Tag Archives: Justice Department

Court Narrows Jurisdiction in Foreign-Bribery Cases

Posted by Brianna McCoy. 

In the very end of August of this year, 2018, a court ruling involving the FCPA could potentially limit the government’s power to go after foreign companies and individuals in bribery cases. This type of court situation is dealt within the U.S. appeals court. The appeals court supported a ruling that tightens and limits the jurisdiction under which prosecutors can bring foreign bribery charges. Attorneys involved in this ruling recognize that “affirming a lower-court ruling that dismissed conspiracy charges against a foreign national accused of facilitating a bribery scheme could have a significant effect on future enforcement,” (WSJ Samuel Rubenfeld). This statement demonstrates the limits of the Foreign Corrupt Practices Act (FCPA). The FCPA was passed in 1977, with the primary purpose to prohibit the payment of bribes, in any form, to foreign officials in order to secure or retain business. It is interesting how this act is for business purposes by American individuals, companies, and issuers of American stock, yet if a foreigner is involved in a corruption scheme while in the U.S. they are also subject to the law.

However, now that there is a narrower view of this statute, the Justice Department is going to see a drawback on their ability to go after foreign companies and foreign individuals. You may wonder where this idea is coming from… This appellate decision is focused “on an individual’s challenge in the foreign-bribery case involving Alstom SA. The French transportation manufacturer agreed in December 2014 to pay $772 million to settle the case, which involved allegations in several countries,” (WSJ Samuel Rubenfeld). Several other people have been charged, one being Lawrence Hoskins, a U.K. national. Hoskins was probed because while he was working for a French unit of Alston, it was alleged that he approved payments to third-party consultants related to a bribery scheme in Indonesia. Luckily for Hoskins, he wasn’t subject to the FCPA because he “didn’t work directly for the U.S.-based unit of Alstom and didn’t participate in the bribery conspiracy while physically in the U.S.” However, the appellate court revised this lower court ruling because prosecutors can argue that Hoskins colluded with the Alstom’s employees while they conducted bribery acts in the U.S., even though Hoskins wasn’t physically in the U.S.

Now, the Justice Department is “reviewing the ruling and considering next steps.” By doing this, questions may come up about whether the U.S. has jurisdiction in an FCPA case earlier in an investigation. In the past, it has been uncommon for an individual to challenge the U.S. government’s affirmation in jurisdiction in an FCPA case, but the appellate decision could provoke more attempts to do so. Because in the past these FCPA settlements have relied on conspiracy theories, now prosecutors will turn toward developing evidence regarding conduct in the U.S. by foreign nationals to bring its FCPA cases. In addition to this, the government may continue its tendency of using money-laundering statue where necessary.

Brianna is a management major at the Stillman School of Business, Seton Hall University, Class of 2021.

Microsoft Hits with Bribery Over a Deal in Hungary

Posted by Abhilasha Aggarwal.

Justice Department, Securities and Exchange Commission investigates in Microsoft Corporation, over bribery and corruption related to software sales in Hungary.

Microsoft sold some of its products to intermediaries at great discounts, and then these firms sold the products to the Hungarian government close to their full price. Investigators are probing whether the intermediary companies used the difference to pay bribes and kickbacks to government officials.

In 2013, Microsoft was charged with the same charges. The results were that Microsoft fired its four employees, and the company said that last year it terminated business relationships with four partners in Hungary, because they violated its policies. The company said it has also boosted efforts to increase transparency about discounting.

This deal helped Microsoft boost their sales, and the SEC is investigating. In addition, Microsoft cited Hungary as its “best-performing subsidiary.”

I think that Microsoft is a renowned and a reputable company and it would not put itself in jeopardy. I agree to fact that Mr. Howards said, “We’re committed to ethical business practices and won’t compromise these standards.”

Abhilasha is a business student at the Stillman School of Business, Seton Hall University.

Antitrust Lawsuit Against AT&T

Posted by Keith DeYoung.

On Thursday, March 23rd, The Justice Department ended its antitrust lawsuit against AT&T’s DIRECTV with a settlement. In early November 2016, The Justice Department filed the lawsuit, after they claimed DIRECTV was in talks with three of its rivals, then AT&T, Charter Communications, and Cox Communications. These communications allegedly contained confidential information about whether or not to carry Sports Net LA, the sole provider of Dodger games. Time Warner Cable in a deal believed to be worth 8.35 million dollars, acquired the rights to distribute the channel, and thus the other companies would have to pay Time Warner Cable in order to provide it to their viewers. However, the other cable providers believed that Time Warner Cable was charging too much for its product, and thus did not buy the rights.

In the Justice Department’s view, they broke the law when they allegedly discussed that none of them would buy the channel, in order to make sure that each company would not lose customers if one company bought the channel and the others did not. However, DIRECTV claims they did not communicate with any other company, and reason that no one accepted the channel was solely due to its price.

By allegedly agreeing not to buy the sports channel amongst themselves, and ensuring none of them would lose viewers, the Justice Department argues that the companies were in fact violating antitrust law because they were sharing confidential information amongst themselves in order to seek financial gain and stability. Antitrust laws seek to prevent vast amounts of a certain market from being held in the hands of a few, as well as promotes competition, and an overall free marketplace. This prevents monopolies and total control over a market, which often ends in unfair prices for consumers. Although DIRECTV, AT&T, Charter Communications, and Cox Communications were four different companies at the time, by collaborating and making the agreement not to carry the sports channel, it can be argued that they resembled a trust by acting as a group, and thus prompted the Justice Department to file this suit. However, by settling the case, the Justice Department instead of taking severe legal action, gave AT&T’s DIRECTV an agreement that they do not illegally communicate with other companies over confidential matters.

Now that the case is settled, AT&T who owns DIRECTV can now legally focus on their pending acquisition of Time Warner Cable. Many are critical of this deal and similarly to antitrust law, claim that it is concentrating the power of this particular market into the hands of too few, and thus creating a monopoly. Hopefully, learning legal lessons from their antitrust case, AT&T and DIRECTV can successfully tread the thin line between strategic move, and totally and unethically taking over of an entire market.

Keith is a finance major at the Stillman School of Business, Seton Hall University.

Sources:

https://www.wsj.com/articles/justice-department-settles-antitrust-claim-against-directv-1490312878

https://www.wsj.com/articles/justice-department-sues-directv-for-collusion-during-dodgers-tv-talks-1478105262

 

IRS Phone Scam

Posted by Theodora Lawlor.

On October 27, 2016, twenty individuals were arrested and charged with multiple crimes. Some of the noted charges were “conspiracy to commit identity theft, false personation of an officer of the United States, wire fraud and money laundering.” In total sixty-one individuals were charged for being involved with this massive scam that affected thousands of Americans. Any form of involvement that officers are able to prove will hold the individual criminally liable.

The crime involved individuals calling the public stating they were from the IRS or apart of the U.S. Citizenship and Immigration Services. These criminals were very intelligent. They did their research prior to making the call to insure they have picked the right victims. The criminals would call these individuals and require them to make payments. The Justice Department stated “the call center operators then threatened potential victims with arrest, imprisonment, fines or deportation if they did not pay taxes or penalties to the government.” Since these criminals knew the correct market to attack, the elderly and immigrants, this made it very easy to receive payments. It was even reported that an amount of over $12,000 dollars was received from one elderly victim.

After payments were received, the criminals needed to quickly make the money disappear overseas. The money laundering process was documented by the Justice Department. They state, “If the victims agreed to pay, the call centers would then immediately turn to a network of U.S.-based co-conspirators to liquidate and launder the extorted funds as quickly as possible by purchasing prepaid debit cards or through wire transfers.” Purchasing these prepaid debit cards would make it easier for them to transfer the money to India using fictitious names.

Having caught the criminals, the Justice Department are now able to inform the public and help prevent future incidences from occurring. In the article they also offer assistance for individuals that feel victimized to this crime. If they made the press release prior to charging the criminals, it could have effected their ability to prosecute the criminals.

Theodora is a graduate accounting student with a certification in forensic accounting at the Feliciano School of Business, Montclair State University, Class of 2017.

Hacking Into the iPhone

Posted by Vicki Elter.

Experts in security and legal matters claim that if Apple has to create a software tool to help agents hack into an iPhone, many people will likely misuse it. In order to use Apple’s information in court, there will need to be numerous tests and work done by forensic experts. This will create more opportunities for leaks. Although the Justice Department explained that it just wants a tool that can just be used on the San Bernardino phone, hackers and other companies could potentially have access to the Apple’s methods.

There are over 200 other cases that are interested in using Apple’s tool to unlock iPhones. Additionally, other arguments against Apple releasing this tool explain that it could encourage hackers to conduct a reverse engineering. Although the software for the tool would be destroyed after its work is done, government employees could make Apple create it again.

Apple explains that the software would need a huge amount of testing before it is used. To finish the testing, Apple would need to send it to outside experts, which would increase the chance of the tool being stolen. Additionally, defense experts would demand scrutiny of the tool.

Vicki is an accounting and management major at the Stillman School of Business, Seton Hall University, Class of 2019.

Getting You When You Sleep

Posted by Kyle Beck.

A company who makes sleep apnea masks has “agreed to pay $34.8 million to settle claims” that say the company paid kickbacks to suppliers that sold its products. Philips Resprionics, Inc. offered free customer support through its medSage call center, while the company’s competitors had to pay for a call center. This act made it more likely that a company would buy from Philips Resprionics Inc, and because the masks can be covered by Medicare or Medicaid programs; this is considered a kickback. Benjamin Mizer of the Justice Department said, “Kickbacks ‘in any form to induce patient referrals threatens public confidence in the health care system.”

Suppliers who bought masks from Phillips Resprionics, Inc. saved “$11.88 per year for each patient that used a Respironics mask. A supplier that had 10,000 patient customers would save $118,800 annually.” The money received from the lawsuit will be divided between 3 groups. The whistleblower Dr. Gibran Ameer will receive $5.4 million, the federal government will receive$28.7 million, and state Medicaid programs will receive $660,000.

This is a good step towards fairness, because it makes sure that no one is taking advantage for people who have medical problems.

Kyle is an economics major in the Stillman School of Business, Seton Hall University, Class of 2018.

Leniency on Criminals vs. Corporation

Posted by Samar Baeshen.

According to an October 21, 2015 news article in The New York Times, “Criminals Should Get Same Leniency as Corporations,” there are many critics arguing that corporations trying to make a big effort to defend their misconducted executives ought to be treated like common criminals. In addition, Emmet G. Sullivan, a federal judge, thought that criminals should be treated like big companies. Due to Obama administration’s method which gives companies the opportunity to not have a criminal record, Judge Sullivan believes that individual criminals should enjoy the same chances. In fact, the Department of Justice officials concur with Judge Sullivan’s opinion, which criticizes the American criminal justice system, and encourage Congress to lower the adjudication standards. Meanwhile, the Justice Department issued a new memo recently and released new approaches to prosecute individual employees after years of accusations about Wall Street criminals.

According to Judge Sullivan, the court is frustrated that the postponed prosecution agreements are not being utilized to give the same chances to individual criminals without causing any negative effects on the criminal conviction. Moreover, there are lack of the postponed prosecution agreements, according to the Justice Department, for both corporations and individuals. However, comparing the number of cases against individuals and companies, cases against individual criminals are enormously more than companies.

In general, the target of the Judge Sullivan’s argument is to reduce the long Sentence for prisoners who did not commit violent crimes.

Samar is a graduate student in accounting at the Feliciano School of Business, Montclair State University.