Source: United States Department of Justice News
Remarks as Prepared for Delivery
Thank you, Brian, for the kind introduction. It’s great to be here with all of you. Today, I will share a snapshot of our 2022 enforcement results as well as our policy approach to white-collar and corporate crime.
I have the pleasure of serving as a Deputy Assistant Attorney General, or DAAG, in the Department of Justice’s Criminal Division. In this role, I’m responsible for overseeing the more than 200 prosecutors in the division’s Fraud Section and Appellate Section – both of which play a critical role in the department’s fight against economic crimes.
I’ve devoted the last decade of my career to public service in a number of jobs – as an AUSA for the Southern District of Florida, as a Trial Attorney and a supervisor in the Fraud Section, and now, as a DAAG.
But one thing has remained constant: I’ve been surrounded by exceptional colleagues – from whom I continue to learn.
These are people who understand that our only duty is to seek justice, whether it means pursuing convictions or declining to prosecute when the circumstances warrant.
People who spend years doggedly reviewing documents and using the grand jury process to piece together facts.
People who travel the country and the world for cases and to build critical partnerships.
People who raise their hands to help on other priorities, such as the scores of January 6th “Capitol Breach” cases led by our colleagues at the D.C. U.S. Attorney’s Office.
And they are people who treat defendants, counsel, agents, courts, victims, witnesses, and each other with fairness and respect.
For those of you in law school, I can assure you, there is no more rewarding legal career than one at the department.
“Where law ends, tyranny begins” is etched on the side of the Robert F. Kennedy Main Justice building, the building I walk into each day, and the phrase informs our work. We believe in equality of all citizens, all people, all defendants under the law – and from Washington, D.C. to California, no one is above the law.
Which brings me to my next topic: the Fraud Section’s enforcement results over the past year.
As you’ve heard from department leadership, our top priority is to prosecute the individuals who commit and profit from these crimes.
One of my favorite supervisors in Miami used to say that our work “isn’t about the numbers, but it’s a little about the numbers.” The numbers have a place – they tell the public, in broad terms, what the department has publicly done. But they don’t tell the full story.
So, let me share some numbers. In the capable hands of leaders Glenn Leon, Lorinda Laryea, and Allan Medina, and with thanks to our many partners, the Fraud Section had a banner year in 2022, charging 280 individuals and convicting more than 340. Most impressively, these prosecutors recorded the highest number of trial convictions in the section in over five years, winning guilty verdicts against 56 individual defendants in 51 cases across 22 different federal districts.
The section also entered a total of seven corporate resolutions, resulting in global monetary penalties of over $2.3 billion, and announced two corporate enforcement policy declinations with disgorgement. This includes our first-ever globally coordinated Foreign Corrupt Practices Act (FCPA) resolution with South African authorities, representative of our focus on building partnerships that leave cross-border criminals fewer places to hide.
The results speak for themselves.
This team works tirelessly to ensure that, as our Attorney General put it, “there is not one rule for the powerful and another for the powerless; one rule for the rich and another for the poor.”
Whether the defendants held positions as executives of public companies, traders at Wall Street banks, founders of cryptocurrency companies, medical professionals, or high-ranking foreign officials, our prosecution teams pursued difficult cases through trial and conviction.
Through this work, a few themes emerge: proactivity, breadth, and impact. The section is incredibly adept at proactively using data analytics to build cases. And as you’ll see, these cases affect dinner-table issues as well as corporate behavior at home and abroad.
Let me now pivot to some specific enforcement highlights from each of the Fraud Section’s three litigating units that illustrate these themes.
First, the Market Integrity and Major Frauds (MIMF) Unit, one of my old homes in the section. As its name suggests, this unit focuses upon schemes that not only victimize individual investors and taxpayers, but also undermine market integrity.
People over the world participate in America’s markets because they expect that they are free and fair, that prices accurately reflect market forces of supply and demand, and that public companies speak the truth.
In the culmination of a years-long effort, in 2022, in two trials in the Northern District of Illinois, prosecutors convicted three former directors at JPMorgan who participated in a massive, eight-year scheme to manipulate the price of gold and silver futures contracts. These traders would place tens of thousands of spoof orders – that is, orders they intended to cancel before execution – to drive prices in a direction they wanted, creating phantom supply and demand. The spoofed orders lured other market participants to trade at prices, quantities, or times that they wouldn’t have otherwise traded. In other words, they were manipulated and ripped off.
Analyzing patterns in market data, combined with traditional law enforcement techniques, our team of agents and prosecutors, in parallel to our regulatory partners, caught and disrupted these complex schemes.
These trial convictions followed earlier guilty pleas by two other individuals working for the same trading desk, as well as a parent-level Deferred Prosecution Agreement (DPA) in which JPMorgan agreed to pay approximately $920 million. From 2019 to present, to combat spoofing, we have brought seven corporate cases totaling more than $1 billion in criminal monetary penalties, and secured convictions of 12 former traders at Wall Street financial institutions.
The title of today’s symposium includes both corporate crime and individual accountability. Collectively, these cases exemplify our comprehensive approach to not only holding culpable individuals accountable, but also pursuing corporate resolutions with institutions whose liability is derivative of those individuals.
Before entering some of these resolutions, we saw only lip service paid to compliance, and in one case, managers who had substantial information about unlawful trading allowed it to continue. Across the board, our resolutions required these companies to cooperate and implement appropriate and effective compliance improvements to course-correct. Years in, these cases have had a tangible, positive effect on market participants.
Beyond spoofing, in 2022, MIMF prosecutors successfully pursued a wide range of cases in keeping with our focus on market integrity and individual accountability, including:
- Charging a defendant in the Southern District of Texas for allegedly running an illegal kickback and commodities insider trading scheme involving natural gas futures;
- Charging eight defendants in connection with an alleged social media-based “pump and dump” scheme, which resulted in over $114 million in illicit profits; and
- Charging the former CEOs of MoviePass Inc. and its parent company in a securities fraud scheme involving allegedly making misrepresentations to artificially inflate the price of the company’s stock and attract new investors.
Cryptocurrency fraud has also been a key priority over the last two years, and I anticipate that cryptocurrency crimes will continue to be a priority across the department. Our Assistant Attorney General, Kenneth Polite, created a National Cryptocurrency Enforcement Team (NCET) within the Criminal Division to serve as the focal point for the department’s efforts to tackle the growth of crime involving digital assets and related emerging technologies.
With respect to the section’s enforcement efforts, in 2022, MIMF prosecutors, together with our partners, charged nine defendants and brought a Crypto Fraud Enforcement Action.
What those numbers don’t tell you is that these cases cover alleged conduct including the largest Non-Fungible Token (NFT) scheme charged to date, a $2.4 billion Ponzi scheme involving the sale of unregistered cryptocurrency securities, and global investment fraud schemes involving over a hundred million dollars in losses. On the trial front, in the District of Massachusetts, the founder of My Big Coin, a purported cryptocurrency and virtual payment services company, was found guilty of executing a scheme that resulted in millions of dollars in losses to investors worldwide. He falsely claimed that My Big Coin was backed by gold and could readily be exchanged for real money – but instead spent investor funds on artwork and jewelry. Earlier this month, the court sentenced him to eight years’ imprisonment.
Crypto markets can be volatile yet alluring to many. There has been some speculation as to how cryptocurrencies should be classified and regulated, but from our vantage point, a grift is a grift.
Consistent with department-wide commitment to combat schemes exploiting the COVID-19 pandemic, in 2022, we continued to pursue Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) fraud cases, as well as securities fraud. For example, the former CEO of a publicly traded health care company was charged with allegedly misleading investors about obtaining rapid test kits.
Finally, MIMF pursued a range of government program and procurement fraud cases. This includes the largest-known Post-9/11 GI Bill fraud case ever brought by the department. Together with colleagues at the U.S. Attorney’s Office for the Southern District of Mississippi and the Criminal Division’s Money Laundering and Asset Recovery Section, our team also convicted the former Executive Director of the Mississippi Department of Human Services. He admitted to conspiring with others to defraud the State of Mississippi of millions of dollars of federal funds from the Temporary Assistance for Needy Families (TANF) and The Emergency Food Assistance Program. In essence, they stole food from the mouths of the neediest families in America.
Undoubtedly, this team will continue to bring novel cases that affect communities and markets across the country in the days and weeks ahead.
The Health Care Fraud Unit investigates and prosecutes egregious schemes collectively amounting to billions of dollars in fraud each year.
The daily relevance of health care crimes is clear. When medical professionals, administrators, and executives abuse the trust placed in them, taxpayers and patients suffer. Greed-based health care schemes can result in substandard care that is not only wasteful, but at times, life-threatening; and they can drive up the cost of care for us all.
The vast scope of the unit’s work over the past year was displayed in its 38 trial convictions, ranging from those involving the owners of rural hospitals in a complex $1 billion billing fraud scheme, to the CEO of a clinic that defrauded the Louisiana Medicaid Program and caused false medical diagnoses of children.
Representative of our work to combat telemedicine and genetic testing fraud is the trial conviction of laboratory owner Minal Patel. Patel conspired with patient brokers, telemedicine companies, and others to target Medicare beneficiaries with telemarketing calls falsely stating that Medicare covered expensive cancer genetic tests and paid off doctors to sign orders so he could bill Medicare for unnecessary tests. In total, Patel’s lab submitted more than $463 million in claims to Medicare and Patel personally received over $21 million.
Overall, the unit is prioritizing investigation and prosecution of schemes that affect vulnerable populations; pandemic fraud; and telemedicine, laboratory testing, and durable medical equipment fraud. We will continue to use data to train our focus upon outliers in billing codes, transactions, and prescribing patterns.
Last year, together with many U.S. Attorneys’ Offices, the Health Care Fraud Unit led three major national enforcement actions and pursued initiatives reflecting these priorities.
As part of the Sober Homes Initiative, a partnership with the U.S. Attorneys’ Offices here in the Central District of California and South Florida, our team prevailed in trials and continued to use new statutes, such as the Eliminating Kickbacks in Recovery Act (EKRA), to dismantle schemes preying upon, and derailing the recovery of, vulnerable addiction treatment patients. One example is the prosecution of Dr. Ligotti, who served as a medical director of more than 50 facilities and submitted more than $746 million in claims for fraudulent urine drug tests and addiction treatments – at the expense of the patients he was supposed to be treating. He was sentenced to 20 years’ imprisonment.
Finally, building on the success of the Appalachian Regional Prescription Opioid (ARPO) Strike Forces, we announced the New England Prescription Opioid (NEPO) Strike Force.
Turning now to the FCPA Unit, which had an even stronger year in 2022 than 2021.
President Biden named fighting corruption as a core national security interest, and for good reason. Corruption threatens democracy and the rule of law itself. Corruption heightens inequality and fuels skepticism of effective governance, aiding autocratic leaders. International cooperation and coordination are, therefore, essential to fighting corruption. In 2022, we continued to build partnerships, including by resolving our first case in parallel to South African authorities – the ABB matter. The Fraud Section also took a leading role in the OECD Working Group on Bribery’s Law Enforcement Officials Group meetings, where prosecutors discuss best practices with law enforcement authorities from around the world. Andrew Gentin – who is with us today – spearheads this effort.
With our partners, FCPA prosecutors pursued cases against individuals to punish corrupt actors and deter others on all sides of the illegal scheme: bribe payors, intermediaries, and public officials.
I want to start by highlighting two trial victories.
First, prosecutors from the Fraud Section, the Money Laundering and Asset Recovery Section, and the Eastern District of New York prevailed in a complex and lengthy trial, convicting Roger Ng, a former Goldman Sachs managing director, of FCPA and money laundering charges for his participation in the massive 1MDB bribery scheme. Again, demonstrating our commitment to holding not only individuals, but also corporations, accountable, the trial against Ng followed a corporate case against Goldman Sachs – in which Goldman agreed to pay $2.9 billion as part of a globally coordinated resolution with criminal and civil authorities in the United States, the United Kingdom, Singapore, and elsewhere.
Second, prosecutors from the FCPA Unit and the Southern District of Florida convicted at trial the former national treasurer of Venezuela and her husband for bribery-related money laundering. The defendants accepted over $100 million in bribes from a Venezuelan billionaire businessman who owned Globovision news network, allowing him to purchase bonds from the Venezuelan National Treasury at a favorable exchange rate, resulting in hundreds of millions of dollars in profit. The conspiracy generated such immense profits that these co-conspirators stashed it in bulk cash hidden in cardboard boxes, offshore shell companies, and Swiss bank accounts. They also purchased multiple private jets, yachts, and funded a high-end fashion line.
Separately, in the Southern District of Florida, prosecutors charged the former Comptroller General of Ecuador with money laundering in connection with the Odebrecht bribery scheme. In another case, we also secured convictions for bribery-related charges against a former senior Bolivian government official, his chief of staff, and three bribe-paying U.S. businessmen and intermediaries. The former Bolivian minister of Government was sentenced to 70 months in prison.
As these cases show, we will not hesitate to use money laundering statutes and all available tools to target corrupt officials.
In addition, the FCPA Unit resolved five corporate cases and announced two Corporate Enforcement Policy declinations. We continued to focus on rooting out corruption involving state-owned entities and by commodity trading companies. Notably, this year’s resolutions included a guilty plea with Glencore International AG to resolve one of the most pervasive FCPA schemes uncovered to date, involving more than $100 million in corrupt payments to officials in seven countries. On the same day, a U.S.-based Glencore entity pled guilty to benchmark manipulation. This was the largest criminal enforcement action to date for a commodity price manipulation conspiracy in oil markets. Glencore made hundreds of millions of dollars from each of these crimes and had to pay a combined total of $1.1 billion; and in each case, because Glencore’s compliance program wasn’t fully implemented or tested, the department required imposition of independent monitors.
Finally, the FCPA Unit entered four DPA resolutions – with ABB companies, Honeywell UOP, GOL Airlines, and Stericycle – in parallel to domestic civil authorities and foreign partners. These matters addressed a broad range of bribery schemes, spanning industries from transportation to medical waste. And in all of these cases, we transparently and consistently applied our policies, including the Anti-Piling On Policy, through which we reward companies who choose to meaningfully coordinate by equitably crediting other authorities.
In 2023, international corruption will continue to be a top priority. These cases are challenging and resource intensive – but we don’t back down.
Indeed, this week, in the District of Connecticut, FCPA prosecutors charged two defendants with bribery and money laundering offenses involving officials of Petrobras, Brazil’s state-owned oil company.
The department cannot measure its success merely in terms of prosecutions, trials, and convictions. Success includes crime prevention.
A more compliant, ethical corporate world is a safer world – one that advances America’s interests writ large. Companies should understand that the way to compete in the global marketplace, and the path to a more secure world, is not offering bribes or manipulating markets – it’s by managing risks and incentivizing ethical employee behavior.
Accordingly, our corporate enforcement policies and our enforcement actions transparently focus upon incentivizing companies to implement effective compliance programs, and for the same reason, reward voluntary self-disclosure, cooperation, and remediation of the causes of misconduct.
2022 was a busy policymaking year for us, which included work on the Deputy Attorney General’s Corporate Crime Advisory Group.
I want to spend a minute talking about what corporate resolutions are and what they aren’t. There is, of course, no corporate jail. Yet, resolutions are not “free passes.” Corporations undertake serious obligations when they enter resolutions. Whether an NPA, DPA, or corporate plea, those obligations include reporting allegations of misconduct to the Criminal Division, regardless of the credibility of those allegations; obligations to improve compliance programs; cooperation obligations; certifications by executives at the conclusion of the resolution; and depending on the facts, the agreement could include an independent compliance monitor. Our prosecutors continue to police companies’ adherence to resolutions throughout their terms, and if companies fail to follow through, they face additional penalties and reputational harm.
In each case, our opportunity (and challenge) is to foster deterrence and accountability so companies don’t just adopt a “cost-of-doing-business” mentality with respect to our investigations and then return to business-as-usual after a corporate resolution.
Consistent with our Deputy Attorney General’s recent guidance, we are taking a broader view of recidivism – we look at prior domestic, foreign, civil, and criminal cases. When determining how to weigh recidivism, we examine the total picture, including, for example, the type and age of prior misconduct, overlap in personnel, and whether instances of misconduct reveal broader weaknesses or a lack of institutional safeguards.
- Compare this year’s ABB resolution, involving a parent-level DPA and two subsidiary guilty pleas to resolve FCPA violations, to the December 2021 NatWest guilty plea. ABB was a three-time FCPA recidivist – yet, the prior misconduct was dated, and ABB provided top-notch cooperation and remediation, and had an effective compliance program. Significantly, ABB demonstrated that it intended to voluntarily self-disclose the conduct before news reporting, but was a hair too slow. So despite ABB’s recidivism, our prosecutors carefully weighed these facts, and concluded that a DPA, rather than a parent-level plea, would be appropriate.
- In contrast, NatWest breached an NPA relating to securities fraud conduct, and committed a new market manipulation crime during the term of corporate probation for a separate offense. Unlike ABB, NatWest’s compliance program was not fully implemented and tested, and its market surveillance of its traders’ activities lagged behind peers. Applying the same principles but based on differing facts, we resolved the NatWest case through a guilty plea and an agreement for an independent compliance monitor.
On the other end of the spectrum, the carrots we offer have never been juicier.
Last month, building upon our Deputy Attorney General’s directive that all components adopt or revise written voluntary self-disclosure policies, Assistant Attorney General Polite announced the first significant revisions to the division’s Corporate Enforcement Policy (CEP) in five years.
In a nutshell, these revisions:
- Reaffirm that, to receive a presumption of a declination, companies must timely voluntarily self-disclose misconduct, fully cooperate, and fully remediate;
- Make it possible for a company to receive a declination in a wider range of cases, e., even where aggravating factors may be present, the company may still be eligible for a declination if it demonstrates that it has met additional factors related to self-disclosure, compliance, cooperation, and remediation;
- For voluntary self-disclosure cases in which a resolution is warranted, offer at least a 50%, and as much as a 75%, reduction from the otherwise applicable U.S.S.G. range for companies that timely, voluntarily disclose misconduct, and fully cooperate and remediate; and
- Even in cases where companies do not voluntarily self-disclose, increase the potential penalty reduction for all companies that fully cooperate and timely and appropriately remediate, from a maximum of 25% to 50% off of the U.S.S.G. range.
We appreciate how carefully boards and counsel weigh these decisions.
Taken together, these changes offer companies new and concrete incentives and powerfully make the business case for voluntary self-disclosure. The revisions also motivate companies to maximally cooperate and remediate even when they have not self-disclosed conduct. The broader range of possibilities under our new policy will enable prosecutors to make sharper distinctions between corporate behavior.
We are looking to reward good corporate citizens.
An instructive example of how the CEP works in practice is the recent declination to prosecute Safran SA, a French aerospace company. Safran self-disclosed FCPA violations that it discovered during post-acquisition due diligence – specifically, bribe payments to a Chinese consultant between 1999 and 2015. Safran also fully cooperated, ensured remediation was complete, and disgorged its U.S. subsidiary’s profits.
Our revised CEP continues to strongly incentivize companies to do as Safran did: disclose misconduct uncovered during due diligence. We do not want to unduly inhibit mergers and acquisitions, and you don’t have to take my word – or my predecessors’ words – for it. Our actions underscore our commitment to appropriately rewarding companies that enter high-risk markets, acquire companies with less than perfect track records, cooperate and remediate, and make fulsome disclosures.
A final note: while these revisions just came out, last year’s resolutions show how we carry out the division’s stated principles in practice. Companies that do not self-disclose egregious and pervasive misconduct are more likely to be required to plead guilty and face steep monetary penalties, like Glencore and the FCA US LLC emissions fraud case.
The bottom line: call us before we call you.
Our work to improve our policies is not complete. At the direction of the Deputy Attorney General, the Criminal Division is examining: (1) what revisions may be warranted to our Evaluation of Corporate Compliance Programs framework to address use of personal devices and third-party messaging applications, including those offering ephemeral messaging; and (2) what additional guidance may be warranted on how we evaluate executive compensation policies.
Stay tuned for further news.
Summing up, all of these measures – vigorous prosecution of individuals and corporations, our enhanced policies, and our continued focus on effective corporate compliance programs – are ultimately designed to accomplish the same objective: to reduce corporate crime and ensure that all offenders face equal justice under the law.
While we’ve covered a lot of ground, my remarks represent only a fraction of the important work that the department does each day.
It’s been a pleasure to address you.
Thank you very much for your time.