United States: Red Notice Newsletter - September 2017


Alere Inc. Agrees to Pay More Than $13 Million to Resolve SEC FCPA Enforcement Action

On September 28, 2017, Alere Inc. ("Alere"), a Massachusetts-based manufacturer of medical diagnostic and testing equipment, submitted an Offer of Settlement to the Securities and Exchange Commission (SEC), resulting in an administrative Cease-and-Desist Order resolving the government's investigation of alleged violations of the Foreign Corrupt Practices Act (FCPA).

Specifically, the SEC's enforcement action alleges that, between 2011 and 2013, Alere subsidiaries in India and Colombia used distributors or consultants to make improper payments to officials of government agencies or entities under government control to get or retain business for Alere.

Separately, the enforcement action also alleges that Alere subsidiaries improperly inflated revenues by prematurely recording sales for products that were still being stored at warehouses or otherwise yet to be delivered to its customers.

As part of the resolution, Alere agreed to pay a civil money penalty of $9,200,000, disgorgement of $3,328,689 and prejudgment interest of $495,196.

The SEC's press release and Cease­and­Desist Order are available here. For more information, see The New York Times' coverage here, The Wall Street Journal's coverage here, the FCPA Blog's coverage here, and Law360's coverage here.

Former Telecommunication Director Sentenced to Time Served for Alleged Role in Foreign Bribery Scheme

On September 28, 2017, Amadeus Richers, a former director of Cinergy Telecommunications Inc. ("Cinergy"), a Miami­based telecommunications company, was sentenced to time served and three years of supervised release for his role in an alleged conspiracy to pay over $1.4 million in bribes to officials at Telecommunications D'Haiti to obtain preferential rates on landline calls in Haiti for Cinergy. Richers had been extradited from Panama and held without bail since February of this year.

Cinergy and Richers were originally named in a superseding indictment filed on January 19, 2012 (both were charged with numerous violations of the FCPA), but, on February 24, 2012, the court ordered the charges against Cinergy dismissed with prejudice after the Department of Justice (DOJ) elected not to go to trial based on a finding that Cinergy was then nonoperational, had no employees and had no assets of any real value.

The DOJ's original press release announcing the indictments of Cinergy and Richers is available here, and the press release announcing Richer's guilty plea is available here. For more information, see the FCPA Blog's coverage here and Law360's coverage here.

DOJ Arrests 10 Individuals Allegedly Involved in NCAA Basketball Corruption Schemes

On September 26, 2017, the DOJ announced that it had arrested 10 individuals, including four NCAA Division I coaches, for their participation in fraud and corruption schemes.

According to the federal criminal complaints filed with the Southern District of New York, the college basketball coaches took cash bribes from athlete advisors, including business managers and financial advisors, in exchange for using their influence over their players to persuade them to retain the athlete advisors paying the bribes. Additionally, in a second alleged scheme, senior executives at Adidas AG ("Adidas"), working in connection with athlete advisors, facilitated bribe payments to players and their families to secure those players' commitments to attend universities sponsored by Adidas, rather than universities sponsored by rival athletic apparel companies. To that end, the complaints have charged various alleged participants in the schemes with one or more counts of bribery, conspiracy, solicitation of bribes, payment of bribes, honest services fraud conspiracy, honest services fraud, wire fraud conspiracy, wire fraud, Travel Act conspiracy, money laundering conspiracy and money laundering.

The DOJ's press release and the complaints that have been unsealed are available here. For more information, see The New York Times' coverage here, The Wall Street Journal's coverage here, The Washington Post's coverage here, and Law360's coverage here.

Telia Company AB Agrees to Pay More Than $965 Million to Resolve Global Foreign Bribery Investigations

On September 21, 2017, Stockholm­based Telia Company AB ("Telia" and f/k/a Teliasonera AB), an international telecommunications company and its Uzbekistan subsidiary, Coscom LLC ("Coscom"), entered into a global foreign bribery resolution concluding investigations by the DOJ, the SEC, and the Public Prosecution Service of the Netherlands (Openbaar Ministerie or OM).

According to the resolutions, from between 2007 and 2010, Telia and Coscom paid approximately $331 million in bribes to an Uzbek government official who was a close relative of a high­ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry. The payments were made through shell companies that Telia and Coscom management knew were beneficially owned by the foreign official, and the payments were made to facilitate Telia's entry into the Uzbek telecom market.

Telia agreed to pay a total criminal penalty of $274,603,972 to the United States, including a $500,000 criminal fine and $40 million in criminal forfeiture that Telia agreed to pay on behalf of Coscom. Telia also agreed to pay a total of $457,169,977 in disgorgement of profits and prejudgment interest to the SEC and to pay the OM a criminal penalty of $274 million for a total criminal penalty of $458,603,972. Because each authority agreed to credit certain of the penalties paid, the total amount paid to effect a resolution of the investigations is $965,773,949.

The DOJ's press release, Deferred Prosecution Agreement and Plea Agreement are available here. The SEC's press release and Order Instituting Cease-and-Desist Proceedings are available here. The OM's press release and Statement of Facts are available here. For more information, see The New York Times' coverage here, The Wall Street Journal's coverage here, the FCPA Blog's coverage here and Law360's coverage here.

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