• Proposed legislation targets current gaps in U.S. financial crime law and enforcement
  • Bi-partisan Senate legislation would likely expand compliance obligations for banks and others in financial services industry
  • Proposed legislation is in line with U.S. and international efforts to fight terrorism and trafficking through economic sanctions and anti-money laundering (AML) rules

On May 25, 2017, Sen. Chuck Grassley (R-IA) introduced the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017” (the “Act”).  The full text of the bill is available here.

Continue Reading Proposed Legislation Would Combat Terrorist Financing, Money Laundering

On September 9, 2015, U.S. Department of Justice (DOJ or the Department), Deputy Attorney General Sally Yates issued a memorandum to all U.S. Attorneys regarding individual accountability for corporate wrongdoing (Yates Memo).

The point of the Yates Memo is clear: while DOJ will continue to pursue companies for corporate wrongdoing, the Department will also simultaneously pursue charges against individual employees. According to the Yates Memo, “[b]ecause a corporation only acts through individuals, investigating the conduct of individuals is the most efficient and effective way to determine the facts and extent of any corporate misconduct.”

And the ultimate target of these efforts? Corporate executives. The DOJ understands that lower-level employees facing individual civil or criminal liability are likely to cooperate against their superiors, thereby facilitating DOJ’s ability to obtain information necessary to prosecute individuals further up the corporate ladder.

Continue Reading DOJ Targets Corporate Executives

United Parcel Service Inc.’s (“UPS”) recent settlement with the Department of Justice (“DOJ”) to resolve allegations that it submitted false claims to the federal government to conceal its failure to timely deliver packages serves as a reminder of the range of conduct that can lead to False Claims Act (“FCA”) liability for not satisfying the

Despite fulfilling its contractual obligations and voluntarily disclosing its possible oversight, nLight Photonic, Inc. (“nLight”), a Washington-based small business, was pushed to a $420,000 settlement with the Department of Justice to resolve allegations that it violated the False Claims Act by knowingly submitting false certifications regarding its eligibility for contracts and grants under the U.S. Small Business Administration’s (“SBA”) Small Business Innovation Research (“SBIR”) program.

The SBIR program was created to encourage U.S. small businesses to conduct federal research & development that may also serve the community at-large. To be eligible for SBIR funds, a company must satisfy several conditions, including:

1. Having a U.S. place of business;
2. Being majority owned and controlled by individuals that are U.S. citizens (or permanent residents) or by another entity meeting this requirement; and
3. Employing fewer than 500 employees.

Continue Reading Small Business Reaches Settlement to Resolve Allegations it Falsely Certified Compliance with SBIR Program

In recent months, Relators’ qui tam complaints have been subject to increased scrutiny by criminal prosecutors. In addition to civil False Claims Act (FCA) liability, individuals doing business with the federal government face potential criminal liability under various criminal fraud-related statutes. Potential charges for fraudulent activities are not limited to a criminal fraud charge, but also include bribery, false statements, conspiracy to defraud, wire fraud, mail fraud, and identity theft, among others. Most of these crimes are felonies and carry substantial penalties, including fines, freezing of assets, and imprisonment. Especially in the healthcare industry and defense procurement space, many criminal investigations originate as civil qui tam filings only later adopting a criminal component. These parallel investigations typically involve the U.S. Department of Justice (DOJ) and may include other enforcement agencies.

Recent DOJ rhetoric encourages an increased use of such parallel investigations. In September 2014, Assistant Attorney General for the Criminal Division of the DOJ, Leslie Caldwell, announced that the Criminal Division would be “stepping up” its review to look for potential criminal liability in qui tam complaints, noting that such complaints “are a vital part of the Criminal Divisions’ future efforts.”[1] Consistent with this message, Caldwell encouraged the Relator’s bar to notify the Criminal Division directly when a complaint is filed instead of coordinating only with the local U.S. Attorney’s Office. As part of the new process, the Criminal Division will receive and review new complaints so that prosecutors may determine the nature and extent of any criminal exposure.

Continue Reading New DOJ Qui Tam Protocols Likely to Lead to Increased Parallel Criminal Investigations

Billions of dollars every year are spent in the United States on “Federal health care programs,”¹ including Medicare, Medicaid and Tricare, among others.² For individuals and entities in the healthcare industry, reimbursement from these programs is a vital component of their business. However, many are unfamiliar with the authorities under which the Department of Health and Human Services (“HHS”) excludes individuals and entities from participation in Federal health care programs, nor are they familiar with the nuances of the exclusion program. Understanding the types of violations that can trigger exclusion, as well as the process for responding to a proposed exclusion, is necessary for parties receiving reimbursement from Federal health care programs to ensure their compliance program is adequate and to understand the steps that must be taken to mitigate the impact of a proposed exclusion.


Pursuant to sections §1128 and §1156 of the Social Security Act (the “Act”), HHS, specifically the Office of the Inspector General (“OIG”), has the authority to exclude individuals and entities from Federal health care programs. Exclusion means that items and services furnished, ordered or prescribed by the excluded individual or entity are not reimbursable under Medicare, Medicaid and all other Federal health care programs. While exclusion by HHS is similar in some respects to suspension and debarment, it does not bar excluded parties from being awarded federal contracts and grants. Once a party is excluded from participation they are added to the List of Excluded Individuals/Entities (“LEIE”) maintained by HHS and the exclusion appears on the System for Award Management (“SAM”). Any healthcare entity participating in Federal health care programs that hires or contracts with an individual or entity on the LEIE may be subject to civil monetary penalties, so it is important that they establish processes and procedures to routinely (monthly is recommended) check the LEIE to ensure new hires, current employees, and potential contractors or subcontractors are not excluded.

Continue Reading Exclusions by the Department of Health and Human Services – Authorities and Procedures

We are all familiar with the “revolving door” between the public and private sector – government employees will often leave their posts and cross over to the private sector to capitalize on their experience in the government. However, when government employees make that transition, it is imperative that they consider the federal conflict of interest laws, which may prohibit them from taking certain private sector positions and, at minimum, require them to be screened from particular types of work on a go forward basis. Failure to consider these laws could lead to severe consequences. A recent plea agreement highlights the importance of remaining mindful of these rules when negotiating post-government employment.

On Tuesday, March 11, 2015, former U.S. Air Force Captain Adam J. J. Pudenz pleaded guilty in Iowa federal court to violating restrictions on post-government employment and making a false statement to law enforcement agents. In 2010, Pudenz served as a U.S. military contracting officer in Afghanistan and worked on several U.S. government contracts related to the purchase of clothing and boots from an Afghan trading company. Pudenz admitted that before leaving his position as a contracting officer in Afghanistan, he negotiated future employment with the same Afghan company. Pudenz ultimately began working for the trading company and lobbied the U.S. government on matters related to the contracts he had previously managed.

Continue Reading Recent Plea Deal Highlights Importance of Post-Government Employment Conflicts of Interest

We recently authored an article on False Claims Act (FCA) enforcement actions brought against pharmaceutical and medical device manufacturers during the past year. In the article, we analyzed the recent settlements for Ansun Biopharma, Inc. (formerly known as NexBio, Inc.); Smith & Nephew, Inc.; McKesson Corporation; and Stryker Corporation and Alliant Enterprises.

The article, “

Following the federal government’s example, states are increasingly looking to their own false claims act (“FCA”) statutes to combat procurement and healthcare fraud. This trend is being driven by two main factors: (1) the huge recoveries by the Department of Justice (“DOJ”) under the federal FCA – $5.7 billion in Fiscal Year 2014 alone; and (2) a federal statute that provided a financial incentive for states to mirror their own FCAs on the federal FCA with regard to healthcare fraud. This state-level activity represents a new front in the battle against procurement fraud, one that government contractors must be aware of to fully analyze and mitigate risks when contracting with state entities.

Currently, 33 states and the District of Columbia have a false claims statute. Of these, 11 states have FCAs that are limited to healthcare fraud; the remaining statutes penalize a broad range of false claims. Many – but not all – of these state FCAs have provisions allowing for whistleblowers to file qui tam actions on behalf of the state government and to share in any recovery.

Continue Reading A New Front in the Battle Against Fraud – the Continued Expansion of State False Claims Act Liability