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The V&E Report
Insights in Government Enforcement and Investigations

Nissan Agrees to Pay $16.1 Million to Settle SEC’s Claim of Fraudulent CEO Compensation

Despite never paying any of the compensation at issue and without admitting or denying the allegations, the Nissan Motor Co., Ltd. (“Nissan”) agreed to pay the Securities and Exchange Commission (“SEC”) $15 million to settle a claim that it engaged in a $140 million fraudulent compensation scheme. On Monday, the SEC announced the settlement with Nissan, its former Chief Executive Officer Carlos Ghosn (“Ghosn”), and its former director Greg Kelly (“Kelly”). Ghosn and Kelly agreed to pay the SEC $1 million and $100 thousand, respectively.

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As Pushback Grows in Europe Against Facebook’s Libra, Walmart Considers its own Cryptocurrency

A few weeks ago we wrote about the skepticism Libra, Facebook’s proposed cryptocurrency, faced from U.S. regulators. Since then, Libra’s unpopularity has spread across the Atlantic. Public officials in France, Germany, and the UK have claimed Libra could undermine monetary sovereignty and have begun calling for a public digital currency in lieu of Facebook’s private-backed proposal.

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THE ABC’S OF AB 5—California Passes Legislation to Rein in Gig Economy

Last Wednesday, the California legislature passed bill AB 5, a sweeping measure sure to impact the “gig economy” and any business that likens itself the “Uber of _____.” If signed into law (and the governor has already signaled his intention to sign it), AB 5 would require companies to re-classify as “employees” many workers who are currently classified as independent contractors, so long as they satisfy certain criteria.

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Because the Mafia Doesn’t Issue 8-Ks: DOJ Explains Recent Corporate Policy Changes and Foreshadows Additional Guidance

On September 12, Deputy Assistant Attorney General Miner announced in a speech that the DOJ Criminal Division will consider issuing prosecutorial guidance on how to evaluate companies’ claims that they are unable to pay large criminal fines. If adopted, the new guidance would be the latest of several recent DOJ policy reforms and clarifications aimed at increasing certainty for companies that are the target of white collar enforcement actions.

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Ninth Circuit Decision Underscores Expansive Definition of “Security”

Is an investment a “security” under the federal securities laws if it is made in part for reasons unrelated to investment returns? And can someone who facilitates the investment be liable for securities fraud? In SEC v. Feng1, the Ninth Circuit answered both questions affirmatively – helping to clarify what qualifies as a “security” under – and so who may be covered by – the federal securities laws.

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Lessons Learned: A High-Profile FARA Acquittal at Trial Provides Guidance for Both the Government and Targets of Future Investigations

On September 4, a federal jury took only a few hours to return a verdict of “not guilty” for Washington, D.C. attorney and former White House Counsel Greg Craig in a high-profile trial brought by the Department of Justice’s Foreign Agents Registration Act (“FARA”) Unit and federal prosecutors from the U.S. Attorney’s Office for the District of Columbia. 

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  • 09
  • September
  • 2019

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When Trade Secret Cases “Go Criminal”

At a time when the federal government is stepping up its enforcement of federal trade secret law in an effort to safeguard American intellectual property from national security threats from China and elsewhere, the recent criminal indictment of former Google and Uber executive Anthony Levandowski underscores the potential criminal specter that looms over civil trade secret disputes.

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Where in the World Is Dirty Money Going? FinCEN’s Newest Investigation Unit Targets Global Money Laundering

The Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) recently announced the launch of a Global Investigations Division (“GID”). GID will focus its efforts on implementing targeted investigation strategies to combat money laundering and terrorism financing in domestic and international contexts.

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  • 03
  • September
  • 2019

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For Whom the Statute Tolls: Challenges to FCPA Indictment May Expose Government Vulnerabilities in International Cases

As companies grow and expand their international footprint, their operations are scrutinized with increasing frequency by federal prosecutors. However, recent pre-trial litigation in a FCPA case suggests that one important government tool may be vulnerable to challenge by sophisticated defense counsel, which could stifle the government’s ability to build and bring a criminal case beyond the normal five-year limitations period, provided the defense can show that the government’s mutual legal assistance request to another country was pretextual in nature.

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“Panama Papers” Case Reminds How to Protect Against Inadvertently Waiving Attorney-Client Privilege

Recent efforts by the Department of Justice to obtain confidential attorney-client communications in connection with a “Panama Papers” indictment present a stark reminder that lawyers and clients must fastidiously protect the attorney-client privilege else their communications may be compromised and used against them at trial. In an age where the threat from hackers stealing and disseminating confidential information is all too real, prosecutors still will be restricted from accessing and using such materials in their investigation provided you and your clients know what steps to take to protect against an inadvertent waiver of privilege.

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Cisco’s $8.6 Million False Claims Act Settlement Signals Viability of Cybersecurity Claims Under the False Claims Act

On July 31, 2019, Cisco Systems, Inc. (“Cisco”) agreed to pay $8.6 million to settle a False Claims Act (“FCA”) whistleblower allegation that it sold video surveillance equipment to government agencies knowing the equipment was susceptible to cyber-attack.1 The FCA, 31 U.S.C. §§ 3729 – 3733, provides liability for any person who knowingly submits false claims to the government.

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  • 14
  • August
  • 2019

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Third Circuit Upholds Bribery Conviction Despite Narrowed Definition of “Official Act” Under McDonnell

Last week, the Third Circuit upheld the conviction of Robert Cordaro, a Lackawanna Pennsylvania County Commissioner, for bribery, extortion, and racketeering despite Cordaro’s claims that the Supreme Court’s holding in McDonnell v. United States decriminalized his conduct. Cordaro was convicted in 2011 for his role in a pay-to-play scheme in which he allegedly received payment and support from engineering firms in exchange for influencing government agencies to contract with the firms on various projects.

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With Bipartisan Support, the Illicit Cash Act Aims to Modernize Anti-Money Laundering Efforts

A promising anti-money laundering bill offers a suite of updates to the current AML regime. It would decrease unnecessary regulations, target shell companies, raise incentives for whistleblowers, and sweep digital currencies into the definition of “monetary instruments.” The proposal is called the Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings Act (or “ILLICIT CASH Act”).

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Not So Cryptic: AG Barr Adamant That “Warrant-Proof Encryption” Poses Threat to Public Safety

In a keynote address at the International Conference on Cyber Security on Tuesday, July 23, Attorney General Barr clearly articulated the DOJ’s position that “‘warrant-proof’ encryption poses a grave threat to public safety by extinguishing the ability of law enforcement to obtain evidence essential to detecting and investigating crimes.”1 Barr outlined the ways in which criminals — including drug traffickers, human traffickers, terrorists, and gangs — use encrypted messaging technology to further criminal enterprises, and he criticized technology companies for failing to work with law enforcement “to preserve lawful access” to suspects’ encrypted devices and messages, even when police have a valid search warrant.2

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Regulators Dislike Facebook’s Entry into Cryptocurrency Market, Calling “Libra” an AML Threat

A month after announcing its new global digital currency “Libra,” Facebook is finding itself under increased scrutiny with U.S. regulators. Lawmakers and senior government officials are raising concerns about how Libra would comply with money laundering, terrorism financing, and trade sanctions laws. While Facebook says it will comply with the laws, the company has offered no concrete ideas on how a semi-anonymous digital cryptocurrency could fit within a legal landscape designed around traditional financial institutions.

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