Last week, the Department of Justice (“DOJ”) announced it declined to prosecute Lifecore, a U.S. biomedical company, after Lifecore voluntarily disclosed that a company it acquired paid bribes to Mexican officials and falsified documents both before and after Lifecore’s acquisition.[1]
In Securities & Exchange Commission v. Govil, No. 22-1658, 2023 WL 7137291 (2d Cir. Oct. 31, 2023), the United States Court of Appeals for the Second Circuit dealt a setback to the enforcement agenda of the Securities and Exchange Commission (“SEC”) by limiting its ability to seek disgorgement under 15 U.S.C. § 78u(d)(5) and (7) to situations in which the regulator can demonstrate investors have suffered pecuniary harm.
Continue Reading Second Circuit Reins in SEC Disgorgement Powers
An official from the Department of Justice (“DOJ”) recently announced the DOJ’s plans to “substantially” add to its current roster of 75 prosecutors specializing in healthcare fraud. On November 7, John “Fritz” Scanlon, assistant chief of the DOJ’s criminal division, fraud section, who spoke at a Healthcare Compliance Association conference in Washington, D.C., stated that the 75 prosecutors are distributed among seven strike forces across the U.S. The DOJ uses nine interagency strike force teams to root out alleged fraudulent activities, particularly focusing on Federal healthcare program fraud and abuse. These teams are spread throughout the country, focusing on regions in the U.S. like Florida and Texas, but several strike force teams also specialize in certain subject matters.
Continue Reading Increased Enforcement in Healthcare? DOJ to Add More Prosecutors
After conducting a thorough and privileged internal investigation, it becomes evident that your Company has overcharged the government over $50 million, and that the fraud was directed by a high-level manager. What do you do next? After the recent HealthSun declination, you should self-disclose under the DOJ’s Voluntary Self-Disclosure policy, in conjunction with other acts of remediation!
Continue Reading Should my Company Self-Disclose Major Fraud? The Answer is Now Clear
In a huge victory for white collar defendants and lawyers alike, the US Sentencing Commission (the “Commission”) recently announced several key amendments to existing federal sentencing guidelines will be effective November 1, 2023. Two of the most significant amendments relate to (1) zero-point offenders and (2) withholding points for acceptance of responsibility.
The Department of Justice (DOJ) announced last week the advent of a new safe harbor for companies that discover wrongdoing by the acquired business in the course of an M&A transaction. Buyers hoping to take advantage of this avenue for leniency would be well-advised to conduct thorough diligence and act quickly to report any wrongdoing they uncover, as the potential upsides for those who do so may be considerable in light of the DOJ’s new policy.
Continue Reading DOJ Announces Mergers & Acquisitions Safe Harbor Policy
On September 29, 2023, Albemarle Corporation (“Albemarle”), a global chemical manufacturer, reached an agreement with the U.S. Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) to resolve investigations into violations of the U.S. Foreign Corrupt Practices Act (“FCPA”). This settlement is the culmination of a five-year investigation stemming from bribe payments made by Albemarle’s third-party sales representatives and employees of a subsidiary to government officials in Vietnam, Indonesia, and India to obtain government contracts in the chemical catalyst business between 2009 and 2017.
Continue Reading Albermarle Agrees to Pay $218 Million to Settle Foreign Bribery Probe
A few weeks ago, we discussed two recent cyber-related False Claims Act (FCA) cases. One of those cases is a qui tam lawsuit against Penn State and, as of the date of our article, we were waiting to see if DOJ would opt to intervene in the case on behalf of the United States.
Continue Reading Update – DOJ Declines to Intervene in Penn State Cyber-Related FCA Case
At the Global Investigations Review Annual Meeting in New York on September 21, 2023, Principal Associate Deputy Attorney General Marshall Miller (“Miller”) delivered remarks that provide an invaluable glimpse into the Department of Justice’s (“DOJ’s”) current and forthcoming priorities and initiatives on corporate criminal enforcement. Miller’s remarks shed light on various key areas of DOJ’s enforcement focus, including DOJ’s continued encouragement of voluntary self-disclosure and increasing attention towards safeguarding national security interests. Miller also emphasized DOJ’s commitment to consistency, predictability and transparency in its corporate enforcement work with an aim that such commitment will help companies better predict outcomes for certain criminal violations and implement robust compliance programs to prevent criminal prosecution.
Continue Reading A Look into DOJ’s Current Corporate Criminal Enforcement Landscape
On August 28, 2023, the Securities and Exchange Commission (“SEC”) instituted cease-and-desist proceedings under Section 8A of the Securities Act against Impact Theory, a Los Angeles media and entertainment company, alleging that the company’s sale of non-fungible tokens (“NFTs”) violated the registration requirements under the Securities Act of 1933 (the “Act”).
In recent weeks, there has been an uptick in news of cyber-related False Claims Act (“FCA”) activity. For example, on September 1, 2023, the court unsealed a qui tam lawsuit against Penn State University relating to allegations of non-compliance with Department of Defense (“DoD”) cybersecurity obligations. Separately, on September 5, 2023, the Department of Justice (“DOJ”) announced a multi-million dollar FCA settlement with Verizon under its Civil-Cyber Fraud Initiative (which focuses on leveraging the FCA to pursue cybersecurity related fraud by government contractors and grant recipients, as we previously discussed here). These and other cases suggest—as many had been speculating—that the number of enforcement actions and publicity associated with previously-sealed qui tam cases will continue to increase. They also signal that contractors and universities should brace for additional scrutiny and potential whistleblower claims in this area.