Subject to Inquiry

Subject to Inquiry


Government Investigations and White Collar Litigation Group
Fraud, Deception and False Claims

Ophthalmic Distributor May Face $848M in Penalties for Kickbacks, False Claims Act Violations

On Feb. 28, a federal jury in the District of Minnesota found the Cameron-Ehlen Group, d/b/a Precision Lens, and its founder and owner guilty of paying kickbacks to ophthalmic surgeons in violation of the False Claims Act and Federal Anti-Kickback Statute between 2006 and 2015.

Read on for details about this case, which illustrates the risks medical device manufacturers and distributors can incur without an effective compliance program.

Enforcement and Prosecution Policy and Trends

U.S. Department of Education Launches Secret Shoppers Program to Investigate Colleges and Universities

Federal Student Aid’s Office of Enforcement announced a “secret shoppers” program to evaluate a college or university’s recruitment, enrollment, financial aid and other practices. The secret shoppers program will focus on student recruitment and enrollment practices, which may include the practices of online program managers.

Read on for details about this initiative, including types of practices that present red flags, and recommended next steps for colleges and universities.

Financial Institution Regulation

Silvergate, Silicon Valley Bank, Bank Receiverships in General, and Payroll Regulatory Challenges

In the wake of Silvergate’s collapse, Silicon Valley Bank entering receivership and another bank following in SVB’s footsteps, startups and other companies directly affected by these events are struggling to manage their payroll and other obligations while credit facilities are frozen. Although depositors likely will be fully protected and most businesses can expect to avoid the brunt of this banking crisis, some employers still may face tough decisions.

Read on to learn about state and federal law considerations and recommended next steps for employers.

Anti-Bribery and Corruption

Ericsson Pleads Guilty, Agrees to Pay $206M in Fines, Following Alleged Violation of FCPA Deferred Prosecution Agreement

Last week, the U.S. Department of Justice (DOJ) announced that Sweden-based multinational telecommunications company Telefonaktiebolaget LM Ericsson (Ericsson) will plead guilty to breaching the Foreign Corrupt Practices Act (FCPA) and has agreed to pay over $206 million in related penalties following its alleged breach of a 2019 Deferred Prosecution Agreement (DPA) with the Department.

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Enforcement and Prosecution Policy and Trends

DOJ Announces “Pilot Program Regarding Compensation Incentives and Clawbacks” with Significant Ramifications for Corporations Facing Criminal Investigations

The Department of Justice Criminal Division announced a “Pilot Program Regarding Compensation Incentives and Clawbacks” (the “Program”) this week with broad implications for corporations and their individual executives operating within the Department’s jurisdiction. During two keynote speeches delivered at the American Bar Association’s National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco (remarks here) and Assistant Attorney General Kenneth A. Polite, Jr. (remarks here), outlined the Program’s two key pillars.  First, moving forward, any corporate resolution with the Department’s Criminal Division must include a requirement that the company develop compliance-promoting criteria within its compensation and bonus system.  Second, Criminal Division prosecutors are instructed to provide fine reductions to companies who either successfully claw back compensation from corporate wrongdoers or undertake good-faith efforts to do so.

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Sanctions, Trade Embargo, and Export Controls

U.S. Department of Justice and Partners Increasing Enforcement of Sanctions and Export Controls

It has been a little more than a year since Russia’s invasion of Ukraine, and the war continues to rage.  In an effort to deter the Russian government and weaken its military capabilities, the United States has imposed significant sanctions and export controls targeting Russia.  Recognizing that these sanctions and export control laws merit aggressive enforcement, the U.S. Department of Justice (DOJ) over the past year has made investigation and prosecution of violations a priority.

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Securities and Commodities

Education Department to Hold Owners, Individuals, Board Members Liable for Higher Education Institutions

Today, the U.S. Department of Education announced it will hold individuals representing corporations or other legal entities, including a member of the board of directors or a chief executive officer, personally liable for the institution of higher education in certain circumstances. Federal Student Aid will require them to sign an institution’s program participation agreement to assume joint and several liability for the institution’s performance of its obligations in the agreement.

Read on for details about this development and implications for school leaders across the country.

Compliance, Enforcement and Prosecution Policy and Trends

U.S. Attorneys’ Offices Adopt Policy Incentivizing Self-Disclosure of Corporate Misconduct

On Feb. 22, 2023, U.S. Attorneys’ Offices throughout the country adopted a new policy that incentivizes corporate voluntary self-disclosure of misconduct.  Deputy Attorney General Lisa Monaco’s Sept. 15, 2022 memorandum (“Monaco Memo”) instructed all DOJ sections to review their policies incentivizing corporate voluntary self-disclosure or, if no formal written policy existed, to draft and publish such policies.  The U.S. Attorneys’ Offices’ new, uniform policy fulfilled the Monaco Memo’s directive. 

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Fraud, Deception and False Claims

Analysis of DOJ’s FY 2022 FCA Statistics and the Mixed Signals Therein

Earlier this month, the U.S. Department of Justice (DOJ) announced that it recovered over $2.2 billion under the False Claims Act (FCA) in Fiscal Year 2022.[1] That is a steep drop from last year’s near-record $5.7 billion haul and the lowest annual recovery since 2008. That year-over-year decline, though, was exacerbated by a $3 billion mega-settlement with a pharmaceutical company that manufactures opioids (and several key individuals) in FY 2021. The net effect of that large settlement executed in early-FY 2021 was a bump for FY 2021 recoveries and an exaggerated decline in FY 2022 recoveries.[2] Take out that settlement, which accounted for more than half of the FY 2021 recoveries, and the FY 2022 recoveries are only about 15% lower than the FY 2021 numbers. Still, the long-term trends suggest a steady decline in recoveries over the last ten years.

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Enforcement and Prosecution Policy and Trends

Department of Education Guidance Expands Possible Liability for Private Companies That Contract With Higher Education Institutions

UPDATE (March 1, 2023): On February 28, 2023, the Department updated the Dear Colleague Letter regarding third-party servicers to expressly state: “the guidance in this Dear Colleague Letter will not become effective until September 1, 2023.” The Department also extended the public comment period on this Dear Colleague Letter to Thursday, March 30, 2023. Finally, the Department extended the reporting deadline for institutions and third-party servicers to September 1, 2023.

On Feb. 15, the U.S. Department of Education issued guidance that significantly expands the definition of “third-party servicer” to include services completed by many online program managers and entities providing other services that historically have not been considered third-party servicers. Institutions and entities considered third-party servicers under the new guidance are subject to mandatory reporting requirements by May 1, 2023.

Read on to learn more about the Department’s guidance.

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