Investigations Newsletter: DOJ Issues First FCPA Advisory Opinion Since 2014

Arent Fox

DOJ Issues First FCPA Advisory Opinion Since 2014

On August 14, the DOJ issued its first advisory opinion on the Foreign Corrupt Practices Act (FCPA) in six years. The DOJ’s opinion release process allows companies to obtain guidance on the legality of specific transactions. The advisory opinions are not binding on any party other than the requesting party, and can only be relied on by the requesting party to the extent that the disclosure of facts it provided is accurate and complete.

The DOJ’s latest opinion advised a U.S.-based multinational company that fees paid to a subsidiary of a foreign investment bank that is indirectly owned by a foreign government would not trigger an enforcement action under the FCPA. According to the opinion, the U.S.-based company purchased a portfolio of assets from a subsidiary of the foreign investment bank with assistance of another subsidiary of the same foreign investment bank. After the sale, the subsidiary that assisted with the sale requested $237,500, equal to 0.5% of the total sale, as compensation for the advisory tasks it had performed related to the sale.

The DOJ opined that the payment to the subsidiary did not qualify as a corrupt payment to a foreign official under the FCPA because it was made to a government-owned entity rather than an individual, and was made in exchange for specific and legitimate services. Furthermore, the DOJ concluded that the payment was transparent and that there was no evidence that it would be diverted from the subsidiary to an individual.

A copy of the DOJ’s full advisory opinion can be found here.

Test Administrator in Varsity Blues Case to Plead Guilty

Niki Williams, a Houston-based teacher’s aide, will plead guilty to a single count of conspiracy to commit mail and wire fraud for allegedly accepting bribes from William Singer, the mastermind behind the college admissions scandal, in exchange for allowing Singer’s associate to assist students with cheating on standardized tests.

Pursuant to the plea agreement, the government has agreed to dismiss two additional counts against Williams and recommend a sentence on the low end of the Federal Sentencing Guidelines.

Williams’ plea hearing is scheduled for September 25. So far, 41 out of 55 defendants, including Williams, who have been indicted as part of the Varsity Blues case have pled guilty or agreed to plead guilty.

A copy of the plea agreement can be found here.

Former Trump Advisor Steve Bannon Charged with Fraud

On Thursday, the United States Attorney’s Office for the Southern District of New York charged President Trump’s former top advisor Steve Bannon with conspiracy to commit wire fraud and conspiracy to commit money laundering. The indictment also charges Brian Kolfage, an Air Force veteran of Florida, Andrew Badolato, a financier of Florida, and Timothy Shea of Colorado.

The indictment alleges that defendants orchestrated a scheme to defraud hundreds of thousands of donors through an online crowdfunding campaign founded by Kolfage known as “We Build the Wall” that raised more than $25 million to build a wall along the southern border of the United States. Despite assurances that Kolfage would not receive any compensation and that 100% of the funds raised would go towards efforts to build the border wall, the defendants instead allegedly used hundreds of thousands of dollars in donor funds for personal use. In order to conceal the payments to Kolfage, the defendants allegedly devised a scheme to route funds from the We Build the Wall fund through a non-profit entity and a shell company controlled by Shea.

Each of the two counts carries a maximum penalty of 20 years imprisonment.

A copy of the indictment can be found here.

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Arent Fox

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