Task Force Created to Increase COVID-19 Related Prosecutions

Posted On Tuesday, May 18, 2021
By: Lourdes Sánchez Ridge

Takeaway:

The government has increased its prosecutions of fraud related to COVID-19 funds and programs.  Given the rapid development of these programs and enforcement, it is more critical than ever to ensure that the government’s evidence and theories comport with the statutory provisions of recently enacted laws.


On May 17, 2021 the United States Attorney General announced the formation of a COVID-19 Fraud Enforcement Task Force.  Due to the COVID-19 pandemic, the federal government provided critical monetary relief to businesses and individuals who were impacted by the pandemic.  While most Americans were honest in their application and use of those relief funds, the government alleges that others were not. The Department of Justice (DOJ) will be joining forces with other governmental agencies to step up its investigations and prosecutions of fraud by sharing information and providing additional support to its partners.

More than $2 trillion has been spent by the federal government in relief funds under the Coronavirus Aid, Relief, and Economic Security (CARES) Act including relief under the Paycheck Protection Program, the Economic Injury Disaster Loan, Economic Impact Payments, Provider Relief Fund, Pandemic Unemployment Assistance, and Federal Pandemic Unemployment Compensation.  DOJ’s prosecutions of COVID-19 related fraud has been fierce.  Even before this task force was created, DOJ prosecuted over 500 individuals in COVID-19 related fraud.  Many of the prosecutions involved making false statements to the government or a bank in applying for the relief funds and/or misusing the funds for non-intended purposes.  Wire fraud, bank fraud, making false statements to the government or bank, and money laundering are the most common charges.

Examples of the many types of fraudulent schemes subject of investigation include:

  • Making false representations and/or using those funds for other than the intended purpose.
  • Charitable solicitation fraud—Involves allegations that a fraudster claims to be a legitimate organization raising funds to aid victims.
  • Price gauging—Involves businesses or individuals raising the cost of necessary items, such as masks.
  • Fraudulent COVID vaccine and test results.
  • Schemes to obtain personal, banking, and Medicare information.
  • Bribes and tax fraud. 

It is easy for anyone to report suspected fraud.  The DOJ has a National Center for Disaster Fraud hotline in place for the public to report suspected fraudulent schemes. With the COVID-19 Task Force in place, it is suspected that the investigations and prosecutions will come at a faster pace and be more streamlined.  The CARES Act went through multiple iterations and companies and individuals being investigated should test the government’s theories to ensure that the government has the evidence it requires to prosecute.

Operation Car Wash Leads to FCPA Conviction

Posted On Thursday, April 29, 2021
By: Douglas K. Rosenblum, Daniel P. Wotherspoon

Takeaway:

U.S. companies doing business in Latin America must ensure that they institute and maintain strong anti-corruption safeguards. These companies must be prepared to coordinate with regulators from multiple jurisdictions in the event that they are subject to an investigation.


The E.D.N.Y. has secured a guilty plea from the former CEO of Brazilian petrochemical company Braskem S.A. (Braskem).  Jose Carlos Grubisich pleaded guilty to two counts of conspiring to violate the U.S. FCPA:

  1. Conspiring to violate the anti-bribery provisions of the FCPA.
  2. Conspiring to violate the books and records provisions of the FCPA in failing to accurately certify Braskem’s financial reports.

Grubisich’s prosecution is a small piece of the massive and wide-ranging bribery investigations into Braskem and parent company Odebrecht S.A. (Odebrecht), which resulted in guilty pleas by the companies and a combined total penalty of at least $3.5 billion.

Odebrecht and Braskem pleaded guilty in 2016 to charges that they utilized a business unit within Odebrecht to systematically pay hundreds of millions of dollars to corrupt government officials in countries all over the world.  As part of their respective plea agreements, Odebrecht and Braskem were required to continue their cooperation with law enforcement in the U.S., including assisting with the investigations and prosecutions of individuals, like Grubisich, who were responsible for the criminal conduct. 

Grubisich and his co-conspirators orchestrated a bribery scheme diverting approximately $250 million from Braskem into a secret slush fund, which they used to pay bribes to Brazilian government officials securing lucrative contracts for Braskem with Petrobras, Brazil’s state-owned and controlled oil company.  

Grubisich admitted to falsifying Braskem’s books to conceal the bribery payments by recording them as payments for legitimate services. He also signed false Sarbanes-Oxley certifications with the SEC attesting that Braskem’s annual reports accurately represented its finances and that Grubisich had disclosed all fraudulent conduct by Braskem’s management and other employees.

The investigation into Odebrecht and Braskem began in 2014 as part of the massive and unprecedented criminal investigation by the Federal Police of Brazil, nicknamed “Operation Car Wash,” which sought to uncover widespread corruption and money laundering activities at Petrobras. Over the next few years, the investigations implicated:

  • Administrative members of Petrobras.
  • Politicians from Brazil’s largest parties, including former presidents and state governors.
  • Businessmen from large Brazilian companies, like Grubisich. 

The U.S. Justice Department became involved in the investigation into Odebrecht’s role in the bribery and money laundering scheme because it suspected, and eventually confirmed, that Odebrecht had made its illicit payments from bank accounts in New York City. In Brazil, Operation Car Wash has signaled that corruption will not go unchecked in Latin America. In the U.S., the wide-ranging effects of the investigations and resulting prosecutions, and the effective cooperation between Latin American and U.S. regulators, makes it clearer than ever that U.S. companies doing business in Latin America must ensure that they institute and maintain strong anti-corruption safeguards.  These companies must also be prepared to coordinate with regulators from multiple jurisdictions in the event that they are subject to an investigation.

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