Tag: White Collar Crime

Four Indicted for $16 Million Money Laundering Scheme

Four Indicted for $16 Million Money Laundering Scheme

On March 23, 2022, an indictment was unsealed in the Western District of Arkansas, charging four men for their involvement in wire fraud and money laundering schemes involving fake investment offerings amounting to an alleged $16 million.

According to court documents, the four men allegedly engaged in an investment fraud scheme between 2013 and 2021 in which they falsely represented the nature of their investment offerings and promised large returns, which they could not and did not yield. The indictment also alleges that two of the defendants encouraged victims to send their funds to bank accounts controlled by the other two defendants, and then transferred the money through a complex series of accounts worldwide.

The defendants were charged with wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. One defendant was further charged with money laundering. If convicted, the men will face up to 20 years in prison for each count. The additional count of money laundering carries an additional sentence of up to 10 years.

The DOJ press release can be found here.

California Man Pleads Guilty To Stealing Government COVID-19 Relief Funds

On March 18, 2022, a California man pleaded guilty in the Central District of California to misappropriating COVID-19 relief funds obtained through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Under the CARES Act Provider Relief Fund, CARES Act health care providers who were financially harmed by the impact of the COVID-19 pandemic are granted federal funds to provide care to patients suffering from COVID-19. According to court documents, the defendant admitted he owned a hospice agency in North Hollywood that was never operational during the COVID-19 pandemic, yet he received approximately $89,162 designated for the medical treatment and care of COVID-19 patients. The defendant admitted he misappropriated the CARES Act funds by spending them for his personal use and then transferring the funds to family members, including one family member in Armenia, rather than using the funds in any way related to the pandemic relief efforts as required.

As part of his guilty plea, the defendant further admitted that he submitted five Economic Injury Disaster Loan (EIDL) applications to the Small Business Administration (SBA) on behalf of his hospice agency and four other entities he controlled. As a result of his fraudulent applications, the SBA disbursed approximately $428,100 in EIDL funds to the man, which he used for his benefit against EIDL requirements.

The man pleaded guilty to three counts of theft of government property and is scheduled to be sentenced on June 13, facing up to 10 years in prison for each count.

The DOJ press release can be found here.

New Jersey Man Convicted for Fraudulently Obtaining US Visas for Chinese Government Employees

On March 23, 2022, a New Jersey man was convicted by a federal jury of one count of conspiracy to defraud the United States and to commit visa fraud for his participation in a conspiracy to fraudulently obtain United States visas for Chinese government employees.

According to court documents, the defendant was involved in a scheme to fraudulently obtain J-1 research scholar visas for employees of the government of the People’s Republic of China (PRC) to allow them to covertly work for the PRC government while in the United States. The defendant operated an office of the China Association for the International Exchange of Personnel (CAIEP), an agency of the PRC government, in New Jersey that seeks to recruit US scientists, academics, engineers, and other experts for the PRC.

The J-1 research scholar program allows foreign nationals to visit the United States to conduct research at a corporate research facility, library, museum, university, or other research institution. The defendant allegedly worked to obtain a J-1 research scholar visa for a prospective employee based on the false representation that the employee would conduct research at a United States university, to conceal unlawful work of another employee who was present in the United States on a J-1 visa sponsored by a US university. The two employees represented to the US government that they were entering the US for the primary purpose of conducting research at US universities, but their actual purpose consisted of working for the CAIEP. The defendant reported the employee’s arrival to the United States to the US universities, procured a local driver’s license for her and disguised her CAIEP salary as a subsidy for research scholar living expenses to make her presence as a research scholar appear legitimate.

As a result of his conviction, the defendant faces a maximum sentence of five years; he is scheduled to be sentenced on July 11.

The Department of Justice (DOJ) press release can be found here.

UPS To Pay $5.3 Million for False Claims Act Allegations

On March 21, 2022, the DOJ announced that United Parcel Service Inc. (UPS) agreed to pay approximately $5.3 million to settle allegations that the company falsely reported information about the transfer of U.S. mail to foreign posts or other intended recipients under contracts with the U.S. Postal Service (USPS), in violation of the False Claims Act (FCA).

UPS was engaged by USPS to pick up U.S. mail at various locations and deliver it to its international and domestic destinations. As a condition of payment, UPS was required to submit electronic scans to USPS to report when the mail was delivered, and there were specified penalties for mail that was delivered late or to the wrong location. The settlement resolves allegations that scans submitted by UPS were falsified times and that UPS, in fact, transferred possession of the mail.

According to DOJ, this is the fifth civil settlement involving air carrier liability for false delivery scans under the USPS International Commercial Air Contracts, pursuant to which the United States has recovered more than $70 million.

The DOJ press release can be found here.

Article By D. Jacques Smith, Randall A. Brater, Mattie Bowden, and Rebecca W. Foreman of ArentFox Schiff LLP

For more white collar crime legal news, click here to visit the National Law Review.

© 2022 ArentFox Schiff LLP

Biden Administration Issues New Government-Wide Anti-Corruption Strategy

On Dec. 7, 2021, the White House published a government-wide policy document entitled “United States Strategy on Countering Corruption” (“Strategy”). The Strategy implements President Biden’s National Security Memorandum from earlier in 2021, which declared international corruption a threat to U.S. national security.

The Strategy is notable for several reasons:

First, the Strategy focuses not just on the “supply side” of foreign bribery and corruption—that is, companies acting in violation of the Foreign Corrupt Practices Act (FCPA)—but also on the “demand side” of the equation, namely corrupt foreign officials and those who assist them. It promises to pair vigorous enforcement of the FCPA with efforts to hold corrupt leaders themselves accountable, via U.S. money laundering laws, economic sanctions, and visa restrictions.

Second, the Strategy specifically calls out the role of illicit finance in facilitating and perpetuating foreign corruption, promising “aggressive enforcement” against those who facilitate the laundering of corrupt proceeds through the U.S. economy. Professional gatekeepers such as lawyers, accountants, and trust and company service providers are specifically identified as targets of future scrutiny. The Strategy also promises to institute legislative and regulatory changes to address anti-money laundering (AML) vulnerabilities in the U.S. financial system. These promised changes include:

  • Finalizing beneficial ownership regulations, and building a national database of beneficial owners, as mandated by the Anti-Money Laundering Act of 2020.

  • Promulgating regulations designed to reveal when real estate is used to hide ill-gotten gains. Contemporaneously with the White House’s issuance of the Strategy, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking (ANPRM), inviting public comment on its plan to apply additional scrutiny to all-cash real estate transactions.

  • Prescribing minimum reporting standards for investment advisors and other types of equity funds, which are currently not subject to same AML program requirements as other financial institutions.

Third, the Strategy calls for a coordinated, government-wide response to corruption, and it contemplates a role not only for law enforcement and regulatory agencies but also for agencies such as the Department of State and Department of Commerce, which is to establish its own new anti-corruption task force. It remains to be seen if the increased scope of anti-corruption efforts called for by the Strategy will result in new or additional penalties for persons and entities perceived as corrupt or as facilitating corruption, but the Strategy may place an additional premium on corporate anti-corruption compliance.

Individuals and entities operating in sectors traditionally associated with corruption and/or AML risk should consider taking the following steps in response to the Strategy. These considerations apply not only to U.S. persons and businesses but also to anyone who may fall within the broad purview of the FCPA, U.S. money laundering statutes, and other laws with extraterritorial reach:

  • Increase due diligence for any pending or future transactions in jurisdictions where potentially corrupt actors or their designees play a role in awarding government contracts. Ensure any payments are the result of arms-length transactions based on legitimate financial arrangements.

  • Professional gatekeepers should become familiar with the particular risks associated with the industries in which they operate. While AMLA made it clear that lawyers, accountants, and real estate professionals will come under increased scrutiny based on the risk profile of their clients, the Strategy increases the likelihood that law enforcement will devote additional resources in this sometimes-overlooked area.

  • Given the increased role the State Department will continue to play in the anticorruption space based on the National Defense Authorization Act and the Strategy, companies doing business in or with countries vital to U.S. foreign policy goals should remember that in addition to the individual leaders of these countries, government institutions and lower-level officials could create risk and will be closely watched. Though the U.S. government often talks about specific government officials, the Strategy appears to take a broader approach.

  • Businesses should continue to examine and reexamine third-party risk with an emphasis on preventing potential problems before they occur. Additional resources and increased cooperation between and among government agencies may lead to additional investigations and enforcement actions, so compliance programs should be updated where necessary.

Article By Kyle R. Freeny and Benjamin G. Greenberg of Greenberg Traurig, LLP

For more white collar crime and consumer rights legal news, click here to visit the National Law Review.

©2021 Greenberg Traurig, LLP. All rights reserved.

SEC Investigating Cyberattacks Used to Find Secret Company Mergers

SEC Investigating Cyberattacks and Insider Trading

According to Reuters, the Securities and Exchange Commission (SEC) is investigating hacks of email accounts of associates and executives that reveal information on potential mergers. The hackers use a technique known as phishing where they craft emails that trick recipients into logging into malicious websites to steal their email logins. These hacks pose a threat because fraudsters can easily use the information to engage in insider trading.

The group, known as FIN4, allegedly targeted a list of 60 companies in biotechnology, medical instruments, hospital equipment, and drugs. Fireeye reported these cyberattacks in February 2014 and found that they were performed to “obtain an edge on the stock trading.” This will continue to be a problem as more businesses move over to cloud computing, which could lead to a significant increase in data breaches.

The SEC’s Office of Compliance Inspections and Examinations released a report on observations relating to cybersecurity and best practices by financial market participants. The observations are offered as guidelines for firms considering how to improve their cybersecurity preparedness and response procedures. The intent is to highlight specific examples of cybersecurity and operational resiliency practices and controls that firms are taking to safeguard against threats, and how they respond in the event of a breach. The SEC “encourages organizations to review their practices, policies, and procedures with respect to cybersecurity and operational resiliency.” Cybersecurity and Resiliency Observations report.

New Technology & Whistleblower Tips Root Out Insider Trading

The SEC relies on technological developments to accomplish its enforcement goals, including identifying and pursuing insider trading cases. In FY 2018, the SEC implemented a Consolidated Audit Trail, intended to enhance, centralize, and update the regulatory data infrastructure available to market regulators. Once fully implemented, the Consolidated Audit Trail will give regulators quicker access to all trade and order data, facilitating the detection of illegal trading practices, such as insider trading.

In addition to technology, the SEC has increasingly relied on whistleblower tips to identify and halt insider trading. Whistleblowers have been instrumental to expose fraud and expose insider trading secrets.

SEC Rewards Whistleblowers for Exposing Insider Trading 

Under the SEC Whistleblower Program, whistleblower are eligible to receive a reward if their original information about insider trading leads to a successful enforcement action with total monetary sanctions of more than $1 million. A whistleblower may receive an award of between 10 to 30 percent of the total monetary sanctions collected. If represented by counsel, a whistleblower may submit a tip anonymously to the SEC.

© 2020 Zuckerman Law

For more on SEC Insider Trading enforcement, see the National Law Review Criminal Law and Business Crimes section.

Are Culpable Whistleblowers Eligible to Receive SEC Whistleblower Awards?

Yes. In many circumstances, culpable whistleblowers are eligible to receive SEC whistleblowers awards (see limitations below). The final rules of the SEC Whistleblower Program recognize that culpable whistleblowers enhance the SEC’s ability to detect violations of the federal securities laws, increase the effectiveness and efficiency of the SEC’s investigations, and provide critical evidence for the SEC’s enforcement actions. In fact, a speech by the former Director of the SEC’s Division of Enforcement highlighted the importance of culpable whistleblowers to the agency’s enforcement efforts:

Finally, I want to say a word about participants in wrongdoing and their ability to be whistleblowers. It is important for participants in misconduct to understand that, in many circumstances, they are eligible for awards and we would like to hear from them. Obviously, culpable insiders with first-hand knowledge of misconduct can provide valuable information and assistance in identifying participants in, transactions relating to, and proceeds of, fraudulent schemes. And, while there are safeguards built into the program to ensure that whistleblowers do not profit from their own misconduct…culpable whistleblowers can still get paid for eligible information they report that falls outside of these limitations.

SEC Whistleblower Awards to Culpable Whistleblowers

The SEC Whistleblower Program’s decision to work with, and award, culpable whistleblowers has proven to be effective in enabling the SEC to discover fraud and protect investors. To date, the SEC has issued several awards to whistleblowers who had some culpability in the violations, including:

  • On August 30, 2016, the SEC announced a $22 million award to a whistleblower who helped the agency “halt a well-hidden fraud” at the company where the whistleblower worked. The accompanying order states that the Commission considered several factors mitigating the whistleblower’s culpability in determining the appropriate percentage, but the whistleblower did not financially benefit from the misconduct.
  • On July 27, 2017, the SEC announced a $1.7 million award to a whistleblower who helped the Commission stop a “serious, multi-year fraud that would have otherwise been difficult to detect.” There were a few mitigating factors in the Commission’s determination of the whistleblower’s final award, including the fact that the whistleblower did not comply with one of the SEC’s rules, an omission which normally requires an award denial. The order stated that “certain unusual circumstances” governed this case, thus the Commission decided to waive that requirement. In determining the award amount, the Commission considered, too, the fact that the whistleblower unreasonably delayed in reporting and ultimately bore “some, albeit limited, culpability” in the fraud.
  • On September 14, 2018, the SEC announced it had reduced a whistleblower’s award to $1.5 million because the Commission found that the whistleblower unreasonably delayed in reporting the fraud, the whistleblower “received a significant and direct financial benefit,” and was culpable in the scheme. The order further details these determining factors, and explains that the whistleblower waited more than a year after learning of the facts to report the fraud and reported to the Commission only after learning of the ongoing investigation.

See additional SEC whistleblower cases that have resulted in multi-million dollar awards.

Limitations on SEC Whistleblower Awards to Culpable Whistleblowers

While the SEC has been clear that it welcomes information from culpable whistleblowers, the SEC Whistleblower Program has specific rules that could disqualify certain whistleblowers from receiving SEC whistleblower awards. In addition, the program has rules that could limit the size of a culpable whistleblower’s future SEC whistleblower award. Importantly, whistleblowers who are concerned about potential liability should consult with experienced SEC whistleblower attorneys before reporting information to the SEC Office of the Whistleblower. Once information is submitted to the SEC, it cannot be withdrawn.

Whistleblowers Cannot Be Convicted of a Criminal Violation

The SEC Office of the Whistleblower will not issue awards to whistleblowers who are convicted of a criminal violation in relation to an action for which they would otherwise be eligible for an award. Moreover, the SEC Whistleblower Program does not provide amnesty to whistleblowers who provide information to the SEC. The fact that a whistleblower reports information to the SEC and assists in an SEC investigation and enforcement action does not preclude the SEC from bringing an action against the whistleblower based upon their own conduct in connection with violations of the federal securities laws. If such an action is determined to be appropriate, however, the SEC will take the whistleblower’s cooperation into consideration. As noted in the speech of the former Director of the SEC’s Division of Enforcement: “There are also other potential benefits for culpable whistleblowers — in appropriate circumstances, we will take their cooperation under the whistleblower program and in our investigation into consideration in deciding what remedies, if any, are appropriate in any action we determine should be brought against the whistleblowers for their role in the scheme.”

Culpable Whistleblowers Cannot Benefit from Their Own Misconduct

Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to enforcement actions with total monetary sanctions in excess of $1 million. A whistleblower may receive an award of between 10-30 percent of the monetary sanctions collected. Since 2011, the SEC Whistleblower Office has issued nearly $400 million in awards to whistleblowers. The largest SEC whistleblower awards to date are a $50 million award, a $39 million award, and a $37 million award.

While the SEC is permitted to issue awards to culpable whistleblowers, the rules of the SEC Whistleblower Program do not allow whistleblowers to benefit from their own misconduct. Specifically, for purposes of determining whether the $1 million threshold has been satisfied or calculating the amount of an award, the SEC will not count any monetary sanctions that the whistleblower is ordered to pay or that are ordered to be paid against any entity whose liability is based substantially on conduct that the whistleblower directed, planned, or initiated.

Culpability May Decrease the Size of an Award

In determining the percentage of monetary sanctions to award a whistleblower, the SEC considers various factors that may increase or decrease the size of a whistleblower’s award. One of the factors that may decrease the size of an award is the whistleblower’s culpability in the securities law violation. When making this determination, the SEC may consider the following factors:

  • the whistleblower’s position or responsibility at the time the violations occurred;
  • if the whistleblower acted with scienter, both generally and in relation to others who participated in the violations;
  • if the whistleblower is a recidivist;
  • the egregiousness of the fraud committed by the whistleblower;
  • whether the whistleblower financially benefitted from the scheme; and
  • whether the whistleblower knowingly interfered with the SEC’s investigation.

Notably, while culpability may reduce a whistleblower’s award percentage, any whistleblower who qualifies for an award under the SEC Whistleblower Program – including culpable whistleblowers – will receive at least 10% of the monetary sanctions collected in the enforcement action.

© 2020 Zuckerman Law

For more on whistleblower rules, see the National Law Review Securities & SEC laws section.

Real Estate Promoter Carlton Cabot Arrested – Is He the Worst Fraudster in Modern History?

The name Carlton Cabot was once synonymous with tenant in common (TIC) real estate projects. Cabot claimed to have raised hundreds of millions of dollars and public records show that he promoted approximately 18 large real estate projects nationwide.

The entire concept of TIC financed projects began in 2002 after the IRS issued a revenue ruling allowing investors to defer capital gains from the sale of real estate involving an “exchange” of properties. (These are sometimes called 1031 exchanges because of section 1031 of the Internal Revenue Code.) For the first time, the IRS said individuals could pool their gains and invest in larger projects.

Unfortunately, along with legitimate developers came a number of scam promoters. Overnight, a new industry was born. Obviously, not all TIC projects are scams but many were.

The first few years of operations saw Cabot building his empire. A golf course in Georgia, a shopping center in Green Bay and an office park in Connecticut are but a few of Cabot’s many TIC financed projects.

The pooled money of the newly created TICs was used to make a down payment and the balance was financed. The borrowers were the TICs but most were told the loans were nonrecourse meaning the lender was only looking to the value of the property and not relying on the TIC members’ credit.

Unfortunately, stockbrokers who had no understanding of the complex loan documents and tax law behind 1031 exchanges sold many of these TIC investment interests including the TIC interests behind Carlton Cabot’s projects. The brokers relied on rosy projections and glossy brochures and other slick marketing materials. Few, if any, read the 1000+ page offering documents. Much higher than average sales commissions didn’t hurt their enthusiasm, either.

Two more factors made these TIC projects the recipe for disaster. First, Carlton Cabot was the master tenant in each of the projects. That gave him the ability to collect rents on behalf of the TICs. Cabot also set up the loan documents so that the mail addressed to the TIC investors was sent to him.

By 2012, we believe that Carlton Cabot was skimming rents. Mortgage payments therefore began being missed. Had the TIC investors known these things, they could have easily cured any default and removed Cabot as the master tenant. Many of the projects had sufficient reserves that could have been used to pay a missed mortgage payment or two.

Unfortunately, Cabot didn’t tell the TICs about his misdeeds. Nor did the lenders, loan trustees or loan servicers. Instead, the TICs often received phony financial statements from Cabot. Even though defaults were occurring everywhere, the TICs had no idea.

By the time the TICs found out, the loans had been accelerated and were in serious default. The TICs went from being investors to owing tens of millions on defaulted mortgages.

The criminal complaint against Carlton Cabot and his manager Timothy Kroll claims that $17 million was stolen from the projects. The feds say some of that money went into Carlton Cabot’s pocket while some was used to pay off and silence the few investors who were beginning to ask questions. We are sure that the money wasn’t going to the mortgage payments, however.

Theft of $17 million is already a serious charge. Because the TICs were forced into default, the problem is much larger. The TICs lost not only the rent payments but also their equity in the property and their investments. For many Cabot victims, the money they lost was their life savings. Worse, they may still be on the hook for any shortfall or deficiency upon foreclosure.

Many of the investors are also quite elderly. Some have died since the various lawsuits began. For those folks, they will never see any justice. The Justice Department says both Carlton Cabot and Timothy Kroll were arrested at their homes. Both men are charged with seven felony crimes including wire fraud, securities fraud, money laundering and conspiracy. Both men face 105 years if convicted on all counts.

We suspect that absent an immediate plea, the charges will increase as the IRS and U.S. Postal Inspection Service continues its investigation.

In announcing the arrests, U.S. Attorney Preet Bharara said, “As alleged, Carlton Cabot and Timothy Kroll conspired to defraud investors out of millions of dollars by misappropriating investor funds, in part to pay for personal luxuries, and they falsified financial statements in an attempt to cover their tracks.  The investigative work of the Postal Inspection Service and the IRS put an end to the alleged scheme.”

Is there hope for investors? Maybe. Investors who purchased from a stockbroker or other financial professional may have a claim against the person who sold or recommended the investment.

Unfortunately, there was such a wave of TIC frauds that many of the broker dealers selling TIC investments are already out of business.

Investors facing foreclosure or the lost of their investment may have valid claims against the servicers, loan trustees, property managers and others who turned a blind eye or actively participated in the crimes. Suing Carlton Cabot is probably not a great idea. We suspect that getting money from him is nearly impossible. Any justice from Cabot will be had if he is convicted and forced to face his victims at sentencing.

In summary, what was once billed as the investment of a lifetime has turned into a life sentence for many victims.  Even if you lost everything, don’t give up. A good fraud recovery lawyer may be able to help defend you against suits from lenders and may even be able to get back some of your lost money from third parties.

ARTICLE BY Brian Mahany of Mahany Law
© Copyright 2015 Mahany Law

Best of the Worst in Insurance Fraud

Risk-Management-Monitor-Com

The second most costly white collar crime in America behind tax evasion, insurance fraud costs an estimated $80 billion annually. Questionable claims rose 26.7% across the United States between 2010 and 2012, according to Mercury Insurance Company, whose Special Investigation Unit (SIU) of 50 investigators nationwide examines questionable claims. The team completed 1,476 investigations in California alone, exposing more than $24 million in attempted fraud, the company said.

insurance fraud

“It’s amazing the things people will do to try and cheat the system, but they don’t know we’ve seen it all,” said Dan Bales, national director of special investigations for Mercury, which established one of the country’s first SIU’s in 1978. “Our SIU goal is to stay several steps ahead of these criminals and continue to uncover fraud, which can contribute to as much as 30% of customers’ premiums.”

Below are Mercury’s Top 3 “Best of the Worst Claims,” in 2013, highlighting some of the methods used to try and beat the system.

Claim #3: Bicycle Down

The claimant alleged he was struck as his bicycle passed behind a Mercury-insured vehicle that was backing up in a parking lot. He called the police, filed a report claiming injury and property damage, and was then transported by ambulance to a medical center to treat his alleged injuries.

The real story was quite different, however, as this criminal didn’t know the entire incident was caught on video. The video clearly showed the claimant intentionally slapping the back of the insured vehicle with his hand and then guiding his bicycle to the ground to make it look like he’d been struck by the car.

The claimant retained an attorney to pursue an injury claim, which was denied by Mercury following the police report that included the security camera video taken at the scene. The claimant was ultimately arrested, convicted and sentenced to three months in jail with three years’ probation, and also had to pay a fine, restitution and his medical bills.

Claim #2: Wrong Way Driver

The insured stopped at an intersection in front of a repair van. Suddenly, the two vehicles collided in what appeared to be a rear-end collision, which necessitated police being called to gather statements.

The insured driver and passenger claimed the van driver had rear-ended the insured’s vehicle and both were allegedly injured. However, the van driver’s adamant contention that he hadn’t caused the accident led the investigating officer to seek surveillance video, which he found at a nearby gas station. Sure enough, the footage revealed that instead of proceeding through the intersection as expected, the insured driver threw her vehicle into reverse, slamming into the front of the van.

The insured driver and her passenger were subsequently charged with insurance fraud and conspiracy, and the driver was also charged with assault with a deadly weapon … her car. And yes, the claim was denied.

Claim #1: A Not-So-Merry Christmas

Looking to make some quick Christmas cash, the insured and two cohorts staged an accident and filed medical payment claims through Mercury, which were identified as questionable and assigned to the SIU for investigation.

A detailed claims history was compiled for the three individuals, who were then interviewed by SIU investigators. What the investigators found was that each claimant’s story was different, so they began to look deeper. That’s when they uncovered some very compelling evidence that suggested this accident was staged.

The SIU team discovered the insured’s prior claim history showed a loss at the same location with the same facts provided. A confession quickly followed about his latest claim, as well as a description of all the fraud he’d committed on each of his previous claims. All three claimants were convicted and given probation, community service and ordered to pay more than $26,000 in restitution to Mercury Insurance.

Suspicious activity can be reported to the National Insurance Crime Bureau.

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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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:

WCC_NLRad

 

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!

White Collar Crime Institute – March 6-8, 2013

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

White Collar Crime March 6-8 2013

The program will provide an in-depth analysis of three recent high visibility trials by the lawyers involved in the cases.  The many topics covered will include: ethical pitfalls and blunders in white collar practice, conducting global investigations (including issues of competing laws), data privacy and blocking statutes, trial tactics in white collar cases, Brady obligations, international issues in white collar practice (including obtaining evidence abroad), handling of, and dealing with, issues related to electronically stored materials, sentencing guidelines and arguing for a departure, updates and trends in securities and FCPA enforcement, and more!

White Collar Crime Institute – March 6-8, 2013

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

White Collar Crime March 6-8 2013

The program will provide an in-depth analysis of three recent high visibility trials by the lawyers involved in the cases.  The many topics covered will include: ethical pitfalls and blunders in white collar practice, conducting global investigations (including issues of competing laws), data privacy and blocking statutes, trial tactics in white collar cases, Brady obligations, international issues in white collar practice (including obtaining evidence abroad), handling of, and dealing with, issues related to electronically stored materials, sentencing guidelines and arguing for a departure, updates and trends in securities and FCPA enforcement, and more!