Last week, the Supreme Court decided in Liu v. SEC that the SEC may continue to seek disgorgement in judicial proceedings as a form of equitable relief under the Securities Exchange Act. A ruling to the contrary would have deprived the SEC of its most significant tool, in dollar terms, for obtaining monetary relief. Although the decision preserves the SEC’s disgorgement power, it restricts how courts may disgorge ill-gotten gains in three ways: in general,… More
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Earlier this month, the Criminal Division of the United States Department of Justice (DOJ) updated its Evaluation of Corporate Compliance Programs guidance. In considering enforcement actions against companies, prosecutors use the guidance to assist in evaluating (1) the form of any resolution or prosecution, (2) the amount of a monetary penalty, if any, and (3) whether to impose compliance obligations, such as a monitor or reporting requirements. The guidance thus provides valuable insight into the factors prosecutors consider when making these decisions.… More
SEC Enforcement Co-Director Provides Update on Priorities During Pandemic: Takeaways for Issuers, Investment Advisers and Investment Companies
Following up on previous guidance, Steven Peikin, Co-Director of the SEC Division of Enforcement (“Enforcement”), provided updated detail on Enforcement’s response to the COVID-19 pandemic in a virtual keynote address last month at the Securities Enforcement Forum West 2020. (We discussed Enforcement’s prior statements here and here.) In his remarks, Peikin affirmed that Enforcement will continue to prioritize COVID-19-related fraud – in particular,… More
The SEC recently brought an FCPA action against a former Goldman Sachs executive for an alleged bribery scheme, but decided not to charge the bank itself.
In the past two weeks, the federal government has charged several individuals in Paycheck Protection Program loan fraud schemes. The allegations have ranged from applying for loans for non-operating businesses to using loan funds to buy cars and jewelry. Charges announced this week showed a whole new level of creativity. A Texas man, Samuel Yates, allegedly used an online name generator to make up the names of hundreds of employees in an effort to obtain a $5 million loan. … More
In yet another sign that the federal government is following through on its warnings about PPP loan fraud, the Department of Justice, according to reports from Reuters, has issued grand jury subpoenas to several Wall Street banks related to an investigation into PPP loans. The subpoenas were reportedly issued by the DOJ’s Fraud Section. The issuance of the subpoenas does not necessarily indicate wrongdoing by the banks. … More
Federal prosecutors continued to quickly respond to PPP loan fraud, bringing two additional cases that allege clear misuse of the funds intended for small businesses. In one case, prosecutors in Georgia charged reality TV personality Maurice Fayne, aka “Arkansas Mo” of “Love & Hip Hop: Atlanta” fame, with bank fraud for allegedly using $1.5 million of a $2 million PPP loan to maintain his luxury lifestyle. … More
On Tuesday, May 5, the Department of Justice (DOJ) filed charges in the federal District Court of Rhode Island against David A. Staveley and David Butziger for conspiracy to make a false statement and conspiracy to commit bank fraud in connection with loan applications made under the federal government’s Payroll Protection Program (PPP). The Complaint alleges that Staveley of Andover, Massachusetts, and Butziger of Warwick, Rhode Island,… More
Editors’ Note: This is the third in our start-of-year series examining important trends in white collar law and investigations in the coming year. Our previous entry discussed healthcare fraud in 2020. Up next: a look at trends regarding the False Claims Act. Look for additional posts throughout the month of January.
2019 was a blockbuster year for FCPA enforcement.… More
The Supreme Court has granted certiorari to decide whether the U.S. Securities and Exchange Commission can seek and obtain disgorgement from a court as a remedy for a securities violation. A decision that the SEC does not have disgorgement authority would have significant consequences for litigants.
In SEC v. Liu, a California District Court held that the defendants had defrauded Chinese individuals seeking to invest in a cancer treatment center to obtain visas under the EB-5 Immigrant Investor Program.… More
This is a follow-up to our September 13, 2019 post discussing the DOJ guidance on corporate claims of inability to pay.
On Tuesday, October 8, 2019, the Department of Justice provided guidance on how its prosecutors should evaluate claims of corporate poverty. This comes on the heels of Deputy Assistant Attorney General Matthew Miner’s comments last month suggesting that further guidance on corporate poverty claims was forthcoming. … More