Department of Justice declines prosecution of private equity firm that self-disclosed sanctions and related offenses committed by acquired entity

HOUSTON - The Justice Department’s National Security Division (NSD) and U.S. Attorney’s Office for the Southern District of Texas (SDTX) announced they have declined prosecution of private equity firm White Deer Management LLC and its affiliated acquisition entities. The decision follows the firm’s discovery and voluntary self-disclosure to NSD of criminal violations of U.S. sanctions laws, export controls and related offenses that Unicat Catalyst Technologies LLC, a Texas-based company it acquired, had committed.

NSD and SDTX also announced that the Department of Justice (DOJ) entered into a non-prosecution agreement (NPA) with Unicat. Additionally, on Aug. 19, 2024, Unicat’s former co-founder and CEO Mani Erfan pleaded guilty in SDTX to conspiring to violate U.S. sanctions against Iran and other countries and foreign governments, as well as to concealment and international promotional money laundering. As part of his plea, Erfan also agreed to pay a money judgement in the amount of $1.6 million.

“After acquiring a company with a hidden history of sanctions violations, this private equity firm uncovered the misconduct, stopped it and quickly reported it to the government, leading to the successful prosecution of a senior executive,” said Assistant Attorney General for National Security John A. Eisenberg. “Our decision to decline prosecution of the acquiror and extend a non-prosecution agreement to the acquired entity in this case reflects the NSD’s strong commitment to rewarding responsible corporate leadership.”

“Illegally exporting sensitive items to Venezuela and Iran to help them evade sanctions directly undermines U.S. foreign policy and threatens our national security,” said Special Agent in Charge Chad Plantz of Immigration and Customs Enforcement - Homeland Security Investigations (ICE-HSI) Houston. “HSI will not sit by idly while businesses or individuals operating in the U.S. blatantly help our nation’s adversaries procure sensitive technologies or weapons and today’s announcement of a $3 million fine and the imposition of criminal charges is just another example of that enduring commitment.”

According to court documents and DOJ agreements from approximately 2014 to 2021, Mani Erfan conspired with others, including a Unicat employee, to illegally sell products to customers in Iran, Venezuela, Syria and Cuba in violation of U.S. sanctions. Erfan directed Unicat to make 23 unlawful sales of chemical catalysts used in oil refining and steel production, generating about $3.33 million in revenue.

Several sales involved exports from the United States and also violated U.S. export control laws. To cover up the scheme, the conspirators falsified export documents and financial records, misrepresenting the identities and locations of customers. They also assured some Unicat employees the company’s business dealings were lawful.

Efran and Unicat employees submitted falsified invoices to understate tariffs on catalysts imported from China, causing an estimated $1.66 million loss in duties, taxes and fees. During negotiations to sell Unicat, its prior owners falsely certified the company complied with U.S. sanctions and export control laws.

The scheme surfaced in June 2021 during the COVID-19 pandemic after White Deer acquired Unicat and a second U.K.-based firm. Once travel restrictions eased, Unicat’s new CEO visited the United States to begin integrating operations. During the visit, the CEO discovered Unicat had a pending transaction with an Iranian customer and immediately canceled the deal.

Over the following month, White Deer and the new CEO hired outside counsel and launched an internal investigation. They discovered Unicat had engaged in multiple transactions with customers subject to various U.S. sanctions programs. Before the investigation concluded, White Deer and Unicat’s new leadership voluntarily disclosed the conduct to the NSD.

The Justice Department determined that White Deer lawfully acquired Unicat and submitted a timely disclosure based on the circumstances, including pandemic-related delays. Both companies fully cooperated with the government’s investigation by identifying key evidence, including foreign-language materials and documents stored overseas and by responding promptly to information requests.

Their cooperation led to the successful prosecution of Unicat’s former CEO. Within a year of discovering the misconduct, Unicat terminated responsible employees, sought reimbursement from the company’s prior owners and implemented a comprehensive compliance program that has proven effective in detecting and preventing similar violations.

Under the terms of the NPA, Unicat agreed to forfeit $3,325,052.10, representing proceeds from violations of U.S. sanctions and export control laws.

In parallel resolutions, Unicat has agreed to pay $3,882,797 to the Treasury Department’s Office of Foreign Assets Control (OFAC) for violating U.S. sanctions laws and $391,183 to the Commerce Department’s Office of Export Enforcement (OEE) for violating export control regulations. Customs and Border Protection separately required Unicat to pay $1,655,189.57 in underpaid duties, taxes and fees. Both OFAC and OEE agreed to credit Unicat’s forfeiture payment to the Justice Department toward their respective penalties.

The NSD and SDTX declined to prosecute White Deer after considering the Justice Department’s Principles of Federal Prosecution of Business Organizations and the NSD Enforcement Policy for Business Organizations. The NSD Enforcement policy presumes the division will decline prosecution when a company lawfully acquires another business, voluntarily and promptly discloses potential criminal conduct, fully cooperates with the investigation and remediates the misconduct in a timely and appropriate manner.

The NSD M&A Policy states that when a company lawfully acquires another business, voluntarily and promptly discloses potential criminal conduct, fully cooperates with the investigation and appropriately remediates the misconduct, NSD generally will not seek a guilty plea from the acquiring company and will presume declination of prosecution.

While this presumption does not apply to the acquired entity itself, NSD will consider whether the acquired company meets the enforcement policy’s standards and will credit the acquiror’s timely self-disclosure accordingly.

This case marks the first time since the Justice Department adopted its Mergers and Acquisitions Policy in March 2024 that it has declined prosecution of an acquiring company that self-disclosed misconduct at an acquired entity.

ICE-HSI, Department of Defense Criminal Investigative Service and Department of Commerce, Bureau of Industry and Security conducted the investigation.

Assistant U.S. Attorneys S. Mark McIntyre and John Marck are prosecuting the case along with Trial Attorneys Adam P. Barry and Yifei Zheng of the NSD’s Counterintelligence and Export Control Section.

Note: View a copy of the White Deer declination letter, Unicat non-prosecution agreement, and Mani Erfan's plea agreement.