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Acting Principal Deputy Assistant Attorney General Trevor N. McFadden of the Justice Department’s Criminal Division Speaks at ACI’s 19th Annual Conference on Foreign Corrupt Practices Act


New York, NY
United States

Good morning, and thank you for the very kind introduction.  It is a pleasure to see so many friends and colleagues here today.  I appreciate the invitation to be with you all, and congratulations to American Conference Institute (ACI) for hosting their 19th  Conference on the Foreign Corrupt Practices Act (FCPA).  

Today, I would like to address the suggestions from some that the Department of Justice no longer is interested in prosecuting white collar crime.  I intend to dispel that myth.  While we are boosting our focus on violent crime prosecutions, the Criminal Division is fully engaged in combatting crime in all its forms, and no matter what color collar its perpetrators wear.  

Of course, in past weeks and months, President Trump and Attorney General Jeff Sessions have expressed important law enforcement priorities on which the Department of Justice is focused.  Attorney General Sessions has asked us to re-double our efforts to prosecute violent crime.  Given the spike in violent crime – and especially in murders – in some areas of the country, it makes perfect sense to focus on violent crime.  Even though, generally, crime has dropped since the late 1980s and the early 1990s, the concern is that the recent rise in violence, especially in major cities, represents the beginning of a trend that must be reversed. 
The Criminal Division is making strides on important violent crime prosecutions and investigations, which we take very seriously.  For example, the Organized Crime and Gang Section (OCGS) recently successfully prosecuted in the District of Maryland, along with the U.S. Attorney’s Office for the District of Maryland, 16 members of MS-13, an international gang notorious for their extreme violence, who committed several murders, attempted murders, robberies, beatings, and other violent crimes.  OCGS also successfully prosecuted six leaders of the Harris Gang, one of the most violent gangs in southwest Florida.  Additionally, OCGS recently convicted 27 leaders of the Vice Lords gang in Detroit and its affiliate, Phantom Outlaw Motorcycle Club, as well as 14 leaders and members of the Plainfield Locos Salvatrucha clique of MS-13 in New Jersey.  These successful prosecutions are the result of thorough investigations conducted by tireless investigators, law enforcement, and our partners at the U.S. Attorney’s Office for New Jersey.  

Indeed, the Criminal Division is prosecuting some of the most notorious criminals around.  Currently, our Narcotic and Dangerous Drug Section (NDDS) continues to prosecute some of the most significant national and international drug trafficking groups and other transnational criminal organizations.  For example, and with assistance from the Office of International Affairs, Mexico recently extradited Joaquin Archivaldo Guzman Loera, also known as “El Chapo,” who now faces charges here in New York for importing and distributing massive amounts of illegal narcotics and conspiring to murder those who posed a threat to his narcotics enterprise.  El Chapo is being prosecuted by NDDS, in coordination with U.S. Attorney’s Offices in the Eastern District of New York and Southern District of Florida.  

These violent crime-focused prosecutions are only a sample of what the Criminal Division is doing in this regard.  Our Child Exploitation and Obscenity Section, which is focused on prosecuting those who sexually exploit children, our Human Rights and Special Prosecutions Section, and our Capital Case Section all have busy and growing violent crime prosecutions.  

However, a great deal of the Criminal Division’s work continues to focus on a wide array of white collar crime matters, such as: fraud, bribery, public corruption, organized crime, trade secret theft, money laundering, securities fraud, government fraud, healthcare fraud and computer and Internet fraud – to name a few.

Our Money Laundering and Asset Recovery Section (MLARS) continues to bring cases that demonstrate the department’s commitment to maintaining the integrity and security of the U.S. financial system.  To cite just one example, we recently entered into a deferred prosecution agreement with Western Union whereby the company admitted that it willfully failed to maintain an effective anti-money laundering program and that it aided and abetted wire fraud.  As part of the agreement, Western Union forfeited $586 million and agreed to create new policies and procedures to avoid future violations.  This money will be used to compensate victims of the fraud.

The investigation was a multi-year, cooperative effort between the MLARS, four U.S. Attorney’s Offices around the country, and multiple federal agencies.  It ultimately found that Western Union processed hundreds of thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme.  As part of this scheme, fraudsters contacted victims in the U.S., falsely promised prizes or job opportunities or posed as family members in need, and directed their victims to send money through Western Union.  Various Western Union agents were complicit in these schemes, and sometimes even received a cut of the fraud proceeds – many of them were convicted in connection with this prosecution.  Over the course of many years, the company failed to take appropriate corrective measures in violation of the Bank Secrecy Act and anti-fraud statutes.  The department’s resolution of the Western Union case not only ensures that the company will pay a price for its willful misconduct – and that victims who were harmed by the company’s misconduct will receive just compensation – it also acts as a deterrent to other financial institutions and thus helps to increase the overall integrity of the U.S. financial system.

In addition to enforcing the FCPA, the Criminal Division’s Fraud Section works in a wide array of white collar criminal matters, including health care fraud (HCF) cases.  Our HCF Unit within the Fraud Section identifies and responds to emerging fraud trends across the country, including large corporate health care fraud.  HCF attorneys work in Washington, D.C., and in nine Medicare Fraud Strike Forces across the country.  The Strike Forces are modeled on a cross-agency collaborative approach, bringing together the investigative and analytical resources of the FBI, the Department of Health and Human Services Office of the Inspector General, the Centers for Medicare & Medicaid Services and other agencies, along with the prosecutorial resources of U.S. Attorney’s Offices and state and local law enforcement partners. 

In July 2016, the Fraud Section, in partnership with the U.S. Attorney’s Office, charged Philip Esformes, the owner of a vast network of South Florida skilled nursing and assisted living facilities, in the largest health care fraud indictment ever brought against an individual by the Criminal Division – involving over $1 billion in fraudulent billings to Medicare and Medicaid.  Esformes and his co-conspirators are alleged to have submitted thousands of Medicare and Medicaid beneficiaries to medically unnecessary treatment from other health care providers in exchange for kickbacks.      
In October 2016, Tenet Healthcare Corporation, a publicly-traded company and the third largest hospital chain in the United States, entered into a global resolution with the government to resolve an investigation of a corporate bribery and fraud scheme at four Tenet-owned hospitals in Georgia and South Carolina in which the hospitals paid over $12 million in bribes to a chain of prenatal care clinics in exchange for the referral of Medicaid patients.  As part of the scheme, the owners and operators of the clinics and others made false statements and representations to these vulnerable expectant mothers, including that Medicaid would only cover the costs associated with their delivery and the care of their newborn baby if the expectant mother delivered at one of the Tenet Hospitals or that they were required to deliver their baby at one of the Tenet Hospitals, leaving expectant mothers with the false and mistaken belief that they could not select the hospital of their choice.  

As a result, many expectant mothers traveled long distances from their homes to deliver at the Tenet Hospitals, placing their health and safety, and that of their newborn babies, at risk.  Under the global resolution:  (1) two Tenet subsidiaries, Atlanta Medical Center, Inc. and North Fulton Medical Center, Inc., pleaded guilty to conspiracy to defraud the United States and health care kickbacks and bribes in violation of the Anti-Kickback Statute and forfeited over $146 million, representing the gross Medicaid and Medicare proceeds traceable to the offense; (2) Tenet Health System Medical, Inc. entered into a non-prosecution agreement requiring, among other things, an independent compliance monitor for a period of three years over all entities owned, in whole or in part by Tenet; and (3) Tenet and its subsidiaries entered into a civil settlement agreement and paid $368 million to the United States, the State of Georgia, and the State of South Carolina.  To date, two individuals have pleaded guilty and on Jan. 24, 2017, the Fraud Section charged John Holland, a former senior executive of Tenet and former CEO of North Fulton Hospital who is alleged to have participated in the scheme.  This settlement should send a clear signal to hospitals and health-care companies around the country that they and their management will be held accountable for fraudulent misconduct.  Just as no major multinational company would responsibly operate without an anti-corruption policy and program, no American hospital should be taking federal dollars for Medicare and Medicaid without ensuring those funds are being used properly.  The American taxpayer does not take kindly to our tax dollars being used to line the pockets of fraudsters masquerading in white coats, and neither will the Justice Department.  

The Criminal Division is also deeply concerned about the opioid abuse epidemic, and we are looking for new and effective ways to hold the doctors and pharmacies accountable who willfully provide opioids to addicts.

Additionally, the Criminal Division is focused on impactful corruption cases at home and abroad.  For example, the Fraud Section, in partnership with the U.S. Attorney’s Office in the Southern District of California, is prosecuting dozens of high-ranking Navy officers for accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor Leonard Francis, the former CEO of Glenn Defense Marine Asia, in exchange for classified and internal U.S. Navy information.  To date, 13 individuals have pleaded guilty.  The indicted defendants were entrusted with administering the operations of the U.S. Navy’s Seventh Fleet, which is tasked with guarding an area from Russia to Southeast Asia and the Indian Ocean.  Unfortunately, however, these defendants are alleged to have sold their responsibility in exchange for personal enrichment.  According to the indictment, the bribery scheme allegedly cost the Navy – and U.S. taxpayers – tens of millions of dollars.

Our Public Integrity section continues to have a busy caseload, with several trials scheduled to begin just in the next few weeks involving allegations of public corruption and official misconduct.

This brings me to our FCPA enforcement, which is also as alive as ever.  The FCPA Unit within the Fraud Section has primary jurisdiction among Department components for prosecuting FCPA matters and in developing FCPA enforcement policy.  As you may know, I spent the last four years in private practice, working on anti-corruption issues.  In those four years, the size of the FCPA Unit has nearly doubled, and our Fraud Section trial attorneys are hard at work on numerous significant investigations.

In 2016 alone, through the diligent work of the FCPA Unit, 17 individuals were charged or pleaded guilty to FCPA violations and 13 corporate resolutions were reached, resulting in $1.36 billion in corporate U.S. criminal fines, penalties, and forfeiture.  If you combine that total to amounts payable to foreign authorities, the number is close to $7.3 billion.  These accomplishments build on a strong legacy of FCPA enforcement.  In the last decade, prosecutors in the FCPA Unit have convicted over 100 individuals who committed FCPA violations or related criminal offenses and entered 101 corporate resolutions with well over $5 billion in corporate U.S. criminal fines, penalties and forfeiture. 

The Fraud Section and FCPA Unit’s aims are not to prosecute every company we can, or break our own records for the largest fines or longest prison sentences.  Our aim is to motivate companies and individuals voluntarily to comply with the law.  It is by working with companies transparently and in partnership that we can achieve this goal.  We recognize that business organizations are our partner in the fight against corruption, because they are in the best position to detect risk, to take preventative measures and to educate those who act on its behalf on best practices.  We hope that, in this cooperative effort, we can reduce corruption with effective compliance programs that prevent nefarious conduct from happening and through effective prosecutions to resolve violations in a way that punishes the conduct and deters similar future misconduct. 

Today, motivated as ever by the importance of ensuring a fair playing field for honest corporations doing business abroad, the department continues to vigorously enforce the FCPA.  The department is committed to enforcing the FCPA and to prosecuting fraud and corruption more generally.  The department does not make the law, but it is responsible for enforcing the law, and we will continue to do so.  We also continue to prioritize prosecutions of individuals who have willfully and corruptly violated the FCPA – Attorney General Sessions has stressed the importance of individual accountability for corporate misconduct.  Finally, the department continues to work with business organizations and their counsel and regularly takes into consideration voluntary self-disclosures, cooperation and remedial efforts when making charging decisions.    

I am glad to say that, in recent years, there has been a notable increase in international cooperation between our international partners and the Department.  In the last couple of weeks alone, Attorney General Sessions and leaders from the Criminal Division have met with four different attorneys general from various partner countries.  In so many of the cases we handle, and nearly all of the white collar cases, cooperation with our foreign partners has become a hallmark of our work.  And of course, international cooperation is a two-way street, meaning that just as we receive significant assistance from our foreign partners in our investigations and prosecutions, so too do we provide significant assistance to them.  Indeed, and especially in the area of bribery of foreign officials, countries around the world are strengthening their domestic laws, and investigating and bringing impactful cases.  As part of our cooperation with our international partners, where appropriate, we seek to reach global resolutions that apportion penalties between the relevant jurisdictions so that companies seeking to accept responsibility for their prior misconduct are not unfairly penalized for the same conduct by multiple agencies.

We want to be transparent about our expectations.  Transparency about our enforcement policies and practices is important.  The Fraud Section’s “Pilot Program” is one example of an effort to provide more transparency and consistency for our corporate resolutions.  The program began last April, and was intended to last for a year, at which point we would review the program.  A year has now passed.  We are now conducting a full assessment of the Pilot Program to consider how we can most effectively motivate companies and individuals to voluntarily comply with the law and how we can appropriately communicate our prosecutorial priorities and expectations to parties subject to the FCPA.  The program will continue in full force as we evaluate it and until we reach a final decision regarding its permanence. 

In closing, I want to again thank ACI and my friends and colleagues who are present.  It has been a privilege to be with you today.  I hope that I have left you with a clear sense of the breadth of the Criminal Division’s mission and our commitment to prosecuting both violent crime and white collar crime.  Thank you again for your time today. 

Asset Forfeiture
Financial Fraud
Updated March 30, 2018