On May 18, former President of the Nicaraguan Football Federal Julio Rocha was extradited from Switzerland to the United States. He was the final FIFA official to be extradited following the arrests made in Zurich in May 2015, according to the Swiss Federal Office of Justice, which has handled the extradition proceedings over the past year. Mr. Rocha was indicted by the DOJ in May 2015 along with 13 other FIFA officials.
On September 29, a New York-based publicly-traded hedge fund agreed to pay approximately $412 million to the DOJ and SEC to resolve related criminal and civil charges of violating the FCPA in connection with the bribery of high-level government officials across Africa. This is the fourth-largest FCPA enforcement settlement of all time, and the first time a hedge fund has been held accountable for violating the FCPA. In the criminal case, the hedge fund entered into a three-year deferred prosecution agreement (DPA) to resolve charges of conspiracy to violate the FCPA, falsification of books and records, and failure to implement adequate internal controls. The hedge fund agreed to pay a criminal penalty of approximately $213 million, and to retain a compliance monitor for three years. The DPA’s Statement of Facts describes bribes paid to government officials in the Democratic Republic of Congo (Congo) and Libya to help the hedge fund obtain special access and preferential prices for investment opportunities in government controlled-mining sectors in Congo, and secure an investment from the Libyan Investment Authority, Libya’s sovereign wealth fund. In parallel proceedings, the hedge fund agreed to pay $199 million to the SEC and entered into an Administrative Order Instituting Cease-and-Desist Proceedings to settle the FCPA civil charges. The SEC’s allegations covered Libya, Chad, Niger, and the Congo, and alleged that the fund used intermediaries, agents, and business partners to corruptly influence foreign officials. The Order found that the hedge fund executives ignored red flags and corruption risks and permitted the corrupt transactions to proceed. Both the fund’s CEO and CFO agreed to settle related allegations, without admitting or denying the findings. The CEO agreed to pay nearly $2.2 million to the SEC in the settlement, and a penalty will be assessed against the CFO at a future date.
On May 6, the DOJ announced that U.S. District Judge Denise L. Cote sentenced the founder of a Costa Rica-based virtual currency company to 20 years imprisonment and ordered him to pay a $500,000 fine for charges related to illegal money laundering. According to the DOJ, the individual owner, at all relevant times, directed and supervised the company’s operations and was aware that cybercriminals, such as credit card traffickers and identity thieves, were using the “digital currency empire” to launder the proceeds of illegal activity. The DOJ further asserts that the company “grew into a financial hub for cybercriminals around the world, trafficking the criminal proceeds of Ponzi schemes, credit card trafficking, stolen identity information and computer hacking.” When the government shut the company down in May 2013, it had more than 5.5 million user accounts worldwide and more than 78 million financial transactions processed, valued at more than $8 billion. Prior to the sentencing hearing, the owner pleaded guilty to one count of conspiring to commit money laundering; four other co-defendants also pleaded guilty, with two individuals being sentenced to five and three years in prison and two others awaiting sentencing.
On May 10, Deputy U.S. Attorney General Sally Yates spoke at the New York City Bar Association’s White Collar Crime Conference and expanded on the DOJ’s Individual Accountability Policy, which informally bears Yates’ name (the Yates Memo). The DOJ issued the Yates Memo in September 2015, and Yates’ remarks were focused on why the DOJ issued the policy and how it has been working in practice. Yates made clear that “holding individuals accountable for corporate wrongdoing has always been a priority for” the DOJ, but that the policy memorandum was necessary to overcome “real world challenges” that the DOJ encounters (e.g., convoluted corporate structures and lines of authority, data privacy laws, and inability to compel foreign witness testimony) so that it can hold individuals responsible for corporate wrongdoing. Read more…
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.