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THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

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

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

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 and misrepresentations.

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Enforcement and Prosecution Policy and Trends

Biden Administration Amends “Buy American” Rules to Increase Domestic Content Requirements

On March 7, the Federal Acquisition Regulatory Council promulgated a final rule aimed at increasing federal government preferences for goods and construction materials that are domestically manufactured and increasing the required domestic content threshold for purchases governed by the Buy American Act.

Read on for highlights from the rule and next steps for government contractors and subcontractors.

Anti-Bribery and Corruption, Sanctions, Trade Embargo, and Export Controls

DOJ Launches “Task Force KleptoCapture” in Response to Russian Invasion

RELATED UPDATES:
New Revelations in Ukraine Lead to Tightening Global Sanctions (April 8, 2022)
Western Companies Starting to Feel Impact of Russian Sanctions (March 24, 2022)
FinCEN Encourages “Increased Vigilance” and Highlights Red Flags for Evasion of Russian Sanctions including Use of Virtual Currency (March 16, 2022)


Last week, the U.S. Department of Justice (DOJ) announced the launch of an aggressive interagency law enforcement task force, Task Force KleptoCapture. The Task Force represents another U.S. enforcement initiative in response to the Russian invasion of Ukraine in which DOJ plans to target Russian officials and “government-aligned elites” for violations of law related to economic sanctions and corruption. In an address to the American Bar Association on Friday, Attorney General Merrick Garland described the task force as a “force multiplier” and stated: “Together with our federal and international partners, we will leave no stone unturned in our efforts to investigate, arrest and prosecute those whose criminal acts enable the Russian government to continue its unjust war against Ukraine.”

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Enforcement and Prosecution Policy and Trends

U.S. Department of Education Officially Asserts Authority over Income Share Agreements

On March 2, 2022, the U.S. Department of Education’s Office of Federal Student Aid (FSA) for the first time asserted regulatory authority over income share agreements (ISAs) as private education loans. FSA issued an electronic announcement to clarify its authority over income share agreements at institutions that receive federal aid under the Higher Education Act of 1965, as amended (HEA). An ISA is a contract in which a lender gives a student money for education, and in return, the student promises to pay the ISA-provider a fixed percentage of the student’s income for a set amount of time after graduation. The student may repay more or less than the amount received, depending on the terms of the ISA. Continue Reading

Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims

First FCPA Settlement of 2022 – Enforcement on the Horizon

On February 17, 2022, the Securities and Exchange Commission (SEC) announced the first Foreign Corrupt Practices Act (FCPA) settlement of the year. Seoul-based KT Corporation (KT Corp.), South Korea’s largest telecommunications operator, will pay $6.3 million to resolve charges that it violated the FCPA by providing improper payments for the benefit of government officials in Korea and Vietnam. Of the $6.3 million, approximately $2.8 million is disgorgement while the remaining $3.5 million is a civil monetary penalty. This settlement follows on the heels of South Korean authorities having indicted 14 KT Corp. executives for the same conduct in November 2021. Continue Reading

Sanctions, Trade Embargo, and Export Controls

U.S. and Allies Significantly Expand Sanctions and Related Restrictions on Russia and Belarus

RELATED UPDATES:
New Revelations in Ukraine Lead to Tightening Global Sanctions (April 8, 2022)
Western Companies Starting to Feel Impact of Russian Sanctions (March 24, 2022)
FinCEN Encourages “Increased Vigilance” and Highlights Red Flags for Evasion of Russian Sanctions including Use of Virtual Currency (March 16, 2022)
DOJ Launches “Task Force KleptoCapture” in Response to Russian Invasion (March 9, 2022)


Over the last several days, the United States and allies in North America, Europe, and Asia have announced a sweeping expansion of the sanctions levied against Russia and affiliated entities and individuals in the wake of Russia’s invasion of Ukraine.  The additional sanctions target Russia’s largest financial institutions; impose further prohibitions related to new debt and equity for significant state-owned enterprises; and block transactions with Russian President Vladimir Putin, Minister of Foreign Affairs Sergei Lavrov, and additional Russian elites and their family members.  The U.S. Commerce Department similarly implemented stringent export control restrictions that will severely restrict exports to Russia of critical U.S.-origin technologies, as well as certain foreign direct products (FDPs) of such technologies.

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Enforcement and Prosecution Policy and Trends

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

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 cases Ruan v. United States and Kahn v. United States, the Court is expected to resolve a circuit split over the availability and scope of acting in “good faith” as a defense for medical practitioners charged with unlawfully distributing narcotics under the CSA.

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Sanctions, Trade Embargo, and Export Controls

Additional Sanctions on Russia and the Importance of Business Contingency Planning

RELATED UPDATES:
New Revelations in Ukraine Lead to Tightening Global Sanctions (April 8, 2022)
Western Companies Starting to Feel Impact of Russian Sanctions
(March 24, 2022)
FinCEN Encourages “Increased Vigilance” and Highlights Red Flags for Evasion of Russian Sanctions including Use of Virtual Currency (March 16, 2022)
DOJ Launches “Task Force KleptoCapture” in Response to Russian Invasion (March 9, 2022)
U.S. and Allies Significantly Expand Sanctions and Related Restrictions on Russia and Belarus (Feb. 28, 2022)


Building on Monday’s Executive Order imposing sanctions on the so-called Donetsk and Luhansk People’s Republics (“DNR” and “LNR,” respectively) in Ukraine, the Biden Administration on Tuesday sanctioned two major Russian state-owned financial institutions as well as several individuals with close ties to the Kremlin and imposed additional restrictions on Russian sovereign debt.  The sanctions were coordinated with similar penalties announced Tuesday by the European Union and Great Britain.  In remarks on Tuesday afternoon, President Biden referred to the measures as the “first tranche of sanctions to impose costs on Russia” for its deployment of troops to the DNR and LNR, noting that the United States will impose additional restrictions if Russia continues to escalate tensions in the region.  Today, the Administration moved ahead with additional measures, sanctioning the company charged with building Russia’s Nord Stream 2 natural gas pipeline, as well as the company’s corporate officers.

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Sanctions, Trade Embargo, and Export Controls

Biden Administration Issues Initial Ukraine Sanctions

RELATED UPDATES:
New Revelations in Ukraine Lead to Tightening Global Sanctions (April 8, 2022)
Western Companies Starting to Feel Impact of Russian Sanctions (March 24, 2022)
FinCEN Encourages “Increased Vigilance” and Highlights Red Flags for Evasion of Russian Sanctions including Use of Virtual Currency
(March 16, 2022)
DOJ Launches “Task Force KleptoCapture” in Response to Russian Invasion (March 9, 2022)
U.S. and Allies Significantly Expand Sanctions and Related Restrictions on Russia and Belarus (Feb. 28, 2022)
Additional Sanctions on Russia and the Importance of Business Contingency Planning (Feb. 23, 2022)


In response to the deteriorating political and military situation on the Ukraine border, last night the Biden administration issued an initial set of sanctions targeting activities involving the Donetsk and Luhansk regions of Ukraine.

Pursuant to President Biden’s Executive Order, any new investment in, importation from or exportation to the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine by a U.S. person or to or from the United States is prohibited. U.S. persons also are prohibited from approving, financing, facilitating or guaranteeing transactions by a non-U.S. person that would be prohibited if performed by a U.S. person or from the United States. These restrictions are similar to those imposed on the Crimea region of Ukraine following its annexation by Russia in 2014, which resulted in Crimea becoming functionally off limits to United States’ commerce. That trade embargo now has been extended to Donetsk and Luhansk.

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Enforcement and Prosecution Policy and Trends

EARN IT Act Opens Online Service Providers to Liability for Online Child Sexual Abuse Hosted on Their Platforms

On Thursday, February 10, 2022, the Senate Judiciary Committee approved the Eliminating Abusive and Rampant Neglect of Interactive Technologies Act (EARN IT Act), first introduced in 2020 by Sens. Lindsey Graham, R-SC, and Richard Blumenthal, D-Conn. The EARN IT Act aims to tackle the online proliferation of child sexual abuse material (CSAM) by paring back online service providers’ broad immunity under Section 230 of the Communications Act of 1934. The Act would open up websites and tech platforms to civil lawsuits and state criminal charges for user-created content hosted on their websites.

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