Category: US Department of Justice

Source: United States Department of Justice Criminal Division

Thank you, United States Attorney Barron. I am Chetan Patil, the Acting Deputy Assistant Attorney General of the Civil Division’s Torts Branch. This morning, attorneys within the Civil Division filed a claim against Grace Ocean and Synergy, the owner and operator of the Motor Vessel DALI, to recover more than $100 million in federal taxpayer funds that were spent in responding to the tragic destruction of the Francis Scott Key Bridge. The suit also seeks punitive damages against these entities, who reaped the profits of conducting business in American ports but did so by engaging in reckless and grossly negligent conduct that led to this catastrophe.

Our investigation remains ongoing. Nevertheless, from what we have learned already, it is clear that this accident was completely avoidable. As we outline in our claim, the electrical and mechanical systems on the DALI were improperly configured and maintained in violation of safety regulations. These configurations caused the ship to lose power, which led to subsequent equipment failures, culminating in the DALI striking one of the piers of the Francis Scott Key Bridge and causing the bridge to collapse into the Fort McHenry Channel.

We believe that the ship initially lost power when the circuit breakers tripped at an electrical transformer in the engine room due to excessive vibration problems with the transformer and its circuitry. The evidence shows that excessive vibration was a long-standing problem on the ship, which Grace Ocean and Synergy sought to remedy with makeshift, after-market fixes that fell well short of appropriate standards. 

When this transformer failed, the power should have automatically shifted to another transformer almost immediately. But, per longstanding practice, this automation had been recklessly disabled, which led to excessive delay in regaining power. Then the ship’s emergency generator also failed. Even when the crew finally did manage to regain power, the DALI lost power a second time, likely because the vessel had been using an inadequate, temporary fuel pump that could not restart after a blackout. This was another legal safety requirement that the DALI failed to follow, in order to cut costs and save time.  

Because power could not be restored, there was no way to steer the ship. And problems with the DALI’s anchor and bow thruster thwarted even last-ditch emergency efforts to avert the disaster. In sum, this accident happened because of the careless and grossly negligent decisions made by Grace Ocean and Synergy, who recklessly chose to send an unseaworthy vessel to navigate a critical waterway and ignored the risks to American lives and the nation’s infrastructure. 

The United States’ claim seeks to hold Grace Ocean and Synergy responsible for the considerable costs they imposed on the federal government in responding to the disaster. Those costs include work relating to the removal of the DALI and the remnants of the Francis Scott Key Bridge from the Fort McHenry channel, in order to restore full access to the Port of Baltimore. In addition, we seek to recover the costs incurred to abate the substantial risk of oil pollution that could have resulted from this accident, as well as costs incurred by several federal agencies as a direct result of Grace Ocean and Synergy’s misconduct. We seek punitive damages here to deter Grace Ocean and Synergy — and other vessel owners and operators — from prioritizing profits over safety and thereby jeopardizing the waterways and well-being of Americans. And we will vigorously contest Grace Ocean and Synergy’s efforts to limit their liability to the woefully inadequate amount of $44 million, which finds no legal support under these circumstances.

While the United States remains committed to the reconstruction of the Francis Scott Key Bridge, it is not seeking damages for those costs at this time. Rather, because the State of Maryland built, owned, maintained and operated the bridge, the State, not the United States, may seek recovery for the costs of rebuilding the bridge. Funds the State may recover in the litigation will be used to repay federal money spent to reconstruct the bridge and highway.

Finally, I want to thank the attorneys of the Aviation, Space & Admiralty Litigation Section of the Civil Division for their diligence and hard work since the day this accident occurred. Their efforts and professionalism are in the finest traditions of the department.

Source: United States Department of Justice Criminal Division

Good morning. My name is Benjamin Mizer, and I am the Principal Deputy Associate Attorney General at the Justice Department. I am joined today by Chetan Patil, who is the Acting Deputy Assistant Attorney General of the Civil Division’s Torts Branch. I am also joined by U.S. Attorney Erek Barron for the District of Maryland and representatives from the U.S. Army Corps of Engineers, the Navy, and the U.S. Coast Guard.

Today, the United States filed a civil claim in the U.S. District Court for the District of Maryland against the owner and operator of the Motor Vessel DALI, the container vessel that destroyed the Francis Scott Key Bridge in Baltimore, resulting in six needless and heartbreaking deaths. The action seeks recovery of more than $100 million in damages and costs incurred by the United States in responding to the fatal disaster and reopening access to the Port of Baltimore.

In the early morning hours of March 26, the DALI left the Port of Baltimore bound for Sri Lanka. While navigating through the Fort McHenry Channel, the vessel lost power, regained power, and then lost power again before crashing into the Francis Scott Key Bridge. The whole country watched the horrifying video footage showing the bridge collapse and plunge into the water below. 

Six construction workers tragically lost their lives when the bridge collapsed. Our hearts go out to their families and loved ones for this senseless and wholly preventable loss.

In addition to the tragic loss of life, the destruction of the Francis Scott Key Bridge severely disrupted the economy of Baltimore and affected the entire nation. Not only did the bridge’s collapse sever a critical link in our highway infrastructure, but it also blocked the Fort McHenry Channel and brought to a standstill all maritime traffic in and out of the Port of Baltimore — one of the largest shipping hubs in the nation.

Just days after the disaster, President Biden pledged that the federal government would do whatever it took to get the Port of Baltimore up and running as soon as possible. What happened next was a heroic feat of governmental cooperation in the public interest. The United States led response efforts among more than 50 federal, state, and local agencies. The initial response focused on search and rescue efforts for those workers who were missing. But even as those efforts were ongoing, planning and operations commenced to remove more than 50,000 tons of steel, concrete, and asphalt from the channel and from the DALI itself. While these efforts were underway, temporary channels were also cleared to start relieving the bottleneck at the Port of Baltimore and mitigating some of the economic devastation caused by the DALI. The work was complex, costly, time-consuming — and at times dangerous. Thanks to these herculean efforts, on June 10, the United States reopened the Fort McHenry Channel, allowing commercial navigation once again to flow freely into and out of the Port of Baltimore.

I stand in awe of the remarkable work done by the U.S. Coast Guard, Army Corps of Engineers, Navy Supervisor of Salvage and Diving, and their contractors, as well as our State and local partners and countless others who supported those agencies.

As we outline in our claim, this catastrophe was entirely avoidable. We allege that the DALI’s owner and operator recklessly cut corners in ways that risked lives and the economic well-being of the nation. In particular, our claim alleges that the owner and operator of the DALI were well aware of vibration issues on the vessel that could cause a power outage. But instead of taking necessary precautions, they did the opposite. Out of negligence, mismanagement, and, at times, a desire to cut costs, they configured the ship’s electrical and mechanical systems in a way that prevented those systems from being able to quickly restore propulsion and steering after a power outage. As a result, when the DALI lost power, a cascading set of failures led to disaster.

The United States spent more $100 million responding to this disaster, to clear the channel, and to reopen the Port of Baltimore. Those costs should be borne by the ship’s owner and operator, not the American taxpayer. But that is not all. To try to keep this type of conduct from ever happening again, we are also seeking punitive damages. The Justice Department is committed to holding the DALI’s owner and operator responsible for the harm they caused and to deter them and others from taking reckless risks with American lives and infrastructure.

In bringing this civil action, I greatly appreciate the partnership we have with the U.S. Attorney’s Office for the District of Maryland, our cooperation with the State of Maryland, and the critical assistance we have received from many departments and agencies of the federal government. I am particularly proud of the work done by the Civil Division in putting together this comprehensive civil action, work that began within hours of when this tragedy occurred.

With that, I will turn it over to U.S. Attorney Barron.

Source: United States Department of Justice Criminal Division

The Justice Department convened on Monday its quarterly interagency meeting with LGBTQI+ community stakeholders. Members of the Office of the Attorney General and the LGBTQI+ Working Group of the Justice Department’s Civil Rights Division outlined relevant enforcement efforts across the department and highlighted actions to address discrimination in education and employment and combat hate crimes. Assistant Secretary of Education Catherine Lhamon of the Department of Education’s Office for Civil Rights also addressed the attendees and highlighted efforts to ensure safe learning environments at schools, colleges and universities.

Justice Department leadership, including representatives from the Civil Rights Division, FBI, Community Relations Service, Office of Justice Programs, Office on Violence Against Women, Office of Victims of Crimes and Office of Juvenile Justice and Delinquency Prevention, heard from participating organizations about discrimination faced by LGBTQI+ students, parents and teachers; barriers to access to gender-affirming medical care for LGBTQI+ people; health data privacy concerns; the need to increase intersex awareness; and hate crimes. Representatives from other government agencies, including the Departments of Education, Health and Human Services, Homeland Security, Veterans Affairs, Labor and State, as well as the Equal Employment Opportunity Commission, Consumer Financial Protection Bureau, Environmental Protection Agency, National Endowment of the Arts and AmeriCorps, were also in attendance.

Combating hate crimes and addressing claims of discrimination are among the division’s top priorities. Monday’s meeting represents the division’s ongoing efforts to engage with LGBTQI+ organizations and stakeholders on issues affecting LGBTQI+ communities.

The department has continued to prosecute hate crimes, including obtaining several life sentences for the perpetrator of the mass shooting at Club Q, an LGBTQI+ establishment in Colorado Springs, Colorado. The department also filed a statement of interest in a case challenging a policy in Florida schools prohibiting teachers from using personal titles and pronouns inconsistent with their sex assigned at birth and a statement of interest in a case challenging a Georgia school district’s alleged retaliation against a teacher for her support of LGBTQI+ students and her opposition to the hostile environment they were allegedly subject to as a result of bullying and harassment.

These and other efforts by the Civil Rights Division can be found on its website at its LGBTQI+ Working Group page.

Source: United States Department of Justice Criminal Division

Good evening. Thank you for the invitation to be with you tonight and for the warm welcome back to NYU School of Law. It’s always a pleasure to be here with so many prominent members of the white-collar bar and corporate compliance community. And a special thank you to the students who are attending. I always enjoy the opportunity to participate in events hosted by the Program on Corporate Compliance and Enforcement. The Program fosters critical dialogue about issues facing the business, compliance, and legal communities, including good corporate governance and effective compliance practices and enforcement strategies. I appreciate the opportunity to speak with you tonight about the newest tool in the Justice Department’s corporate enforcement toolbox: The Criminal Division Corporate Whistleblower Awards Pilot Program.

The Criminal Division is on the front lines of the department’s efforts to hold culpable individuals and companies accountable for corporate crime. We also lead the way in developing innovative policies designed to enhance the department’s work and encourage companies to be good corporate citizens. The Corporate Whistleblower Awards Pilot Program is a critical new tool in these efforts. With this Pilot Program, we are telling individuals who know about corporate misconduct: our tip line is open, so if you see something, say something. We are also sending a message to company executives and leadership: invest in compliance and take internal reports of wrongdoing seriously, because we are using more tools than ever before to identify corporate misconduct.

Companies play a critical role as the first line of defense against corporate crime. That is why we are focused on corporate accountability and corporate enforcement policies that create strong incentives for companies to take compliance seriously. A robust compliance program can prevent criminal activity and allow a company to detect and effectively address misconduct when it occurs. Our corporate enforcement policies are designed to encourage companies to invest in making their compliance programs effective — from hiring capable compliance officers and staff to empowering those individuals to have a real voice in the company and its culture to holding accountable individuals who engage in wrongdoing by having them face real consequences in their performance evaluations and compensation. These policies also create incentives for companies to step up and own up when misconduct occurs. We reward companies that do the right thing by making voluntary self-disclosures of misconduct and cooperating with our investigations because that helps us achieve our top priority — holding culpable individuals accountable for their crimes. The sooner we learn of misconduct, the faster we can jumpstart our own, independent investigations into the individuals responsible for the misconduct.

We understand that when companies are deciding whether to make a voluntary self-disclosure, they assess not only the benefits of self-reporting under our policies, but also the risk that the department will learn about the misconduct from other sources. The department is upping the ante in that calculus by increasing the incentives for others to come forward. We know from our own experience — and from the experiences of our regulatory partners — that whistleblowers are key to uncovering corporate crime.

Encouraging companies to be good corporate citizens and promoting individual accountability are two key drivers of our whistleblower program and the Criminal Division Pilot Program on Voluntary Self-Disclosures for Individuals that we announced here at NYU earlier this year. Under the whistleblower program, individuals who know about and come forward to report corporate crime that results in forfeiture could get paid a portion of the recovery from the case, so long as they didn’t play a meaningful role in the misconduct. And under our Pilot Program on Voluntary Self-Disclosures for Individuals, individuals with criminal exposure who come forward and report misconduct will receive a non-prosecution agreement if they meet certain criteria.

Together, our corporate voluntary self-disclosure policy, our whistleblower pilot program, and our individual voluntary self-disclosure pilot are mutually reinforcing. Through these policies, we are encouraging both companies and individuals to come forward with information about wrongdoing, increasing the incentives for corporations to improve compliance and internal reporting systems, and ensuring that we get the information we need to hold criminal actors accountable. 

Let me take a minute to explain how we got here and to highlight the focus of our whistleblower program. Whistleblower programs at other agencies — including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission, the IRS, and Financial Crimes Enforcement Network — have received thousands of tips, paid out hundreds of millions of dollars in awards, and resulted in holding culpable actors accountable for misconduct. And at the Justice Department, qui tams have resulted in identification of scores of fraud cases brought under the False Claims Act. The department has used whistleblower information from these programs to build successful individual and corporate prosecutions. But these programs do not cover the full range of white collar and corporate misconduct that the department prosecutes. Our Corporate Whistleblower Awards Pilot Program seeks to fill those gaps.

Our Pilot Program covers four areas of corporate crime. Each is a priority for Criminal Division prosecutors, and none is covered by an existing whistleblower program.

First, foreign corruption. Some foreign corruption cases are covered by the SEC’s whistleblower program, but many of the foreign corruption cases we prosecute are not. Take our cases involving bribery at international commodity trading companies, which resulted in six corporate resolutions, convictions of 20 individuals, and over $1.7 billion in financial penalties including forfeiture between 2017 and 2024. None of those companies issued securities in the United States, so none of them was covered by the SEC’s program. Our whistleblower program would reach that type of foreign corruption and help ensure accountability for corporate wrongdoers. This effort is all the more important given the recent enactment of the Foreign Extortion Prevention Act — which we plan to vigorously enforce.

Second, crimes involving financial institutions. Financial institutions are the first defense against illicit finance, and we want whistleblowers to report abuses of the financial system that are not covered by existing whistleblower programs. This includes cases like Binance — a cryptocurrency exchange that did business in the United States but failed to register with financial regulators and comply with U.S. law. It also includes efforts to access services from U.S. financial institutions through fraud, like Danske Bank, which did business with U.S. financial institutions by misrepresenting the nature of anti-money laundering controls it had to address certain high-risk customers. And it includes cases like Rabobank, which sought to obstruct and defraud its primary banking regulator by concealing deficiencies in its anti-money laundering program.

These are two areas where we are already actively pursuing corporate cases and have been for years. Our whistleblower program will also target two areas where we are looking to expand our corporate enforcement efforts: corrupt conduct here in the United States — such as where a company, acting through its employees or agents, bribes a government official to win a contract — and health care fraud schemes focused on private insurers. Fraud on federal health care benefit programs is already covered by the Civil Division’s qui tam program — and we have no intention of interfering with that highly successful program. But there is no comparable whistleblower program for fraud schemes targeting private insurers, even though estimates show tens of billions of dollars in fraud on private insurers each year.

Let me now take a few minutes to talk about how our program will work in practice. As you know, earlier this year, Deputy Attorney General Monaco asked the Criminal Division to lead a policy “sprint” to develop and implement a whistleblower program that would encourage individuals with information about corporate crime to come forward. Our Money Laundering and Asset Recovery Section and our Fraud Section led that effort. They engaged with a broad swath of stakeholders both within and outside the department, including officials at other agencies’ whistleblower offices, whistleblower advocates, in-house compliance personnel, white-collar defense attorneys, and academics who specialize in corporate enforcement. We received critical input from dozens of experts on design, implementation, and best practices.

Our program is based on existing statutory authority — Section 524(c) of Title 28 of the U.S. Code — which authorizes the Attorney General to pay awards for information or assistance leading to civil or criminal forfeiture. The department has used this authority in the past, but not in a programmatic way and not with a focus on corporate enforcement. Under our whistleblower program, individuals who come forward with original, truthful, and complete information about corporate misconduct in one of our four program areas can qualify for a monetary award paid out of forfeitures obtained as a result of the tip. Whistleblowers will be eligible to receive an award of up to 30% of the first $100 million of net assets forfeited, and up to 5% of the net assets forfeited between $100 million and $500 million.

Our program prohibits payments to any whistleblower who meaningfully participated in the criminal activity they report. In short, individuals are eligible for awards if they are no more than “minimal participants” in criminal activity — defined in the U.S. Sentencing Guidelines as individuals who are “plainly among the least culpable of those involved in the conduct of a group.”

We have a separate program to encourage individuals who played a meaningful role in criminal conduct to come forward. Under our Pilot Program on Voluntary Self-Disclosures for Individuals, which we announced earlier this year, we provide a clear and transparent path to a non-prosecution agreement for culpable individuals who come forward to report misconduct and cooperate.

Let me turn now to internal reporting and what our whistleblower program means for companies. Through our whistleblower awards program, we are not only incentivizing individuals to come forward and report corporate crime to the department. We are also encouraging individuals to use internal company reporting procedures. Making an internal report before coming forward to the department is a factor that will increase the amount of a whistleblower award.

We are also incentivizing companies to invest in strong internal reporting structures and to report crime when they learn about it. Alongside our whistleblower program, we announced an amendment to our Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). Under that amendment, where a company receives an internal report from a whistleblower, if the company comes forward and reports the misconduct to the department within 120 days and before the department reaches out to the company, the company will be eligible for the greatest benefit under our policy — a presumption of a declination — so long as they fully cooperate and remediate and pay any applicable victim compensation or forfeiture.

To be clear, under this amendment to our CEP, a company could qualify for a presumption of a declination regardless of whether the whistleblower made a report to the department first. This is a significant benefit to companies and a departure from our usual approach. We are offering this benefit to encourage companies to invest in robust internal reporting structures and to incentivize voluntary self-disclosures. A strong culture of internal reporting will pay dividends for compliance programs — the more employees who both understand how to internally report potential misconduct and feel comfortable doing so, the stronger the compliance program will be. And that is why we changed our policy to make sure companies can still benefit from voluntary self-disclosures even after an employee comes forward to the department under our whistleblower program.

I also want to address an issue many stakeholders raised during our policy sprint — the risks whistleblowers face when they decide to come forward. Our statutory authority does not include anti-retaliation provisions, but this is an issue we take incredibly seriously. Let me be clear: our prosecutors will protect whistleblowers’ identities to the fullest extent allowable under law. And if a company retaliates against a whistleblower, we will take all appropriate steps: the company will lose credit for cooperation and remediation and could face sentencing enhancements — and even prosecution — for obstruction of justice.

Let me wrap up where I started. The Criminal Division’s policies relating to corporate enforcement provide incentives for companies to take compliance seriously. They also help us achieve our top priority: holding culpable individuals accountable for their criminal acts. Our whistleblower program reinforces our existing corporate voluntary self-disclosure program and our new individual voluntary self-disclosure policy, helping to expose criminal schemes. Our message is clear: we will use every tool at our disposal to uncover criminal conduct. Company executives and leadership have an opportunity to do the right thing now and make the necessary compliance investments to help prevent, detect, and remediate misconduct. And when misconduct does occur and companies are considering whether to make a self-report, remember this simple message: call us before we call you.

We have a web page dedicated to our whistleblower program that tells you more about how it works. It’s easy to find at justice.gov/corporatewhistleblower. And if you want to submit a tip, you can reach us at corporatewhistleblower@usdoj.gov.

Thank you again for the opportunity to speak with you. 

Source: United States Department of Justice Criminal Division

A Michigan woman was sentenced today to five years in prison for conspiracy to commit sex trafficking of a minor.

According to court documents, from around December 2021 through around March 2022, Latesha Gardner, 30, of Flint, Michigan, and her boyfriend, Charles Cunigan, conspired to sex traffic a minor victim and used force, fraud, or coercion to carry out the conspiracy. Cunigan and Gardner transported the minor victim across state lines, from Tennessee to Illinois, Louisiana, and Texas, for the purpose of causing her to engage in commercial sex acts. Specifically, Gardner taught the minor victim how to “pose sexy” for photos and used those photos to advertise the minor victim online for commercial sex. Gardner also participated in commercial sex encounters with the minor victim and would instruct the minor victim what to do during the encounters. If the minor victim did not comply with Cunigan’s demands, he would beat the minor victim, and on occasion, he directed Gardner to use physical force against the minor victim as well. In an altercation in February 2022, Cunigan punched and kicked the minor victim, and Gardner hit the minor victim with a liquor bottle and a high-heeled shoe. Cunigan and Gardner knew the minor victim was a juvenile throughout the timeframe of the conspiracy.

In addition to the prison sentence, Gardner was also ordered to serve three years of supervised release and pay $9,750 in restitution to the victim. After her release from prison, Gardner will be required to register as a sex offender under the Sex Offender Registration and Notification Act (SORNA).

Gardner pleaded guilty on June 18 to conspiracy to commit sex trafficking of a minor. Cunigan pleaded guilty on June 25 to conspiracy to commit sex trafficking of a minor and sex trafficking by force, fraud, or coercion. He is scheduled to be sentenced on Sept. 24.

Principle Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, and U.S. Attorney Duane A. Evans for the Eastern District of Louisiana made the announcement.

Homeland Security Investigations investigated the case.

Trial Attorney Melissa E. Bücher of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Maria M. Carboni for the Eastern District of Louisiana’s Financial Crimes Unit are prosecuting the case.