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Government Enforcement Exposed - "The GEE"
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06 Jun 2014 Canadian Corruption of Foreign Officials Act Update: Three Takeaways from the Cryptometics Case

The Royal Canadian Mounted Police (the RCMP) recently announced charges against Robert Barra, Dario Bernini and Shailesh Govindra, three individuals connected with Cryptometrics Canada (Cryptometrics), a subsidiary of U.S.-based Cryptometrics Corporation (Cryptometrics USA), for violations of Section 3.1 of the Canadian Corruption of Foreign Officials Act (the CFPOA).  These charges relate to a failed scheme to bribe Indian officials to secure the award of a $100 million contract for facial recognition software, and come in the wake of the conviction and sentencing of Nazir Karigar, a Canadian citizen and former agent for Cryptometrics, for his involvement in the scheme.   The charges are significant for U.S. companies – particularly those doing business in Canada – for three reasons.   First, the charges were brought against…

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04 Jun 2014 “Gatekeepers” Beware: A New Tool of the SEC

  In a recent speech at Compliance Week 2014, the premier conference for corporate compliance officers and government regulators, Securities and Exchange Commissioner Kara M. Stein expressed disappointment in the lack of scrutiny and infrequency of enforcement cases brought against what she called the “gatekeepers” – i.e. compliance officers, accountants, auditors and—yes—attorneys.   In Stein’s opinion, failures by those tasked with maintaining and promoting corporate compliance have led to tragic financial losses that have harmed innocent individuals and threatened confidence in the markets. Stein targeted attorneys, stating they in particular are rarely prosecuted even though they are deeply entrenched in almost every decision and transaction a company makes. Stein argued that attorneys who facilitate fraud or provide poor legal advice are typically protected from liability…

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30 May 2014 Federal Appellate Court Adopts Broad Definition of “Instrumentality” as used in the Foreign Corrupt Practices Act

  In a ground-breaking decision, the United States Court of Appeals for the Eleventh Circuit has defined “instrumentality” under the Foreign Corrupt Practices Act (FCPA). Until now no federal appellate court had weighed in on a definition of “instrumentality,” leaving individuals and entities only the government’s interpretation of the statute for guidance.  Not surprisingly, the government’s interpretation of what constitutes an “instrumentality” of the state for purposes of a bribe to one of its officials or employees included state-owned or state-controlled entities.[1]   The Eleventh Circuit’s decision in United States v. Esquenazi, No. 11-15331 (May 16, 2014), in large part adopted the government’s interpretation, defining an “instrumentality” as “an entity controlled by the government of a foreign country that performs a function the controlling government…

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28 May 2014 Dear Department of Justice: Welcome to the “Modern Age”

  On May 12, 2014, Deputy Attorney General James Cole issued a memo to federal prosecutors, as well as several investigative offices (the FBI, DEA, ATF and U.S. Marshals Service) entitled “Policy Concerning Electronic recording of Statements.” The issuance of the memo is somewhat worthy of note because it was done with no fanfare or announcement by the Department, at the time. It is more worthy of note because it reflects a dramatic change in a many decades-long policy of the Department not to electronically record in-custody interviews. Attorney General Holder has described the change as a “sweeping new policy” and the Department announced the “significant policy shift concerning electronic recording of statements” in a May 22, 2014, press release, after several published reports on the…

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27 May 2014 CYBERCRIME & YOUR COMPANY – FAILING TO PREPARE = PREPARING TO FAIL, Part 2

Continuation of last week’s Cybercrime & Your Company – Failing to Prepare = Preparing to Fail, Part 1.   V. If Your Company Becomes the Next Victim   If your company becomes the next target/victim of cybercriminals, personal information of your employees and customers can be compromised. Sensitive and proprietary data can be stolen and sold to the highest bidder, usually one of your competitors. Financial resources can disappear and the reputation of your business can be ruined.   VI. Key Steps to Protect Your Computer System from the Cybercriminal   How can you protect your computer system from a cybercriminal, a digital terrorist, waiting to wreak havoc upon your company? Here are some key tips:  Ensure your employees set strong passwords, change them periodically and…

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22 May 2014 CYBERCRIME & YOUR COMPANY – FAILING TO PREPARE = PREPARING TO FAIL, Part 1

  1. The Threat “If you don’t lock your car, it’s vulnerable.  If you don’t’ secure your computer, it’s vulnerable.”   “Reduce your vulnerability, and you reduce the threat.”   Information on how to protect your computer.   There are over 2 billion people worldwide using the Internet.  An alarming number of these people make a decent living as cybercriminals.  In doing so, they cower behind the anonymity provided by the Internet.  They destroy lives.  They injure businesses and compromise the integrity of the global economy.   2. The Reality In a report recently released by the FBI’s Internet Crime Complaint Center (“IC3”), the agency disclosed that it had received 262,813 “consumer” complaints of suspected internet crime in 2013.  These complaints involved an adjusted dollar…

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20 May 2014 Quick Tip: CFTC to Make First Dodd-Frank Whistleblower Award

  The Commodity Futures Trading Commission plans to make its first whistle-blower award under the Dodd-Frank Wall Street Reform and Consumer Protection Act, with the recipient getting about $240,000 for exposing information about commodities law violations, Acting Director Mark Wetjen said in a May 20 statement.   The number of “high quality tips, complaints and referrals” received by CFTC continues to increase, Christopher Ehrman, head of agency’s Whistleblower Office, said in statement.  

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20 May 2014 District Court Bolsters the Five-Year Statute of Limitations Defense to SEC Civil Enforcement Actions

  A recent decision by a federal district court judge in the Southern District of Florida held that the five year statute of limitations in 28 U.S.C. § 2462 applies to civil enforcement actions by the Securities & Exchange Commission regardless of the relief requested.   The district court’s holding in SEC v. Graham, Case No. 4:13-10011 (S.D. Fla. Ruling May 12, 2014), is an important expansion of the US Supreme Court’s ruling in Gabelli v. SEC, 568 U.S. __ (2013). In Gabelli, the Supreme Court held that the five-year statute of limitations in section 2462 for the SEC to bring a civil enforcement action begins to tick when the fraud occurs, not when it is discovered. Since the Gabelli decision, the SEC has argued that the…

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15 May 2014 Magistrates’ Revolt: Unexpected Resistance to Federal Government Efforts to Get “General Warrants” for Electronic Information

  Any White Collar practitioner, and anyone interested in current and future efforts by the Federal Government to access electronic communications in its investigations, should take note of a recent mini-trend amongst a number of United States Federal Magistrates around the country. That trend, recently noted by the Washington Post, involves United States Magistrates – the “work horses” of the Federal courts who handle much of the day-to-day work carried out in the Federal court system. In a number of rulings issued without generating much publicity, a series of Federal Magistrates around the country have been denying Government requests for search warrants for broad, and sometimes all encompassing, swaths of electronic communications of suspects. These requests typically come before the Magistrates in the form of search warrants addressed to telecommunications companies to provide…

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29 Apr 2014 Is the Second Circuit About to Put the Brakes on the Government’s Pursuit of Insider Trading “Tippees”?

The Second Circuit Court of Appeals has raised questions about federal prosecutors’ burden to convict the recipient of confidential information of insider trading, suggesting the Court may adopt a “bright line” that would provide much-needed guidance to an ambiguous area of law.   At issue is the knowledge the government must prove to convict the recipient (or “tippee”), who often may be many layers removed from the initial disclosure of the confidential information.  Attorneys for former hedge fund managers Todd Newman and Anthony Chiasson have asked the Court to require the government to prove that the tippee must have known that the information was disclosed in exchange for a reward or “personal benefit.”  Federal prosecutors have argued for a broader definition, seeking to convict only…

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