In a series of key policy announcements between November 2017 and May 2018, the Department of Justice has demonstrated an increasingly coherent perspective on how it will handle key aspects of white collar criminal enforcement. The policies largely reiterate a message federal prosecutors have delivered for years regarding what they want to see from companies… Continue Reading
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DOJ Memorandum Sets Out FCA Dismissal Factors
A January 10 internal memorandum from the director of the fraud section of the DOJ’s civil division commercial litigation branch, which has recently become public, sets out the factors the government should consider in dismissing False Claims Act (FCA) cases in which it has declined to intervene, and may suggest a greater possibility that the… Continue Reading
Ninth Circuit Ruling Weakens Materiality Standard under the FCA
Last year in Universal Health Services, Inc. v. United States ex rel. Escobar et al. (discussed on this blog), the Supreme Court reminded litigants that the False Claims Act “is not an all-purpose antifraud statute.” In that case, the Court expanded upon the FCA’s materiality standard, calling it both “rigorous” and “demanding.” How demanding that… Continue Reading
President’s Proposed Budget Increases Healthcare Fraud Enforcement Funding
Much of the discussion surrounding President Trump’s 2018 budget blueprint has focused on cuts, but one proposed budget increase shows the new administration is likely to continue focusing on healthcare fraud enforcement. Among cuts of approximately 18% to the budget of the Department of Health and Human Services (HHS), the president’s budget proposes $70 million… Continue Reading
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims
Will 2017 Be the Year of Insider Trading Reform?
For several years running, insider trading has been among the most high-profile enforcement priorities for both DOJ and the SEC. Unlike most federal criminal law, insider trading remains undefined by statute, having instead been largely judge-made. Unsurprisingly, since the explosion of enforcement actions began, prosecutors and defendants have both pushed the courts to clarify (or… Continue Reading
Supreme Court Rules on False Claims Act’s Seal Requirement
In the midst of a False Claims Act (FCA) case, the relators have blatantly violated the FCA’s seal provision. Surely this will lead to dismissal, right? Wrong. On Tuesday, December 6, the Supreme Court unanimously ruled that violating the FCA’s seal requirement does not necessarily demand that a case be dismissed. The case before the… Continue Reading
Department of Education Adopts Rules Increasing Student Loan Risk for Schools
As we previously reported, in June the Department of Education (DOE) proposed new rules relating to when students could assert a borrower defense to repayment, effectively a discharge of student loans. On November 1, DOE adopted the rules in substantially the same form they were proposed. In commentary, DOE observes that the former borrower defense… Continue Reading
Energy Enforcement, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims
Court Holds FERC De Novo Review to Proceed as “Ordinary Civil Action”
Last week, a federal district judge ruled for the first time that the “review de novo” promised by section 31(d) of the Federal Power Act (“FPA”), 16 U.S.C. § 823b(d), will be “treated as an ordinary civil action requiring a trial de novo.” FERC v. Maxim Power Corp., Civ. No. 3:15-30113-MGM, at 2 (D. Mass.… Continue Reading
Supreme Court Hands Down Opinion in Universal Health Services v. Escobar
Recently, the Supreme Court handed down its much-anticipated opinion in Universal Health Services, Inc. v. United States ex rel. Escobar et al.—a case addressing the viability of the implied certification theory in FCA litigation. Justice Thomas, writing on behalf of a unanimous Court, found that the implied certification theory can in fact serve as a… Continue Reading
Election and Political Law, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities
AN IMPORTANT CHECK ON THE ABUSE OF GOVERNMENT AUTHORITY
As citizens of a nation founded on the rule of law, we depend upon law enforcement and prosecutors to protect us from harm and from those who infringe our liberty. In exchange for this protection, we permit these public servants to exercise authority and at times great power. Thankfully, and it should go without saying,… Continue Reading
Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities
SEC Describes Recent Efforts to Combat Pyramid Schemes and Affinity Frauds
Over the past two years, the Securities and Exchange Commission (SEC) has stepped up enforcement actions against pyramid schemes and related affinity frauds. Last week, in a speech at the University of Illinois at Chicago, Andrew Ceresney, director of the SEC’s Enforcement Division, addressed his division’s most recent efforts to combat these frauds. In particular,… Continue Reading
The Olympus Debacle: Why Internal Whistleblowing is a Good Thing for Compliance
The U.S. Department of Justice announced last week that Olympus Corporation of the Americas (OCA) agreed to pay $646 million to resolve three cases relating to its longstanding practice to bribe doctors and hospitals in the U.S. and abroad. The company entered deferred prosecution agreements (DPA) related to violations of the Anti-Kickback Statute (AKS) and… Continue Reading
Is the Government the Public? Seventh Circuit Suggests Willingness to End FCA Circuit Split by Joining Sister Circuits in Saying No
Courts generally agree in False Claims Act cases that the government alone does not count as “the public” for purposes of the Act’s public disclosure bar. The current bar calls for dismissal of complaints whose allegations have already been publicly disclosed, with the aim of preventing parasitic suits. Seven circuits subscribe to the view that… Continue Reading
Developer Facing 230-Year Sentence Illustrates Necessity of Full and Accurate Disclosure
Demonstrating the importance of full and accurate disclosure, a Chicago commercial real estate developer faces a maximum sentence of 230 years in prison for misrepresenting his company’s finances. After a two-week trial, on February 24, a jury found Laurance Freed, president of Joseph Freed and Associates LLC (JFA), guilty of bank fraud, mail fraud, and… Continue Reading
Anti-Bribery and Corruption, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims
The SFO’s ‘Seize and Sift’ Procedure
R (on the application of Colin McKenzie) v Director of the Serious Fraud Office saw an unsuccessful attempt to judicially review the SFO’s currently in-use procedure for dealing with material that it has seized, and which may contain content subject to legal professional privilege (“LPP”). This ‘procedure’, set out in the SFO’s Operational Handbook, provides… Continue Reading
Anti-Money Laundering, Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims
FinCEN Announces First Card Club AML Enforcement Action
Just in time for Christmas, the Financial Crimes Enforcement Network (FinCEN), the financial industry (including casinos and card clubs) regulator, announced its first-ever enforcement action against a card club, California’s Oaks Card Club (Oaks). The enforcement action, which carried a penalty of $650,000, is the latest in a string of actions against gaming enterprises and is… Continue Reading
Anti-Bribery and Corruption, Compliance, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Uncategorized
Cooperation, Leniency, Internal Investigations, Self-Incrimination, Privilege and All That Jazz
I recently attended a Fraud Conference in Miami where I heard a French lawyer insisting that since he was a defence advocate, his job was to defend his clients against fraud allegations, not to prosecute them. Instead of cosying up to the authorities, and self-reporting, he regarded it as his duty to challenge the prosecutor and… Continue Reading
Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities
First Guilty Verdict for Dodd-Frank “Spoofing” Violations
On November 2, 2015, Law360.com reported that Michael Coscia became the first individual to be convicted for the crime of “spoofing” under the Dodd-Frank Act of 2010. The Dodd-Frank Act amended section 4c(a)(5) of the Commodities Exchange Act, making it unlawful to engage in any trading or practice that “is, is of the character of,… Continue Reading
Fourth Circuit to Weigh in on Use of Statistical Sampling in False Claims Act Cases
Last month, the Fourth Circuit Court of Appeals agreed to hear an interlocutory appeal on the issue of whether to allow statistical sampling to prove liability and damages in a False Claims Act (FCA) case. By taking this unusual step, the Fourth Circuit will have the opportunity to weigh in on what has become an… Continue Reading
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims
CFPB Obtains Injunction Against World Law Group
The CFPB recently obtained preliminary injunctions against debt-reduction company World Law Group, its affiliates and its owners, thereby freezing the company’s assets and stopping all further operations pending the outcome of a CFPB lawsuit against the company. The injunctions, issued on September 2 and September 14, come on the heels of the complaint filed by… Continue Reading
Anti-Bribery and Corruption, Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims
Making Bankers Accountable
The Financial Conduct Authority and the Prudential Regulatory Authority have recently been showing signs of gearing up for the new regime which is intended to have the effect of making senior bankers and other financial services managers accountable for failings within their institutions. The intention, of course, is to avoid the kind of meltdown we all… Continue Reading
FinCEN Final Rule on Foreign Bank Requires Covered Financial Institutions to Take “Special Measures”
On July 22, 2015, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a final rule pursuant to Section 311 of the Patriot Act against FBME Bank Ltd. (FBME, formerly known as Federal Bank of the Middle East). FBME is based in Tanzania but does most of its… Continue Reading
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims, Securities and Commodities
Reflections on a Sentence: Spooking the City
Tom Hayes emerges from his trial at Southwark Crown Court for Libor manipulation as a very considerable loser, who took some very bad decisions in the course of the SFO investigation and trial (and perhaps deserves his long sentence for the level of stupidity displayed alone, although the Judge specifically stated that he took no… Continue Reading
FFIEC Assessment Helps Financial Institutions Prevent Cyber Attacks
The Federal Financial Institutions Examination Council (FFIEC) recently issued an assessment tool meant to assist financial institutions in the detection of cybersecurity vulnerabilities and the prevention of cyber attacks. The FFIEC is an interagency body that develops the principles and standards used by agencies and organizations empowered to examine financial institutions, such as the Consumer… Continue Reading