Budget Proposal to Eliminate the PCAOB Could Leave Financial Markets More Susceptible to Accounting Fraud and Misconduct

By Jovalin Dedaj

The White House recently unveiled its federal budget proposal and, as expected, funding for regulatory agencies is on the chopping block once again.  Under the proposal, the Consumer Financial Protection Bureau (“CFPB”) would see its budget trimmed by $110 million in 2021 while the Commodity Futures Trading Commission (“CFTC”) faces a potential budget cut of more than 20 percent.

Yet, perhaps the most surprising feature of the proposed budget is what it leaves out. The administration has proposed eliminating the Public Company Accounting Oversight Board (“PCAOB”) and reassigning its responsibilities to the Securities and Exchange Commission (“SEC”) beginning in 2022. The White House estimates the move would save the government $57 million in its first year and up to $580 million by 2030 by reducing “regulatory ambiguity and duplicative statutory authorities.” But doing away with the PCAOB will weaken the policing of auditing firms and ignores the improvements made in accounting standards and auditing quality. Continue reading “Budget Proposal to Eliminate the PCAOB Could Leave Financial Markets More Susceptible to Accounting Fraud and Misconduct”

Second Circuit Decision in NY Assembly Speaker’s Bribery Conviction Reversal Opens Possible Loophole

Sheldon Silver, former speaker of the New York State Assembly, was convicted of a number of political corruption crimes in 2015, namely accepting bribes in exchange for favorable “official acts” that benefited some bribe payors. He appealed his conviction to the Second Circuit on two grounds: first, that the trial court erred by failing to require that the prosecution establish that he and the bribe payor had a “meeting of the minds” on the specific official act to be performed in exchange for the bribes; and second, that the trial court erred by allowing the prosecution to proceed on a theory that allowed conviction based on a “nonspecific promise to undertake official action on any future matter beneficial to the payor.” (Emphasis added.)

On January 21, 2020, the United States Court of Appeals for the Second Circuit partially reversed Silver’s conviction and remanded the case for resentencing. The court’s logic and findings are significant and merit close attention.

View the full Alert on the Duane Morris LLP website.

Three Years After Policy Shift, Still No Wage-Fixing or No-Poach Prosecutions from DOJ

In an October 2016 guidance document, the United States Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission alerted human resources professionals to potential violations of the antitrust laws in hiring and compensation decisions. The guidance included the announcement that, “Going forward, the DOJ intends to proceed criminally against naked wage-fixing or no-poaching agreements.” A naked agreement is one that is not ancillary to a broader, legitimate collaboration between businesses.

The DOJ’s decision to proceed criminally against such agreements is significant. Although the Sherman Act allows the DOJ to proceed either criminally or civilly against antitrust violators, before the guidance was issued the DOJ had treated agreements between competitors not to solicit each other’s employees as merely civil violations. Following the guidance, companies and individuals suddenly had to worry about criminal fines and potential jail sentences for entering into such agreements. Nevertheless, three years have now passed without a single such indictment being filed.

View the full Alert on the Duane Morris LLP website.

Discovery Ruling in District of Minnesota May Have Far-Reaching Implications for FCA Defendants

In a concise, six-page discovery order, a federal judge in Minneapolis may have just started the proverbial shifting of tectonic plates undergirding routine defense procedures in False Claims Act (FCA) litigation by requiring a defendant in an FCA lawsuit to produce the information provided to the Department of Justice (DOJ) during the DOJ’s process of determining whether to pursue the matter.

The FCA creates liability for persons or entities found to have knowingly submitted false claims to the government or having caused others to do so. Like some other federal laws, the FCA creates a private right of action; under the act, a private party—a whistleblower or “relator”—may bring a qui tam action on behalf of the government. When initially filed, the court seals the complaint pending the government’s investigation of the case. If the government chooses, it may intervene and pursue the matter. If not, the relator may pursue the case on its own. (In either case, the relator is entitled to a percentage of the government’s recovery.)

View the full Alert on the Duane Morris LLP website.

Department of Justice Announces National Enforcement Sweep of Genetic Testing Laboratories and Telemedicine Providers

Genetic testing and telemedicine targeting senior citizens and individuals with disabilities have been the subject of growing government scrutiny. Most recently, on September 27, 2019, the United States Department of Justice announced charges against nearly three-dozen individuals—across numerous federal judicial districts—allegedly responsible for more than $2.1 billion in Medicare billing losses, all of which stem from misconduct in the provision of genetic testing and telemedicine services.

According to the DOJ’s press release, the federal investigation uncovered a scheme in which cancer genetic testing laboratories paid kickbacks and bribes to healthcare providers in exchange for the referral of medically unnecessary services for Medicare beneficiaries. The government alleges that, in many instances, the tests were ordered by physicians who had no treating relationship with the patients and the results of the unnecessary tests were often withheld from the beneficiaries or their actual treating physicians. The DOJ also alleges that the defendants targeted seniors and individuals with disabilities. According to the government, the patients often received scripts for genetic testing from physicians with whom they had never interacted or had had only brief telephone conversations.

View the full Alert on the Duane Morris LLP website.

Sometimes, You CAN Always Get What You Want: Counseling Clients On Taking Breaks Before a Federal Grand Jury

Sooner or later, nearly every white collar defense attorney will represent a witness subpoenaed to testify before a federal grand jury.  It is well settled in most circuits that federal grand jury witnesses do not have a right to have defense counsel present during the grand jury proceedings – but how frequently may witnesses request a break in the grand jury proceedings to leave the room to consult with their lawyers about the questions being posed?

Quite frequently, it turns out.   Many federal courts allow non-immunized grand jury witnesses to consult with their lawyers after each question posedSee U.S. v. Soto, 574 F.Supp. 986, 990 (D. Conn. 1983).  Courts recognize that witnesses reasonably wish to consult with counsel to avoid, for example, providing testimony which may tend to incriminate them.  While some courts may limit the frequency of consultation to every two or three questions, particularly if the breaks become too lengthy or disruptive, courts will typically honor requests for regular consultation unless the request appears “frivolous” or “with intent to frustrate the proceedings.”  See In re Tierney, 465 F.2d 806, 810 (5th Cir. 1972). Continue reading “Sometimes, You CAN Always Get What You Want: Counseling Clients On Taking Breaks Before a Federal Grand Jury”

Second Circuit Asks How to Address 924(c) Appeals in the Wake of Davis

By Jovalin Dedaj

The Supreme Court’s landmark ruling in United States v. Davis, 588 U.S. ___ (2019), has opened the floodgates to hundreds of petitions seeking to overturn convictions under the residual clause of Section 924(c).  Now, circuit courts of appeals across the nation are feeling the immediate impact of the decision as federal offenders appeal their firearms convictions and seek to reduce their sentences.  Continue reading “Second Circuit Asks How to Address 924(c) Appeals in the Wake of Davis”

Supreme Court Strikes Down Criminal Firearms Statute As Unconstitutionally Vague

By Jovalin Dedaj

An important statute in the prosecution of federal firearms offenses was struck down this week by the Supreme Court in United States v. Davis.  The ruling will relieve many defendants who would otherwise face longer sentences for using firearms while committing a “crime of violence” – a phrase the Supreme Court determined was unconstitutionally vague as defined under the statute. Continue reading “Supreme Court Strikes Down Criminal Firearms Statute As Unconstitutionally Vague”

Double Jeopardy “Loophole” Withstands Supreme Court Review in Gamble v. United States

By Jovalin Dedaj

The protection against double jeopardy is guaranteed by the Fifth Amendment of the United States Constitution.  While well enshrined in both the law and public awareness,  this protection does not actually extend to a situation in which state and federal authorities seek to prosecute a defendant for the same offense.  For decades, the Supreme Court has justified this exception to the Double Jeopardy Clause by invoking the dual sovereignty doctrine.  Yesterday, in Gamble v. United States, the Supreme Court doubled down on its previous decisions and upheld the double jeopardy exception that allows federal and state prosecutors to pursue alleged criminals for the same offense. Continue reading “Double Jeopardy “Loophole” Withstands Supreme Court Review in Gamble v. United States”

DOJ Criminal Division Issues Comprehensive Guidance on Corporate Compliance Programs


On April 30, 2019, the U.S. Department of Justice (“DOJ”) issued the most comprehensive guidance that the DOJ has provided on how prosecutors should evaluate corporate compliance programs (“Policy”).  In a speech announcing the Policy, Assistant Attorney General for the Criminal Division, Brian A. Benczkowski expressed the DOJ’s desire “to provide additional transparency” to companies in designing and implementing compliance programs.

Continue reading “DOJ Criminal Division Issues Comprehensive Guidance on Corporate Compliance Programs”