Former Executive Sentenced for Conspiracy to Bribe Panamanian Government Officials

On December 16, the U.S. District Court for the Northern District of California sentenced a former regional director of a Pennsylvania-based software and technology company for his involvement in a conspiracy to bribe Panamanian government officials to obtain technology contracts. U.S. District Judge Charles R. Breyer sentenced Vicente Eduardo Garcia to 22 months in prison for his role in the bribery scheme. In August 2015, Garcia pleaded guilty to conspiracy to violate the FCPA, admitting that in 2009 he and others conspired to bribe two Panamanian government officials directly and a third official through an agent in order to obtain a contract to provide a Panamanian state agency with a technology upgrade package. Garcia and his co-conspirators used sham contracts and false invoices to conceal the bribes, and Garcia personally received over $85,000 for arranging the bribes. Garcia previously settled with the SEC and agreed to pay disgorgement of $85,965 plus prejudgment interest.

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Former Russian Government Official Sentenced For Nuclear Energy Conspiracy Involving FCPA Violations

On December 15, a former Russian government official, Vadim Mikerin, was sentenced to 48 months in prison for conspiracy to commit money laundering in connection with $2 million in bribe payments he accepted to award government contracts with a Russian state-owned nuclear energy corporation. U.S. District Judge Theodore D. Chuang of the District of Maryland also ordered Mikerin, who resides in Maryland, to forfeit $2.1 million. Between 2004 and October 2014, Mikerin received bribe payments intended to improperly influence him in his role as a key official at a subsidiary of a Russian state-owned nuclear energy corporation and to secure improper business advantages for U.S. companies that did business with the subsidiary. Mikerin admitted that, in connection with the FCPA violations, he conspired with others to transmit approximately $2,126,622 from the United States to shell company bank accounts in Cyprus, Latvia and Switzerland. Mikerin also admitted to using consulting agreements and code words to conceal the bribes. Two of Mikerin’s co-conspirators – Daren Condrey and Boris Rubizhevsky – also pleaded guilty to conspiracy charges and are awaiting sentencing.

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DOJ Announces Racketeering Indictment Alleging Money Laundering Schemes

On December 10, the DOJ announced three unsealed indictments of a total of 20 defendants in connection with various money laundering schemes. Fifteen of the defendants were arrested and taken into custody, while the remaining individuals are still being sought by authorities.

The first indictment alleges that the former president and CEO of an Orange County, California bank and five other individuals, as members of a narcotics trafficking and international money laundering organization, violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by participating in schemes to launder drug proceeds. According to the DOJ, the former bank official used his position, insider knowledge, and connections to “promote and facilitate money laundering transactions involving members and associates of the enterprise.” The DOJ alleges that the six defendants (i) arranged to convert purported drug proceeds, in the form of cash provided by an undercover informant, into cashier’s checks made out to a company the informant claimed to own; (ii) proposed to an informant that the informant and his boss purchase a controlling interest in the Orange County bank to more easily facilitate money laundering operations; and (iii) proposed to set up a foundation in Liechtenstein to be used, in part, to launder the informant’s drug sale proceeds. Read more…

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DOJ Announces Sentencing of Former Secret Service Agent for Involvement in Silk Road Investigation

On December 7, the DOJ announced that a former Secret Service agent was sentenced to 71 months in prison on charges of money laundering and obstruction of justice. Between 2012 and 2014, the former agent conducted forensic computer investigations from the Northern District of California to locate, identify, and prosecute persons involved in operating Silk Road, a covert online marketplace for illicit goods, as part of the Baltimore Silk Road Task Force. As part of his guilty plea, the agent admitted to using account information from a January 2013 search and arrest of a Silk Road customer support representative to “reset passwords and pins of various accounts on Silk Road and move approximately 20,000 bitcoin, at the time worth approximately $350,000, from those accounts into a bitcoin ‘wallet’ [he] controlled.” The former agent also admitted to (i) moving stolen bitcoin money into an account on a Japan-based online digital currency exchange; (ii) liquidating the bitcoin into $820,000 in U.S. currency and transferring those funds into a personal investment account in the U.S.; (iii) using the customer support representative’s access to Silk Road to steal bitcoin, which limited the investigation of Silk Road; and (iv) making false and misleading statements to both prosecutors and investigators involved in the San Francisco grand jury investigation into his activity. In addition to the prison sentence, the court ordered the former agent to forfeit more than $650,000. The Secret Service agent is the second federal agent to be sentenced this year in connection with the Baltimore Silk Road Task Force’s investigation into the Silk Road.

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DOJ Charges 16 Additional Individuals with FIFA-Related Corruption; Swiss Authorities Arrest Two High-Ranking FIFA Members

On December 3, the DOJ charged an additional 16 individuals in connection with its ongoing corruption investigation into FIFA. The new indictment included a number of high ranking FIFA members, including Alfredo Hawit, the president of the Confederation of North, Central America and Caribbean Association Football (CONCACAF) and vice-president of FIFA, and Juan Angel Napout, the president of the South American Football Confederation (CONMEBOL) and a member of the FIFA executive committee. Both of these individuals were arrested by Swiss authorities in Zurich and are opposing extradition to the United States.

With the additional 16 individuals, a total of 41 people and entities have been charged as part of the DOJ’s ongoing investigation.

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Deputy Attorney General Yates Expands on DOJ’s White-Collar Prosecution Policy

On November 16, the DOJ’s Deputy AG Sally Yates delivered remarks at the American Bankers Association and American Bar Association Money Laundering Enforcement Conference. Yates focused her remarks on recent revisions – originally outlined in a September 9 policy memorandum – to the United States Attorney’s Manual (USAM), as follows: (i) updating the corporate criminal cases section, specifically the “Principles of Federal Prosecution of Business Organizations” chapter, or the “Filip factors”; (ii) implementing an entirely new section to the civil cases chapter on enforcing claims against individuals in corporate matters; and (iii) updating its policy on parallel proceedings. First, the DOJ updated the Filip factors and the written guidance accompanying the factors to emphasize individual accountability in corporate cases and company cooperation in the DOJ’s investigation of individual wrongdoing. Yates highlighted the following policy change: “In the past, cooperation credit was a sliding scale of sorts and companies could still receive at least some credit for cooperation, even if they failed to fully disclose all facts about individuals. That’s changed now… providing complete information about individuals’ involvement in wrongdoing is a threshold hurdle that must be crossed before [the DOJ will] consider any cooperation credit.” Read more…

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DOJ Unseals Indictment Against Individuals for Alleged Involvement in Hacks Against Various U.S. Institutions

On November 10, the DOJ unsealed an indictment against three individuals, Gery Shalon, Joshua Samuel Aaron and Ziv Orenstein, for allegedly orchestrating and committing computer hacking crimes against U.S. financial institutions, brokerage firms, and financial news publishers. According to the DOJ, “these three defendants perpetrated one of the largest thefts of financial-related data in history – making off with the sensitive information of literally thousands” of Americans. The DOJ alleges that, from approximately 2012 to mid-2015, Shalon and Aaaron hacked financial institutions to steal the personal information of more than 100 million customers, and then manipulated the price of certain U.S. publicly traded stocks, seeking to “market the stocks, in a deceptive and misleading manner, to customers of the victim companies whose contact information they had stolen in the intrusion.” Additionally, Shalon engaged in illegal businesses with Orenstein between 2007 and July 2015, allegedly operating (i) unlawful internet gambling businesses; (ii) multinational payment processors for illegal pharmaceutical suppliers, counterfeit and malicious software distributors, and unlawful internet casinos; and (iii) Coin.mx, a Bitcoin exchange company that violated federal anti-money laundering laws. Read more…

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DOJ Announces Sentencing of Former DEA Agent for Criminal Involvement in Silk Road Investigation

On October 19, the DOJ announced that a former DEA agent was sentenced to 78 months in prison for crimes he committed while working as an undercover agent in the Silk Road investigation. On July 1, the former DEA agent pleaded guilty to charges of extortion, money laundering, and obstruction of justice. Using his DEA-sanctioned persona, “Nob,” the former agent sold Ross Ulbricht – Silk Road’s convicted operator – fake drivers’ licenses and inside information about the investigation, directing Ulbricht to conceal his payments, which were made in bitcoin, using encrypted messaging. Understanding that the payments were government property and constituted evidence of a crime, the former agent admitted to falsifying reports and depositing the funds into his own personal bank accounts, receiving more than $100,000 in bitcoin payments from Ulbricht. In addition, the former agent created another, not government-sanctioned online persona, “French Maid,” which he used to solicit and receive approximately $100,000 in bitcoins from Ulbricht in exchange for information on the government’s Silk Road investigation. The former agent also admitted to serving as the chief compliance officer for a digital currency exchange company, even though he did not receive permission from the DEA to do so. In February 2014, the company alerted him to suspicious activity in a certain account, but, using his capacity as a DEA agent, the former agent directed the company to freeze $337,000 in cash and digital currency from the account, and then transferred $300,000 of the digital currency into an account he controlled. In addition to his prison sentence and post-sentence supervision, the former DEA agent will pay $340,000 in restitution.

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Former Vice President of Defense Contractor Jailed for Bribing Kuwaiti Officials

On October 9, James Rama, a former Vice President of Florida-based defense contractor IAP Worldwide Services, Inc., was sentenced in the U.S. District Court for the Eastern District of Virginia to 120 days in prison for conspiracy to violate the anti-bribery provisions of the FCPA. Rama pleaded guilty to the conspiracy charge on June 16 for his role in a scheme by IAP to pay more than $1.7 million in bribes to Kuwaiti officials to win a government contract intended to provide nationwide surveillance capabilities for several Kuwaiti government agencies. Rama had faced a recommended sentence under the Sentencing Guidelines of between 57 and 60 months, but received a substantially shorter sentence in part due to his cooperation with authorities during their investigation. Prosecutors had recommended that Rama receive a one year sentence, while the defense had requested just supervised release. IAP previously entered into a non-prosecution agreement with the DOJ and agreed to pay $7.1 million to resolve the allegations against the company.

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DOJ Disables Malware Designed for Bank-Theft; Unseals Indictment Against Botnet Administrator

On October 13, the DOJ unsealed an indictment against a Moldovan citizen for his alleged involvement in a criminal conspiracy to steal confidential financial information by distributing malware software through phishing emails. According to the indictment, the Defendant and his co-conspirators infected computers with malware designed to circumvent anti-virus protections and steal confidential personal and financial information from victims. The confidential information, such as online banking credentials, was used to “falsely represent to banks that the defendant and co-conspirators were the victims or employees of the victims with authority to access the victims’ bank accounts.” The investigation found that an estimated $10 million loss in the U.S. alone can be attributed to the Defendant’s scheme.

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Georgia Resident Pleads Guilty to Charges of Operating Unlicensed Money Transmitting Business

On October 13, the DOJ announced that a Columbus, Georgia resident pleaded guilty to one count of operating an unlicensed money transmitting business. According to the DOJ, between February 2013 and March 2014, the individual unlawfully owned, operated, and managed multiple money transmitting companies throughout the Columbus area, offering check-cashing services. The individual allegedly knew that he was required to register his company with FinCEN and with the state of Georgia, but failed to do so. Scheduled to face sentencing in January 2016, the individual faces a statutory maximum sentencing of five years and has agreed to a forfeiture order of more than $1,300,000.

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Kinross Gold Discloses FCPA Investigation by SEC and DOJ

On October 2, Canadian mining company Kinross Gold Corp. announced that the SEC and DOJ are investigating potentially improper payments to government officials in West Africa. The company’s announcement states that it received subpoenas from the SEC in 2014 and 2015, and a request for information from the DOJ in December 2014. The subpoenas came after the company launched an internal investigation in August 2013 to investigate a whistleblower complaint alleging improper payments to government officials and internal control deficiencies in the company’s West African mining operations.

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Former CEO of Siemens-Argentina Pleads Guilty to FCPA Offenses

On September 30, the former CFO of Siemens S.A.-Argentina pleaded guilty in a federal court in New York to conspiring to pay nearly $100 million dollars in bribes to Argentinian officials. The former executive, Andres Truppel, who is a German and Argentinian citizen, pleaded guilty to conspiracy to violate the antibribery, internal controls, and books and records provisions of the FCPA, and conspiracy to commit wire fraud. As described in the U.S. Attorney’s Office for the Southern District of New York’s press release, the violations stemmed from Siemens’ bid to win an Argentine government contract worth $1 billion to create a national identity card system. Mr. Truppel faces up to five years in prison and three years of supervised release when he is sentenced; there is no information on when sentencing will occur.

Truppel was one of eight former Siemens executives indicted in 2011 on charges of conspiring to violate the FCPA and other statutes (see previous BuckleySandler coverage here and here). Siemens itself reached a record $800 million resolution in 2008 with the DOJ and SEC related to FCPA violations in numerous countries, including Argentina. Siemens S.A.-Argentina pleaded guilty to conspiracy to violate the FCPA’s books and records provisions as part of that resolution.

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FIFA Investigation Ensnares President Blatter

After months of speculation about potential legal ramifications for FIFA President Joseph (“Sepp”) Blatter, the Office of the Attorney General of Switzerland announced that Mr. Blatter is the subject of criminal proceedings in that country. The allegations include criminal mismanagement related to a contract with the Caribbean Football Union that was purportedly against the interests of FIFA, as well as misappropriation related to a payment to the President of the Union of European Football Associations (UEFA). The Office of the Attorney General also reported that Mr. Blatter was interrogated and his offices were searched.

Previous FCPA Scorecard coverage of this investigation can be found here.

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Owner of Mortgage Company Sentenced to Serve More Than 11 Years for Role in $64 Million Mortgage Fraud Operation

On September 24, the DOJ released a statement regarding the sentencing of the owner of a Florida mortgage company for allegedly organizing a mortgage fraud scheme. In July 2015, the owner, along with his business partner and a senior underwriter for the mortgage company, pleaded guilty to the mortgage fraud scheme that resulted in $64 million in losses to the FHA. The August 2014 indictment stated that the three individuals edited borrowers’ loan applications, altering important information so that they appeared to be qualified for FHA loans when, in fact, they were not. As a result of the September sentencing, the owner of the company will pay more than $64 million in restitution and forfeit $8 million in illegal profits. The owner’s business partner was sentenced to serve 41 months in prison; in addition, he will pay more than $7 million in restitution and forfeit $400,000 in illegal profits. The company’s underwriter will pay more than $24 million in restitution and serve 51 months in prison. A total of 24 defendants were charged in the case, which was jointly investigated by the HUD-OIG and the DOJ.

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