Subject to Inquiry

Subject to Inquiry

THE LATEST ON GOVERNMENT INQUIRIES AND ENFORCEMENT ACTIONS

Government Investigations and White Collar Litigation Group
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.

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

Cross-Border Enforcement and Trends — 2022 Year in Review

Key developments in U.S. cross-border enforcement were driven by the year’s most newsworthy developments, from Russia’s invasion of Ukraine and the battery of sanctions that swiftly followed, to the collapse of the cryptocurrency market.

For details, download this inaugural review, which focuses on anti-money laundering, as this issue continued its rise up the enforcement and regulatory agenda. The review features enforcement highlights from 2022 and significant trends that will continue to drive enforcement in this space in 2023.

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Fraud, Deception and False Claims

Supreme Court to Determine Whether False Claims Act Liability Is Precluded Where Defendants Proffer an Objectively Reasonable Interpretation of an Ambiguous Legal Requirement

On January 13, 2023, the Supreme Court granted a writ of certiorari to petitioners in two False Claims Act cases to determine whether the False Claims Act’s knowledge requirement reaches defendants who can offer an “objectively reasonable” interpretation of an ambiguous legal or contractual requirement material to government payment. The Court’s decision will likely be one of the most significant FCA decisions in decades, and it will have important implications for government contractors and healthcare providers whose businesses require compliance with complex and sometimes opaque regulatory regimes.

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Compliance, Securities and Commodities

SEC Issues Risk Alert on Reg BI Deficiencies Identified During Exams

On Jan. 30, the U.S. Securities and Exchange Commission’s Division of Examinations released a Risk Alert identifying perceived weaknesses in broker-dealers’ compliance with the disclosure, care, conflicts of interest and compliance obligations of Regulation Best Interest.

Read on for highlights from the alert and how they reflect the SEC’s evolving expectations during examinations

Enforcement and Prosecution Policy and Trends, Sanctions, Trade Embargo, and Export Controls

FinCEN Alert Highlights Potential U.S. Real Estate Investments by Sanctioned Russian Elites

The Financial Crimes Enforcement Network recently issued an alert cautioning all financial institutions about potential investments in the U.S. commercial real estate sector, by or on behalf of Russian elites and their proxies. FinCEN’s communication complements U.S. efforts, in response to Russia’s war against Ukraine, to isolate sanctioned Russian persons from the international financial system. In addition to highlighting specific vulnerabilities to sanctions evasion in this sector, the alert provides guidance to help financial institutions identify red flags for such activities.

Read on for details about the alert and recommended next steps for financial institutions.

Enforcement and Prosecution Policy and Trends

New Incentives Added to the Criminal Division’s Corporate Enforcement Policy

UPDATE: U.S. Attorneys’ Offices Adopt Policy Incentivizing Self-Disclosure of Corporate Misconduct (Feb. 27, 2023)


On January 17, 2023, Assistant Attorney General (AAG) Kenneth A. Polite, Jr. delivered remarks to an audience at the Georgetown University Law Center, announcing changes to the Criminal Division’s Corporate Enforcement Policy (CEP). These changes to the CEP follow the September 15, 2022 direction from U.S. Deputy Attorney General Lisa Monaco, which we previously covered, for each Department of Justice (DOJ) Department to publish policies around voluntary self-disclosure, and to clarify the benefits of self-reporting. Although the Criminal Division already has such a policy, AAG Polite noted that the DAG’s direction was an opportunity to take stock of the existing policy and strengthen it.

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