HorrorFest 2020 Celebration: The Revenge of Frankenstein and the J&F FCPA Resolution

Thomas Fox

Compliance Evangelist

In this third edition of October HorrorFest 2020 celebration we consider the first Hammer film sequel (and second in the series) – The Revenge of Frankenstein which was released in 1958. It begins as the Curse of Frankenstein ended, the Priest, who the Baron had given his final confession to, leading Baron Victor Frankenstein to the guillotine. However, the Baron escapes execution by the guillotine by having the priest beheaded and buried in his place with the aid of a hunchback named Karl. Three years later, Victor, now going by the name Doctor Stein, has become a successful physician in Carlsbrück, catering to the wealthy while also attending to the poor in a paupers hospital. Hans Kleve, a junior member of the medical council, recognizes the Baron and blackmails him into allowing him to become his apprentice.

Together with Karl, Victor and Hans continue with the Baron’s experiment: transplanting a living brain into a new body, one that is not a crude, cobbled-together creature. The deformed Karl is more than willing to volunteer his brain thereby gaining a new, healthy body particularly after meeting the new assistant at the hospital, the lovely Margaret. The transplant succeeds, but when the excited Hans tells Karl that he will be a medical sensation, Karl panics and convinces Margaret to free him. Hans notes that the chimpanzee into which Victor had transplanted the brain of an orangutan ate its mate, and worries about Karl, but his concerns are brushed off by Victor.

At the hospital, the patients violently attack Victor out of fear, and Hans rushes his dying mentor to the lab. The police arrive to arrest Victor, but when Hans shows them Victor’s dead body, they leave. Hans then transplants Victor’s brain into a new body that Victor had prepared earlier, which he made to resemble him. Sometime later in London, Hans assists Victor, now calling himself Doctor Franck.  This is probably my favorite of the Hammer Frankenstein collection, with Peter Cushing at the top of his game as the Baron. He is not as evil as in the first film but he does perform the odd amputation in his charity hospital to obtain the parts needed for his Creature.

I wanted to use this Hammer movie, The Revenge of Frankenstein, to introduce our topic today, that of the criminal Foreign Corrupt Practices Act (FCPA) action involving, J&F Investimentos SA (J&F), a Brazil-based investment company that owns and controls companies involved in multiple industries, including the meat and agriculture industry. Over the next several blog posts I will be mining the Department of Justice (DOJ) resolution via Information and Plea Agreement. There was also a Securities and Exchange Commission (SEC) settlement via a Cease and Desist Order (Order).

The Penalty

According to the DOJ Press Release, J&F “has agreed to pay a criminal monetary penalty of $256,497,026 to resolve the department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA).  The resolution arises out of J&F’s scheme to pay millions of dollars in bribes to government officials in Brazil in exchange for obtaining financing and other benefits for J&F and J&F-owned entities.” The company also pled “guilty and entered into a cooperation plea agreement with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York in connection with a criminal information filed today in the Eastern District of New York charging J&F with one count of conspiracy to violate the anti-bribery provisions of the FCPA.” However, the final penalty was reduced by one-half as J&F received credit for payments it has made and continues to make to Brazil authorities to settle an earlier enforcement action.

What They Said

According to Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, “With today’s guilty plea, J&F has admitted to engaging in a long-running scheme to bribe corrupt officials in Brazil to obtain financing and other benefits for the company. As part of this scheme, executives at the very highest levels of the company used U.S. banks and real estate to pay tens of millions of dollars in bribes to corrupt government officials in Brazil in order to obtain hundreds of millions of dollars in financing for the company and its affiliates.  Today’s resolution demonstrates the department’s continuing commitment to combating international corruption and holding companies accountable for violations of the FCPA.”

Acting U.S. Attorney Seth D. DuCharme for the Eastern District of New York said, “Today’s resolution and guilty plea, including a $256 million fine, demonstrates our office’s full commitment to holding accountable those entities that seek to gain an improper advantage over competitors by bribing foreign officials and using the U.S. financial system to carry out the crimes. Protecting the integrity of the financial system is a core priority of the Department of Justice.”

Special Agent in Charge, James A. Dawson of the FBI Washington Field Office Criminal Division said, “No matter where it occurs, the FBI and our global partners are committed to diligently rooting out corruption which betrays public trust and threatens a fair economy. Today’s plea demonstrates the FBI’s commitment to combatting foreign corruption reaching the United States, and today’s actions send a strong message that we will not relent in our efforts to uphold the law and hold everyone accountable to play by the same, fair rules.”

Charles Cain, Chief of the SEC Enforcement Division’s FCPA Unit, said in a SEC Press Release, “Engaging in bribery to finance their expansion into the U.S. markets and then continuing to engage in bribery while occupying senior board positions at Pilgrim’s reflects a profound failure to exercise good corporate governance. This brazen misconduct flies in the face of what investors should expect from those occupying the role of an officer or director of a U.S. issuer.”

The SEC violations related that US entity Pilgrim’s Pride and J&F (and others) consented to the SEC’s Order finding that they caused Pilgrim’s Pride’s violations of the books and records and internal accounting controls provisions of the FCPA and agreed to cease-and-desist orders.  Further, JBS SA agreed to pay approximately $27 million in disgorgement individual civil penalties of $550,000. The parties must also comply with a three-year undertaking to self-report on the status of certain remedial measures.

Join me on Monday where I look into the bribery schemes.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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