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THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

Government Investigations and White Collar Litigation Group

McGuireWoods LLP

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SEC Speaks 2022: Ongoing Efforts to Restore Public Trust, Aggressive Enforcement Agenda

Enforcement and Prosecution Policy and Trends, Securities and Commodities
Securities and Exchange Commission officials highlighted a commitment to restoring trust in the agency and aggressive enforcement during the recent SEC Speaks conference. See our alert for analysis of their comments and stated enforcement priorities, which addressed crypto markets, aggressive use of remedies, creditworthy cooperation, the Wells process, aggressive litigation, disgorgement efforts, municipal securities, gatekeeper… Continue Reading

DOJ and Aerojet Settle for $9 Million in Qui Tam Cybersecurity False Claims Act Case

Fraud, Deception and False Claims, Government Contracts
On July 8, 2022, the U.S. Department of Justice announced a $9 million settlement with federal government contractor Aerojet Rocketdyne, Inc. for alleged violations of the False Claims Act in a case pending in the Eastern District of California. The settlement results from alleged false statements by Aerojet related to compliance with Department of Defense… Continue Reading

Court Holds U.S. Wire Fraud Statute Reaches Foreign Defendant’s Conduct

Fraud, Deception and False Claims
The federal wire fraud statute has a far-reaching scope, allowing prosecutors to go after conduct as varied as investor fraud to college admissions scandals. In late June, the Fourth Circuit U.S. Court of Appeals arguably broadened that scope even further by affirming a wire fraud conviction for a defendant who devised the scheme from Israel.… Continue Reading

DOJ’s Public Struggles with Electronic Evidence Highlights the Need for Counsel to Formally Demand Discovery Early and Often

Enforcement and Prosecution Policy and Trends, Miscellaneous
DOJ’s dismissal last week of a Foreign Corrupt Practices Act case in Boston is the latest in a string of bad outcomes for the government due to discovery mishaps. While the government works to revise its discovery policies and seek resources to collect, review, and analyze the vast amount of electronic evidence attendant to nearly… Continue Reading

Largest-Ever Small-Business Contracting Fraud Settlement Related to Pass-Through Subcontracting

Enforcement and Prosecution Policy and Trends, Government Contracts
Federal contractors should take note of a $48.5 million False Claims Act settlement between the Department of Justice and TriMark USA LLC — the largest-ever FCA settlement based on allegations of small-business set-aside contracting fraud. DOJ alleged that TriMark had a plan to circumvent specific small-business contracting requirements by providing significant assistance to three small… Continue Reading

DOJ Ramps up Resources and Renews Focus on Combatting COVID-19 Related Fraud in 2022

Fraud, Deception and False Claims
On March 10, 2022, the U.S. Department of Justice (DOJ) announced the appointment of Associate Deputy Attorney General Kevin Chambers to serve as the Director for DOJ’s COVID-19 Fraud Enforcement Task Force. In remarks delivered at the American Bar Association’s 37th National Institute on White Collar Crime earlier this month, U.S. Attorney General Merrick Garland… Continue Reading

FinCEN Encourages “Increased Vigilance” and Highlights Red Flags for Evasion of Russian Sanctions including Use of Virtual Currency

Anti-Money Laundering, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Sanctions, Trade Embargo, and Export Controls
RELATED UPDATES: FinCEN Alert Highlights Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites and Their Proxies (January 30, 2023) New Revelations in Ukraine Lead to Tightening Global Sanctions (April 8, 2022) Western Companies Starting to Feel Impact of Russian Sanctions (March 24, 2022) The Financial Crimes Enforcement Network (FinCEN) has issued an alert… Continue Reading

Update: Pain Management or Pill Mill? Supreme Court Hears Arguments Regarding Standards for Prosecutions of Practitioners Prescribing Narcotics

Enforcement and Prosecution Policy and Trends
Last week, the Supreme Court (Court) heard oral arguments in companion cases Ruan v. United States and Kahn v. United States, concerning the application of the Controlled Substances Act (“CSA” or “the Act”) to medical practitioners. Through these cases, the Court is expected to resolve a circuit split over the role of “good faith” as… Continue Reading

DOJ Settles First False Claims Act Enforcement Action Since Launch of Civil Cyber-Fraud Initiative

Fraud, Deception and False Claims
On March 8, 2022, the U.S. Department of Justice (DOJ) announced a $930,000 settlement with Comprehensive Health Services, LLC (CHS) for alleged violations of the False Claims Act (FCA). This settlement marks DOJ’s first resolution of an FCA enforcement action involving cyber fraud after launching its Civil Cyber-Fraud Initiative in October 2021, signaling DOJ’s eagerness to combat cybersecurity violations… Continue Reading

Pain Management or Pill Mill? Supreme Court to Weigh in on Standards for Prosecutions of Practitioners Prescribing Narcotics

Enforcement and Prosecution Policy and Trends
Update: Pain Management or Pill Mill? Supreme Court Hears Arguments Regarding Standards for Prosecutions of Practitioners Prescribing Narcotics (March 11, 2022) Introduction Next week, the Supreme Court will hear oral argument in a pair of cases that may reshape the landscape of legitimate prescribing under the Controlled Substances Act (“CSA” or “the Act”). In companion… Continue Reading

Elizabeth Holmes of Theranos Found Guilty of Making False Representations to Investors

Fraud, Deception and False Claims
Elizabeth Holmes, founder of Theranos, was convicted of three counts of wire fraud and one count of conspiracy to commit wire fraud. The verdict follows a high-profile, fifteen-week trial in federal court in San Francisco.  Holmes was alleged to have defrauded investors, medical professionals, patients, and the public by exaggerating and making false statements about… Continue Reading

CMMC 2.0: Department of Defense Revamps Cybersecurity Maturity Model Certification Program

Government Contracts
On November 4, 2021, the Department of Defense (DoD) announced significant changes to the strategic direction of the Cybersecurity Maturity Model Certification (CMMC) program.  Specifically, DoD stated that the goal of these changes is to simplify the CMMC standard and prioritize the protection of certain types of controlled defense information.  After a nine-month internal review by the… Continue Reading

SEC Advisory Fees Focus Continues as Reflected in Division of Examinations Risk Alert and Chair Gensler Comments

Securities and Commodities
Recent comments from U.S. Securities and Exchange Commission (SEC) Chair Gensler at the Institutional Limited Partners Association Summit and an SEC Division of Examinations (EXAMS) Risk Alert published on the same day highlight the ongoing focus of the SEC on advisory fees, both in the institutional and retail spaces. In Chair Gensler’s remarks, he expressed… Continue Reading

Return to the Yates Memo: Deputy Attorney General Announces Tougher Approach to White Collar Enforcement

Enforcement and Prosecution Policy and Trends
RELATED UPDATE: New DOJ Guidance on Corporate Criminal Enforcement (9/16/2022) On October 28th, Deputy Attorney General Lisa Monaco announced that the U.S. Department of Justice (DOJ or Department) is renewing its focus on white collar crime and enforcement, in remarks delivered during the American Bar Association’s 36th National Institute on White Collar Crime. Deputy Attorney… Continue Reading

The Perils of Global Expansion: World’s Largest Ad Agency Sanctioned $19 Million for FCPA Violations, Insufficient Controls

Anti-Bribery and Corruption, Sanctions, Trade Embargo, and Export Controls, Securities and Commodities
Global expansion without adequate controls is asking for trouble. That’s the lesson of a $19 million settlement between WPP, the world’s largest advertising agency, and the U.S. Securities and Exchange Commission (SEC) to resolve alleged violations of the Foreign Corrupt Practices Act (FCPA). According to an SEC order memorializing the settlement, WPP’s trouble began when… Continue Reading

Department of Justice Announces National Cryptocurrency Enforcement Team

Enforcement and Prosecution Policy and Trends, Financial Institution Regulation
On October 6, 2021, the U.S. Department of Justice (DOJ) announced its plans for increased scrutiny of the cryptocurrency market with the creation of a National Cryptocurrency Enforcement Team (NCET) to pursue criminal investigations and actions against cryptocurrency misuse. The NCET will focus on “crimes committed by virtual currency exchanges, mixing and tumbling services, and… Continue Reading

Department of Justice Announces Increased FCA Enforcement Through New Civil Cyber-Fraud Initiative

Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims
On October 6, 2021, the Department of Justice (DOJ) announced a new Civil Fraud Cyber Initiative to “combine the department’s expertise in civil fraud enforcement, government procurement and cybersecurity to combat new and emerging cyber threats to the security of sensitive information and critical systems.”… Continue Reading

Gleanings From DOJ’s 2021 Healthcare Takedown Announcement

Compliance
On Sept. 17, the U.S. Department of Justice released the results of its 2021 Healthcare Takedown — an annual announcement aggregating months of investigations and indictments across the country involving fraud in the healthcare and life sciences industries. Read on for details and analysis of criminal charges against 138 defendants, including 42 medical professionals, related… Continue Reading

FINRA’s Important Reminder to Firms—Don’t Forget to Supervise Third-Party Vendors

Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities
Overview Broker-dealers, like most companies, rely on third-party vendors for a wide variety of functions.  This common practice of outsourcing does not relieve a broker-dealer of its regulatory compliance and supervision obligations over the outsourced functions.  Accordingly, management and supervision of third-party vendors present important issues that merit careful attention from regulatory, compliance, and legal… Continue Reading

President Biden Announces Findings of Critical Supply Chain Assessment

Government Contracts
On June 8, the White House released the findings of a 100-day assessment of critical supply chains, identifying actions needed to bolster domestic manufacturing of critical goods, reduce dependence on foreign nations for supply chain needs, create jobs and address unfair trade practices. For highlights of the report detailing structural weaknesses in supply chains for… Continue Reading

DOJ Announces Plan for Coordinated Civil Rights Response to COVID-19

Compliance
On April 2, 2021, Pamela S. Karlan, the Principal Deputy Assistant Attorney General for Civil Rights at the U.S. Department of Justice Civil Rights Division (DOJ), issued a public statement regarding the Division’s intent to lead a coordinated civil rights response to the Coronavirus (COVID-19) pandemic. The statement, which attached a resource guide, is intended… Continue Reading

Courts Adopt Varying Approaches to Implementing Due Process Protections Act

Compliance, Enforcement and Prosecution Policy and Trends
In a December 2020 article, we highlighted in this blog the amendment of Federal Rule of Criminal Procedure 5(f) in the new Due Process Protections Act (“DPPA” or “the Act”). The Act requires federal courts to enter a Brady order at the outset of all criminal cases and may prompt courts to enter orders setting… Continue Reading

U.S. Supreme Court Declines to Clarify False Claims Act Falsity Standard

Fraud, Deception and False Claims, Government Contracts
The U.S. Supreme Court recently declined to address a circuit split regarding the standard for establishing that a statement material to a claim for payment is false under the False Claims Act (FCA); specifically, whether the FCA requires pleading and proof of an “objectively false statement,” or whether liability can be based on allegedly false… Continue Reading

Responses Matter: Securities Fraud Sentence Shows the Value of a Sound Response to a Government Investigation

Fraud, Deception and False Claims, Securities and Commodities
It’s an old lesson in government investigations, but one worth repeating. Conduct during an investigation can matter as much as the conduct under investigation – sometimes even more. High-profile prosecutions of the past have shown the severe consequences of mistakes in responding to government investigations. Martha Stewart went to prison not for insider trading but… Continue Reading

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