White-Collar Criminal Law

March 24, 2020 by Duane Morris

U.S. Department of Justice Files Civil Complaint for COVID-19-Related Fraud

By Brett M. Feldman and Jessica Linse

Since the outbreak of the COVID-19 virus, law enforcement officials throughout the country have publicly committed to aggressively combatting pandemic-related fraud. Those pronouncements have translated into action focused, at least at this early stage, upon frauds which might impact consumers’ health and safety. The first federal civil enforcement action took place on Saturday, March 21, 2020. On that date, the U.S. Department of Justice, in coordination with the U.S. Attorney for the Western District of Texas, filed the first civil enforcement action against a COVID-19 related fraud. Prosecutors sought an injunction shutting down a website, which purportedly offered to provide “free” coronavirus “vaccine kits” for a $4.95 shipping and handling fee. This request for injunctive relief, which resulted in a temporary restraining order pursuant to 18 U.S.C. § 1345, is likely an omen of more to come. Continue reading “U.S. Department of Justice Files Civil Complaint for COVID-19-Related Fraud”

January 29, 2020July 21, 2020 by Duane Morris

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.

October 10, 2019July 21, 2020 by Duane Morris

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.

October 8, 2019July 21, 2020 by Duane Morris

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.

October 7, 2019July 21, 2020 by Duane Morris

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.

August 20, 2019August 20, 2019 by Karen Lehmann Alexander

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 posed. See 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 (5^th Cir. 1972). Continue reading “Sometimes, You CAN Always Get What You Want: Counseling Clients On Taking Breaks Before a Federal Grand Jury”

January 16, 2019 by Christopher H. Casey

2018 Data Show No Slowdown in Corporate Prosecutions at DOJ

With the change of presidential administrations in January 2017, it was expected that the priorities of the U. S. Department of Justice (DOJ) would shift away from white-collar crime enforcement and towards immigration, violent crime, and narcotics enforcement. But recent data actually show a significant uptick in both prosecutions and convictions of individuals by the DOJ Criminal Division’s Fraud Section in 2018 over the previous two years. Moreover, the amount of money the DOJ recovered from companies through Deferred Prosecution Agreements (DPAs) or Non-Prosecution Agreements (NPAs) skyrocketed in 2018 .

Continue reading “2018 Data Show No Slowdown in Corporate Prosecutions at DOJ”

January 4, 2019January 16, 2019 by Duane Morris

DOJ Implements 2018 Granston Memo on False Claims Act

In early 2018, the U.S. Department of Justice announced a new policy encouraging prosecutors handling False Claims Act (FCA) cases to seek dismissal of qui tam complaints that threaten the government’s interests. However, it was unclear how and to what extent prosecutors would carry out that directive. Now a year later, federal prosecutors appear to be embracing the new policy—and it is already having an effect on one case involving a drug manufacturer.

The January 2018 Granston memorandum outlined the Department’s new approach to handling FCA prosecutions in “in light of the government’s limited resources.” Under the new policy, prosecutors are encouraged to move to dismiss qui tam claims as a way to “advance the government’s interests, preserve limited resources, and avoid adverse precedent.” This marked a departure from the Department’s previous policy of rarely exercising its statutory authority to dismiss such claims. To guide prosecutors, the memorandum offered a nonexhaustive list of factors as to when a motion to dismiss a qui tam claim is proper. Those factors include: (1) “curbing meritless qui tams”; (2) “preventing parasitic or opportunistic qui tam actions”; (3) “preventing interference with agency policies and programs”; (4) “controlling litigation brought on behalf of the United States”; (5) “safeguarding classified information and national security interests”; (6) “preserving government resources”; and (7) “addressing egregious procedural errors.” Overall, the memorandum instructed prosecutors to seek dismissal when the litigation does not serve the government’s interests.

Read the full Alert on the Duane Morris LLP website.

December 10, 2018 by Duane Morris

DOJ Eases Yates Memo’s “All or Nothing” Approach to Corporate Cooperation Credit

On November 29, 2018, Deputy Attorney General Rod J. Rosenstein announced the Department of Justice’s (DOJ) much-anticipated revisions to the September 2015 Memorandum on “Individual Accountability for Corporate Wrongdoing,” commonly known as the “Yates Memo” and named for Rosenstein’s predecessor, Sally Q. Yates. The Yates Memo emphasized the importance of holding individuals accountable for corporate misconduct, and set forth principles for DOJ prosecutors to follow in determining when corporations would qualify for “cooperation credit” in corporate criminal and civil investigations. The most significant—and controversial—provision in the Yates Memo required that “in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct.” The new policy announced by Rosenstein modifies this “all or nothing” approach to cooperation credit by giving DOJ prosecutors and civil attorneys more flexibility.

In announcing the new policy, Rosenstein reaffirmed the Department’s commitment to prosecuting individual wrongdoers, stating that, “The most effective deterrent to corporate criminal misconduct is identifying and punishing the people who committed the crimes.” However, he stated that the lack of flexibility in the Yates Memo’s approach impeded resolutions and wasted resources, and in some cases was not strictly enforced.

Visit the Duane Morris LLP website to read the full Alert.

October 23, 2018 by Duane Morris

New DOJ Guidance on Corporate Compliance Monitors Is More Business-Friendly

On October 11, 2018, Assistant Attorney General for the Criminal Division of the U. S. Department of Justice (DOJ) Brian A. Benczkowski issued new guidance on the selection of corporate compliance monitors in Criminal Division matters. The Benczkowski Memorandum signals a shift toward a more business-friendly approach to the imposition and use of monitors by the DOJ. Among other new provisions, the guidance directs prosecutors to weigh the potential benefits of a monitor against the costs and burdens on the company, and to consider whether the company’s existing compliance program and controls obviate the need for a monitor.

Read the full Alert on the Duane Morris LLP website.