The Pastoral Plays Of Jorge: DOJ Pops Goldman Sachs In $2.9 Billion Bribery FCPA Case - More To Come

Jorge has been busy, busy, busy!

Where is Melanie?

Happy Fratelli Tuttii!

#maytheheavensfall

Goldman Sachs Charged in Foreign Bribery Case and Agrees to Pay Over $2.9 Billion

The Goldman Sachs Group Inc. (Goldman Sachs or the Company), a global financial institution headquartered in New York, New York, and Goldman Sachs (Malaysia) Sdn. Bhd. (GS Malaysia), its Malaysian subsidiary, have admitted to conspiring to violate the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay over $1 billion in bribes to Malaysian and Abu Dhabi officials to obtain lucrative business for Goldman Sachs, including its role in underwriting approximately $6.5 billion in three bond deals for 1Malaysia Development Bhd. (1MDB), for which the bank earned hundreds of millions in fees.  Goldman Sachs will pay more than $2.9 billion as part of a coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere. 

Goldman Sachs entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Eastern District of New York charging the Company with conspiracy to violate the anti-bribery provisions of the FCPA.  GS Malaysia pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA. 

Previously, Tim Leissner, the former Southeast Asia Chairman and participating managing director of Goldman Sachs, pleaded guilty to conspiring to launder money and to violate the FCPA.  Ng Chong Hwa, also known as “Roger Ng,” former managing director of Goldman and head of investment banking for GS Malaysia, has been charged with conspiring to launder money and to violate the FCPA.  Ng was extradited from Malaysia to face these charges and is scheduled to stand trial in March 2021.  The cases are assigned to U.S. District Judge Margo K. Brodie of the Eastern District of New York.

In addition to these criminal charges, the department has recovered, or assisted in the recovery of, in excess of $1 billion in assets for Malaysia associated with and traceable to the 1MDB money laundering and bribery scheme.   

“Goldman Sachs today accepted responsibility for its role in a conspiracy to bribe high-ranking foreign officials to obtain lucrative underwriting and other business relating to 1MDB,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “Today’s resolution, which requires Goldman Sachs to admit wrongdoing and pay nearly three billion dollars in penalties, fines, and disgorgement, holds the bank accountable for this criminal scheme and demonstrates the department’s continuing commitment to combatting corruption and protecting the U.S. financial system.”

“Over a period of five years, Goldman Sachs participated in a sweeping international corruption scheme, conspiring to avail itself of more than $1.6 billion in bribes to multiple high-level government officials across several countries so that the company could reap hundreds of millions of dollars in fees, all to the detriment of the people of Malaysia and the reputation of American financial institutions operating abroad,” said Acting U.S. Attorney Seth D. DuCharme of the Eastern District of New York.  “Today’s resolution, which includes a criminal guilty plea by Goldman Sachs’ subsidiary in Malaysia, demonstrates that the department will hold accountable any institution that violates U.S. law anywhere in the world by unfairly tilting the scales through corrupt practices.”

“When government officials and business executives secretly work together behind the scenes for their own illegal benefit, and not that of their citizens and shareholders, their behavior lends credibility to the narrative that businesses don’t succeed based on the quality of their products, but rather their willingness to play dirty,” said Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.  “Greed eventually exacts an immense cost on society, and unchecked corrupt behavior erodes trust in public institutions and government entities alike.  This case represents the largest ever penalty paid to U.S. authorities in an FCPA case.  Our investigation into the looting of funds from 1MDB remains ongoing. If anyone has information that could assist the case, call us at 1-800-CALLFBI.”

“1MDB was established to drive strategic initiatives for the long-term economic development of Malaysia. Goldman Sachs admitted today that one billion dollars of the money earmarked to help the people of Malaysia was actually diverted and used to pay bribes to Malaysian and Abu Dhabi officials to obtain their business,” said Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office.  “Today’s guilty pleas demonstrate that the law applies to everyone, including large investment banks like Goldman Sachs.  IRS Criminal Investigation will work tirelessly alongside our law enforcement partners to identify and bring to justice those who engage in fraud and deceit around the globe.  When the American financial system is misused for corruption, the IRS will take notice and we will take action.”

According to Goldman’s admissions and court documents, between approximately 2009 and 2014, Goldman conspired with others to violate the FCPA by engaging in a scheme to pay more than $1.6 billion in bribes, directly and indirectly, to foreign officials in Malaysia and Abu Dhabi in order to obtain and retain business for Goldman from 1MDB, a Malaysian state-owned and state-controlled fund created to pursue investment and development projects for the economic benefit of Malaysia and its people.  Specifically, the Company admitted to engaging in the bribery scheme through certain of its employees and agents, including Leissner, Ng, and a former executive who was a participating managing director and held leadership positions in Asia (Employee 1), in exchange for lucrative business and other advantages and opportunities.  These included, among other things, securing Goldman’s role as an advisor on energy acquisitions, as underwriter on three lucrative bond deals with a total value of $6.5 billion, and a potential role in a highly anticipated and even more lucrative initial public offering for 1MDB’s energy assets.  As Goldman admitted — and as alleged in the indictment pending in the Eastern District of New York against Ng and Low — in furtherance of the scheme, Leissner, Ng, Employee 1, and others conspired to pay bribes to numerous foreign officials, including high-ranking officials in the Malaysian government, 1MDB, Abu Dhabi’s state-owned and state-controlled sovereign wealth fund, International Petroleum Investment Company (IPIC), and Abu Dhabi’s state-owned and state-controlled joint stock company, Aabar Investments PJS (Aabar). 

Goldman admitted today that, in order to effectuate the scheme, Leissner, Ng, Employee 1, and others conspired with Low Taek Jho, aka Jho Low, to promise and pay over $1.6 billion in bribes to Malaysian, 1MDB, IPIC, and Aabar officials.  The co-conspirators allegedly paid these bribes using more than $2.7 billion in funds that Low, Leissner, and other members of the conspiracy diverted and misappropriated from the bond offerings underwritten by Goldman.  Leissner, Ng and Low also retained a portion of the misappropriated funds for themselves and other co-conspirators.  Goldman admitted that, through Leissner, Ng, Employee 1 and others, the bank used Low’s connections to advance and further the bribery scheme, ultimately ensuring that 1MDB awarded Goldman a role on three bond transactions between 2012 and 2013, known internally at Goldman as “Project Magnolia,” “Project Maximus,” and “Project Catalyze.” 

Goldman also admitted that, although employees serving as part of Goldman’s control functions knew that any transaction involving Low posed a significant risk, and although they were on notice that Low was involved in the transactions, they did not take reasonable steps to ensure that Low was not involved.  Goldman further admitted that there were significant red flags raised during the due diligence process and afterward — including but not limited to Low’s involvement — that either were ignored or only nominally addressed so that the transactions would be approved and Goldman could continue to do business with 1MDB. As a result of the scheme, Goldman received approximately $606 million in fees and revenue, and increased its stature and presence in Southeast Asia.

Under the terms of the agreements, Goldman will pay a criminal penalty and disgorgement of over $2.9 billion.  Goldman also has reached separate parallel resolutions with foreign authorities in the United Kingdom, Singapore, Malaysia, and elsewhere, along with domestic authorities in the United States.  The department will credit over $1.6 billion in payments with respect to those resolutions.

The department reached this resolution with Goldman based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department; the nature and seriousness of the offense, which included the involvement of high-level employees within the Company’s investment bank and others who ignored significant red flags; the involvement of various Goldman subsidiaries across the world; the amount of the bribes, which totaled over $1.6 billion; the number and high-level nature of the bribe recipients, which included at least 11 foreign officials, including high-ranking officials of the Malaysian government; and the significant amount of actual loss incurred by 1MDB as a result of the co-conspirators’ conduct.  Goldman received partial credit for its cooperation with the department’s investigation, but did not receive full credit for cooperation because it significantly delayed producing relevant evidence, including recorded phone calls in which the Company’s bankers, executives, and control function personnel discussed allegations of bribery and misconduct relating to the conduct in the statement of facts.  Accordingly, the total criminal penalty reflects a 10 percent reduction off the bottom of the applicable U.S. sentencing guidelines fine range. 

Low has also been indicted for conspiracy to commit money laundering and violate the FCPA, along with Ng, E.D.N.Y. Docket No. 18-CR-538 (MKB).  Low remains a fugitive.  The charges in the indictment as to Low and Ng are merely allegations, and those defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The investigation was conducted by the FBI’s International Corruption Unit and IRS-CI.  The prosecution is being handled by the Criminal Division’s Fraud Section and the Money Laundering and Asset Recovery Section (MLARS), and the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York.  Trial Attorneys Katherine Nielsen, Nikhila Raj, Jennifer E. Ambuehl, Woo S. Lee, Mary Ann McCarthy, Leo Tsao, and David Last of the Criminal Division, and Assistant U.S. Attorneys Jacquelyn M. Kasulis, Alixandra Smith and Drew Rolle of the Eastern District of New York are prosecuting the case.  Additional Criminal Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Eastern District of New York and Central District of California have provided valuable assistance with various aspects of this investigation, including with civil and criminal forfeitures.  The Justice Department’s Office of International Affairs of the Criminal Division provided critical assistance in this case. 

The department also appreciates the significant assistance provided by the U.S. Securities and Exchange Commission; the Board of Governors of the Federal Reserve System, including the Federal Reserve Bank of New York; the New York State Department of Financial Services, the United Kingdom Financial Conduct Authority; the United Kingdom Prudential Regulation Authority; the Attorney General’s Chambers of Singapore; the Singapore Police Force-Commercial Affairs Division; the Monetary Authority of Singapore; the Office of the Attorney General and the Federal Office of Justice of Switzerland; the judicial investigating authority of the Grand Duchy of Luxembourg and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg; the Attorney General’s Chambers of Malaysia; the Royal Malaysian Police; and the Malaysian Anti-Corruption Commission.  The department also expresses its appreciation for the assistance provided by the Ministry of Justice of France; the Attorney General’s Office of the Bailiwick of Guernsey and the Guernsey Economic Crime Division.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

MLARS’s Bank Integrity Unit investigates and prosecutes banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

MLARS’s Kleptocracy Asset Recovery Initiative, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, seeks to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office.

Relevant court documents will be uploaded throughout the day and available at the following links: The Goldman Sachs Group Inc. and Goldman Sachs Sdn. Bhd.

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DOJ Takes Down International Trafficking Tiny Humans Adoption Operation In Strongsville, Ohio

Strongsville seems to be the focus, de jour.

I wonder what Lisa Page has to say since Russia banned the U.S. from international adoptions.

I should twat her.

The same thing goes on in the United States, except it is much more gruesome because no one cares about the horrors of Child Protective Services, Foster Care & Adoption, the oldest form of survival.

Three Individuals Charged with Arranging Adoptions from Uganda and Poland Through Bribery and Fraud

Three women were charged in a 13-count indictment filed on Aug. 14 in the Northern District of Ohio for their alleged roles in schemes to corruptly and fraudulently procure adoptions of Ugandan and Polish children through bribing Ugandan officials and defrauding U.S. adoptive parents, U.S. authorities, and a Polish regulatory authority.

Margaret Cole, 73, of Strongsville, Ohio, Debra Parris, 68, of Lake Dallas, Texas, and Dorah Mirembe, 41, of Kampala, Uganda, were charged in the indictment.  In relation to the Uganda scheme, Parris and Mirembe were each charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and commit visa fraud, one count of conspiracy to commit mail fraud and wire fraud, one count of conspiracy to commit money laundering, three substantive FCPA counts and three substantive counts of money laundering.  Parris was also charged with one count of mail fraud.  In relation to the Poland scheme, Parris and Cole were each charged with one count of conspiracy to defraud the United States.  Cole was further charged with one count of making a false statement to a U.S. accrediting entity and one count of making a false statement to a Polish authority.

“The defendants allegedly resorted to bribery and fraud to engage in an international criminal adoption scheme that took children from their home countries in Uganda and Poland without properly determining whether they were actually orphaned.  The defendants sought to profit from their alleged criminal activity at the expense of families and  vulnerable children,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division.  “These charges clearly show that the Department of Justice is committed to protecting children worldwide, including those involved in the international adoption process.”

“These defendants are accused of orchestrating an alleged scheme that bribed Ugandan officials, defrauded the United States and manipulated parents inside and outside of the country,” said U.S. Attorney Justin Herdman of the Northern District of Ohio.  “As a result of this alleged conduct, prospective parents were deceived, hundreds of thousands of dollars were misused and innocent children were displaced from their homes.”

“These three defendants preyed on the emotions of parents, those wanting the best for their child, and those wishing to give what they thought was an orphaned child a family to love,” said Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office.  “These defendants allegedly lied to both sides of the adoption process, and bribed Ugandan officials who were responsible for the welfare of children.  Parents, prospective parents and children were emotionally vested and were heartbroken when they learned of the selfishness and greed in which these three engaged.  The FBI will never cease in its efforts to protect the innocent and unwitting from those who prey on that trust and confidence and we will vigorously pursue and hold those responsible accountable.”

With respect to the Uganda scheme, the indictment alleges that Parris and Mirembe, together with others, engaged in a scheme to pay bribes to Ugandan officials to corruptly procure the adoption of Ugandan children by families in the United States, including the adoption of children who were not properly determined to be orphaned and who had to be ultimately returned to their birth parents.

Specifically, Parris, Mirembe, and their co-conspirators allegedly (1) paid bribes to social welfare officers in exchange for them issuing welfare reports recommending that certain children be placed into orphanages without first ensuring that the children were actually orphaned or that putting them up for adoption was in the children’s best interest; (2) paid bribes to Ugandan magistrate judges to obtain court orders placing those children in an orphanage that was willing to accept the children without inquiring into whether they were actually orphans; (3) paid bribes to court registrars to cause the court registrars to assign the cases of these children to two corrupt “adoption-friendly” judges; and (4) paid bribes to the corrupt Ugandan judges to obtain orders to permit their clients to bring the children to the United States for adoption.

Parris, Mirembe, and others also allegedly lied to, and concealed material information from, adoptive parents, including lying about the bribe payments and whether the children were properly determined to be eligible for adoption, and concealing other material information about the children’s history.  The indictment also alleges that Parris, Mirembe, and others agreed to cause false documents to be submitted to the U.S. Department of State to hide the corrupt and fraudulent scheme and to mislead it in its adjudication of visa applications for the Ugandan children being considered for adoption.  The co-conspirators and the entities they worked for received more than $900,000 in connection with these adoptions.

With respect to the Poland scheme, the indictment alleges that after clients of their adoption agency determined they could not care for one of the two Polish children they were set to adopt, Cole and Parris took steps to transfer the child to Parris’s relatives, who were not eligible for intercountry adoption and one of whom had a criminal arrest record.  After the child was physically abused, Cole and Parris took steps to conceal their improper conduct from the entity responsible for accrediting U.S. intercountry adoption agencies—and from the Polish authority responsible for intercountry adoptions—in an attempt to continue profiting from these adoptions. 

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

If you believe you are a victim of this offense, please visit https://www.justice.gov/criminal-fraud/victim-witness-program or call (888) 549-3945.

The FBI’s Cleveland Field Office is investigating the case.  Trial Attorneys Jason Manning and Alexander Kramer of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Chelsea Rice of the Northern District of Ohio are prosecuting the case.  The Justice Department’s Office of International Affairs assisted in the investigation.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

Cole Et Al Indictment - Strongsville Ohio Adoptions by Beverly Tran on Scribd

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SENATE: Hearing On The DNI Appointment Of John Ratclife

The appointment of John Ratcliffe.

He was asked if he discussed loyalty with Trump.

I bet he did and was too dumb to know he did.

Hot mess.

#maytheheavensfall

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JUDICIARY: Citizens United Hearing - No One Wants To Talk About The Children's Trust Funds, Parental Rights Of Foreign Corporations Or FARA

So, Judiciary has a hearing on corporation PACs where they had Ted Deutch, of Ethics and Pramila Jayapal testify as witness experts on dark money, without calling out foreign corporations running Medicaid fraud into political campaign like Bob MAXIMUS GOODLATTECUS, former Judiciary Chairman did with TEVA, under Foreign Corrupt Practices Act.

No one even mentioned how MAXIMUS GOODLATTECUS tried to pull a fast one and introduce legislation to gut the Ethics Committee that was investigating this matter, that Ted Deutch did not even mention.

This was about corporate parental rights, which seems to be a concept foreign to Judiciary, because no one wants to talk about the children's trust funds.

Perkins Coie's SEC Money Laundering Trust Fund Emolument Fraud Scheme

Yes, we all know the FEC does not have a quorum, but no one wants to talk about the U.S. Treasury having superseding powers of authority over political campaign finance.

One reason is because Perkins Coie Sucks, which basically runs the FEC, where Marc Elias is MIA when it comes to those pesky congressional subpoenas no one is enforcing.

This was a hot mess of a hearing!

#perkinscoiesucks

FEC Children's Trust Funds Advisory Opinion by Beverly Tran on Scribd

Goodlatte OCE Amendment to House Rules by Beverly Tran on Scribd

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SEC & Congress Discuss Fraud & The Whisleblowers

SEC and the Congress have issues with the amount of the awards to whistleblowers.

Well, I can simply everyone's life and propose that this can all be resolved by bowing down and giving reverence to those who bear witness.

All you have to do is #sayhisname.

The SEC can not audit private companies because that is called an investigation.

The SEC can neither audit Public Private Partnerships....like the Detroit Land Bank Authority....because it never incorporated....so it has no SEC filings....and if it is listed in any other SEC filings on record....the SEC then should consider themselves whistleblowers, too....because they probably found some Corporate Shape Shifters.

Oh, my!

There are fake ass groups submitting fake ass letters to report fraud, to investigate something else, as a throw from what others are doing?

Well, I guess it would be a novel idea to have all whistleblower sign their name on any grievance, under penalty of law, don't ya think?

Wanna Bet The SEC Investigating The Detroit Land Bank Authority?

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DOJ: The Kleptocracy Initiative - Foreign Corrupt Practices Act To End Stealin' The Children, Land & Votes

I want to see the asset recovery operations for Detroit.

Assistant Attorney General Brian A. Benczkowski Delivers Remarks at the American Conference Institute’s 36th International Conference on the Foreign Corrupt Practices Act

National Harbor, MD

 ~

Wednesday, December 4, 2019

Remarks as Prepared for Delivery

Good morning, and thank you, Rachel for that kind introduction.

It is an honor and privilege to address this year’s ACI Conference on the Foreign Corrupt Practices Act.  Although there are many excellent legal conferences throughout the year, this one always stands out because of the quality of the speakers and the deep substantive focus on foreign bribery investigations and prosecutions. 

I am particularly pleased to be here at this time, given that the Criminal Division has seen remarkable prosecution activity and case developments in the FCPA space over the past year.   

So far in 2019, the Criminal Division’s FCPA Unit has publicly announced more charges against individuals [34] than in any other year in history.  It has also publicly announced more guilty pleas by individuals [30] than ever before.  

This number of individual prosecutions in 2019 is not an outlier or a statistical anomaly.  Rather, it is part of the Department’s continued dedication to holding individual wrongdoers accountable across the board. 

Indeed, this year’s record number of individual FCPA charges and guilty pleas builds on 2017 and 2018, which were previously the two biggest years for those categories of cases.  

Building cases against individuals takes time and resources, even more so when those individuals assert their trial rights. 

And yet, these overall individual prosecution numbers (charges and pleas) have been generated in a year in which our prosecutors also have been very busy at trial. 

So far in 2019, the FCPA Unit has equaled its annual high-water mark for trials ending in conviction. 

Yet, our work prosecuting individual wrongdoers has not impacted our efforts to police corporate FCPA cases.  By the end of this week, the FCPA Unit will have resolved seven corporate cases with criminal resolutions in 2019, as well as two additional cases that were resolved via declinations with disgorgement under the FCPA Corporate Enforcement Policy. 

These corporate resolutions – including one to be announced later this week – collectively represent the largest amount ever recovered by the DOJ in FCPA cases in a single year ($1.6B versus the previous high in 2016 of $1.3B), and a total of $2.8 billion recovered globally through coordinated resolutions.

In addition to its efforts under the FCPA, the Criminal Division also pursues foreign corruption through money laundering enforcement and asset forfeiture.  The Division’s Kleptocracy Asset Recovery Initiative is a prime example of that enforcement. 

Administered through our Money Laundering and Asset Recovery Section (MLARS), prosecutors, analysts and agents investigate and prosecute acts of high-level foreign corruption – such as embezzlement and money laundering – that affect the U.S. financial system.

The Section also brings asset recovery actions to seize and forfeit the proceeds of foreign official corruption in which, as appropriate, the proceeds are returned for the benefit of the foreign citizens that were victimized by that greed. 

The success of the Kleptocracy Initiative was on full display in 2019, as it reached a historic settlement of its civil forfeiture cases against assets acquired by Low Taek Jho, known to all as Jho Low.

Jho Low allegedly used funds misappropriated from 1MDB, Malaysia’s investment development fund, and laundered them through financial institutions in several jurisdictions, including the United States, Switzerland, Singapore and Luxembourg. 

Low then allegedly engaged in extravagant spending sprees, acquiring valuable artwork, real estate, airplanes, yachts, and sports cars, all while gambling freely at casinos, and enjoying what any observer would call a lavish lifestyle. 

The terms of this settlement are striking, especially when considered alongside the Division’s prior disposition of related forfeiture cases.  In all, the United States will have recovered or assisted in the recovery of more than $1 billion in assets associated with the IMDB scheme.

That remarkable sum represents not only the largest recovery to date under the Kleptocracy Initiative, but also the largest civil forfeiture ever concluded by the Justice Department.  And we did so by working closely with our able counterparts in the United States Attorney’s Office in Los Angeles, who also contributed extensively to this effort. 

These prosecution numbers and case achievements in foreign corruption matters are in line with the overall trend of white collar enforcement in the Criminal Division. 

So far this year, the Fraud Section has brought charges against more than 440 individuals, which is an all-time high that will only increase through the close of the year. 

And by the end of this week, the Section will have reached 16 corporate criminal resolutions this year. 

With these numbers in mind, it is fair to say that reports of the death of white collar enforcement at the Department are grossly exaggerated.

In citing the achievements of the past year, I would be remiss if I didn’t give credit where the credit is truly due – to the career prosecutors, law enforcement agents, and supervisors who have worked tirelessly over the past months and years to build and prosecute these cases. 

I also want to recognize a changing of the guard that happened over the last year.  The former head of the FCPA Unit, Dan Kahn, was promoted to Senior Deputy Chief of the Fraud Section. 

Over the last decade, Dan moved up steadily within the FCPA Unit, starting as a line Trial Attorney, then becoming an Assistant Unit Chief, and finally being promoted to head the FCPA Unit three years ago. 

Under Dan’s leadership, the Unit has prosecuted a record number of individuals, recovered billions of dollars in monetary penalties, and launched groundbreaking policy reforms.  I am very grateful that Dan was willing to bring his well-honed legal skills, keen judgement, and even-keeled temperament to Fraud’s front office, where his talents will be brought to bear to benefit the entire Section, not just our FCPA program.

Dan leaves behind big shoes to fill.  The new head of the FCPA Unit is Chris Cestaro, a longtime veteran prosecutor and supervisor within the Unit.  Chris is a thoughtful leader and dedicated public servant. 

He has worked alongside Dan for many years, and I am confident that the FCPA Unit will continue to thrive under his excellent leadership.

For many years, conferences like this one have taken on outsized importance because there was so little case law that developed around the FCPA. 

Companies typically resolved matters through negotiation, and individuals were historically not prosecuted as vigorously as they are today.  And the Department was less transparent about how it reached the results it did.

As I’ve noted, the Department’s focus on individual accountability has led to more individual prosecutions.  Correspondingly, those prosecutions are now yielding jury trials and actual FCPA case law. 

At the rate we are going, in another ten years, the FCPA section in white collar crime textbooks will be chock full of judicial opinions with which to challenge law students via the Socratic method.

I want to highlight one such case, the prosecution and recent trial victory against Lawrence Hoskins.  As many of you likely recall, the Hoskins case earlier involved a consequential appeal and decision by the Second Circuit. 

I won’t go through that decision here – it has been fully debated and, indeed, I am told there was a mock oral argument about the case on this stage just two years ago. 

Instead, I want to talk about a different aspect of our case that has received a significant amount of attention.  Namely the Department’s use of agency liability to prosecute Mr. Hoskins for violating the FCPA.

Before getting into that discussion, let me provide a very brief summary of the Hoskins case for the small handful of you here who might be unfamiliar with it.  In doing so, I realize this is a very specialized conference and deeply knowledgeable audience, so this is a bit like summarizing Hamlet at a Shakespeare convention. 

Lawrence Hoskins is a U.K. national, who was employed at a European subsidiary of Alstom S.A., and served as a senior vice president of the International Network division of the company. 

He was convicted last month of helping to carry out a massive bribery scheme to obtain a $118 million contract from a state-owned utility in Indonesia. 

And this is the part that matters in particular for my remarks today on agency:  He participated in this bribery scheme to secure the contract for Alstom’s U.S. subsidiary, Alstom Power, Inc., as well as another partner on the project. 

Another important detail is that Hoskins never personally took any of his actions related to the bribery conduct within the United States.

The government’s prosecution theory, which resulted in the conviction, was that Hoskins violated the anti-bribery provisions of the FCPA through his actions as an agent of Alstom Power, Inc., a U.S. domestic concern. 

Some observers have raised concerns about how the Department might pursue agency-based FCPA cases after Hoskins.  I hope to dispel some of those concerns today.

First, it is important to keep in mind that each of the FCPA’s three jurisdictional components reach conduct by “any officer, director, employee, or agent” of entities covered by those provisions.  This has been black letter statutory law for more than two decades. 

Accordingly, the use of agency principles in FCPA prosecutions is far from controversial, whether applied to the Act’s issuer provisions (15 U.S.C. § 78dd-1), domestic concern provisions (15 U.S.C. § 78dd-2), or U.S. territorial conduct provisions (15 U.S.C. § 78dd-3).  Indeed, in its decision last year, the Second Circuit wrote that the government’s agency theory of prosecution was “squarely within the terms of the statute.”  That is something with which I wholeheartedly I agree.

With that said, some of the concerns that have been voiced are not lost on me.  Not too long ago, I was a lawyer in private practice.  I know that the hardest questions to answer aren’t the ones that fall “squarely within the terms of the statute[,]” but those at the outer edges.

I want to be clear today that the Department is not looking to stretch the bounds of agency principles beyond recognition, or even push the FCPA statute towards its outer edges. 

For example, the Criminal Division will not suddenly be taking the position that every subsidiary, joint venture, or affiliate is an “agent” of the parent company simply by virtue of ownership status.  Conversely, we will also not be taking the position that every parent company should automatically be held liable for the acts of its subsidiaries, joint ventures, or affiliates based on an agency theory.  Simply put, the law requires more.

Each case and application of agency liability will need to be evaluated on its own and be based on a provable facts that align with agency principles. 

In this regard, the district court’s jury instruction in Hoskins is, well, instructive.  There, the jury was called upon to evaluate Hoskins’ conduct to look for proof of an agency relationship and control by the principal. 

Additionally, the court made clear that a person or entity may be an agent for some business purposes and not for others.  This meant that the government needed to prove that Hoskins was an agent of a domestic concern in connection with the specific events related to the project at issue. 

Before pursuing an FCPA case based on an agency theory, whether as to an individual or a company, the Department will need to measure the facts against the legal standard articulated by the court.  And our prosecutors will need to be confident that their evidence will be able to carry the government’s burden of proof at trial.  These are no small things. 

Aside from the law, the Department and its prosecutors must always exercise appropriate prosecutorial discretion. 

Where the evidence supports a finding of agency between a parent and a subsidiary, or for an individual, we will assess whether it is appropriate to exercise our discretion to apply the principle in that case. 

In exercising that discretion, our prosecutors will look to the factors they consider in every case under the Department’s Principles of Federal Prosecution of Business Organizations, as well as under the FCPA Corporate Enforcement Policy. 

Those factors are ones that are familiar to everyone in this room – the nature and seriousness of the offense, the pervasiveness and involvement of high-level executives in the misconduct, and whether the company voluntarily disclosed the misconduct, fully cooperated, and took timely and appropriately remedial actions. 

That said, I want to be very clear on one important point:  if the Department were to find evidence of the use of corporate structures to shield a parent from criminal liability, or the use of agents to shield a high-level individual executive from accountability, the Department likely would strongly favor prosecution in those instances. 

My remarks today regarding agency are intended to provide a window into the Department’s thinking and approach to cases.  Although many aspects of prosecutors’ work must be kept confidential, there is no need for there to be a black box around the principles and policies that guide our decisions. 

I actually believe a black box approach can stand in the way of the Department’s goals and mission.

For example, it is not in the Criminal Division’s interest to be opaque about the factors we want our prosecutors to consider when evaluating corporate compliance programs.  We want the corporate community to invest heavily in compliance, and do so efficiently and effectively. 

Strong corporate compliance programs and cultures not only detect misconduct, but they can also have a strong deterrent effect on those who might be tempted to violate laws or corporate policies.  These by-products of strong compliance align with the Criminal Division’s goals and mission.   

Nonetheless, you can imagine a company that is considering an investment in improved control systems to augment other aspects of its compliance program.  The new controls may flag misconduct that has previously gone undetected, giving rise to a greater sense of legal exposure – or at least known legal exposure. 

This sense of increased risk may then create resistance to the project from within the company. An important compliance program improvement is then never undertaken, and certain misconduct then goes unchecked, unless and until the Department happens upon it.  That is not the outcome we want.

Our policies need to be designed and communicated in a way that helps companies trust they are making the right investments.  It has been my goal since I arrived to foster and increase that trust, and I think the Department and the Criminal Division have made great strides in that regard. 

In publishing the Criminal Division’s compliance evaluation guidance earlier this year, we sought to convey to the bar and the corporate community that we place a significant value on compliance program investment and improvement, and that we will approach compliance program evaluation in a thoughtful way that is guided by much more than 20/20 hindsight. 

We reinforced the guidance through enhanced compliance training for our prosecutors, giving them a more sophisticated understanding of compliance program design and the challenges to effective implementation.  And that training will continue.

Through our monitorship selection policy, we have encouraged companies to make strong remedial investments in their compliance programs after misconduct is discovered by signaling through the policy that such investments will weigh against the imposition of a monitor.

And the Department’s improved voluntary self-disclosure guidance and policy against piling-on speak to the risk that an improved compliance program may ferret out otherwise unseen misconduct.  The FCPA Corporate Enforcement Policy lets companies know that, if a problem is discovered, there is a means for self-disclosing it in a way that mitigates risk in concrete ways.  

The piling-on policy seeks to contain risk in other ways, helping to foster greater trust that companies will be treated fairly, if a problem is detected. 

In speaking about our policies, I use the word “trust” for a reason.  Whether our policies are designed to incentivize or deter certain behaviors, or to pull back the veil to demystify processes or clear away confusion, they can only be effective if they are trusted. 

For that reason, the Criminal Division will continue to demonstrate our adherence to and application of our policies by our actions, including in press statements, public resolution documents, and program-related declinations.  After all, in law as in life, actions speak louder than words.

As we all know, policies can be changed at the drop of a hat by successive Department leaders and successive Administrations.  But good policies tend to survive beyond the tenures of those who helped make them, and they can serve as building blocks for further refinement.

I hope that is what we have been doing in this space for the last few years – making worthwhile refinements to existing policies and developing our own building blocks for the future. 

Time will tell whether this work will endure, and conferences like this exist in large measure for experts like you to help us understand whether we are going in the right direction.     

Thank you for your time and attention this morning, and I look forward to further dialogue on these important issues, including in the Q and A that will follow.

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DOJ: Ending The Trafficking Of Tiny Humans Under The Foreign Corrupt Practices Act - Domestic & International Foster Care & Adoption

I am breathless.

DOJ is using FCPA.

FCPA may also be applied to domestic Foster Care & Adoption operations, which extend to the Children's Trust Funds, because these Child Placing Agencies, like Bethany or any other state privatized contract under the U.S. Conference of Catholic Bishops, where the Vatican is a foreign corporation, enforcing its own, privatized laws of chattel, are invading our nation, stealin' the children, the land and the votes.

Behold, the Residuals of the Peculiar Institution because the same thing goes on in the United States, but no one wants to talk about it.

It started in Detroit.

Texas Woman Pleads Guilty to Conspiracy to Facilitate Adoptions From Uganda Through Bribery and Fraud

A Texas woman who managed aspects of an international program at an Ohio-based adoption agency pleaded guilty today for her role in a scheme to corruptly facilitate adoptions of Ugandan children through bribing Ugandan officials and defrauding U.S. adoptive parents and the U.S. Department of State.

Robin Longoria, 58, of Mansfield, Texas, pleaded guilty before U.S. Magistrate Judge William H. Baughman, Jr. of the Northern District of Ohio to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), to commit wire fraud and to commit visa fraud.  Sentencing will be before U.S. District Judge Christopher A. Boyko of the Northern District of Ohio.

“The defendant compromised protections for vulnerable Ugandan children and undermined the United States’ visa screening process,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Today’s plea ensures that she is held accountable for the far-reaching consequences of her corrupt conduct.”

“This defendant has admitted to playing a part in a conspiracy in which judges and other court officials in Africa were paid bribes to corrupt the adoption process,” said U.S. Attorney Justin Herdman of the Northern District of Ohio.  “We are committed to pursuing justice for the adoptive parents and for all parties involved.”

“While adoptive families were financially and emotionally invested in the welfare of their future child, misrepresentations were made by Ms. Longoria and others to disguise bribe payments made to court officials in Uganda,” said Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office.  “We are pleased Ms. Longoria has accepted responsibility for her role in facilitating an international adoption scam.”

As part of her guilty plea, Longoria admitted, among other things, that she and her co-conspirators agreed to, and did, cause bribes disquised as fees to be paid to an Uganda Agent. Longoria knew that these fees would and were used by the to pay bribes to court registrars and Ugandan High Court judges to corruptly influence the court registrars to assign particular cases to “adoption-friendly” judges and to corruptly influence the judges to grant the U.S. clients of the adoption agency the authority to bring the Ugandan children to the United States for the purpose of adoption.  Longoria also admitted that she and her co-conspirators agreed to, and did, conceal these bribes from the adoption agency’s U.S. clients.  Further, Longoria admitted that she and her co-conspirators agreed to, and did, create false documents for submission to the U.S. State Department to mislead it in its adjudication of visa applications for the Ugandan children being considered for adoption.

If you believe you are a victim of this offense, please visit https://www.justice.gov/criminal-fraud/victim-witness-program or call (888) 549-3945.

The FBI’s Cleveland Field Office is investigating the case.  Trial Attorney Jason Manning of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Chelsea Rice of the Northern District of Ohio are prosecuting the case. 

The Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at

https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.  

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Cocktails & Popcorn: Matt Whitaker Is Back To Say Barr & Ratcliffe Are The Perfect Team - The Celestial Goddess Of The Woodshed Concurs

"TEVA, anyone?", said Herrington, the
Super Secret Agent Whistleblower.

Yes, John Ratcliffe is leaving Congress, the U.S. Judiciary Committee, to become the new Director of National Intelligence, replacing Dan Coats, to work with U.S. Attorney Bill Barr.

Yes, they make the perfect team because this is about trafficking tiny humans.

For those who do not remember, or simply do not like to click the links I provide to review what I have been presenting, here is a fun video on Ratcliffe and his work in trafficking tiny humans.

You can see how effective Ratcliffe was when it came to trafficking tiny humans by watching Gowdy's lovely facial expressions.

Trey knows all the stuff.

Matt knows lots of stuff, too.

Trump’s spy chief pick, Texan John Ratcliffe, accused of fudging role in 'Holy Land' terrorism case

WASHINGTON -- The North Texas Republican picked by President Donald Trump to be America's next intelligence chief is grappling with reports that he embellished his role in a high-profile anti-terrorism case he's cited as proof of his national security bona fides.

At issue is the extent of Heath Rep. John Ratcliffe's involvement as a federal prosecutor in the U.S. vs. Holy Land Foundation case, which ended in 2009 with officials at a Texas-based charity being found guilty of funneling money to the terrorist group known as Hamas.

While Ratcliffe has touted that he "convicted individuals" involved in the scheme, ABC News and NBC News this week cast doubt on that account.

Jim Jacks, one of the Holy Land case's lead prosecutors, also told The Dallas Morning News on Tuesday that Ratcliffe "wasn't part of the trial team or the investigative team." Asked if it was accurate to say that Ratcliffe "convicted individuals" in the case, he said, "No."

In response to those reports, Ratcliffe spokeswoman Rachel Stephens clarified this week that the Texan, while serving as U.S. Attorney for the Eastern District of Texas, was appointed to investigate issues related to the mistrial that occurred in the case's first trial.

"Because that investigation did not result in any criminal charges, it would not be in accordance with Department of Justice policies to make further details public," she said, confirming a written statement provided to ABC News and NBC News.

Jacks, a former U.S. attorney in the Northern District of Texas, confirmed that depiction, explaining that Ratcliffe was "appointed to look into a collateral matter after the first trial" and that the assignment lasted for a "relatively short-lived period of time."

He added that he found Ratcliffe to be "very smart, a very good lawyer, just first-rate."

The dispute over the Holy Land case is no mere résumé dispute.

Ratcliffe, a three-term lawmaker, was already facing criticism that he lacks the experience to be Director of National Intelligence, given that outgoing spy chief Dan Coats and his predecessors came into the job with extensive national security and foreign affairs backgrounds.

That dynamic, along with Ratcliffe's standing as a Trump loyalist, could jeopardize his confirmation in the GOP-run Senate.

Some key Republican senators have so far offered muted reactions, with a few admitting that they were simply unfamiliar with the Texan's credentials. Some top Senate Democrats have already weighed in against Ratcliffe's nomination, casting him as a partisan warrior unfit for the job.

Several intelligence officials have also made clear their unease.

"Mr. Ratcliffe appears to be somebody who is more interested in pleasing Donald Trump," John Brennan, CIA director under President Barack Obama and a frequent Trump critic, said this week on MSNBC.

Stephens rejected those criticisms, pointing to Ratcliffe's experience as a federal prosecutor and then as a congressman serving on the House intelligence and judiciary committees.

"Ratcliffe opened, managed and supervised numerous domestic and international terrorism related cases," she said of his time in the U.S. attorney's office, adding that he "handled top secret, secret and confidential national security information as part of his daily responsibilities."

The Texan's allies have also defended his qualifications.

Texas Sen. John Cornyn on Monday called Ratcliffe a "worthy successor" to Coats, upon whom he heaped praise. Trump on Tuesday hailed Ratcliffe as a "very talented guy. "And former U.S. attorney Matt Orwig, who hired Ratcliffe, said he was "imminently qualified."

Orwig sought to further buttress Ratcliffe's standing by telling ABC News that his one-time protégé worked several terrorism-related cases, though he declined to specify them.

The former top prosecutor in the Eastern District of Texas also told The News that when Ratcliffe served as his anti-terrorism and national security chief, he worked to "bring together all the state, federal and local agencies" involved in security efforts.

"That's the job that he did," Orwig said. "He did it very, very well."

Federal Judge Hands Downs Sentences in Holy Land Foundation Case

Holy Land Foundation and Leaders Convicted on Providing Material Support to Hamas Terrorist Organization

Today, in federal court in Dallas, U.S. District Judge Jorge A. Solis sentenced the Holy Land Foundation for Relief and Development (HLF) and five of its leaders following their convictions by a federal jury in November 2008 on charges of providing material support to Hamas, a designated foreign terrorist organization.

"Today's sentences mark the culmination of many years of painstaking investigative and prosecutorial work at the federal, state and local levels. All those involved in this landmark case deserve our thanks," said David Kris, Assistant Attorney General for National Security. "These sentences should serve as a strong warning to anyone who knowingly provides financial support to terrorists under the guise of humanitarian relief."

HLF was incorporated by Shukri Abu Baker, Mohammad El-Mezain, and Ghassan Elashi. Mufid Abdulqader and Abdulrahman Odeh worked as fund raisers. Together, with others, they provided material support to the Hamas movement.

Shukri Abu Baker, 50, of Garland, Texas, was sentenced to a total of 65 years in prison. He was convicted of 10 counts of conspiracy to provide, and the provision of, material support to a designated foreign terrorist organization; 11 counts of conspiracy to provide, and the provision of, funds, goods and services to a Specially Designated Terrorist; 10 counts of conspiracy to commit, and the commission of, money laundering; one count of conspiracy to impede and impair the Internal Revenue Service (IRS); and one count of filing a false tax return.

Mohammad El-Mezain, 55, of San Diego, California, was sentenced to the statutory maximum of 15 years in prison. He was convicted on one count of conspiracy to provide material support to a designated foreign terrorist organization.

Ghassan Elashi, 55, of Richardson, Texas, was sentenced to a total of 65 years in prison. He was convicted on the same counts as Abu Baker, and one additional count of filing a false tax return.

Mufid Abdulqader, 49, of Richardson, Texas, was sentenced to a total of 20 years in prison. He was convicted on one count of conspiracy to provide material support to a designated foreign terrorist organization, one count of conspiracy to provide goods, funds, and services to a specially designated terrorist, and one count of conspiracy to commit money laundering.

Abdulrahman Odeh, 49, of Patterson, New Jersey, was sentenced to 15 years in prison. He was convicted on the same counts as Abdulqader.

HLF, now defunct, was convicted on10 counts of conspiracy to provide, and the provision of, material support to a designated foreign terrorist organization; 11 counts of conspiracy to provide, and the provision of, funds, goods and services to a Specially Designated Terrorist; and 10 counts of conspiracy to commit, and the commission of, money laundering.

The Court reaffirmed the jury’s $12.4 million money judgment against all the defendants, with the exception of El Mezain, who was not convicted of money laundering.

From its inception, HLF existed to support Hamas. Before HLF was designed as a Specially Designated Terrorist by the Treasury Department and shut down in December 2001, it was the largest U.S. Muslim charity. It was based in Richardson, Texas, a Dallas suburb. The "material support statute," as it is commonly referred to, was enacted in 1996 as part of the Antiterrorism and Effective Death Penalty Act. That statute recognizes that money is fungible, and that money in the hands of a terrorist organization — even if for so called charitable purposes — supports that organization’s overall terrorist objectives.

The government presented evidence at trial that, as the U.S. began to scrutinize individuals and entities in the U.S. who were raising funds for terrorist groups in the mid-1990s, the HLF intentionally hid its financial support for Hamas behind the guise of charitable donations. HLF and these five defendants provided approximately $12.4 million in support to Hamas and its goal of creating an Islamic Palestinian state by eliminating the State of Israel through violent jihad.

The government’s case included testimony that in the early 1990's, Hamas’ parent organization, the Muslim Brotherhood, planned to establish a network of organizations in the U.S. to spread a militant Islamist message and raise money for Hamas. The government’s case also included testimony about Hamas material found in zakat committees. The defendants sent HLF-raised funds to Hamas-controlled zakat committees and charitable societies in the West Bank and Gaza. Zakat is an Arabic word referring to the religious obligation to give alms.

HLF became the chief fundraising arm for the Palestine Committee in the U.S. created by the Muslim Brotherhood to support Hamas. According to a wiretap of a 1993 Palestine Committee meeting in Philadelphia, former HLF President and CEO Shukri Abu Baker, spoke about playing down their Hamas ties in order to keep raising money in the U.S. Another wiretapped phone call included Abdulrahman Odeh, HLF’s New Jersey representative, referring to a suicide bombing as "a beautiful operation."

The government also presented evidence that several HLF defendants have family members who are Hamas leaders, including Hamas’ political chief, Mousa Abu Marzook, who is married to a cousin of Ghassan Elashi, HLF’s former Chairman of the Board. Ghassan Elashi, who also served as the vice-president of marketing for Infocom Corporation, is currently serving an 80-month sentence following his conviction on several charges related to export violations. Mohammed El-Mezain was HLF’s Director of Endowments and Mufid Abdulqater was a major HLF fundraiser. Two named defendants, Akram Mishal and Haitham Maghawri are fugitives.

The defendants provided financial support to the families of Hamas martyrs, detainees, and activists knowing and intending that such assistance would support the Hamas terrorist organization. Since 1995, when it first became illegal to provide financial support to Hamas, HLF provided approximately $12.4 million in funding to Hamas through various Hamas-affiliated committees and organizations located in Palestinian-controlled areas and elsewhere.

During trial, the government also presented evidence that HLF was so concerned about investigators uncovering the group’s intentions that they kept a manual entitled "The Foundation’s Policies and Procedures." HLF followed various security procedures outlined in the manual to include hiring a security company to search the HLF for listening devices, ordering defendant Haitham Maghawri, a fugitive, to take training on advanced methods in detecting wiretaps, shredding documents after board meetings, and maintaining incriminating documents in off-site locations.

The case was investigated by the Joint Terrorism Task Force, involving agents from federal, state, and local agencies including: FBI, IRS - Criminal Investigation, U.S. Immigration and Customs Enforcement (ICE), Department of State, U.S. Secret Service, U.S. Army Criminal Investigation Division, the Texas Department of Public Safety, and the Dallas, Plano, Garland and Richardson, Texas, Police Departments. In addition, the Department of Justice Criminal Division’s Asset Forfeiture and Money Laundering Section provided assistance.

The case was prosecuted by James T. Jacks, acting U.S. Attorney; Barry Jonas, Trial Attorney for the Department of Justice Counter-terrorism Section; and Elizabeth J. Shapiro, Deputy Director, Federal Programs Branch, Department of Justice, serving as a Special Assistant U.S. Attorney.

Just a naming coincidence, I am sure.

Mississippi Medicaid Fraud ... by Beverly Tran on Scribd

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Trump wants 'lifetime ban' for lobbying for foreign governments

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Judiciary Jolly Jerry Has Russia FARA Issues

All Jerry Nadler had to do was to be nice to my Sweetie, but noooo.......

Jolly Jerry has more important issues to deal with right now, like Trump obstructing justice by keeping that IG Report in his back pocket, but hey, what do I know?

I know MAXIMUS GOODLATTECUS et al have Israel FARA issues, too.

Nice start, Jack,.

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DOJ: Mobile Telesystems Pjsc and Its Uzbek Subsidiary Enter into Resolutions of $850 Million with the Department of Justice for Paying Bribes in Uzbekistan

Former General Director of MTS’s Uzbek Subsidiary and Former Uzbek Official Charged in Bribery and Money Laundering Scheme Totaling Almost $1 Billion

Moscow-based Mobile TeleSystems PJSC (MTS), the largest mobile telecommunications company in Russia and an issuer of publicly traded securities in the United States, and its wholly owned Uzbek subsidiary, KOLORIT DIZAYN INK LLC (KOLORIT), have entered into resolutions with the Department of Justice and Securities and Exchange Commission (SEC) and agreed to pay a combined total penalty of $850 million to resolve charges arising out of a scheme to pay bribes in Uzbekistan.  In addition, charges were unsealed today against a former Uzbek official who is the daughter of the former president of Uzbekistan and against the former CEO of Uzdunrobita LLC, another MTS subsidiary, for their participation in a bribery and money laundering scheme involving more than $865 million in bribes from MTS, VimpelCom Limited (now VEON) and Telia Company AB (Telia) to the former Uzbek official in order to secure her assistance in entering and maintaining their business operations in Uzbekistan’s telecommunications market.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman of the Southern District of New York, Special Agent in Charge Raymond Villanueva of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Washington, D.C. and Chief Don Fort of IRS Criminal Investigation (IRS-CI) made the announcement.

Gulnara Karimova, 46, a citizen of Uzbekistan, was charged in an indictment filed in the Southern District of New York on March 7 with one count of conspiracy to commit money laundering.  Karimova is a former Uzbek official who allegedly had influence over the Uzbek governmental body that regulated the telecom industry.  Bekhzod Akhmedov, 44, a citizen of Uzbekistan and the former Uzbek executive, was charged in the same indictment with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), two counts of violating the FCPA, and one count of conspiracy to commit money laundering.  Karimova’s and Akhmedov’s case is assigned to U.S. District Judge Kimba Wood of the Southern District of New York.  

“Gulnara Karimova stands accused of exploiting her official position to solicit and accept more than $865 million in bribes from three publicly traded telecom companies, and then laundering those bribes through the U.S. financial system,” said Assistant Attorney General Benczkowski.  “The indictment and corporate resolution announced today, together with two prior corporate resolutions involving bribes allegedly paid to Karimova, demonstrate the Department’s comprehensive approach to foreign corruption: we will aggressively pursue both corrupt foreign officials and the companies and individuals who bribe them in order to gain unfair business advantages, and we will do everything we can to keep the proceeds of that corruption out of the U.S. financial system.”

“This is the third installment in a trilogy of cases arising from an almost $1 billion bribery scheme that reached the highest echelons of the Uzbekistan government and was orchestrated by some of the largest telecommunications companies in the world,” said U.S. Attorney Berman.  “By funneling multimillion-dollar bribe payments through the U.S. financial system, the companies and individual defendants corruptly tried to tip the global economy in their favor and line their own pockets.  But they are now paying the price.  Today, my Office and our law enforcement partners are sending a bold, unequivocal message that the U.S. financial system is not in business to enable foreign bribery or money laundering.  This Office stands ready to prevent, prosecute, and penalize foreign corrupt practices wherever in the world we find them.”

“Corruption of this level and reach poisons our integrity as a participant in the global marketplace,” said HSI Washington Special Agent in Charge Villanueva.  “Thanks to our skillful and collaborative investigators at HSI and the IRS-CI, Karimova and Ahkmedov’s exploitive crimes will be presented before the just eye of our courts and no longer will such corruption be permitted to metastasize across our borders.” 

“With the increase in globalization and ease with which funds can be moved, criminals think their financial transactions cannot be tracked—but they would be wrong,” said IRS-CI Chief Fort.  “We will continue to investigate violations of the Foreign Corrupt Practices Act to ensure our country’s financial institutions are not used for devious purposes.  We are committed to aggressively pursuing all who engage in corruption, money laundering, and bribery for their own personal gain and at the expense of the U.S. government.”

According to the indictment against Karimova and Akhmedov, in or around the early 2000s, they agreed that Akhmedov would solicit and facilitate corrupt bribe payments from telecommunications companies seeking to enter the Uzbek market.  In exchange, Karimova allegedly used her influence over Uzbek authorities to help the telecommunications companies obtain and retain lucrative business opportunities in the Uzbek telecommunications market.  In total, Akhmedov conspired with the telecom companies and others to pay Karimova more than $865 million in bribes, and Akhmedov and Karimova conspired with others to launder and conceal those funds to, from and through bank accounts in the United States, in order to promote the ongoing bribery scheme, the indictment alleges. 

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

MTS entered into a deferred prosecution agreement with the Department of Justice in connection with a criminal information filed yesterday in the Southern District of New York charging the company with one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA and one count of violating the internal controls provisions of the FCPA.  KOLORIT pleaded guilty to a one-count criminal information filed in the Southern District of New York, charging the company with conspiracy to violate the anti-bribery and books and records provisions of the FCPA.  Pursuant to its agreement with the department, MTS agreed to pay a total criminal penalty of $850 million to the United States, including a $500,000 criminal fine and $40 million in criminal forfeiture that MTS agreed to pay on behalf of KOLORIT.  MTS also agreed to the imposition of an independent compliance monitor for a term of three years and to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals such as Akhmedov and Karimova.  The case against MTS and KOLORIT is assigned to U.S. District Judge J. Paul Oetken of the Southern District of New York.  

In related proceedings, MTS reached a settlement with the SEC.  Under the terms of its agreement with the SEC, MTS agreed to pay a $100 million civil penalty.  Consistent with Coordination of Corporate Resolution Penalties in Parallel and/or Joint Investigations and Proceedings Arising from the Same Misconduct (Justice Manual 1-12.100), the Department of Justice agreed to credit the civil penalty paid to the SEC as part of its agreement with MTS.  Thus, the combined total amount of criminal and regulatory penalties paid by MTS and KOLORIT to U.S. authorities will be $850 million.

According to the companies’ admissions, MTS and KOLORIT, through various managers and employees within MTS, MTS’s Uzbek subsidiaries Uzdunrobita LLC and KOLORIT, and other affiliated entities, paid approximately $420 million in bribes to Karimova, who had influence over the Uzbek governmental body that regulated the telecom industry.  The bribes were paid on multiple occasions between 2004 and 2012 so that MTS could enter the Uzbek market through the acquisition of Uzdunrobita and so that Uzdunrobita could gain valuable telecom assets and continue operating in Uzbekistan.  The companies admittedly structured and concealed the bribes through payments to shell companies that members of MTS’s and Uzdunrobita’s management knew were beneficially owned by Karimova.  MTS and Uzdunrobita also acquired KOLORIT, knowing that the price MTS and Uzdunrobita paid was inflated, in order to bribe Karimova in exchange for Uzdunrobita’s continuing to operate in Uzbekistan.  Uzdunrobita made payments to purported charities and for sponsorships to entities related to Karimova.  The Uzbek government expropriated Uzdunrobita in 2012 as a result of MTS’s, Uzdunrobita’s and KOLORIT’s failure to meet Karimova’s demands for additional payments.

A number of factors contributed to the Department’s criminal resolution with the companies, including (1) the companies did not voluntarily disclose; (2) the companies’ level of cooperation and remediation was lacking, not proactive; (3) the nature and seriousness of the office, including $420 million in bribes to a high-level Uzbek official; and (4) the mitigating factors present in this case, including that the Uzbek government expropriated the companies’  telecommunications assets in Uzbekistan, resulting in no realized pecuniary gain to the companies as a result of the misconduct.

The resolution, reached in coordination with the SEC’s resolution, marks the third such resolution by a major international telecommunications provider for bribery in Uzbekistan.  On Feb. 18, 2016, Amsterdam-based VimpelCom and its Uzbek subsidiary, Unitel LLC, entered into resolutions with the Department of Justice and admitted to a conspiracy to make more than $114 million in bribery payments to Karimova between 2006 and 2012.  On Sept. 21, 2017, Stockholm-based Telia and its Uzbek subsidiary, Coscom LLC, also entered into resolutions with the Department and admitted to a conspiracy to make more than $331 million in bribery payments to Karimova.  The investigation has thus far yielded a combined total of over $2.6 billion in global fines and disgorgement, including over $1.3 billion in criminal penalties to the United States.  In related actions, the Department has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland, which constitute bribe payments made by MTS, VimpelCom and Telia, or funds involved in the laundering of those corrupt payments to Karimova.

The IRS-CI and HSI are investigating the cases as part of the IRS Global Illicit Financial Team in Washington, D.C.  Assistant Chief Ephraim Wernick and Senior Litigation Counsel Nicola J. Mrazek of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Edward Imperatore and Daniel Noble of the Southern District of New York are prosecuting the case against MTS and KOLORIT.  Assistant Chief Wernick and Trial Attorney Elina Rubin-Smith of the Fraud Section and Assistant U.S. Attorneys Imperatore and Noble are prosecuting the case against Karimova and Akhmedov.  Trial Attorney Michael Khoo of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) is prosecuting the forfeiture case with substantial assistance from former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington.

Law enforcement authorities in Austria, Belgium, Cyprus, France, Ireland, Isle of Man, Latvia, Luxembourg, Norway, the Netherlands, Switzerland, Sweden and the United Kingdom have provided valuable assistance in this case.  The Criminal Division’s Office of International Affairs provided significant assistance as well.  The SEC referred the matter to the Department and also provided extensive cooperation and assistance.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

Mobile TeleSystems Settles FCPA Violations

The Securities and Exchange Commission today announced that Russian telecommunications provider Mobile TeleSystems PJSC (MTS) will pay $100 million to resolve SEC charges that it violated the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan.

According to the SEC’s order, MTS bribed an Uzbek official who was related to the former President of Uzbekistan and had influence over the Uzbek telecommunications regulatory authority.  During the course of the scheme, MTS made at least $420 million in illicit payments for the purpose of obtaining and retaining business.  The payments enabled MTS to enter the telecommunications market in Uzbekistan and operate there for eight years, during which it generated more than $2.4 billion in revenues.  In 2012, the Uzbek government expropriated MTS’s Uzbek operations.  As further described in the SEC’s order, the bribes were funneled to front companies controlled by the Uzbek official and were disguised in MTS’s books as acquisition costs, option payments, purchases of regulatory assets, and charitable donations.

“The company engaged in egregious misconduct for nearly a decade, secretly funneling hundreds of millions of dollars to a corrupt official.  Building business on a foundation of bribery leaves the business and American investor interests at the mercy of corrupt officials,” said Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit.

MTS consented to the SEC’s order finding that it violated the anti-bribery, books and records and internal accounting control provisions of the Securities Exchange Act of 1934, and requiring it to pay a $100 million penalty.  In a related matter, MTS has entered into a deferred prosecution agreement with the U.S. Department of Justice and its subsidiary has pleaded guilty in federal court, and has agreed to pay a criminal fine and forfeiture in the amount of $850 million.  The Department is crediting the $100 million penalty that MTS is paying to the SEC.  The company must also retain an independent compliance monitor for at least three years.

This is the third case brought by the SEC and the Department of Justice involving public companies operating in the Uzbek telecommunications market.  Taken as a whole, these actions have led to the recovery by U.S. and foreign authorities of $2.6 billion.

The Commission greatly appreciates the cooperation and assistance of the Department of Justice Criminal Division’s Fraud and Money Laundering and Asset Recovery Sections, the Internal Revenue Service, the Department of Homeland Security, the Prosecution Authority of the Netherlands, the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM), the Swedish Prosecution Authority, the Office of the Attorney General in Switzerland, and the Corruption Prevention and Combating Bureau in Latvia.  Valuable assistance was also provided by regulatory and law enforcement colleagues in the United Kingdom, France, and Ireland, including the British Virgin Islands Financial Services Commission, the Cayman Islands Monetary Authority, the Bermuda Monetary Authority, the Central Bank of Ireland, the Paris Court of Appeals, the Serious Fraud Office, and the Financial Control Authority.

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