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In An Unusual Development, The DOJ Brings A $7 Million FCPA Enforcement Action Against Las Vegas Sands Nine Months After The SEC’s $9 Million Enforcement Action Based On The Same Conduct

LVS

Parallel DOJ and SEC Foreign Corrupt Practices Act enforcement actions against issuers based on the same core conduct are common. However, such actions are coordinated and announced on the same day.

In a highly unusual development, late yesterday the DOJ announced an FCPA action against Las Vegas based on the same core conduct at issue in the SEC’s April 2016 FCPA enforcement action against Las Vegas Sands. (See here and here prior posts).

Quite frankly, I can’t recall another instance of this happening.

But then again some strange things are happening in the final weeks and days of the Obama administration before existing DOJ officials exit. (See this Wall Street Journal article titled “Obama Administration Races To Finish Probes, Wring Payments From Firms” noting that in the past approximate week the U.S. has reached settlements worth approximately $20 billion).

Adding to the intrigue is that Sheldon Adelson (founder, chairman and chief executive officer of Las Vegas Sands) is a major Republican contributor.

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FCPA Flash – A Conversation With Thomas Gorman

FCPA Flash

The FCPA Flash podcast provides in an audio format the same fresh, candid, and informed commentary about the Foreign Corrupt Practices Act and related topics as readers have come to expect from the written posts on FCPA Professor.

This FCPA Flash episode is a conversation with Thomas Gorman, a lawyer with Dorsey & Whitney. Prior to private practice, Gorman spent several years at the SEC including as Senior Counsel in the SEC’s Division of Enforcement. Gorman focuses his practice on SEC and related public company issues including those arising under the Foreign Corrupt Practices Act. In addition, Gorman founded and runs the informative SEC Actions blog.

In the episode, Gorman talks about the FCPA’s books and records and internal controls provisions using the recent Las Vegas Sands enforcement action as a guide (see prior posts here and here). In addition, Gorman responds to the following questions: whether the books and records and internal controls provisions are essentially standardless and whether the SEC, with the perfect benefit of hindsight, advances expansive theories of liability; and whether with ever-expanding theories of enforcement, the time has come for an issuer to put the SEC to its burden of proof in an FCPA enforcement action.

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Friday Roundup

Roundup

New DOJ FCPA Unit Chief, “noisy exit” lawsuit settled, an Uber instrumentality?, and for the reading stack.

It’s all here in the Friday roundup.

DOJ FCPA Unit Chief

According to this report:  “The U.S. Justice Department has named Daniel S. Kahn to lead the government’s Foreign Corrupt Practices Act unit … Mr. Kahn has led the Justice Department’s anti-bribery unit since March on a temporary basis, taking over from Patrick Stokes. Mr. Stokes was made senior deputy chief in the Fraud Section.”

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Issues To Consider From The Las Vegas Sands Enforcement Action

Issues

This recent post went in-depth into the recent $9 million Foreign Corrupt Practices Act books and records and internal controls enforcement action against Las Vegas Sands (LVS).

This post continues the analysis by highlighting various issues to consider.

Is Your Company In Violation of the Books and Records and Internal Controls Provisions?

LVS is not a “normal” company in that its Chairman and CEO Sheldon Adelson (or his family) own a majority of company shares.

Moreover, Adelson is very active in his support of Republican candidates and causes, an issue that has been well-documented. (See here for instance). As a result, some have suggested that LVS was targeted by the Democratic administration.

I have no insight or opinion about this.

But I will say the following.

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Whistled For A Foul: Las Vegas Sands Agrees To Pay $9 Million To Resolve Books And Records And Internal Controls Action

CBA

The Foreign Corrupt Practices Act has always been a law much broader than its name suggests.

In addition to anti-bribery provisions, the FCPA also contains more generic books and records and internal controls provisions. While there are a few sentences in this 15 page administrative order released yesterday against Las Vegas Sands (LVS) that touch upon issues relevant to the anti-bribery provisions, the enforcement action was on balance a pure books and records and internal controls action.

Among other things, the SEC found that LVS lacked supporting documentation or appropriate authorization concerning the company’s involvement with a Chinese basketball team, the purchase of a building, a high-speed ferry service, and other aspects of its casino business in Macau.

The substance of yesterday’s enforcement action has been in the public domain for years. (See this 2012 New York Times article and this 2012 Wall Street Journal article). Indeed, FCPA Professor has been following LVS’s scrutiny since November 2010 upon the “noisy exist” of Steven Jacobs (the former President of Macau Operations) from the company. (See here for the original post).

In summary fashion, the order states:

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