So the question is, how do we encourage corporations not to engage in corporate wrongdoing?
This is my top ten list of what I think exists and what needs to be changed -
1. Most companies try to abide by the law.
2. Complying with the law is not always easy for corporations. In some instances the law and regulations are unclear, making it difficult to discern what is legal. The array of different laws and regulations (e.g., state, federal, and international), as well as their complexity makes corporate compliance problematic.
3. Companies resort to internal investigations to get information of wrongdoing within the company. In some instances companies will threaten individuals with the possible loss of their jobs if they fail to cooperate with a corporate internal investigation. Individuals who provide information to their employers sometimes do not realize that the company may provide that information to the government and the information may then be used against them.
4. If a company is criminally charged, it typically is financially beneficial for the company to fold, work with the government, and provide information to the government of alleged individual wrongdoing within the company.
5. DOJ's incentives to a corporation that causes it to fold and provide evidence to the government against alleged individual wrongdoers may be causing more harm because it pits corporations against its individual constituents.
6. We need a stronger regulatory system. Our system is broken and one just can't blame agencies like the SEC.
7. If we expect agencies like the SEC to work, Congress needs to provide them with more money to engage in real regulatory enforcement.
8. There are many good folks in DOJ, including AG Holder, who look longterm at stopping corporate wrongdoing. But there are also individuals in DOJ who fail to see the ramifications of what may seem like short-term benefits.
9. Corporate crime can be reduced if everyone - the corporation, government, and also the individual constituents would work together.
10. It would be beneficial in reducing corporate crime if there was more transparency. We all need to hear what works - when there are declinations of prosecutions, or when an agency decides not to fine a company. We can learn from the good things companies do (anonymously) and when DOJ declines to proceed against the company.
April 8, 2014 in Conferences, FCPA, Prosecutions, Prosecutors, Qui Tam, SEC, Settlement | Permalink | Comments (0) | TrackBack (0)
Wednesday, June 19, 2013
New SEC Policy On Admissions Of Wrongdoing: Tangibles And Intangibles
SEC Chair Mary Jo White has announced an end to the SEC's blanket "does not admit or deny" settlement agreement policy. In a select number of cases involving "widespread harm to investors" or "egregious intentional misconduct" the Commission will now insist on admissions of wrongdoing on the part of civil defendants who want to settle. The blanket policy was previously eroded, in January 2012, in cases where settling defendants had already pled guilty to related criminal charges. Yesterday's Reuters story is here. Todays Thomson Reuters News & Insight analysis is here.
I strongly suspect that the tangible impact of the policy shift will be minimal. Since almost no SEC civil defendants can afford to admit wrongdoing as a condition of settlement (except in cases where a guilty plea occurred or is anticipated), we can expect the instances in which the SEC will insist on such admissions to be extremely rare. And those very rare cases will result in trials.
But the intangible impact of annually insisting on admissions of wrongdoing in three or four cases may be greater over time. First, the trials, though few in number, should be well-covered by the media. Second, the SEC will regain some much needed respect for its toughness. Third, going to trial and airing the dirty laundry accumulated by malefactors of great wealth should have salutary educational and public policy benefits. Fourth, we may actually see some deterrent effect from all this, so that companies don't automatically view SEC settlements as a cost of doing business.
We will revisit this issue as the new policy is implemented.
June 19, 2013 in AIG, SEC, Securities, Settlement | Permalink | Comments (0) | TrackBack (0)
Wednesday, September 26, 2012
NPA, DPA, Guilty Plea or Trial - Tyco & Subsidiaries
It is always interesting to see who will get a non-prosecution agreement, a deferred prosecution, or be placed in the position of pleading guilty. There are few who go to trial, but occasionally it happens. The risk of trial is enormous especially if the company is in the defense procurement area, accounting, health care, or dealing with possible collateral consequences.
According to a DOJ press release, "Tyco International Ltd - together with a subsidiary that pleaded guilty" to a criminal charge of conspiracy to violate the FCPA agreed to pay more than $26 million for the DOJ resolution and for charges from the SEC.
It seems that "an indirect, wholly owned subsidiary of Tyco" is the one pleading guilty, but near the bottom of this same press release one finds that Tyco received a non-prosecution agreement.
To what extent does the collateral consequences of the process drive the different resolutions?
September 26, 2012 in Deferred Prosecution Agreements, Settlement | Permalink | Comments (0) | TrackBack (0)
Tuesday, July 3, 2012
Commentary on GlaxoSmithKline Settlement - The Government Push is Definitely on Health Care Fraud
This $3 billion settlement between GlaxoSmithKline and the government is the largest settlement in the health care fraud arena. But DOJ's focus on health care fraud is not limited to this one case.According to TRAC reports here for "FY 2011 the government reported 1,235 new health care fraud prosecutions." This is particularly noteworthy because it demonstrates a number that is "up 68.9% over the past fiscal year when the number of criminal prosecutions totaled 731" in the health care fraud area. If one looks at the percentage change from 5 years ago, it is up 134%, from ten years ago 95.7% and 20 years ago 740%. This increase in prosecution of health care fraud is incredible. And the place showing the highest amount of fraud is in the Southern District of Florida.
The government took some wrong turns initially in the GlaxoSmithKline case when they proceeded against the former VP and Associate General Counsel of the company. Lauren Stevens had been initially charged with a 6-count Indictment for the alleged crimes of obstruction (1512), falsification and concealment of documents (1519) and false statements (1001). The case was dismissed here with all kinds of revelations (like what co-blogger Sol Wisenberg noted on June 2011 - how the Maryland US Attorney refused to sign the indictment here). See also David Stout, Main Justice, Lauren Stevens: A Case the DOJ Would probably Like to Forget. To me it seemed like an indictment of a possible discovery violation, if that, by none other then the DOJ, who had its share of discovery violations in failing to provide Brady material in cases like the Ted Stevens case.
But this latest settlement with the company is an important step forward in saying that the current administration is concerned not only about providing health care to all, but also in not allowing companies to commit fraudulent acts. The GlaxoSmithKline website has its 2011 Corporate Responsibility Report on its front page here and a statement here, which includes a statement from CEO Sir Andrew Witty saying "[o]n behalf of GSK, I want to express our regret and reiterate that we have learnt from the mistakes that were made."
White collar cases can take many years to resolve and many, such as whistleblowers (see here & here), may have difficult times in the process of waiting. But it is important to congratulate the DOJ on not going for a quick "short-cut" resolution here and instead taking the time, energy, and money, to investigate a company on multiple levels. Resolving it also is a strong cost-saving measure.
(esp)(with disclosure that she received her B.S. from Syracuse - the home of TRAC).
July 3, 2012 in Fraud, Settlement | Permalink | Comments (1) | TrackBack (0)
Monday, July 2, 2012
GlaxoSmithKline Plea - Largest Health Care Fraud Settlement
July 2, 2012 in Settlement | Permalink | Comments (2) | TrackBack (0)
Wednesday, June 27, 2012
Barclays Bank to Pay - $160 Million - as Part of Non-Prosecution Agreement
A DOJ Press Release reports, Barclays Bank PLC Admits Misconduct Related to Submissions for the London Interbank Offered Rate and the Euro Interbank Offered Rate and Agrees to Pay $160 Million Penalty
Some highlights of the press release -
- "Barclays Bank PLC, a financial institution headquartered in London, has entered
into an agreement with the Department of Justice to pay a $160 million penalty
to resolve violations arising from Barclays’s submissions for the London
InterBank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR),
which are benchmark interest rates used in financial markets around the world..."
- "To the bank’s credit, Barclays also took a significant step toward accepting
responsibility for its conduct by being the first institution to provide
extensive and meaningful cooperation to the government."
- "Barclays’s cooperation has been extensive, in terms of the quality and type of
information and assistance provided, and has been of substantial value in
furthering the department’s ongoing criminal investigation."
- "The agreement requires Barclays to continue cooperating with the department in
its ongoing investigation."
- "As a result of Barclays’s admission of its misconduct, its extraordinary
cooperation, its remediation efforts and certain mitigating and other factors,
the department agreed not to prosecute Barclays for providing false LIBOR and
EURIBOR contributions, provided that Barclays satisfies its ongoing obligations
under the agreement for a period of two years. The non-prosecution agreement
applies only to Barclays and not to any employees or officers of Barclays or any
Commentary - As a non-prosecution agreement it does not go through the courts and DOJ has the power to enforce or proceed should it believe there is a violation of the agreement. It also sounds like the white collar defense bar may have some new clients as the government has secured the cooperation of the company to go after individuals.
See also Jenna Greene, BLT Blog, Barclays Agrees to Pay $360M to Settle with CFTC, DOJ
over Interest Rate Manipulation
June 27, 2012 in Defense Counsel, Deferred Prosecution Agreements, Investigations, Prosecutors, Settlement | Permalink | Comments (1) | TrackBack (0)
Thursday, May 31, 2012
Corporate Sentencing Statistics With Commentary
Some have been claiming that corporate prosecutions are down in numbers. It certainly has not seemed that way, so I was glad to see the numbers, which demonstrate that corporate sentencings have been average over the past few years.
Lisa Rich, Director of the Office of Legislative and Policy Affairs at the United States Sentencing Commission provided the following corporate statistics for the recent Federal Sentencing Conference (although I have reworded some of what she provided): In FY 2011, there were 160 organizational cases and 151 pled guilty and 9 were convicted after jury trials. Probation was ordered in 111 cases and 31 had court ordered compliance/ethics programs. Three cases received credit for self-reporting and 44 received credit for cooperating with the government. But of the approximately 74 cases in FY2011 for which the Commission had Chapter 8 culpability information, there were no entities receiving full credit for having an effective compliance program. Not one of the 74 cases received credit under subsection (f).
These statistics do not reach the full corporate efforts by DOJ since they fail to include non-prosecution agreements or deferred prosecution agreements that have not gone through chapter 8. So some bottom line observations: 1) if the government decides to prosecute a corporation - it has an incredibly high chance of success; 2) more emphasis needs to be put into teaching corporations how to operate an effective compliance program; 3) studies need to examine whether by using deferred and non-prosecution agreements the government is increasing prosecutions against corporate individuals (it certainly seems likely that this would be the case).
May 31, 2012 in Conferences, Deferred Prosecution Agreements, Government Reports, News, Prosecutions, Settlement, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)
Friday, May 25, 2012
Government Dismisses Lindsey Manufacturing Case Appeal
The DOJ filed a motion to voluntarily dismiss (Download USA v Lindsey, etc., et al.___ecf.ca9.uscourts) in the U.S. Court of Appeals for the Ninth Circuit the FCPA case involving Lindsey Manufacturing Co., its CEO and CFO. The government had filed an appeal on December 1, 2011 following an Order of District Judge Howard Martz, who ruled that the Lindsey prosecution had been tainted by a pervasive pattern of flagrant government misconduct. Contributing Blogger Solomon Wisenberg posted here excerpts from this initial Order. By today's dismissal, the government is finally dropping this prosecution and it also ends the efforts to get the company to forfeit $24 million.
Attorney Jan Handzlik of Venable LLP stated, "This is a great day for the fair administration of justice. We couldn't be happier for Keith, Steve and the 110 loyal, hard-working employees of Lindsey Manufacturing Company. This dismissal further vindicates Dr. Lindsey's belief in our system of justice and in his innocence. Keith and Steve were steadfast in their belief that the government had not played fair and that the truth would come out."
Congratulations also go to Janet Levine (CrowellMoring), who also represented an accused in this case. Both Jan Handzlik and Janet Levine were the inaugural recipients of the White Collar Criminal Defense Award given at the NACDL White Collar Criminal Defense College at Stetson (see here).
May 25, 2012 in FCPA, News, Prosecutions, Prosecutors, Settlement | Permalink | Comments (0) | TrackBack (0)
Monday, February 6, 2012
Will the SEC's Requiring Settling Parties to Admit Wrongdoing Increase the Number of Trials?
In criticizing Judge Jed Rakoff's refusal to rubber-stamp its proposed settlement agreement with Citibank, the SEC has claimed that if it has to require companies to admit wrongdoing as a condition of settlement, there will be far fewer settlements and more trials. As a result, says the SEC, its resources would be so strained so that it would bring considerably fewer enforcement actions. The New York Times on Friday, February 3, cited unnamed "legal experts" as endorsing that view, saying that companies will be less likely to admit facts which could be used against them in shareholder lawsuits. See here.
There is a certain logic to that argument. Companies that have committed misconduct now do choose to pay the SEC rather than admit or reveal their wrongdoing to the public (and to class action lawyers). Companies that believe they have not committed misconduct sometimes decide it is less costly to pay the SEC than fight it. Few SEC cases go to trial. This settlement model works well for the SEC, which gets a check with less sweat, and for most defendants, which conceal their misconduct and/or save money.
But is that in the public good? More trials should lead to more public knowledge, promote more curative government action, and add an additional deterrent to corporate misconduct. Additionally, it should force the SEC to be more scrupulous in bringing marginal or questionable cases since they would more often be required to justify the charges in court.
I also question whether these "experts" are right in their expectation that there would be far more trials. I am not so sure that many corporate executives want public airings of the factual details of the company's wrongdoing. "Experts" predicted that the enactment of the Sentencing Guidelines would overwhelm the federal courts with trials since many more criminal defendants would exercise their right to trial because of the perceived (and actual) harshness and rigidity of the Guidelines upon a conviction. That simply has not happened. The percentage of cases settled by plea has remained relatively constant, if not increased, since the enactment of the Guidelines.
February 6, 2012 in Civil Enforcement, Fraud, SEC, Settlement | Permalink | Comments (0) | TrackBack (0)
Sunday, January 15, 2012
Federal Organizational Plea Agreements Website
Professors Brandon Garrett and Jon Ashley have an incredible new website that is a library of 1495 federal corporate plea agreements in which an organization was convicted. They intend to update this collection of agreements. The site has the agreements by date, U.S. Attorney Office district and name. The site also provides links to other helpful data concerning corporate convictions. This is an amazing website that provides a wealth of information.
January 15, 2012 in Deferred Prosecution Agreements, Prosecutions, Scholarship, Settlement | Permalink | Comments (0) | TrackBack (0)
Monday, January 9, 2012
SEC Ends Orwellian Policy
Stop the presses. Hold the back page. Saturday's New York Times reports here on the SEC's decision to end its "does not admit or deny" policy, but only for SEC civil defendants who are also pleading guilty to criminal charges or admitting wrongdoing as part of a deferred criminal adjudication. In other words, the policy is similar in its immediate effect to Lincoln's Emancipation Proclamation, which (for the most part) merely freed slaves in rebel held territory. Why be so boastful about ending a policy that never made much sense in the first place, because it allowed individuals and entities to neither admit or deny civil allegations when they had already pled guilty to similar, and more serious, criminal charges? To hear the SEC tell it, the decision to abandon the old policy is NOT in response to Judge Rakoff's order rejecting the proposed Citigroup consent decree, as the new policy would not apply in the Citigroup case and the decision has been under consideration since Spring 2011. The decision itself may not be in response to Judge Rakoff, but it is hard to believe that its timing is not. Although Judge Rakoff should be commended for his thoughtful opinion, I am not without sympathy for Khuzami. He and the SEC are the only actors at the governmental level who appear to be systematically investigating and bringing actions against the elite financial entities largely responsible for our economic meltdown. (DOJ is on holiday.) Still, the SEC spends too much time on its public relations.
January 9, 2012 in SEC, Securities, Settlement | Permalink | Comments (0) | TrackBack (0)
Thursday, October 13, 2011
Charges Dropped In Mortgage Fraud Case Following Hung Jury
Prosecutors have decided to drop the charges against an individual who had been arrested last year as part of "Operation Copout," a mortgage fraud investigation. The individual had initially been charged with 34 criminal charges, including multiple counts of mail and wire fraud. The case had been tried in a five month jury trial that had ended in a hung jury.
Attorney Michael Pasano, a white collar crime attorney at the law firm of Carlton Fields, who represented the client stated, "The strain on the client and his family was enormous and it is with great relief that we heard today that the Government agreed not to reprosecute and dismissed the case as to Mr. Stoll. It was a hard fought case, and I applaud the prosecutors for doing the right thing,”
It is difficult for prosecutors to be "ministers of justice" with the public outcry for retribution on mortgage fraud cases. It's nice to see that there are prosecutors out there who can do the right thing when the situation warrants it.
October 13, 2011 in Fraud, Prosecutors, Settlement | Permalink | Comments (1) | TrackBack (0)
Wednesday, October 5, 2011
DOJ White Collar Prosecutions
Is it my imagination, or has the DOJ been picking up its numbers in prosecutions and resolutions in white collar cases? Or is it just an increase in DOJ Press Releases? -
DOJ Press Release, Australian Man Pleads Guilty to Accepting Payment as Reward for Steering $15 Million in U.S.-Funded Contracts in Afghanistan
DOJ Press Release, Former EPA-CID Special Agent in Texas Pleads Guilty to Perjury and Obstruction of Justice
DOJ Press Release, SAIC and Others to Pay U.S. More Than $22.6 Million to Resolve False Claims Allegations
DOJ Press Release, Houston-based Principals of A&O Entities Sentenced in Virginia for $100 Million Fraud Scheme
DOJ Press Release, Trident Seafoods Corp. to Pay $2.5 Million to Resolve Clean Water Act Violations and Spend More Than $30 Million to Upgrade Processing Plants
DOJ Press Release, Superseding Indictment Filed in $670 Million Fraud Scheme
DOJ Press Release, Johnson & Johnson Subsidiary Scios Pleads Guilty to Misbranding Heart Failure Drug Natrecor - California-Based Company Will Pay $85 Million Criminal Fine
October 5, 2011 in Prosecutions, Settlement | Permalink | Comments (0) | TrackBack (0)