Yesterday, outgoing Attorney General Eric Holder — perhaps in one of his final swan songs as the country’s top fraud cop — trumpeted the $24.7 billion in civil and criminal fines the Department of Justice brought home this fiscal year (ending Sept. 30, 2014). See DOJ Press Release. It is more than three times the $8 billion DOJ recovered in 2013. It also represents close to a one-thousand percent return on the $2.9 billion spent on the 94 U.S. Attorneys’ offices and the main litigating divisions of DOJ this year.
According to DOJ, the largest recoveries this year came from financial institutions to resolve financial fraud claims stemming from the 2008 financial crisis. This included the $13 billion paid by JPMorgan and the $7 billion paid by Citigroup to resolve federal and state claims related to the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS). Both resolutions include record penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and provide billions of dollars of relief to struggling homeowners.
DOJ highlighted several other industries in which it scored major settlements this year. It recovered hundreds of millions of dollars in fines from its ongoing investigation into the manipulation of the London Interbank Offered Rate (LIBOR), including its major settlements with UBS and RBS. It recovered hundreds of millions of dollars from its ongoing investigation into international price-fixing and bid rigging in the auto parts industry, including its $425 million criminal fine of Bridgestone. It recovered several multi-million dollar payments in connection with environmental cleanups, including its $14 million settlement with Titanium Metals Corporation (TIMET) for the company’s unauthorized manufacture and disposal of PCBs. And it continued on its crusade to go after foreign bribery under the Foreign Corrupt Practices Act (FCPA), pointing to its $25 million settlement with Diebold for bribing government officials in China and Indonesia and falsifying records in Russia.
But what is perhaps the most notable piece of DOJ’s 2014 fraud round-up is the nod it gave to whistleblowers. According to the agency, a major part of its enforcement success this year is due to whistleblowers who roused the government to action through their qui tam filings under the whistleblower provisions of the False Claims Act. Yet another powerful indication of the unparalleled success of the American whistleblower system. Other countries considering adopting or revamping their own whistleblower programs should take notice. UK are you listening? See UK Continues to Say No to US-Styled Whistleblower Rewards.
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