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The V&E Report
Insights in Government Enforcement and Investigations

Bid-Rigging Bonanza: DOJ Announces Criminal Charges in Three New Investigations

The Department of Justice (“DOJ”) ended its recent drought of new criminal antitrust cases by bringing bid-rigging charges under the Sherman Act against individuals in three separate cases over the past few weeks.1 These charges, two of which involve guilty pleas, are the first in each case, and confirm the Department’s continued prioritization of public bid-rigging cases and focus on individual accountability in the prosecution of criminal antitrust violations.

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If You Give A Cop Your Passcode... Court Considers Whether Using Voluntarily-Provided Codes Violates the Fourth Amendment

The Colorado Supreme Court held last week that when a defendant voluntarily disclosed his four-digit passcode for what he thought was a limited purpose and an officer used the code to search the defendant’s entire phone, it did not violate the Fourth Amendment. The court reasoned that the defendant “had no legitimate expectation of privacy in the digits of his passcode after providing them to [a police officer].”1

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  • 10
  • April
  • 2019

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Kokesh costs SEC nearly $1 Billion; DOJ and Congress React

In 2017, the SEC’s enforcement power faced a setback when, in Kokesh v. SEC,1 the Supreme Court curtailed its ability to seek disgorgement outside the five-year statute of limitations period for civil penalties.2 This was a blow to the agency because its Enforcement Division had relied heavily on its disgorgement power as a means to deter companies from wrongdoing by reclaiming all ill-gotten profits that result from it.

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Lorenzo v. SEC: Supreme Court Finds Liability For Knowingly Disseminating Misleading Misstatements (Even If “Made” By Someone Else)

The Supreme Court has now made clear that a person can be held liable for disseminating false or misleading statements with the intent to defraud, under SEC Rules 10b-5(a) and (c) even if the person did not “make” the false statement and even if the dissemination of the false or misleading statement was done at the direction of a superior.1

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Appellate Court Confirms that Steering Contracts to a Third Party Can Violate the Hobbs Act

The First Circuit Court of Appeals recently ruled that steering contracts to a third party may violate the federal prohibition against extortion — even where the extortionist receives no personal benefit. The case, United States v. Brissette, serves as a stark reminder of the breadth of conduct that can constitute “extortion” under the Hobbs Act.

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DENIED: SCOTUS Denies Cert. in Mueller’s Mystery Case

On Monday, March 25, 2019, in a brief order without any dissents, the Supreme Court denied certiorari in In re Grand Jury Subpoena,1 the case also known as the “Mueller Mystery Case” because the name of the party involved remains under seal by the courts. The Supreme Court’s order comes one day after Attorney General William Barr submitted his summary of the main conclusions from Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 election.

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  • 27
  • March
  • 2019

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Giving Credit Where Credit is Due: University’s False Claims Act Settlement Highlights Importance of Proper Accounting Practices for Federal Award Recipients

On March 21, 2019, the Department of Justice (“DOJ”) announced that the University of Wisconsin-Madison (the “University”) agreed to pay $1.5 million to settle allegations that it had violated the False Claims Act (“FCA”) by failing to properly credit rebates and discounts to costs allocable to federal grants and awards obtained by the University. While cases involving defense contractors and Medicare or Medicaid providers tend to dominate FCA headlines, the University’s settlement serves as a reminder that the FCA applies to all recipients of federal grants and awards.

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Are Illegal Funds Fueling the Real Estate Market? Initiatives to Deter Money Laundering Lead to Increased Scrutiny and Higher Fines

On March 4, 2019, a British customs agency raided 50 real estate agencies and announced the largest fine ever imposed in the U.K. for money laundering violations in the real estate market. The fine, £215,000 (about $283,000), was issued to Countrywide estate agents for failing to conduct due diligence, proper verification and record keeping, and failing to ensure compliance with policies and controls in violation of U.K. money laundering regulations.

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Footnote Fodder: DOJ’s Modified FCPA Guidance Includes Footnote That Appears to be Responding to Criticism

Last week, the DOJ updated its guidance to the Foreign Corrupt Practices Act (“FCPA”) and in doing so tweaked its de-confliction advice. “De-confliction” is the practice of asking corporate counsel to delay interviewing an employee in an internal investigation to allow the DOJ to speak with the employee first.

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DOJ Updates FCPA Cooperation Credit Policy for M&A

Last week, the Department of Justice (“DOJ” or “Department”) made a series of changes to the 2017 FCPA Corporate Enforcement Policy (“Policy”) contained in the Justice Manual (until last year, known as the United States Attorneys’ Manual). These changes, which were first announced by Assistant Attorney General Brian Benczkowski on March 8, 2019 during the ABA White Collar Crime Conference, include rescinding the requirement that companies prohibit the use of disappearing messages applications, clarifying the Department’s “de-confliction” policy, and updating language to soften companies’ requirement to disclose facts about involved individuals consistent with a policy change announced in November 2018.

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Burn After Reading? — DOJ Loosens Previous Ban on Secretive Messaging Apps

DOJ has again modified its guidance regarding enforcement of the FCPA. Among the recent modifications is a loosening of the ban it had announced in 2017 on the use of disappearing messaging applications or software by companies hoping to receive cooperation credit under the Corporate Enforcement Policy. In 2017, DOJ had announced a policy that required companies wishing to receive full cooperation credit to “prohibit[] employees from using software that generates but does not appropriately retain business records or communications,” as part of prohibiting the destruction or deletion of business records.

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Recent FCPA Speeches Highlight and Defend DOJ Priorities

On March 7 and 8, 2019, Deputy Attorney General Rod Rosenstein and Assistant Attorney General Brian Benczkowski delivered separate speeches on developments in FCPA enforcement, highlighting that DOJ aims to make “corporate criminal enforcement more effective and efficient.”1 These statements effectively double-down on DOJ’s FCPA Corporate Enforcement Policy of trying to get companies to self report and cooperate by dangling the carrot of declinations, even in cases of serious wrongdoing.

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