Antitrust Division 2013 Criminal Enforcement Update
The Antitrust Division’s vigorous criminal enforcement efforts continued in 2012. This year, the Division obtained significant fines and prison sentences, and won jury trial victories relating to the liquid crystal display (LCD), municipal bonds, and coastal freight investigations. The Division also continued to achieve convictions in investigations of cartels involving auto parts, real estate foreclosure auctions, and tax liens.
In fiscal year 2012, the Division filed 67 criminal cases and obtained a record $1.14 billion in criminal fines. In these cases, the Division charged 16 corporations and 63 individuals and courts imposed 45 prison terms with an average sentence of just over two years per defendant.
Division Obtains Record Criminal Fines in 2012 and More Than $3 Billion Since 2009
The FY 2012 $1.14 billion criminal fine total is the highest ever obtained by the Division in a single year and the second time since 2009 that the Division exceeded the $1 billion fine mark. Since 2009, the Division has obtained more than $3 billion in criminal fines.
Over the last five fiscal years the Division brought in an average of nearly $785 million in criminal fines, versus an average direct appropriation of about $79 million. These fines do not go to the Antitrust Division, but rather are contributed to the Crime Victim’s Fund, helping those victimized by crimes throughout our country.
Individuals Going to Prison More Often and for Longer Sentences
Holding culpable individuals accountable is the most effective way to deter and punish cartel activity. The Division’s enforcement statistics demonstrate that individuals prosecuted by the Division are being sent to prison with increasing frequency and for longer periods of time.
During FY 2012, 78 percent of the individuals sentenced in Division cases were sentenced to prison time. The Division is now sending approximately twice as many defendants to prison as it did in the 1990s. And the defendants sentenced to prison are serving longer terms, reflecting the harm inflicted by the cartels in which they participated. In FY 2012, the average prison sentence for Division defendants was almost 25 months, more than three times the average of eight months in the 1990s.
Foreign nationals also faced average prison sentences of 16 months during FY 2012, including two 36-month sentences imposed upon individuals from Taiwan convicted at trial for conspiring to fix prices in the LCD industry and 24-month sentences for two Japanese executives for their participation in conspiracies to fix prices and rig bids in the auto parts industry. The Division remains committed to ensuring that culpable foreign nationals, just like U.S. co-conspirators, serve prison sentences for violating the U.S. antitrust laws. This includes using all appropriate tools to find and arrest or extradite international fugitives where appropriate.
Criminal Trial Success
The Division secured several significant criminal trial wins during 2012.
Liquid Crystal Display Panels
On March 13, 2012, following an eight-week trial, a jury in the Northern District of California returned guilty verdicts against AU Optronics (AUO), a Taiwan manufacturer of liquid crystal display panels, its American subsidiary, AU Optronics America, and the former president and former vice president of AUO for their participation in a conspiracy to fix the price of thin film transistor liquid crystal display panels (TFT-LCD panels). The jury was unable to return a unanimous verdict as to one of the subordinates charged. It returned not guilty verdicts against two other subordinates. The guilty verdicts were notable in that the jury determined that the Division had proven beyond a reasonable doubt that the gain derived from the conspirators for sales into the U.S. was at least $500 million. This was the first time that a jury convicted a corporate defendant under the antitrust laws and applied the “twice the pecuniary gain or loss” alternative fine provision of 18 U.S.C. § 3571(d).
On September 20, 2012, AUO was sentenced to pay a $500 million fine and the convicted executives were each sentenced to serve three years in prison. The $500 million fine matches the largest fine ever imposed against a company for violating the U.S. antitrust laws.
The Division successfully retried the third AUO executive, who was found guilty after a three-week trial, on December 18, 2012.
Including these trial convictions, the Division’s LCD investigation thus far has resulted in convictions of ten companies and criminal fines totaling $1.39 billion, as well as convictions of 13 executives, and charges against seven additional individuals (one awaiting trial and six who remain fugitives).
Press Releases
December 18, 2012
AU Optronics Corporation Executive Convicted for Role in LCD Price-Fixing Conspiracy
September 20, 2012
Taiwan-Based AU Optronics Corporation Sentenced to Pay $500 Million Criminal Fine for Role in LCD Price-Fixing Conspiracy
March 13, 2012
Taiwan-Based AU Optronics Corporation, Its Houston-Based Subsidiary, and Former Top Executives Convicted for Role in LCD Price-Fixing Conspiracy
Municipal Bonds
The ongoing investigation into bid rigging in the municipal bonds market highlights the Division’s focus on investigating and prosecuting antitrust violations in complex financial markets, in addition to the Division’s emphasis on working with other Federal and state agencies.
Within the last year, the Division’s municipal bonds investigation garnered Federal jury convictions in two separate trials against six individuals, all of whom were tried in the U.S. District Court for the Southern District of New York. In the first case to go to trial in this investigation, three former executives from General Electric Co. were convicted on May 11, 2012, after a three-week trial, for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts. The three defendants were sentenced on October 18, 2012, with two executives sentenced to serve three years in prison and the third to serve four years.
On August 31, 2012, three former executives from UBS AG were convicted at trial of conspiracy and fraud charges for corrupting the bidding process for more than a dozen investment agreements to increase the number and profitability of the agreements awarded to UBS. At trial the Division presented evidence relating to approximately 26 corrupted bids and more than 75 recorded conversations made by co-conspirator financial institutions.
Including these recent jury trial convictions, 19 individuals and one company have been convicted in the municipal bonds investigation. Additionally, in July 2012, the Division indicted another individual, who is currently awaiting trial. The municipal bonds investigation has also produced settlements with a number of large financial institutions involved in the conspiracies. To date, the implicated firms have agreed to pay a total of nearly $745 million in restitution, penalties, and disgorgement to Federal and state agencies.
Press Releases
January 3, 2013
Former Financial Services Broker Sentenced to Serve 18 Months in Prison for Role in Conspiracies Involving Investment Contracts for the Proceeds of Municipal Bonds
August 31, 2012
Three Former UBS Executives Convicted for Frauds Involving Contracts Related to the Investment of Municipal Bond Proceeds
July 20, 2012
Former Financial Services Executive Indicted for His Participation in a Far-Reaching Conspiracy and Scheme to Defraud Involving Investment Contracts for the Proceeds of Municipal Bonds
July 18, 2012
Former New York Employee of a Financial Institution Pleads Guilty for His Role in Fraud Conspiracy Involving Municipal Bonds
January 9, 2012
CDR Financial Products Executive and Former Executive Plead Guilty in New York to Bid-Rigging and Fraud Conspiracies Related to Municipal Bond Investments
December 30, 2011
CDR Financial Products and Its Owner Plead Guilty to Bid-Rigging and Fraud Conspiracies Related to Municipal Bond Investments
December 23, 2011
GE Funding Capital Market Services Inc. Admits to Anticompetitive Conduct by Former Traders in the Municipal Bond Investments Market and Agrees to Pay $70 Million to Federal and State Agencies
December 8, 2011
Wachovia Bank N.A. Admits to Anticompetitive Conduct by Former Employees in the Municipal Bond Investments Market and Agrees to Pay $148 Million to Federal and State Agencies
Coastal Freight
On January 29, 2013, following a two-week trial, a jury in Puerto Rico convicted the former president of a coastal water freight transportation company for his participation in a conspiracy to fix rates and surcharges for water transportation of freight between the continental United States and Puerto Rico. The conspiracy affected the price of nearly every product that was shipped to or from Puerto Rico during the charged period.
To date, the Division has charged three companies and seven individuals in its coastal freight transportation investigation. The investigation also has resulted in $46 million in criminal fines and prison sentences for five individuals ranging from seven months to four years.
Press Releases
January 29, 2013
Former Executive Convicted for Role in Price-Fixing Conspiracy Involving Coastal Freight Services Between the Continental United States and Puerto Rico
August 1, 2012
Florida-Based Crowley Liner Services Inc. Pleads Guilty to Price Fixing on Freight Services Between U.S. and Puerto Rico
November 17, 2011
Florida-Based Sea Star Line LLC Agrees to Plead Guilty and Its Former President Is Indicted for Price Fixing on Coastal Freight Services Between the Continental United States and Puerto Rico
Ongoing Investigations Continue to Produce Results
Auto Parts
The Division is dedicating significant resources to the ongoing automobile parts investigation. To date, this investigation has yielded charges against nine companies and 12 individuals and more than $809 million in criminal fines for participation in conspiracies to fix prices of and rig bids on automobile parts, including safety systems such as seatbelts, airbags, steering wheels, and antilock brake systems, and critical parts such as instrument panel clusters and wire harnesses. Two of the executives charged are Japanese citizens. Each was sentenced in 2012 to serve two years in prison, the longest sentences imposed on foreign nationals voluntarily submitting to U.S. jurisdiction for an antitrust violation. During FY 2012, this investigation also yielded the third-largest criminal antitrust fine ever imposed—a $470 million fine against Yazaki Corporation. The Division continues to cooperate with its counterparts in Japan, Korea, the EC, and Canada, among others, on this investigation.
To date, the following corporate fines have been obtained:
- U.S. v. Yazaki Corporation, $470 million—the third largest criminal fine ever for an antitrust violation
- U.S. v. Furukawa Electric Company Ltd., $200 million
- U.S. v. DENSO Corporation, $78 million
- U.S. v. Fujikura Ltd., $20 million
- U.S. v. Tokai Rika Co., Ltd., $17.7 million
- U.S. v. Autoliv, Inc., $14.5 million
- U.S. v. TRW Deutschland Holding GMBH, $5.7 million
- U.S. v. G.S. Electech, Inc., $2.7 million
- U.S. v. Nippon Seiki Co., Ltd., $1 million
Press Releases
November 16, 2012
Ohio Automobile Parts Supplier Executive Pleads Guilty in Price-Fixing and Bid-Rigging Conspiracy
October 30, 2012
Japanese Automobile Parts Manufacturer Agrees to Plead Guilty to Price Fixing and Obstruction of Justice
August 28, 2012
Japanese Automobile Parts Manufacturer Agrees to Plead Guilty to Price Fixing on Parts Installed in U.S. Cars
August 16, 2012
Yazaki Executive Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars
July 30, 2012
German Subsidiary of TRW Automotive Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars
June 6, 2012
Autoliv Inc. and a Yazaki Corp. Executive Agree to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars
April 26, 2012
DENSO Corporation Executive Agrees to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging Conspiracy
April 23, 2012
Fujikura Ltd. Agrees to Plead Guilty to Price Fixing on Auto Parts Installed in U.S. Cars
April 3, 2012
G.S. Electech Agrees to Plead Guilty to Price Fixing on Auto Parts Installed in U.S. Cars
March 26, 2012
DENSO Corporation Executive Agrees to Plead Guilty to Price Fixing and Bid Rigging on Auto Parts Installed in U.S. Cars
January 30, 2012
Yazaki Corp., DENSO Corp. and Four Yazaki Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging Conspiracies
Real Estate Foreclosure and Tax Liens Auctions
The Division’s ongoing efforts to investigate and prosecute bid rigging and fraud at real estate auctions across the country thus far have resulted in charges against 53 individuals and two companies. The Division has partnered with the FBI to combat a pattern of collusive schemes among real estate speculators aimed at eliminating competition at real estate foreclosure auctions. Instead of competitively bidding at public auctions for foreclosed properties, groups of real estate speculators work together to keep public auction prices artificially low by paying each other to refrain from bidding or holding unofficial “knockoff” auctions among themselves. Similar collusive conduct also has been detected among bidders for public tax liens, and eight individuals and three companies have pleaded guilty as part of an ongoing investigation into bid rigging and fraud related to municipal tax lien auctions in New Jersey.
The Division is investigating this type of anticompetitive conduct at auctions in multiple states. Through its work combating bid rigging and collusion at public auctions, the Antitrust Division has been a major contributor to the efforts of the Financial Fraud Enforcement Task Force (FFETF) to investigate and prosecute financial crimes.
Press Releases
March 7, 2013
Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
February 5, 2013
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
December 19, 2012
New Jersey Company Pleads Guilty for Role in Bid Rigging Scheme at Municipal Tax Lien Auctions
December 12, 2012
Two Alabama Real Estate Investors and Their Company Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions
November 8, 2012
North Carolina Real Estate Investor Pleads Guilty to Mail Fraud Scheme for the Purchase of Real Estate at Public Foreclosure Auctions
November 1, 2012
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
September 26, 2012
Pennsylvania Corporation Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey
August 15, 2012
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
July 24, 2012
Alabama Real Estate Investor Pleads Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions
June 28, 2012
Two Alabama Real Estate Investors and Their Company Indicted for Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions
June 7, 2012
Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
April 27, 2012
Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions
April 26, 2012
Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
April 23, 2012
New Jersey Financial Investor and His Company Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions
April 20, 2012
Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracies to Rig Bids and Commit Mail Fraud for the Purchase of Real Estate at Public Foreclosure Auctions
April 17, 2012
Former Executive of New York-Based Tax Liens Company Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey
March 27, 2012
New York Financial Investor Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey
February 24, 2012
California Investor Pleads Guilty to Bid Rigging and Fraud at Public Real Estate Foreclosure Auctions
February 23, 2012
Two Financial Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions in New Jersey
February 9, 2012
Three Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
January 27, 2012
California Investor Pleads Guilty to Bid Rigging and Fraud at Public Real Estate Foreclosure Auctions
December 13, 2011
Five Individuals Indicted for Bid Rigging and Fraud at Public Real Estate Foreclosure Auctions
December 2, 2011
Alabama Real Estate Investor Agrees to Plead Guilty to Conspiracy to Rig Bids for the Purchase of Real Estate at Public Foreclosure Auctions
October 27, 2011
Eight Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging at Public Foreclosure Auctions
LIBOR
On February 6, 2013, the Department announced that RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS), agreed to plead guilty to a criminal information to be filed in the U.S. District Court for the District of Connecticut charging it with one count of wire fraud for engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating the Japanese Yen London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world. RBS Securities Japan agreed to pay a $50 million fine. Additionally, it was announced that a criminal information would also be filed against parent company RBS as part of a deferred prosecution agreement (DPA), charging RBS with wire fraud for its role in manipulating LIBOR benchmark interest rates, and with participation in a price-fixing conspiracy by rigging the Yen LIBOR benchmark interest rate with other banks. The DPA requires the bank to admit and accept responsibility for its misconduct, to continue cooperating with the Justice Department in its ongoing investigation, and to pay a $100 million penalty beyond the fine imposed on RBS Securities Japan.
Together with approximately $462 million in regulatory penalties and disgorgement—$325 million as a result of a Commodity Futures Trading Commission (CFTC) action and approximately $137 million as a result of a U.K. Financial Services Authority (FSA) action—the Justice Department’s criminal penalties bring the total amount of the resolution with RBS and RBS Securities Japan to approximately $612 million.
In addition, a criminal complaint was unsealed in the U.S. District Court for the Southern District of New York in December 2012, charging two former senior UBS traders with colluding to manipulate the Yen LIBOR rate. These defendants remain fugitives.
Press Releases
February 6, 2013
RBS Securities Japan Limited Agrees to Plead Guilty in Connection with Long-Running Manipulation of Libor Benchmark Interest Rates
December 19, 2012
UBS Securities Japan Co. Ltd. to Plead Guilty to Felony Wire Fraud for Long-Running Manipulation of LIBOR Benchmark Interest Rates
