Criminal Proceedings

June 16, 2020

The U.S. Navy’s leading supplier of high-yield steel for submarines, Bradken Inc., has agreed to pay $10.8 million and comply with a three-year deferred prosecution agreement in order to settle allegations it violated the False Claims Act through its Tacoma foundry producing and selling steel that failed to meet certain strength standards required by the Navy.  In 2017, the defense contractor discovered and self-disclosed that test results for a substantial portion of its steel productions, spanning thirty years, had been improperly altered by then director of metallurgy, Elaine Thomas, causing shipbuilders to submit false claims to the Navy.  DOJ; USAO WDWA

June 10, 2020

Alutiiq International Solutions LLC (AIS), an Alaskan Native Corporation and government contractor, has agreed to pay $1.25 million and enter into a non-prosecution agreement to settle allegations of violating the Anti-Kickback Act in connection with a multi-million dollar General Services Administration (GSA) contract to modernize the Harry S. Truman Federal Building in Washington, D.C.  Beginning in 2010, a project manager formerly employed by AIS allegedly accepted kickbacks from a subcontractor in exchange for steering more work to the subcontractor, while also fraudulently billing GSA for a non-existent on-site supervisor and overinflating costs from its subcontractor.  AIS and its parent company, Afognak Native Corporation, cooperated fully with the investigation and have since engaged in extensive remedial actions.  DOJ

June 10, 2020

A South Korean engineering company has been ordered to pay $68 million in criminal fines, civil penalties, and restitution after pleading guilty to defrauding the U.S. Army in a 2008 contract worth hundreds of millions of dollars.  According to the press release, SK Engineering & Construction Co. Ltd. (SK) submitted documents to the Army that were doctored to conceal $2.6 million in payments to a fake construction company that had bribed an Army Corps of Engineers official on SK’s behalf.  The company also took steps to hamper investigations by U.S. and Korean officials by withholding and destroying relevant documents, attempting to tamper with a potential witness, and failing to properly discipline the employees involved with the bribery scheme.  SK was suspended from participating in certain contracts with the U.S. government in 2017; with this plea agreement, it will undergo another three years of probation.  DOJ

May 6, 2020

The United States has obtained a settlement of $49 million in the 1Malaysia Development Berhad (1MDB) scandal, in which high-level officials of 1MDB and their associates allegedly robbed the people of Malaysia by misappropriating over $4.5 billion in public funds, which they laundered through financial institutions based in the United States and other countries and squandered on expensive properties and possessions.  With the conclusion of the case against Emirati businessman Khadem al-Buraisi, the United States has recovered over $1.1 billion in assets arising from the 1MDB scandal, representing the largest civil forfeiture by the DOJ and the largest recovery to date under the agency’s Kleptocracy Asset Recovery Initiative.  DOJ; USAO CDCA

April 30, 2020

Entities of Israeli banking conglomerate Bank Hapoalim have pleaded guilty and entered into civil settlements for their role in a money laundering scheme for bribes made to soccer officials with Fédération Internationale de Football Association (FIFA) and others in exchange for preferences including in the award of soccer match broadcasting rights.  As part of three-year non-prosecution agreement, the bank will forfeit $20.73 million, pay a fine of $9.33 million, and undertake specified remedial and compliance efforts. The bank simultaneously entered into a separate settlement regarding tax evasion.  DOJ; USAO EDNY

April 30, 2020

Israel-based Bank Hapoalim, together with its Swiss and other subsidiaries, will pay nearly $875 million and plead guilty to charges that it conspired with U.S. taxpayers and others to conceal $7.6 billion in thousands of Swiss and Israeli bank accounts from the Internal Revenue Service and other U.S. government entities, including New York State.  As part of its plea, the bank admitted that it assisted U.S. customers in setting up secret accounts, sheltering assets and income, and evading taxes.  The total payment by bank entities consists of $216.8 million in restitution to the IRS, $160.3 million in forfeiture, federal penalties of $239.8 million, $37.4 million in civil monetary penalties to the Federal Reserve System, and $220 million in penalties to the New York State Department of Financial Services.   As part of a deferred prosecution agreement, the bank will cooperate with ongoing investigations and disclose information regarding U.S.-related accounts. The bank simultaneously entered into a separate settlement agreement regarding money laundering with respect to the FIFA bribery investigation. DOJ; USAO SDNY; NY.

April 20, 2020

The Industrial Bank of Korea will pay $86 million as part of a deferred prosecution agreement resolving claims arising from the bank’s processing of more than $1 billion of transactions between Korean entities to Iranian entities in violation of economic sanctions law under the International Emergency Economic Powers Act. The bank admitted that it failed to institute an adequate and effective anti-money laundering program despite repeated warnings by its New-York based compliance officer.  The bank will pay a $35 million to the State of New York and forfeit $51 million to the U.S.  USAO SDNY; NY

April 14, 2020

Importer Blue Furniture Solutions, LLC, its successor XMillennium, LLC, and former executives Yingqing Zeng and Alex Cheng have agreed to pay more than $5.2 million to settle allegations that they violated the False Claims Act in conspiring to evade customs duties and fees on furniture imported from China.  In a qui tam complaint by whistleblower University Loft Company, which the United States elected to intervene in, the defendants were accused of declaring wooden bedroom furniture as “metal” or “non-bedroom”, manipulating packing lists and invoices, and directing manufacturers to mislabel boxes and falsify invoices to help defendants evade U.S. customs officials.  USAO WDTX