Investigations Newsletter: Mortgage Company to Pay $24.9 Million to Resolve Alleged False Claims Act Violations

Arent Fox

DOJ News

Mortgage Company to Pay $24.9 Million to Resolve Alleged False Claims Act Violations

On October 28, 2020, the Department of Justice (the “DOJ”) announced that Guild Mortgage Company (“Guild”), a California-based mortgage company, agreed to pay $24.9 million to resolve alleged False Claims Act violations in connection with the origination and underwriting of mortgages insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA). Under the FHA mortgage insurance program, lenders can recover losses from the United States when an FHA-insured loan defaults, so long as the lender meets program requirements ensuring that the FHA only insures mortgages that meet certain credit and underwriting criteria. The DOJ alleged that Guild knowingly breached material program requirements by (i) approving materially ineligible loans that ultimately defaulted and resulted in claims to FHA for mortgage insurance, (ii) failing to maintain requisite quality control programs to prevent underwriting deficiencies, and (iii) failing to self-report materially deficient loans the company identified.

The settlement resolves allegations brought by Guild’s former head of quality control under the qui tam provisions of the False Claims Act. The former head of quality control will receive $4,4980,000 of the recovery.

See here for the DOJ press release.

Beverage Company Agrees to Pay $19 Million to Resolve FCPA Investigation

On October 27, 2020, the DOJ announced that Beam Suntory Inc. (“Beam”), a Chicago-based company that produces and sells distilled beverages, agreed to pay $19,572,885 to resolve alleged violations of the Foreign Corrupt Practices Act (“FCPA”).

In a criminal information unsealed in the Northern District of Illinois, Beam was charged with one count of conspiracy to violate the anti-bribery, internal controls, and books and records provisions of the FCPA. Beam admitted that it conspired with others to violate the FCPA by engaging in a scheme to pay one million Rupees to a senior Indian government official in exchange for the approval of a license to bottle products that Beam sought to sell in India. Beam admitted that this bribe was authorized by a high-ranking executive who directed that the payment be made through a third-party bottler in order to conceal it.

Beam also admitted to paying bribes and making other improper payments to Indian government officials between 2006 and 2012 to obtain or retain business in the Indian market, largely through third-party promoters and distributors. Beam further admitted that it conspired to fail to implement and maintain adequate internal accounting controls that would have detected and prevented corrupt payments to Indian government officials, and to falsify its books and records.

Beam has entered into a three-year deferred prosecution agreement with the DOJ and the U.S. Attorney’s Office for the Northern District of Illinois. As a part of this deferred prosecution agreement, Beam has agreed to continue to cooperate with the DOJ in any ongoing or further criminal investigations concerning Beam and to enhance its compliance program.

See here for the DOJ press release.

Former President of Nuclear Transportation Company Sentenced to Prison for Bribery

On October 28, 2020, the DOJ announced that the former president of Transport Logistics International Inc. (“TLI”), a Maryland-based transportation company that transports nuclear materials, was sentenced to 48 months in prison and three years of supervised release for his role in a scheme to bribe a Russian official in exchange for obtaining contracts for TLI.

The former vice president was convicted on November 22, 2019 of four counts of violating the FCPA, two counts of wire fraud, and one count of conspiracy to violate the FCPA and commit wire fraud. According to evidence presented at trial, the defendant conspired to pay over $1.5 million in corrupt and fraudulent bribes over the course of approximately seven years to a Russian official at JSC Techsnabexport (“TENEX”), a subsidiary of Russia’s State Atomic Energy Corporation (ROSATOM), in order to secure contracts with TENEX. The Russian official directed the co-conspirators to make these payments through offshore shell companies in Latvia, Cyprus, and Switzerland. Evidence at trial further demonstrated that to conceal the bribe payments, the defendant and his co-conspirators caused fake invoices to be prepared from TENEX to TLI, which described services that were never provided.

Two other defendants have pleaded guilty in connection with this scheme. TLI’s former co-president, who is awaiting sentencing, pleaded guilty to conspiracy to violate the FCPA and commit wire fraud. The Russian national that received the bribes also pleaded guilty to conspiracy to commit money laundering and was sentenced to 48 months in prison. TLI has entered into a deferred prosecution agreement with the DOJ in connection with this bribery scheme.

See here for the DOJ press release.

Written by:

ArentFox Schiff

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