Archive

April 24, 2017

The Securities and Exchange Commission today announced that Elek Straub and Andras Balogh two former executives at Hungarian-based telecommunications company Magyar Telekom have agreed to pay financial penalties and accept officer-and-director bars to settle a previously-filed SEC case alleging they violated the Foreign Corrupt Practices Act (FCPA). Magyar Telekom paid a $95 million penalty in December 2011 to settle parallel civil and criminal charges that the company bribed officials in Macedonia and Montenegro to win business and shut out competition in the telecommunications industry.  The SEC’s complaint also charged the company’s former CEO Straub and former chief strategy officer Balogh with orchestrating the use of sham contracts to funnel millions of dollars in corrupt payments.  The two executives were set to stand trial this month. Straub has agreed to pay a $250,000 penalty and Balogh has agreed to pay a $150,000 penalty.  Both executives agreed to a five-year bar from serving as an officer or director of any SEC-registered public company.  The settlements are subject to court approval. “The executives in this case were charged with spearheading secret agreements with a prime minister and others to block out telecom competitors,” said Stephanie Avakian, Acting Director of the SEC’s Division of Enforcement.  “We persevered in order to hold these overseas executives culpable for corrupting a company that traded in the U.S. market.” A third Magyar Telekom executive charged in the SEC’s complaint, former director of business development and acquisitions Tamas Morvai, agreed to a settlement that was approved by the court in February requiring him to pay a $60,000 penalty for falsifying the company’s books and records in connection with the bribery scheme. SEC

April 26, 2017

An Indian national pleaded guilty to one count of conspiracy to commit money laundering for his role in liquidating and laundering victim payments generated through various telephone fraud and money laundering schemes via India-based call centers. According to admissions made in connection with the plea, Chaudhari and his co-conspirators perpetrated a complex scheme in which individuals from call centers located in Ahmedabad, India, impersonated officials from the IRS or U.S. Citizenship and Immigration Services in a ruse designed to defraud victims located throughout the United States. Using information obtained from data brokers and other sources, call center operators targeted U.S. victims who were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government. Victims who agreed to pay the scammers were instructed how to provide payment, including by purchasing stored value cards or wiring money, and upon payment, the call centers would immediately turn to a network of “runners” based in the U.S. to liquidate and launder the fraudulently-obtained funds. DOJ

January 26, 2017

The SEC charged two former executives at Och-Ziff Capital Management Group with being the driving forces behind a far-reaching bribery scheme that violated the Foreign Corrupt Practices Act (FCPA).  The SEC’s complaint alleges that Michael L. Cohen, former head of Och-Ziff’s European office, and Vanja Baros, an investment executive on Africa-related deals, caused tens of millions of dollars in bribes to be paid to high-level government officials in Africa.  Their alleged misconduct induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds.  Cohen and Baros also allegedly directed illicit efforts to secure mining deals to benefit Och-Ziff by directing bribes to corruptly influence government officials in Chad, Niger, Guinea, and the Democratic Republic of the Congo.  SEC

January 18, 2017

Texas-based medical device company Orthofix International will admit wrongdoing and pay more than $14 million to settle charges that it improperly booked revenue in certain instances and made improper payments to doctors at government-owned hospitals in Brazil to increase sales.  According to the SEC’s order, Orthofix improperly recorded certain revenue as soon as a product was shipped despite contingencies requiring certain events to occur in order to receive payment in the transaction.  In other instances, Orthofix immediately recorded revenue when it had provided customers with significant extensions of time to make payments.  The accounting failures caused the company to materially misstate certain financial statements from at least 2011 to the first quarter of 2013.  Four former Orthofix executives will pay penalties to settle cases related to these accounting failures.  A separate SEC order found that Orthofix violated the Foreign Corrupt Practices ACT (FCPA) when its subsidiary in Brazil schemed to use high discounts and make improper payments through third-party commercial representatives and distributors to induce doctors under government employment to use Orthofix’s products.  Orthofix will pay a $8.25 million penalty to resolve the accounting violations and more than $6 million in disgorgement and penalties to settle the FCPA charges.  SEC

January 13, 2017

Chilean-based chemical and mining company Sociedad Quimica y Minera de Chile S.A. (SQM) will pay more than $30 million to resolve parallel civil and criminal cases finding that it violated the Foreign Corrupt Practices Act (FCPA).  According to the SEC’s order, SQM made nearly $15 million in improper payments to Chilean political figures and others connected to them over a seven-year period.  Most of the payments were made based on fake documentation submitted to SQM by individuals and entities posing as legitimate vendors.  SQM will pay a $15 million penalty to settle the SEC’s charges and a $15.5 million penalty as part of a deferred prosecution agreement with the Department of Justice.  SEC

January 19, 2017

Nevada-based gaming and resort company Las Vegas Sands Corp. agreed to pay a $6.96 million criminal penalty to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) in connection with business transactions in China and Macao. According to admissions by Sands, certain Sands executives failed to implement internal accounting controls to ensure the legitimacy of payments to a business consultant who assisted Sands in promoting its brand in China and Macao and to prevent the false recording of those payments in its books and records. Sands continued to make payments to the consultant despite warnings from its finance staff and an outside auditor that the business consultant had failed to account for portions of these funds. In addition, Sands terminated the finance department employee who raised concerns about the payments. Sands also agreed to pay a civil penalty of roughly $9 million to settle related SEC charges for a total payout of roughly $16 million. DOJ

January 17, 2017

United Kingdom-based manufacturer and distributor of power systems for the aerospace, defense, marine and energy sectors Rolls-Royce plc agreed to pay nearly $170 million as part of an $800 million global resolution to investigations by DOJ and U.K. and Brazilian authorities into a long-running scheme to bribe government officials in exchange for government contracts in violation of the Foreign Corrupt Practices Act. According to company admissions, Rolls-Royce paid more than $35 million in bribes through third parties to foreign officials in various countries including Thailand, Brazil, Kazakhstan, Azerbaijan, Angola and Iraq in exchange for those officials’ assistance in providing confidential information and awarding contracts to Rolls-Royce and affiliated entities. DOJ

January 12, 2016

Warsaw, Indiana-based medical device manufacturer Biomet will pay more than $30 million to resolve SEC and DOJ investigations into the company’s repeat violations of the Foreign Corrupt Practices Act.  Biomet first faced FCPA charges from the SEC and entered into a deferred prosecution agreement with the DOJ in March 2012 when it also agreed to pay $22 million to settle both cases.  As part of the SEC settlement, Biomet agreed to retain an independent compliance consultant to review its FCPA compliance program.  After the settlement, while implementing recommendations from the consultant, Biomet discovered potential anti-bribery violations in Mexico and Brazil.  The company notified the monitor and the SEC in 2013.  The SEC’s order finds that Biomet continued to interact and improperly record transactions with a known prohibited distributor in Brazil, and used a third-party customs broker to pay bribes to Mexican customs officials to facilitate the importation and smuggling of unregistered and mislabeled dental products. SEC

January 13, 2017

Chilean chemicals and mining company Sociedad Química y Minera de Chile (SQM) agreed to pay a criminal penalty of more than $15 million in connection with payments to politically-connected individuals in Chile in violation of the Foreign Corrupt Practices Act. According to the government, SQM made donations to dozens of foundations controlled by or closely tied to Chilean politicians with influence over the government’s mining plans in Chile, a key segment of SQM’s business. SQM also admitted to falsifying its books and records to conceal payments to vendors associated with politicians, logging them as consulting and professional services SQM never received. In total, SQM admitted having paid nearly $15 million between 2008 and 2015 to vendors despite having no evidence any goods or services were actually received. SQM also agreed to pay $15 million to settle related charges with the Securities and Exchange Commission, for a total payment of $30 million. DOJ

January 12, 2017

Indiana-based manufacturer of orthopedic and dental implant devices Zimmer Biomet Holdings Inc. agreed to pay a $17.4 million criminal penalty in connection with a scheme to pay bribes to government officials in Mexico and for violations of the internal controls provisions of the Foreign Corrupt Practices Act involving the company’s operations in Mexico and Brazil. By failing to require appropriate due diligence and documentation and contracts for payments to third parties, Biomet allowed its Mexican subsidiary Biomet 3i Mexico S.A. de C.V. to pay bribes to Mexican customs officials through customs brokers and sub-agents so 3i Mexico could import contraband dental implants into Mexico. Importing those products into Mexico violated Mexican law because they lacked proper registration or labeling. In related proceedings, the company also agreed to pay the SEC disgorgement of $6.5 million including pre-judgment interest and $6.5 million as a civil penalty. DOJ