Category: Criminal Law

Diagnostic Laboratories Settles for $17.5 Million After Healthcare Whistleblowers’ Allegations of Medicare Fraud

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The Department of Justice announced yesterday that Diagnostic Laboratories and Radiology, the West Coast’s largest supplier of laboratory and X-ray services to nursing homes, will pay $17.5 million to settle whistleblower allegations that the California-based company violated the False Claims Act by giving kickbacks for referral of mobile lab and radiology services, which were subsequently billed to Medicare and Medi-Cal (California’s Medicaid program).  Diagnostic Labs allegedly took advantage of Medicare’s and Medi-Cal’s reimbursement systems by billing them at standard rates while secretly giving discounted fees to the participating nursing homes. According to the lawsuit, those fees were as much as 80 percent below the lab’s normal rates.

For inpatients, Medicare pays a fixed rate based on the patient’s diagnosis, regardless of specific services provided.  For outpatients, Medicare pays for each service separately.  Diagnostic Labs’ scheme supposedly enabled the nursing homes to maximize their profits for providing inpatient services by decreasing the cost of them.  It also allegedly allowed Diagnostic Labs to obtain a steady stream of lucrative, outpatient referrals that it could directly bill to Medicare and Medi-Cal.  This provision of inducements, including giving discounted rates to generate referrals, is prohibited by both federal and state law. By law, the discounts should have been passed along to the government programs.

The Medicare whistleblowers in this case were two former Diagnostic Lab employees, Jon Pasqua and Jeff Hauser, who said they were fired after reporting the secret discounts and kickbacks to the authorities. Hauser and Pasqua worked in the company’s sales office and said they tried to report the questionable discount practices to supervisors first, but were ignored. They then provided information to state and federal officials, and were subsequently fired from their jobs shortly before filing the healthcare fraud case in February 2010, according to their lawyers.

This settlement will resolve Hauser and Pasqua’s lawsuit, which was filed under the qui tam, or whistleblower, provisions of the federal and state False Claims Act. This act allows private citizens with knowledge of fraud to bring qui tam lawsuits on behalf of the US government. The individual filing the lawsuit is known as the relator, or whistleblower.  Healthcare whistleblowers, such as Hauser and Pasqua, serve an important role in exposing and eliminating healthcare fraud.

While it is true that whistleblowers take on a personal risk in these cases, it is still worthwhile for them to come forward with their information. Because qui tam whistleblowers help to eliminate government fraud, they receive a significant proportion of the lawsuit’s settlement for their efforts.

Together, Pasqua and Hauser will receive a total $3,755,500 as their share of the federal government’s recovery.

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The Foreign Corrupt Practices Act (FCPA) in the News: Big Scoops, Real Fallout

Sheppard Mullin 2012

In early August, the New York Times reported that the U.S. Securities and Exchange Commission (SEC) is investigating JPMorgan Chase related to alleged violations of the Foreign Corrupt Practices Act (FCPA) in China.  According to the article, the press had not previously reported on the investigation, and the Times knowledge of it was based on a “confidential United States government document.”  The article generated a number of similar news reports.

This is not the first time the media has hopped on the FCPA bandwagon following a juicy story about alleged bribery.  For example, in 2012 and again this year, the New Yorker ran feature articles on alleged corruption in the Macau gambling industry and the Guinean mining industry.  And reports by the Wall Street Journal and other sources, both inside and outside the United States, brought into focus the alleged bribery payments arising from the News Corp phone hacking scandal in the United Kingdom.

The increase in feature reporting on the FCPA makes some sense: stories typically involve racy factual underpinnings, exotic locations, multi-national companies and crooked governments.   Nonetheless, the FCPA may have been underreported in the mainstream press, even as it was being vigorously enforced by the SEC and Department of Justice.

As the press catches up to enforcement, it appears that the stories themselves may in turn have ramifications for the enforcement environment.  One result of more prominent news coverage may be increased pressure on the U.S. government to prosecute alleged FCPA violations.  While it is possible that a news story could trigger a new investigation, coverage of an ongoing investigation would seem to increase scrutiny on it, thereby inciting the government to investigate more thoroughly than might otherwise be the case, or to push harder against potential procedural hurdles like jurisdiction or the statute of limitations.  Given the high cost that has come to be associated with defending against enforcement actions, this type of pressure could lead to major expenditures by companies.  Indeed, some FCPA investigations have reportedly led to $100 million or more in attorneys’ fees.

The FCPA’s heightened visibility in the mainstream press thus brings into relief an issue with which companies need to be particularly aware: bad press.  In fact, the more negative press that accumulates with respect to a particular company and/or allegation, the worse the ramifications for the company.  Investors may start to abandon the company, management changes or other dramatic action may be taken to demonstrate the company’s commitment to addressing perceived problems, and the company may ultimately be more willing to settle the matter on the government’s terms to make the issue go away.

Companies can help protect against violations – and the adverse PR that may come with violations or even allegations of violations – by implementing comprehensive anti-corruption programs.  In addition, companies must foster a “tone from the top” that stresses compliance with anti-corruption laws and open communication about suspected violations.  Potential whistleblowers must feel secure and appreciated for coming forward to report allegations internally, so they are less inclined to report the allegations externally.  In other words, companies that do not want to air their dirty laundry had better keep a clean house.

Doing Business In Latin America: Does Your Local Supplier Have Best Practices In Place So That Your Company Can Avoid Liability Under The Foreign Corrupt Practices Act (FCPA)?

Sheppard Mullin 2012

Imagine yourself the CEO of a successful multinational company. In the past few years, you have overseen ACME’s expansion into Latin America – a market whose demographic profile holds the promise of mouthwatering profits for your company, particularly with the upcoming holiday season. As they say, la vida es buena!

In planning for the Latin America expansion, you knew about the rules and prohibitions of the Foreign Corrupt Practices Act (“FCPA”) and implemented measures to ensure your employees do not run afoul of the law. However, you may not have known that the company can incur FCPA liability for payments made by third parties, such as such as suppliers, logistics providers, and sales agents, with whom your company works. In fact, a company can be held liable if it knows or should know that a third-party intends to make a corrupt payment on behalf of or for the benefit of the company. Because a company can be responsible for conduct of which it should have known, a conscious disregard or deliberate ignorance of the facts will not establish a defense.

To protect your company from third party liability, it is essential to perform due diligence on potential business partners. This is not to say that you cannot consider the recommendations of local employees in selecting business partners. Relying on those recommendations alone, however, could expose the company to FCPA liability if that company does not conduct itself with the same level of integrity that you do. The amount of diligence necessary varies from one potential business partner to the next and can include an anti-corruption questionnaire, document review, reference interviews, or local media review, among other things.

That’s all well and good, but what about companies with whom you are already doing business and whom you now realize you may not have adequately investigated? Asking to review those companies’ FCPA compliance policies is a good first step. If you determine that a policy is inadequate, you may ask the company to provide FCPA training to its employees. You should also carefully monitor the company’s contract performance to ensure compliance. In particular, you should consider evidence of unusual payment patterns, extraordinary “commissions,” or a lack of transparency. The key question is: how is the company spending your money?

When in doubt, experienced legal counsel can assist you in navigating these and other FCPA issues. For example, Sheppard Mullin offers Spanish language training on the provisions of the FCPA and advice for successfully implementing internal safeguards and controls to protect against FCPA liability.

With a solid FCPA plan in place, your thoughts wander back to the upcoming holiday season and your company’s projected profits for the new Latin America division and you smile to yourself. La vida es buena.

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In Largest Known Data Breach Conspiracy, Five Suspects Indicted in New Jersey

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On July 25, 2013, the United States Attorney for the District of New Jersey announced indictments against five men alleging their participation in a global hacking and data breach scheme in which more than 160 million American and foreign credit card numbers were stolen from corporate victims, including retailers, financial institutions, payment processing firms, an airline, and NASDAQ.  The scheme is the largest of its kind ever prosecuted in the United States.

The Second Superseding Indictment alleges the defendants (four Russian nationals and one Ukrainian national) and other uncharged co-conspirators targeted corporate victims’ networks using “SQL [Structured Query Language] Injection Attacks,” meaning the hackers identified vulnerabilities in their victims’ databases and exploited those weaknesses to penetrate the networks.  Once the defendants had access to the networks, they used malware to create “back doors” to allow them continued access, and used their access to install “sniffers,” programs designed to identify, gather and steal data.

Once the defendants obtained the credit card information, they allegedly sold it to resellers all over the world, who in turn sold the information through online forums or directly to individuals and organizations.  The ultimate purchasers encoded the stolen information on blank cards and used those cards to make purchases or withdraw cash from ATMs.

The defendants allegedly used a number of methods to evade detection.  They used web-hosting services provided by one of the defendants, who unlike traditional internet service providers, did not keep records of users’ activities or share information with law enforcement.  The defendants also communicated through private and encrypted communication channels and tried to meet in person.  They also changed the settings on the victims’ networks in order to disable security mechanisms and used malware to circumvent security software.

Four of the defendants are charged with unauthorized access to computers (18 U.S.C. §§ 1030(a)(2)(C) and (c)(2)(B)(i)) and wire fraud (18 U.S.C. § 1343).  All of the defendants are charged with conspiracy to commit these crimes.

Two of the defendants have been arrested, with one in federal custody and the other awaiting an extradition hearing.  The other three defendants, two of whom have been charged in connection with hacking schemes, remain at large.

This conspiracy is noteworthy for its massive scale, and for the patience the hackers demonstrated in siphoning data from the networks.  The U.S. Attorney “conservatively” estimates more than 160 million credit card numbers were compromised in the attacks, and alleges that the hackers had access to many victims’ computer networks for more than a year.  Many prominent retailers were targets, including convenience store giant 7-Eleven, Inc.; multi-national French retailer Carrefour, S.A.; American department store chain JCPenney, Inc.; New England supermarket chain Hannaford Brothers Co.; and apparel retailer Wet Seal, Inc.  Payment processors were also heavily targeted, including one of the world’s largest credit card processing companies, Heartland Payment Systems, Inc., as well as European payment processor Commidea Ltd.; Euronet, Global Payment Systems and Ingenicard US, Inc. The hackers also targeted financial institutions such as Dexia Bank of Belgium, “Bank A” of the United Arab Emirates; the NASDAQ electronic securities exchange; and JetBlue Airways.  Damages are difficult to estimate with precision, but they total several hundred million dollars at least.  Just three of the corporate victims suffered losses totaling more than $300 million.

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Observations on a Milestone Bribery Investigation and Increased Scrutiny of Foreign Companies in China

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The Chinese government’s recent crackdown on alleged bribery and corruption of local officials by multinational pharmaceutical companies could signal a broad trend toward elevated scrutiny of all foreign corporations operating in the country—and provides an even greater incentive for companies to identify and implement anti-corruption practices focused on China’s unique business and legal culture.

Elevated Compliance Risks, Elevated Compliance Duties

The international pharmaceutical industry is the latest commercial sector to face increased scrutiny in China.  A major investigation of a leading pharmaceutical company has allegedly uncovered evidence of what Chinese authorities have characterized as “widespread, prolonged corruption” and has generated considerable publicity.  The investigation marks the latest in a recent surge of aggressive inquiries by the Chinese government into foreign companies, targeted at alleged violations ranging from bribery to price-fixing.

This new trend is a worrying development for international companies operating in China, and a signal that the sporadic crackdowns may finally be coalescing into a new reality of permanently elevated scrutiny by the central Chinese government.  This “new normal” will increase the need for proactive policies, procedures and diligence by international companies, which have traditionally faced significant compliance pressures and risks, mainly from non-Chinese laws such as the United States’ Foreign Corrupt Practices Act and the United Kingdom’s Bribery Act.

Background

In early July 2013, the government of the People’s Republic of China (PRC) announced a milestone investigation into GlaxoSmithKline Plc. (GSK) that has allegedly uncovered bribery involving millions of U.S. dollars that were funneled through more than 700 travel agents and other third parties over the last six years.  More than 20 GSK employees, including high-level executives, have been detained by the police, and international travel restrictions have been imposed on at least one foreign executive.  Notably, the government has indicated that the investigation uncovered signs that other pharmaceutical companies may have illegally given incentives to doctors and other hospital staff, or bribes to government officials and medical associations.

The exact trigger for the GSK inquiry is currently unknown, but there has been wide speculation about a variety of motives for the timing and targets of the case including a desire to reduce healthcare costs.  Regardless of the cause of the investigation, the case is expected to spawn a significant, industry-wide investigation and crackdown, in which the PRC government will be targeting foreign pharmaceutical companies with official “requests,” unannounced visits and dawn raids.  Indeed, at least one other company has acknowledged being visited recently by government investigators in connection with this investigation.

Our Observations

Concealed From the Government, Hidden From the Home Office

GSK’s response to the investigation has been clear and public.  The company has stated that its global headquarters was not aware of the bribery in China, and has reaffirmed its zero tolerance policy for compliance violations.

Certainly, the PRC—as evidenced by the statements of Gao Feng, a top official in China’s Ministry of Public Security—seems to believe “bribery is part of the strategy” of pharmaceutical companies and has expanded its investigations to other multinationals in China.  This raises concern that a culture of compliance may not be as strongly embedded in companies as one would hope, or, at minimum, such a culture is not perceived as strongly embedded.  The China operations of multinationals often experience significant turnover and have increasingly shifted to a local-hire model.  The shift to local hires is due to a variety of factors, including new social security requirements, food safety concerns, increasing pollution and a rise in perceived hostility towards foreigners.  As key positions change hands for whatever reason, multinational companies can expect that local teams, in their efforts to impress corporate leaders, may be guided more by sales results than compliance with regulations, supervisory controls and policies dictated by global headquarters.

Recommendations

In the wake of the Chinese government’s launch of a new round of aggressive investigations, multinational companies should begin scrutinizing their operations more carefully to ensure that their policies are well understood, and look for signs of potential bribery being carried out by their employees.  To do so, they should truly localize their global compliance policy and program to specifically address their local operations in China, including the development and implementation of the following:

  1. Thorough and complete Foreign Corrupt Practices Act (FCPA) risk-based due diligence for mergers with, and acquisitions of, Chinese local companies
  2. Thorough due diligence review of third-party business partners, including but not limited to agents, distributors, consultants and travel agents
  3. A robust compliance program covering all critical functions, including sales and marketing personnel as well as compliance, legal, finance and human resources staff
  4. A well-run ethics helpline with active follow-up to all complaints and queries
  5. Ongoing compliance training for local management as well as employees
  6. Periodic compliance audits and immediate remediation as necessary

To fully benefit from these compliance efforts, multinationals should consider engaging professionals with the following skills and strengths:

  1. Familiar not only with FCPA requirements but also PRC anti-corruption laws and regulations
  2. Possess a deep understanding of Chinese business culture, along with a command of the unique nuances of compliance challenges in China, and able to to identify and formulate effective responses to new and innovative forms of bribery and corruption
  3. Specialized in dealing with Chinese government investigations appropriately and licensed in China

The insights of such professionals would be helpful in minimizing risk and potential consequences, including reputational damage and executives’ liability.

Ultimately, as the current anti-corruption campaign illustrates, global compliance measures superimposed upon China’s unique business environment are not enough.  A truly effective compliance program for China needs to be one that identifies and addresses the issues arising out of local business and legal culture.

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Total Settles Foreign Corrupt Practices Act (FCPA) Bribery Claims for $398M

Katten Muchin

On May 29, French oil and gas company, Total SA, agreed to pay $398 million to settle US civil and criminal allegations that it paid bribes to win oil and gas contracts in Iran in violation of the Foreign Corrupt Practices Act (FCPA). Notably, the criminal penalty is the fourth-largest under the FCPA and the case marks the first coordinated action by French and US law enforcement agencies in a major foreign bribery case.

In a scheme that allegedly began nearly 20 years ago in 1995 and continued until 2004, Total allegedly paid approximately $60 million in bribes to induce an intermediary, designated by an Iranian government official, to help the company win contracts with National Iranian Oil Co. The contracts gave Total the right to develop three oil and gas fields and included a portion of South Parys, the world’s largest gas field. Total allegedly characterized the bribes as “business development expenses” in its books and records.

The DOJ filed a three-count criminal investigation charging Total with FCPA conspiracy and internal controls and books-and-records violations. Total agreed to resolve the FCPA charges by paying a $245.2 million criminal penalty, which was at the bottom of the $235.2 to $470.4 million range of fines available under the US Sentencing Guidelines. The company also settled a related civil case with the US Securities and Exchange Commission for $153 million in disgorgement of its profits in the scheme. The criminal case will be dismissed after three years if Total complies with the deferred prosecution agreement, which requires Total to (i) retain a corporate compliance monitor, who will conduct annual reviews; (ii) cooperate with authorities and (iii) implement an enhanced compliance program designed to prevent and detect FCPA violations. The compliance program requires, among other things, that Total’s Board of Directors and senior management “provide, strong, explicit and visible support and commitment” to the company’s anti-corruption policy and that they appoint a senior executive to oversee the program and report directly to an independent authority, such as internal audit, the Board or a committee thereof. Total’s problems, however, are not over. French prosecutors have recommended that the company and its chief executive officer be brought to trial on violations of French law, including France’s foreign bribery law.

U.S. v. Total SA, 13-cr-239 (E.D. VA. May 29, 2013).

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2nd Annual White Collar Crime Institute – May 20, 2013

The National Law Review is pleased to bring you information about the upcoming 2nd Annual White Collar Crime Institute:

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When:

Monday, May 20, 2013 from 9 a.m. to 5 p.m

Where:

The New York City Bar, located at 42 West 44th Street in New York City, New York

The City Bar Center for CLE at the New York City Bar will present the 2nd Annual White Collar Crime Institute, a full day program co-sponsored by the White Collar Crime committee  with a networking reception to follow.

Th relatively new committee on White Collar Crime, formerly headed by New York City Bar’s former President Samuel Seymour is currently  headed by John F. Savarese of Wachtell, Lipton, Rosen & Katz. The members of the committee are well known in the field and come from law firms with substantial white collar crime practices as well as from government agencies. The committee has been quite active on various fronts, including putting together this groundbreaking CLE program.

Do not miss this opportunity to hear from a talented pool of panelists. Scheduled to participate from the government are George Canellos, SEC Acting Director of Enforcement, David Meister, CFTC Director of Enforcement, Marc Berger, Chief of the Securities Fraud Unit of the U.S. Attorney’s Office for the S.D.N.Y., and Richard Zabel, Deputy U.S. Attorney for the Southern District. The Honorable Raymond Lohier of the Second Circuit Court of Appeals and the Honorable John Gleeson of the Eastern District of New York are scheduled to participate. Panelists also include distinguished academics and top practitioners in the field. The May 20 program also features two prominent keynote speakers, Loretta Lynch, United States Attorney for the Eastern District of New York and Cyrus Vance, Manhattan District Attorney.

Plenary sessions will focus on:

  • the impact of media coverage on prosecutorial decision-making; and
  • the importance of effective pre-indictment advocacy in white collar cases

Break-out sessions will focus on:

  • market abuse;
  • emerging trends and challenges in criminal discovery;
  • navigating conflicts in corporate and executive representation; and
  • cyber crime

Register now!

SEC Announces First Non-Prosecution Agreement Involving Foreign Corrupt Practices Act (FCPA) Violations

DrinkerBiddle

On April 22, 2013, the Securities and Exchange Commission (SEC) announced it had entered into a Non-Prosecution Agreement (NPA) with Ralph Lauren Corporation under which the company agreed to disgorge approximately $700,000 in connection with certain unlawful payments made by a foreign subsidiary to government officials in Argentina from 2005 to 2009.  This is the first time the SEC has used a NPA for violations of the Foreign Corrupt Practices Act (FCPA).

According to the NPA, Ralph Lauren Corporation’s Argentine subsidiary paid “bribes,” i.e., payments in violation of the FCPA, to government and customs officials to improperly secure the importation of Ralph Lauren Corporation’s products in Argentina.  The purpose of the unlawful payments, made through a “customs broker,” was to obtain entry of Ralph Lauren Corporation’s products into the country without certain paperwork and to avoid certain inspections by customs officials.  The unlawful payments to Argentine officials totaled $593,000 during a four-year period.

The NPA further notes that the unlawful payments occurred during a period when Ralph Lauren Corporation lacked meaningful anti-corruption compliance and control mechanisms over its Argentine subsidiary.  The company discovered the misconduct in 2010 as a result of measures it adopted to improve its worldwide internal controls and compliance efforts, including implementation of a FCPA compliance training program in Argentina.  The NPA notes that the SEC determined not to charge Ralph Lauren Corporation with violations of the (FCPA) in light of several factors including:  (1) the company’s prompt reporting of the violations on its own initiative, (2) the completeness of the information it provided, and (3) the company’s extensive, thorough, and real-time cooperation with the SEC’s investigation.  According to the SEC, Ralph Lauren Corporation’s cooperation saved the Commission “substantial time and resources.”

In parallel criminal proceedings, the Justice Department also entered into a Non-Prosecution Agreement with Ralph Lauren Corporation under which the company will pay an $882,000 penalty.[1]

NPAs are part of the Enforcement Division’s Cooperation Initiative announced in 2010.  Prior to 2010, the SEC did not have the ability to enter into NPAs or Deferred Prosecution Agreements (DPAs).  The purpose of the Cooperation Initiative was to give the Commission the flexibility to incentivize and reward cooperation while at the same time ensuring that cooperators are held accountable for their misconduct.  Since 2010 and prior to this instance, the Commission has entered into three NPAs[2] and two DPAs[3]  It is likely that the SEC will continue to use DPAs and NPAs particularly in connection with FCPA matters given the factual complexity of the cases and the difficulty in discovering violations, which almost always occur outside the U.S.

The Ralph Lauren NPA provides useful guidance as to what the SEC will consider in assessing corporate cooperation by detailing the significant actions that Ralph Lauren Cooperation took in connection with the parallel investigations.  According to the NPA, Ralph Lauren Corporation:

  • reported preliminary findings of its internal investigation to the staff within two weeks of discovering the illegal payments and gifts:
  • voluntarily and expeditiously produced documents;
  • provided English language translations of documents to the staff;
  • summarized witness interviews that the company’s investigators conducted overseas; and
  • made overseas witnesses available for staff interviews in the U.S.

The NPA also notes that Ralph Lauren Corporation entered into tolling agreements during the staff’s investigation.  The statute of limitations with respect to the 2005 conduct, the earliest conduct charged, would have likely run in 2010, just as the company reported the violations to the SEC.

The Ralph Lauren NPA provides several other takeaways.  First, the Ralph Lauren Corporation agreed to enter into the NPA “without admitting or denying liability.”  While the NPA also contains the standard provision prohibiting the Ralph Lauren Corporation from “denying, directly or indirectly, the factual basis of any aspect of the” NPA, the inclusion of the “without admitting or denying language” seems to run counter to the policy announced by the Enforcement Division in January 2012 to eliminate the use of “neither admit nor deny” language from settlement documents involving parallel (i) criminal convictions or (ii) NPAs or DPAs[4]  This may suggest that the “without admitting or denying liability” language remains negotiable.

Second, under the agreement, the Company must seek the staff’s prior approval of the contents of any press release concerning the NPA.  Third, while the SEC emphasizes the Ralph Lauren Corporation’s enhanced compliance program and successful implementation of the enhancements, it also highlights that the Ralph Lauren Corporation has ceased retail operations in Argentina and is in the process of winding down all operations there.  It is possible Ralph Lauren Corporation’s decision to close operations in Argentina was a significant factor in the SEC’s decision to use a NPA in this circumstance.  Fourth, notably, the NPA does not require the Ralph Lauren Corporation to retain an independent consultant to review its policies and procedures and to prepare a report to the staff regarding any findings.  The financial burden of independent consultant “reviews” is often significant.  The staff’s willingness to forego such an undertaking demonstrates the value of taking quick and full remedial action during an investigation.

Fifth, the NPA also refers to “gifts” such as perfume, dresses and handbags valued at between $400 and $14,000, which were provided to three different government officials during the relevant time.  This underscores the importance of having policies and procedures that extend beyond prohibiting monetary payments to government officials.  Finally, the NPA requires that the Ralph Lauren Corporation “to pay disgorgement obtained or retained as a result of the violations discovered during the investigation.”  In its press release, the SEC notes that Ralph Lauren Corporation will “disgorge” $700,000 in illicit profits and interest.  The disgorgement, however, appears to be the total amount of unlawful payments plus interest made rather than any profit earned as a result of the unlawful payments.  Disgorgement is frequently difficult to calculate, especially in FCPA cases.  It appears that rather than tracing the unlawful payments to profits, the SEC was satisfied to use the amount of unlawful payments as a proxy for disgorgement.  Moreover, the low monetary value of the unlawful payments may have also contributed to the SEC’s decision to enter into a NPA in this instance.

[1]  The agreement with the Justice Department stands as yet another example of DOJ’s position that senior management be intricately involved in anti-corruption compliance efforts.  More specifically, the agreement requires that Ralph Lauren’s “directors and senior management provide strong, explicit, and visible support and commitment to its corporate policy against violations of the anti-corruption laws and its compliance code.”  Further, the agreement requires that the company “assign responsibility to one or more senior corporate executives of the Company for the implementation and oversight of the Company’s anti-corruption compliance code, policies and procedures.” 

[2]  In December 2010, the SEC entered into a NPA with Carters Inc. in connection with a financial fraud perpetrated by a former Executive Vice President of Carters.  The NPA focused on the isolated nature of the misconduct, Carters’ prompt self-reporting, extensive cooperation and remedial actions.  In December 2011, the SEC entered into DPAs with Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) in connection with certain misleading statements claiming that the companies had minimal holdings of higher-risk mortgage loans including subprime loans.  The NPA focused on Freddie Mac’s and Fannie’s Mae’s cooperation in connection with the SEC’s litigation against former senior executives.

[3]  In May 2011, the SEC entered into a DPA with Tenaris S.A. in connection with FCPA violations.  The DPA required Tenaris to disgorge approximately $5.4 million.  The DPA focused on Tenaris’ early self-reporting, extensive cooperation and remedial actions.  InJuly 2012, the SEC entered into a DPA with Amish Helping Fund in connection with certain misrepresentations and omissions in offering documents.  Again, the DPA focused on Amish Helping Fund’s immediate and complete cooperation, its willingness to offer investors a right of rescission and its remedial efforts. 

[4]  The Amish Helping Fund DPA entered into on July 18, 2012, does not contain the “without admitting or denying” or “neither admitting nor denying” language.

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Violence Against Women Act Renewed

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Early last month, Congress renewed and extended federal legislation known as the “Violence Against Women Act” or “VAWA.”  The VAWA was originally enacted in 1994, and at that time, its objective was as clear as its name – to prevent and address domestic violence, primarily against women.  The VAWA reformed how the law grapples with domestic violence.  But the VAWA’s enactment has perhaps transformed how we look at domestic violence and the victims who struggle with it at home.

The original legislation that made up the VAWA ensured free access to court protective orders regardless of income level, established the National Domestic Violence Help-Line, and was the legislative source for fiercely contested “rape shield laws” that prohibit evidence relating to a victim’s past sexual history.  The VAWA also required training among civil servants and medical personnel to help encourage victims of domestic violence to identify themselves and reach out for help.  We likely do not notice how the VAWA has kept us mindful of the dangers of violence in the family.  After all, how often does one reflect on anti-stalking laws?  Yet, with any trip to an urgent care, emergency room, or radiologist’s lab a medical provider will ask: “Are you involved in a relationship where you don’t feel safe?”  That’s the VAWA.  And while the VAWA’s name may seem to have everything to have to do with women, the act’s recent reenactment has a much more expansive view – and reach.

Under the original enactment, some Native American tribal members were previously left out in the cold following a 1978 Supreme Court ruling in the case of Oliphant v. Suquamish Tribe, 435 U.S. 191 (1978), which limited a tribe’s jurisdiction over non-Indian abusers.  Native American tribes will now have greater authority to prosecute non-Indian abusers under the reenacted VAWA, based on a special jurisdictional provision to the law. However, a tribe’s jurisdiction to address the victimization of a tribal member is restricted only to those non-Indians with significant ties to the prosecuting tribe, those who reside in the Indian country of the prosecuting tribe, or are employed in the Indian country of the prosecuting tribe, or are either the spouse or intimate partner of a member of the prosecuting tribe.  Although some critics question whether limited jurisdiction over non-Indian defendants will withstand Constitutional muster, many in support of the VAWA’s reenactment are hopeful that the ability of tribes to prosecute non-Indian offenders in some instances will reduce the nearly 40-70% of rape potential prosecutions against non-Indians that are declined by federal prosecutors.

The VAWA reenactment is also aimed at targeting cyber-bullying and other instances of abuse that were not the focus of the VAWA originally.  Protections for men and members of the “LGBT” (Lesbian Gay Bisexual and Transgender) community who are struggling with domestic violence now enjoy greater recognition under the updated law.  These changes to the VAWA send a clear message that domestic violence is not a “women’s issue” – it’s a family one because anyone can be a victim of domestic violence.

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Congress Renews Violence Against Women Act, Expands Tribal Court Jurisdiction

The National Law Review recently featured an article by Brian L. Pierson with Godfrey & Kahn S.C., regarding Recent Congressional Actions:

Godfrey & Kahn S.C. Law firm

On February 28, 2013 the House of Representatives approved Senate Bill 47, which reauthorizes and amends the Violence Against Women Act of 1994 (VAWA). The Bill, already approved in the Senate, became law when the President signed it on March 7th.

The VAWA is a major legislative achievement for Indian country. The Supreme Court held in 1978 that tribes lack inherent power to exercise criminal jurisdiction over non-Indians. For the first time since that decision, Congress has authorized tribes to exercise such jurisdiction. Title IX of the VAWA amends the Indian Civil Rights Act (ICRA) to permit tribes to exercise “special domestic violence criminal jurisdiction” over non-Indians who are charged with domestic violence, dating violence, and violations of protective orders that occur on their lands. Features of special domestic violence criminal jurisdiction include:

  • either the perpetrator or victim must be Indian
  • the tribe must prove that the defendant has ties to the tribal community
  • tribal jurisdiction is concurrent with state and federal jurisdiction
  • the defendant has the right to a trial by an impartial jury that is drawn from sources that –
    • reflect a fair cross section of the community; and
    • do not systematically exclude any distinctive group in the community, including non-Indians
  • In the event that a sentence of imprisonment “may” be imposed, the tribe must guarantee the defendant the enhanced procedural rights added to the ICRA by the Tribal Law and Order Act of 2010, including:
    • effective assistance of counsel, paid for by the tribe if the defendant is indigent
    • a legally trained judge licensed to practice law
    • published laws and rules of criminal procedure
    • recorded proceedings

Copyright © 2013 Godfrey & Kahn S.C.