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Government Enforcement Exposed - "The GEE"
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17 Jun 2016 Supreme Court Preserves Implied Certification Theory in Closely Watched False Claims Act Case

In the much-anticipated ruling on Universal Health Services Inc. v. United States ex rel. Escobar, the United States Supreme Court today held that False Claims Act liability can be predicated on an implied certification theory of liability.  (For the factual background and procedural history of the case, see our earlier blog post about the court’s grant of certiorari.) The court also clarified the materiality threshold that must be satisfied to pursue actionable claims under this theory, finding that materiality can be established with or without express language in the regulations that it is a condition of payment.   In upholding the theory of implied certification, the court addressed the situation under which a misleading omission could render a claim false or fraudulent, stating that when…

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12 May 2016 Internet Infamy: Criminal Registries and White Collar Crime

Implementing what the New York Times has dubbed “a scarlet letter of sorts on the state’s financial felons,” Utah has now finalized and published its online White Collar Crime Offender Registry.   Authorized by HB 378 of the Utah Legislature’s 2015 General Session, the Registry is publicly available online and includes offender photographs, physical descriptions and any known aliases.  The Registry encompasses all persons convicted of a second-degree felony since Dec. 31, 2005, for the following offenses: securities fraud, theft by deception, unlawful dealing of property by fiduciary, fraudulent insurance, mortgage fraud, communications fraud and money laundering.  A first-time offense secures an offender a place on the Registry for 10 years. A second offense earns another 10 years and a third offense places an offender…

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29 Apr 2016 Accounting Fraud Getting Increased Attention from the SEC and Class Action Counsel

Accounting and financial disclosure issues are increasingly becoming the focus of litigation – both with the Securities and Exchange Commission (SEC) and the plaintiffs’ class action bar – according to recent pronouncements from the SEC and a leading research firm that tracks securities class actions.   Last week, the SEC announced two financial fraud cases against companies and their former executives, accusing them of various accounting failures that gave investors inaccurate views of company finances. These cases appear to be among the fruits of the SEC’s Financial Reporting and Audit Task Force, created in 2013 to strengthen the SEC’s efforts to identify securities law violations relating to the preparation of financial statements, issuer reporting and disclosure and audit failures. The Task Force’s efforts have taken…

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08 Apr 2016 Department of Justice Rolls Out FCPA Enforcement Pilot Program

On April 5, the Department of Justice (DOJ) issued a press release and accompanying memorandum detailing what it is terming a one-year FCPA “pilot program” as part of an effort to provide more transparency and guidance to companies on the benefits of self-disclosing FCPA violations and cooperating with government investigations. The memorandum sets out three components of the DOJ’s “enhanced FCPA enforcement strategy,” which are:   Increasing law enforcement resources for FCPA prosecutions by hiring 10 new prosecutors for the Fraud section’s FCPA unit; Strengthening coordination with foreign counterparts in order to share leads, documents and witnesses; and Establishing the pilot program to motivate companies to voluntarily self-disclose FCPA-related misconduct, cooperate and remediate.   The central theme of the enhanced strategy appears to be the…

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01 Apr 2016 DOJ Launches Targeted Elder Justice Task Forces

  On March 30, the Department of Justice (“DOJ”) announced the formal launch of 10 regional Elder Justice Task Forces designed to identify nursing homes and other long-term care (“LTC”) facilities that provide “grossly substandard care” to residents.   Similar to DOJ’s previously launched Medicare Fraud Strike Force and Health Care Fraud Prevention & Enforcement Action Team (“HEAT”) initiative, the newly created Elder Justice Task Forces will focus on coordination and information sharing among federal, state and local enforcement agencies to combat suspected cases of physical abuse and financial fraud. Each task force will consist of representatives from the U.S. Attorneys’ Offices, state Medicaid Fraud Control Units, state and local prosecutors’ offices, the Department of Health and Human Services, state Adult Protective Services agencies, Long-Term…

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24 Mar 2016 The Best Policy: Fifth Circuit Finds Prosecutorial Misconduct and Vindictiveness

  Giving credence to the adage that honesty is the best policy, a panel from the Fifth Circuit Court of Appeals in United States v. Dvorin affirmed the district court’s finding that the lead prosecutor “exhibited a reckless disregard for her duties and conducted the proceedings in an irresponsible manner” during a bank fraud prosecution by withholding material evidence concerning the credibility of a key government witness, and also by knowingly using false testimony to obtain a conviction. The panel also found that the government failed to overcome the presumption of prosecutorial vindictiveness because it added an additional forfeiture notice once forced to retry the case as a result of prosecutorial misconduct during the first trial.   In 2012, a grand jury indicted Jason Dvorin…

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23 Mar 2016 A New Approach: DOJ Antitrust Division in Wake of Yates Memo

  For more than five years, the Department of Justice’s (DOJ) Antitrust Division and the FBI have had the automotive parts industry under a microscope. In September 2015, the DOJ announced it would undertake a policy shift to focus more ardently on the investigation and prosecution of individuals responsible for company misconduct. This new policy shift may already be influencing the manner in which the Antitrust Division is conducting criminal investigations.   The ongoing federal investigation into price fixing, bid rigging, and other anticompetitive conduct has netted at least 38 corporate convictions, 58 indictments of corporate executives, and approximately $2.6 billion in criminal fines. Most recently, INOAC Corp., an auto parts supplier and major player in the advanced materials industry, pled guilty for conspiring to…

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10 Mar 2016 Watch What You Write, Watch What You Say

  While market manipulation cases typically involve circumstantial evidence, prosecutors are finding more sophisticated ways to get defendants’ direct statements into evidence. In market fraud cases, government prosecutors are required to prove a defendant’s state of mind (the criminal intent component of a case). Historically, they have done so based on what the defendant did under specific circumstances—something referred to as “circumstantial evidence.” For example, an insider trading case may turn on the circumstance that a corporate insider had earnings information on the date she sold large quantities of corporate stock. Or, a market manipulation case may turn on the trades a defendant entered into after receiving a specific phone call.   Another significant component of such cases is the defendant’s own notes and comments….

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08 Mar 2016 DOJ Leaves Much Unsaid After Announcing Need for Corporate Certifications to Finalize Settlements

  On Feb. 4, the Department of Justice’s (DOJ) Fraud Section announced it will start requiring companies involved in white-collar crime investigations to “certify” that it has disclosed all information regarding individuals involved in the alleged misconduct. According to the Wall Street Journal, this corporate certification will be required before the DOJ will finalize a settlement agreement with a company. The new certification process is still in the “development” stage, “according to the department, but it could be a written certification.” While the U.S. Attorney Manual already requires companies “identify all individuals involved in the misconduct” and disclose “all facts relating to the misconduct;” it does not require a formal, written certification as a prerequisite to finalize a settlement. See U.S.A.M. § 9-28.700.   The…

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07 Mar 2016 SEC Busts Tech Company for Bribing Chinese Officials

  On Feb. 16, the SEC announced settlement of parallel civil and criminal actions involving violations of the Foreign Corrupt Practices Act (FCPA) by Massachusetts-based tech company PTC, Inc. As part of the agreement, PTC and two Chinese subsidiaries agreed to pay more than $28 million in fines, interest and disgorgement for providing Chinese officials with vacations, improper gifts and entertainment that were disguised as legitimate business expenses. Specifically, PTC agreed to pay $13.6 million in disgorgement ($11.858 million) plus interest ($1.764 million) while its two Chinese subsidiaries agreed to pay a $14.54 million fine as part of a non-prosecution agreement.   In related action, the SEC also announced its first deferred prosecution agreement (DPA) with an individual involved in an FCPA investigation. Yu Kai…

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