Remarks as Prepared for Delivery
Good morning. It is a pleasure to be here with you today—albeit remotely. Before I begin, I would like to extend a thank you to PLI for hosting me today, and to Jim and Martine—as well as the PLI staff—for all that they have done to organize this event. It is a true honor for me to lead the Department of Justice’s Criminal Division in an acting capacity, and I am pleased to be here this morning to speak about the Division’s strong track record of white-collar enforcement.
It would be an understatement to say that the last seven months have been unprecedented—for everyone. The Department’s Criminal Division is certainly no exception. Like the rest of the legal world, we have been in a predominately telework posture since March and—with the exception of the Division’s senior leadership—we mostly remain there today.
Despite significant challenges, the Division and our law enforcement partners remain very much “open for business.” Because of the nature of our work, we could not temporarily pause or stop our efforts, and the Division has found ways to overcome the many obstacles caused by the pandemic. Thanks to the dedication and sacrifice of our attorneys and staff, we have been hard at work pursuing wrongdoing, advancing our cases, and achieving meaningful results.
With all that has been going on over the past seven months, it can be easy to lose sight of this, and so I’d like to use my time today to take a step back and provide you with an overview of what the Criminal Division has done so far this year, what we are doing now, and what lies ahead.
I’d also like to take a few minutes to provide some broader perspective about the Division’s work over the last several years. As many of you know, our cases are frequently complex, and they often can take significant time to investigate, develop, and resolve. Indeed, major investigations initiated under the leadership of one Assistant Attorney General, or administration, are often resolved during the tenure of another. For that reason, a single year provides only a partial snapshot—often an incomplete picture—of the Division’s broader work—particularly when you factor in the impact of a global pandemic that essentially caused the legal world to shut down for many months.
So, what have we been up to over the past several years, and this past year in particular? Put simply, quite a bit. I am pleased to report that—even despite the disruptions and challenges caused by the ongoing pandemic—the Criminal Division’s work continues to produce outstanding results for the American people.
We have brought, and continue to bring, significant and meaningful individual and corporate prosecutions. We have undertaken, and continue to undertake, sweeping initiatives that address widespread fraud and unlawful conduct in a number of different areas and disciplines. And we have implemented, and continue to implement, thoughtful policy enhancements and reforms aimed at providing transparency and guidance to those involved in our investigations.
Let me begin by talking about what we have done so far in 2020. By any measure, our work this year demonstrates that the Criminal Division remains hard at work on behalf of the American people, and that we are committed to robust white-collar criminal enforcement.
While the number of charges and corporate resolutions are only one benchmark of productivity, the Criminal Division’s enforcement activity this year has been remarkable. As of early September the Division’s Fraud Section had publicly charged over 150 individuals and entered into 8 corporate resolutions. These cases involved total losses of over 3 billion dollars. These individual and corporate matters, taken together, cover a broad variety of illegal conduct—from FCPA violations, to market manipulation, to fraud against the government, to name just a few.
During 2020, and over the last several years, we have continued our traditional focus on ensuring corporate criminal responsibility for illegal conduct in appropriate cases. While we must always be mindful that prosecuting corporations can have serious impacts on non-culpable individuals—such as innocent employees and shareholders—holding companies accountable for wrongdoing is an important part of the Criminal Division’s work.
In addition to being a critical means of imposing punishment for corporate criminal wrongdoing, the prosecution of corporations frequently enables us obtain significant restitution for victims. And in what I see as one of the most significant criminal enforcement evolutions of the past several years, we have increasingly sought to incentivize or require corporate rehabilitation through the terms of our corporate resolutions. We’ve moved away from simply seeking ever-larger fine payments from corporations, and are in every case taking great care to achieve the maximum public benefit available using all of the tools at our disposal, be they fines, other monetary payments, improvements to internal processes such as compliance or reporting functions, or any number of oversight and assurance mechanisms.
This attention not just to corporate punishment, but also to corporate rehabilitation—which of course is a key way to deter future criminal conduct, decrease recidivism, and otherwise protect the public—is having, we believe, a real impact on corporate behavior, and it is something I have every confidence the Criminal Division will continue to prioritize in the years ahead.
Focusing specifically on the Fraud Section’s corporate work, the matters resolved this year have been significant. In terms of numbers, the Fraud Section’s corporate resolutions have involved over 4.5 billion dollars in fines, penalties, restitution, and disgorgement imposed by authorities around the world. Of that, nearly 1.2 billion dollars was imposed by U.S. authorities, and some 940 million dollars was imposed by the Department alone. In any year, these numbers would be notable. But in the midst of a global pandemic, they speak to the Criminal Division’s continuing focus on prosecuting white-collar crime and holding corporations accountable.
Of course, numbers and statistics—while helpful at a very high level —cannot really speak to the nature and quality of the Criminal Division’s work and the cases that we bring, which is how I prefer to measure whether we are being successful. For that reason, I’d like to take a moment to highlight just a few of the most significant corporate cases that we have resolved this year.
First, in the FCPA space:
- At the beginning of this calendar year, the Department entered into a corporate resolution with Airbus which is currently the largest worldwide FCPA resolution in history, with over 3.9 billion dollars in penalties imposed worldwide.
- In the pharmaceutical and healthcare industry, this past summer you also saw several Novartis-related companies pay a total of 345 million dollars in connection with a coordinated resolution with us and the SEC involving multi-country bribery schemes.
- Just last month, Herbalife paid 122 million dollars and admitted to falsifying its books and records to cover up corrupt payments to Chinese government officials.
- And just yesterday we announced a guilty plea by a company named Sargeant Marine in connection with a smaller—but nevertheless significant—multi-year, multi-million-dollar scheme to bribe officials in Brazil, Venezuela, and Ecuador to obtain lucrative government contracts.
I will pause to note that our Airbus matter reflects a key theme of our recent work: cooperation and coordination with our international partners. The Airbus resolution was particularly noteworthy because it reflected a collaborative and cooperative effort between the United States and our counterparts in the United Kingdom and France – a combination of enforcement authorities not seen before in this area of the law. We have a long history of coordination within the Criminal Division, and with our domestic law enforcement partners. And these domestic efforts are in turn amplified through our cooperation and collaboration with our international partners, from longtime friends like the U.K.’s Serious Fraud Office and Financial Conduct Authority, to newer, but no less valuable partners like those in Brazil and Singapore. In a world where white-collar crime frequently crosses borders, it is imperative that we ally ourselves with our enforcement counterparts across the globe and work together to obtain critical evidence and deny criminals safe haven.
In 2020, you also have seen ground-breaking and high-impact prosecutions by the Fraud Section’s Market Integrity unit:
- For example, this summer we charged and entered into a 60 million dollar DPA with the Bank of Nova Scotia based on the bank’s illegal trading activity in precious metals futures contracts. Notably, that DPA included a monetary penalty at the high-end of the applicable Sentencing Guidelines range, as well as the imposition of an independent compliance monitor. The Bank of Nova Scotia resolution was just the latest in a series of resolutions by the Department with financial firms charged with “spoofing” futures markets. We remain active in this area, and I would expect to see significant additional resolutions in this space this year.
- As for government procurement fraud cases, we also obtained a guilty plea from SK Engineering & Construction, one of the largest construction firms in South Korea, as a result of its fraud and obstruction in connection with obtaining millions of dollars of U.S. Army contracts.
Because of the nature of its work, I have focused so far on the excellent results obtained this year by the Division’s Fraud Section. But our Money Laundering and Asset Recovery Section is a key part of our white-collar enforcement program, and our MLARs attorneys have been hard at work, too.
- Earlier this year, for example, MLARS’s Bank Integrity Unit (BIU), together with our partners in the Eastern District of New York, entered into a non-prosecution agreement with Bank Hapoalim, where the bank admitted to engaging in a conspiracy to launder monetary instruments arising out of the Department’s long-running FIFA bribery investigation. The bank agreed to forfeit over $20 million and pay a criminal fine of more than $9 million.
This resolution comes on the heels of two significant criminal resolutions against financial institutions that MLARS obtained last year—both involving sanctions-related misconduct.
- First, Standard Chartered Bank agreed to forfeiture of $240 million and a fine of $480 million, and to the amendment and extension of its DPA with the Department for conspiring to violate IEEPA. This conspiracy resulted in Standard Chartered processing approximately 9,500 financial transactions worth approximately $240 million through U.S. financial institutions for the benefit of Iranian entities.
- Second, UniCredit Bank AG (UCB AG), a German financial institution, operating under the name HypoVereinsbank, and part of the UniCredit Group, agreed to enter a guilty plea to conspiring to violate IEEPA and to defraud the United States by processing hundreds of millions of dollars of transactions through the U.S. financial system on behalf of an entity designated as a weapons of mass destruction proliferator and other Iranian entities subject to U.S. sanctions. The settlement involved total financial penalties of approximately $1.3 billion.
Of course, the Division’s corporate prosecutions and resolutions—while significant—only tell part of the story. We have also continued to focus on ensuring that individuals are held accountable for white-collar criminal wrongdoing.
Our ongoing commitment to individual accountability is a theme that you have seen emerge time and again in our work this year, and over the past several years. An important—indeed, essential—part of corporate criminal deterrence includes holding culpable individuals accountable for their role in criminal wrongdoing within an organization.
Our focus on individual accountability is demonstrated by the fact that we have brought individual charges in many of the corporate cases I just mentioned. It is also apparent from the many other cases the Criminal Division has been actively litigating in the past year against senior corporate executives, including:
- The former CFO and COO of Celadon Group, a publicly traded trucking company;
- Two former managing directors of Goldman Sachs;
- The CEO, President, and CFO of Outcome Health, which was a major health care marketing company in Chicago;
- The former CEO of Braskem, a publicly traded Brazilian petrochemical company;
- The former President and former Chief Legal Officer of Cognizant, a publicly traded IT services company; and
- The former CFO of Roadrunner Transportation Systems, another publicly traded trucking company.
Our MLARs section has also focused on individual accountability. Just last week, MLARS filed civil complaints seeking forfeiture of more than $300 million in assets associated with the international conspiracy to launder funds misappropriated from 1MDB, the Malaysian sovereign wealth fund. Combined with earlier civil forfeiture complaints, the United States has sought the forfeiture of more than $2.1 billion in assets traceable to funds embezzled from 1MDB. As a result of these actions, the United States has recovered or assisted Malaysia in recovering nearly $1.1 billion in assets associated with the 1MDB scheme. Collectively, these represent the largest civil forfeiture actions ever instituted in the Department’s history.
One aspect of our work prosecuting individuals this year that I must highlight has been our efforts to combat fraud connected to the Paycheck Protection Program, or PPP. Just a few weeks ago, I was proud to announce that the Criminal Division’s Fraud Section has initiated criminal charges against nearly 60 individual defendants across the country in connection with those defendants’ attempts to steal over 175 million dollars of funds from the PPP. We continue to pursue this important initiative, and as I recently mentioned, I would expect to see many more PPP cases brought by the Department in the future.
Our work prosecuting PPP cases is strengthened by an important tool—the use of data analytics—and has become increasingly more common during our white-collar investigations in recent years.
Pioneered by our healthcare fraud prosecutors, the Division’s use of data analytics has become a staple in our efforts to identify, investigate, and prosecute a wide variety of white-collar criminal conduct. This data-driven approach to investigation continues to pay enormous dividends, not just where it started in our healthcare fraud cases, but also in our market manipulation—or “spoofing”—cases and most recently in our PPP enforcement efforts.
And finally no discussion of our focus on individual accountability would be complete without mention of the outstanding work our healthcare fraud prosecutors continue to do around the country, charging and convicting those who defraud government health care fraud programs like Medicare. This year alone our healthcare fraud prosecutors have publicly charged over 70 people, including doctors and other healthcare professionals. As with our corporate resolutions, I anticipate this figure will grow significantly before year’s end.
Of course, any pending charges, including those that I have discussed here today, are only accusations. Like all defendants, these individuals are presumed innocent until they are found guilty beyond a reasonable doubt in a court of law.
In 2020, we have also continued to focus on revising and updating Criminal Division policies and procedures to ensure that we are fair, clear, and consistent in what we do.
Just this year, we updated and revised drafts of two key documents: our Evaluation of Corporate Compliance Programs guidance and our FCPA Guide. Since their original issuance, these policies have become critical tools for the Division, corporate actors, and counsel. In updating them this year, we sought to stay current with developments in the law and provide guidance where appropriate, all with the overarching aim of ensuring consistency and transparency in our enforcement efforts.
This highlights another theme of the Criminal Division’s recent work: transparency and openness about our policies and procedures. In recent years, the Criminal Division has been a leader in ensuring fairness and consistency in our approach to white-collar enforcement through the creation of policies and guidance that clarify process, methodology, and expectations. You see this in the policy reforms that I’ve already highlighted and in the Division’s other policy announcement and updates, such as our “Inability to Pay” guidance and our policy addressing the “Selection of Monitors in Criminal Division Matters,” all of which have taken effect over the last four years. Through these efforts, the Criminal Division has demonstrated in concrete, tangible ways its commitment to consistency and transparency in its enforcement efforts.
The Criminal Division’s impact thus far in 2020 should come as no surprise given our success and strong white-collar enforcement work over the last several years.
Returning to the theme of holding individual accountable, since 2017, the Fraud Section alone has publicly charged more than 1,300 individuals, addressing conduct involving losses of over 17 billion dollars.
Our corporate resolutions in each of the past four years are also significant. Indeed, since the beginning of 2017, the Criminal Division has resolved no fewer than 43 corporate matters involving over 17.5 billion dollars in fines, penalties, restitution, and disgorgement imposed by authorities worldwide, with 8 billion dollars of that total being specifically attributable to our criminal enforcement actions.
The last several years also have seen several landmark cases in a variety of our traditional enforcement areas, such as the FCPA and the Bank Secrecy Act. They include:
- Our 2019 resolution with Ericsson, a parent-level DPA and subsidiary plea that was part of a more than 1 billion dollar coordinated resolution with the SEC;
- Our 2019 resolution with MTS, a parent-level DPA and subsidiary plea that was part of an 850 million dollar coordinated resolution with the SEC;
- Our 2018 resolution with Petrobras, a parent-level NPA that was part of an 853 million dollar coordinated global resolution; and
- Our 2017 resolution with Rolls-Royce, a parent-level DPA that was part of an 800 million dollar coordinated global resolution.
Outside the FCPA, there was also:
- Our 2018 resolution with Rabobank NA, in which the bank pleaded guilty to a felony conspiracy charge for impairing, impeding and obstructing its primary regulator, the OCC. As part of its guilty plea, Rabobank agreed to forfeit over $368 million.
- Our 2018 resolution with Société Générale, a multi-faceted resolution addressing FCPA violations and LIBOR manipulation, which resulted in a parent-level DPA and a subsidiary plea that were part of a 1 billion dollar coordinated global resolution;
- Our 2018 resolution with HSBC in connection with foreign exchange-related fraud, which resulted in an over 100 million-dollar, parent-level DPA;
- Our 2018 resolution with MoneyGram, which extended the company’s DPA and required MoneyGram to forfeit $125 million due to significant weaknesses in the company’s anti-fraud and AML program;
- Our 2017 resolution with Western Union, which resulted in a DPA and forfeiture of $586 million as a result of the bank’s willful failure to maintain adequate anti-fraud and AML programs—failures that led to widespread use of the MSB by known fraudsters, and hundreds of millions in losses to victims; and
- And finally, a series of enforcement actions against futures market manipulation, an effort which has continued and grown in the time since then.
These cases—like those that I mentioned earlier—reflect our commitment to taking strong action to hold corporations responsible for wrongdoing in appropriate circumstances. Many also reflect our efforts to coordinate closely with key domestic partners like the SEC and foreign authorities worldwide to ensure corporate accountability.
As you can see from the cases we have brought already, we continue to focus on high-quality matters that address a broad variety of white-collar misconduct that includes everything from healthcare fraud to market manipulation; government procurement fraud to FCPA violations; and everything in between. Our cases range from the largest and most complex fraud and international bribery schemes to more traditional, but often just as harmful, investment and consumer fraud cases. Our results speak clearly to the nature, quality, and diversity of our work.
Let me conclude with a few points about how we have achieved the results I’ve had the privilege to speak about today—namely, through the hard work of the attorneys and staff of the Criminal Division, the prosecutors who wake up every day and work tirelessly to ensure justice for the American people.
Our successes are, of course, not entirely our own. We have all benefited from years of steady leadership by my predecessors, from the current and prior senior leadership of the Department, and in particular from the leadership teams of the Sections themselves, who have done so much to support and position the Criminal Division for success.
But I am especially mindful that our successes are only possible through the tireless work of the line prosecutors, managers, and support staff in the Criminal Division. They are the ones doing spadework in the trenches each day, and they represent the best traditions of the Department of Justice, enforcing the federal criminal laws fairly, dispassionately, and without fear or favor. Their work, and the results the Criminal Division has delivered this year, are remarkable—all the more so when one considers that they have been achieved amid a once-in-a-century global health crisis, which has forced us, like so many others, to completely redesign the mechanics of what we do.
The restrictions imposed here, at home, and elsewhere in the world easily could have ground our enforcement operations to a halt. But as the figures, cases, and initiatives that I have mentioned today show, we have refused to slow down, and if anything, we have redoubled our efforts amid the crisis.
We are taking on entirely new challenges—like PPP fraud—without losing sight of our existing work—like FCPA, market manipulation, and healthcare fraud. We are advancing investigations, bringing charges, and even pursuing convictions in trial during a period of national emergency when grand juries and courts are closed or have their operations significantly curtailed.
And we are not done. Our work continues apace. As I mentioned before, I have every confidence that, in weeks and months ahead, between now and the end of the year, you will see and hear about much more of our work and a number of additional noteworthy resolutions in particular.
We are in new and challenging times—there is no question about that. But the constant over the past four years here in the Criminal Division—and over this past year in particular—has been a steadfast, unwavering commitment to doing justice on behalf of the American people. We have been, and we remain, devoted to the mission.
Thank you again for the opportunity to speak with you this morning, and I wish you well with the remainder of your program today.