Posted On Wednesday, March 18, 2015
By:
Last month, the federal government announced a $3 million reward for information leading to the arrest and/or conviction of Evgeniy Mikhailovich Bogachev, a Russian national listed as one the FBI’s Cyber’s Most Wanted. Announced in a joint press release by DOJ, FBI, and the State Department, the reward follows the indictment and related civil lawsuit filed in mid-2014 in Pittsburgh, Pennsylvania for Bogachev’s alleged role in financially-motivated cyber crime.
He is charged with operating the hacker ring responsible for the GameOver Zeus botnet, a malicious piece of software which allowed a computer to be controlled without the computer’s owner knowing. The botnet was used to capture bank account numbers, PIN’s, and other personal data which were used to access online banking accounts. Once the hackers had access to the bank accounts, the credentials were used to initiate wire transfers to overseas accounts controlled by the hackers. The FBI believes that the botnet infected over 1 million computers, resulting in a loss of more than $100 million to individual and corporate victims.
The Russian is also alleged to be the mastermind behind Cryptolocker, a type of “ransomware,” a malicious software which prevents users from accessing their computer unless a ransom is paid. It is estimated that 25% of the computers infected with Cryptolocker were located inside the United States. Many of the computers infected with Cryptolocker was also infected with the GameOver Zeus botnet. Through the civil suit filed in Pittsburgh, federal law enforcement gained the ability to seize the command and control servers operating Cryptolocker.
Bogachev was added to the FBI’s Cyber’s Most Wanted list in June 2014 but the $3 million reward was only recently announced. Additional information on Bogachev, the GameOver Zeus botnet, and Cryptolocker can be found here.
The SEC has announced that Goodyear Tire and Rubber Company has agreed to pay $16 million to settle allegations that the company violated the Foreign Corrupt Practices Act (“FCPA”). The allegations against Goodyear involve alleged cash bribes paid over the course of four years to government officials, government-owned entities, and employees of private companies in Angola and Kenya to boost tire sales. These payments were allegedly made through Goodyear’s subsidiaries – Trentyre and Treadsetters – in those countries. By way of example, the general manager and finance director at Treadsetters allegedly approved payments for fake promotional products and directed their finance assistant to write checks out to cash. Those funds were then alleged to have been used to line the pockets of officials and business leaders in Kenya.
Although $16 million is a lot of money for anyone to pay to the government, it is just a drop in the bucket for a company as large as Goodyear. According to Goodyear’s 10-K for the year ending December 31, 2014, the company’s net annual income was roughly $2.5 Billion. This settlement represents sixth tenths of one percent of the company’s annual income. The SEC has designated approximately $14 million of the settlement proceeds as disgorgement of unlawful proceeds. The remaining $2 million accounts for prejudgment interest. No fine was imposed. Goodyear was not required to admit any liability in accepting this settlement offer. This counters the current trend at the SEC. Chair Mary Jo White has publicly stated her position of increasing the Commission’s requirement of admissions of liability in settlements.
So how, you might ask, did Goodyear obtain such a favorable result? The answer is self-reporting and cooperation. This investigation began with a call to Goodyear’s compliance tip line. The company’s investigation of that tip led to prompt self-disclosure to the Commission.
This settlement teaches companies around the globe, and their counsel here in the United States, that the initial reaction and subsequent response to discovery of FCPA violations are critical. Once the company’s compliance program identifies a potential issue, it is of paramount importance to engage knowledgeable counsel, investigate immediately, self-report when possible, and cooperate when appropriate.
