White Collar Law Developments Archives

False Hope for False Claims Act Defendants? Government Dismissals of Qui Tam Cases May Increase

Nicholas C. Harbist and Lauren E. O’Donnell

On January 10, 2018, the Department of Justice (“DOJ”) Civil Fraud Section Director, Michael Granston, sent an internal memorandum (the “Memorandum”) to attorneys responsible for civil False Claims Act (“FCA”) enforcement. The Memorandum provides guidance to DOJ attorneys considering whether to dismiss FCA qui tam cases. The Memorandum begins by noting that, while the number of FCA qui tam cases has increased substantially over the years, the rate of government intervention has remained the same. The Memorandum advises DOJ attorneys to consider seeking dismissal as they evaluate whether to intervene. Continue reading “False Hope for False Claims Act Defendants? Government Dismissals of Qui Tam Cases May Increase”

Financial Institutions’ Hiring Practices under the Microscope: The Importance of Anti-Corruption Programs

Shawn M. Wright, Mayling C. Blanco, and Richard L.A. Wolf

On February 14, 2018, another major financial institution disclosed that it is under investigation for possible violations of the Foreign Corrupt Practices Act (“FCPA”). This disclosure comes at a time when the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) continue to scrutinize the hiring practices of financial institutions in and with respect to their Asian markets.

Investigations of Financial Institutions Operating in Asia

In its earnings statement, the financial institution announced that the DOJ and the SEC are investigating its “hiring practices in the Asia Pacific region and, in particular, whether [it] hired referrals from government agencies and other state-owned entities in exchange for investment banking business and/or regulatory approvals” in violation of the FCPA.¹ In November 2016, a similar financial institution and its Hong Kong-based subsidiary agreed to pay the SEC, the DOJ, and the Federal Reserve Board $264 million to settle charges that it violated the FCPA by hiring unqualified employees referred by government officials, particularly those with connections to upcoming transactions.² Other financial institutions have been investigated for similar practices in the region.³ Continue reading “Financial Institutions’ Hiring Practices under the Microscope: The Importance of Anti-Corruption Programs”

The Sessions Memo: A Significant Reversal of Policy?

Nicholas C. Harbist and Melissa Fundora Murphy

In May 2017, Attorney General Jeff Sessions issued a memorandum to U.S. attorneys, ordering all federal prosecutors to “charge and pursue the most serious, readily provable offense” as a “core principle” of charging and sentencing policy. The memorandum defines the most serious offenses as “those that carry the most substantial guidelines sentence, including mandatory minimum sentences.”

This policy represents a significant reversal of the comparatively lenient stance established by Eric Holder, one of Sessions’ predecessors under President Barack Obama, who had ordered federal prosecutors in 2013 to refrain from charging defendants with certain offenses that could see long mandatory minimum sentences.

Prosecutors will now be expected to recommend a sentence within federal guidelines when before a federal judge, and must disclose to the sentencing court all of the facts that impact the sentencing guidelines or mandatory minimum sentences. Recommendations outside of the guidelines will require a documented explanation, as well as approval from a U.S. attorney, assistant attorney general, or a designated supervisor. Deviations from the “core principle” of pursing the most serious offenses will only be granted if “justified by unusual facts.”

Attorney General Sessions made it clear that he wants this shift in policy to be immediate, noting that “[a]ny inconsistent previous policy of the Department of Justice relating to these matters is rescinded, effective today.”

This article was originally published in the July 2017 edition of White Collar Watch. Click here to read the article online.

The Perils of Dealing with Whistleblowers under the False Claims Act

Blank Rome LLP Partner Nicholas C. Harbist recently spoke on “Lyin’, Cheatin’, Stealin’: The Perils of Dealing with Whistleblowers under the False Claims Act” at Seton Hall Law’s U.S. Healthcare Compliance Certification Program, on June 12, 2017, at Seton Hall Law School. Continue reading “The Perils of Dealing with Whistleblowers under the False Claims Act”

Reimbursements for Costs Incurred in Internal Investigations

Nicholas C. Harbist

Internal investigations have become commonplace in corporate America. From Fox’s Bill O’Reilly to the General Motors investigation, companies often hire law firms as a signal to shareholders that they are taking a crisis seriously, as well as a signal to the government that they are able to clean house. Apart from these high profile scandals, internal investigations are routinely done in order to ferret out wrongdoing within companies which have been victimized by employees. In cases where companies are victims, they often use internal investigations to root out the mechanics of the fraud as well as the responsible employees in order to turn them over to the authorities. In these instances, the provisions of the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663A(a)(2) require a court to order restitution for a victim’s “actual loss directly and proximately caused by the defendant’s offense of conviction.” A recent case from the Fifth Circuit demonstrates the reach of the MVRA.

Continue reading “Reimbursements for Costs Incurred in Internal Investigations”

New Jersey Attorney General Announces Two New Incentives Programs to Generate Leads in Public Corruption Cases

Carlos F. Ortiz, Mayling C. Blanco, Bridget M. Briggs, and Richard Wolf

On May 9, 2017, New Jersey Attorney General Christopher S. Porrino announced two new, short-term initiatives to combat public corruption: the Anti-Corruption Whistleblower Program and the Anti-Corruption Reward Program. The Attorney General’s Office expects both programs will help generate initial leads to uncover and prosecute public corruption crimes, as these types of cases are characteristically difficult to expose because they are often document intensive and involve sophisticated actors. Both programs are offered for only a limited time—until August 1, 2017. The Attorney General’s Office indicates that the temporary availability is intended to generate quick results; however, these programs will also allow the Attorney General’s Office to evaluate the efficacy of such programs to determine whether to offer similar programs in the future.

Continue reading “New Jersey Attorney General Announces Two New Incentives Programs to Generate Leads in Public Corruption Cases”

The Global Anti-Corruption Corner: A Primer to the Foreign Corrupt Practices Act

Shawn M. Wright, Carlos F. Ortiz, Mayling C. Blanco, Ariel S. Glasner

Any company doing business abroad is subject to the long reach of the Foreign Corrupt Practices Act (“FCPA”). Small or privately-held companies, just like large or public companies, are subject to the criminal specter of the FCPA. The operative inquiry is whether the company is operating and/or transacting any type of business abroad with the government, government owned entities, or involving foreign officials—either directly, through joint ventures, or indirectly, through agents. A foreign official also includes employees of entities owned by the government. Continue reading “The Global Anti-Corruption Corner: A Primer to the Foreign Corrupt Practices Act”

Lessons from FinCEN’s Latest Gaming Enforcement Action

Eric G. Fikry and Lauren E. O’Donnell

On Oct. 3, 2016, the Financial Crimes Enforcement Network assessed a civil monetary penalty of $12 million against CG Technology d/b/a Cantor Gaming, pursuant to the Bank Secrecy Act and its regulations, with which casinos are required to comply. In addition to the fine, Cantor is required to undertake remedial compliance measures and pay $16.5 million to the U.S. Department of Justice to settle a parallel investigation (a portion of the FinCEN fine was offset by this payment).

Cantor operates race and sports books in Nevada, offers mobile gaming within Nevada, and provides gaming technology to casino customers globally. It is licensed to operate at prominent Nevada establishments, such as the Hard Rock, Tropicana, Venetian and Palms. Its books are associated with high dollar value wagering and are popular with professional gamblers. Continue reading “Lessons from FinCEN’s Latest Gaming Enforcement Action”