Fall.  The colors are changing and the apples are crisp.

This month’s FCPA Professor Apple Award goes to … U.S. District Court Judge Richard Sullivan (S.D.N.Y.).

According to a recent Law360 article (“Judge Mocks US Attorney Bharara’s Press Release”), at a recent Practising Law Institute conference Judge Sullivan “ridiculed” this press release put out by the office of Manhattan U.S. Attorney Preet Bharara in a public corruption case “calling into question the prosecutorial practice of issuing purportedly sensationalist statements about charges prior to a conviction.”  According to the article, Judge Sullivan “derided a supposedly over-the-top statement issued by Bharara’s office announcing bribery and fraud charges against New York State Sen. Malcolm Smith and New York City Council Member Daniel Halloran.”  The article states as follows.

“In the midst of a discussion on the pros and cons of bringing corruption cases during an election cycle, Judge Sullivan produced a copy of the April press release, and to the scattered laughter of attendees, proceeded to read aloud Bharara’s quote verbatim.  ‘Today’s charges demonstrate, once again, that a show-me-the-money culture seems to pervade every level of New York government. The complaint describes an unappetizing smorgasbord of graft and greed involving six officials who together built a corridor of corruption stretching from Queens and the Bronx to Rockland County and all the way up to Albany itself,’ the judge restated in a mocking tone.  ‘That sounds like the theme from Mighty Mouse,’ he said, noting the release is five pages long with five different press contacts listed for reporters. […] ‘This seems to be designed for tabloid consumption,’ Judge Sullivan said, adding, ‘there should be a question asked that is that appropriate at the preconviction stage.'”

According to the Law360 article, “fellow panel member and deputy U.S. Attorney for the Southern District of New York Richard B. Zabel defended the practice, saying under U.S. Department of Justice guidance, part of the reason to have a press conference or release is to explain to the public what is going on.  ‘The purpose of a quote is to be quoted and draw attention to the case,’ Zabel said. “Laypeople can’t read a complaint.”

The irony of Zabel’s quote of course is that “laypeople” on the grand jury issued the charging document and “laypeople” sit in judgment of the defendants and ultimately determine whether the DOJ has proved the elements of the offense set forth in the charging document.

Back to Judge Sullivan’s comments.

If he was agitated by the DOJ’s statements in the above case, he would have had a field day with the DOJ and FBI’s press releases and statements in connection with the Africa Sting case.  In connection with the case, the FBI issued this release stating that “the ruse played out with all the intrigue of a spy novel.”   In a sophomoric statement, the Assistant Attorney General stated “this is one case where what happened in Vegas doesn’t stay in Vegas.’’

Indeed, Judge Richard Leon commented on the general issue when dismissing the Africa Sting cases.  As noted in this prior post, Judge Leon stated:

“This appears to be the end of a long and sad chapter in the annals of white collar criminal enforcement.  Unlike takedown day in Las Vegas, however, there will be no front page story in the New York Times or the Post for that matter tomorrow reflecting the government’s decision today to move to dismiss the charges against the remaining defendants in this case.  Funny isn’t it what sells newspapers.”

For a prior post highlighting how the DOJ often issues press releases when charging defendants, but often goes silent when those charges result in acquittals or dismissals, see here.

[The FCPA Apple Award recognizes informed, candid, and fresh thought-leadership on the Foreign Corrupt Practices Act or related topics.  There is  no prize, medal or plaque awarded to the FCPA Professor Apple Award recipient.  Just recognition by a leading FCPA website visited by a diverse group of readers around the world. There is no nomination procedure for the Apple Award.  If you  are writing something informed, candid and fresh about the FCPA or related topics, chances are high that I will find your work during my daily searches for FCPA content.]

This month’s FCPA Professor Apple Award goes to …

Pamela Marple (Chadbourne & Park).  In The FCPA A New Bear in the Woods? Marple writes:

“Is this statute really the bear in the woods some say it is? Those answering yes may guide expansion away from foreign markets, reduce investments in regions at risk or refrain from opportunities fearing they cannot compete. This is understandable. The FCPA certainly poses a triple whammy: draconian government enforcement, higher internal compliance costs and reduced ability to control practices in unfamiliar cultures.

The reality, however, might be different. It could be that the FCPA is not a particularly formidable risk management task when compared to others faced by companies over the years. And the solution seems to be the same: the exercise of good judgment and the oversight of competent management. Indeed, the FCPA stories that strike fear into business leaders are those borne out of corporate governance issues. The FCPA stories that are akin to bumps in the road, on the other hand, are those where a rogue employee or division is corrected within a reasonable time frame. This makes sense, because the FCPA does not require a company to know what every person around the globe is up to, and it does not require certification that every fee is not a prohibited payment.

The unsurprising conclusion is that if directors and management use good judgment to establish reasonable internal communications and systems, the FCPA woods should be mostly clear.

[…]

The existence of the FCPA industry (and professionals who are available to conduct internal investigations at a high price) does not mean that this reaction is what is always required. What is required first and foremost is reasonable judgment exercised by directors and professionals who seek both compliance and solutions—without assuming a bear is present at every turn.”

[The FCPA Apple Award recognizes informed, candid, and fresh thought-leadership on Foreign Corrupt Practices Act or related topics.  There is no prize, medal or plaque awarded to the FCPA Professor Apple Award recipient. Just recognition by a leading FCPA website visited by a diverse group of readers around the world. There is no nomination procedure for the Apple Award.  If you are writing something informed, candid and fresh about the FCPA or related topics, chances are high that I will find your work during my daily searches for FCPA content.]

I am pleased to introduce a new monthly feature to FCPA Professor – the FCPA Professor Apple Award.

The Apple Award recognizes informed, candid, and fresh thought-leadership on Foreign Corrupt Practices Act or related topics.

There is no prize, medal or plaque awarded to the FCPA Professor Apple Award recipient.

Just recognition by a leading FCPA website visited by a diverse group of readers around the world.

There is no nomination procedure for the Apple Award.  If you are writing something informed, candid and fresh about the FCPA or related topics, chances are high that I will find your work during my daily searches for FCPA content.

The inaugural FCPA Professor Apple Award goes to ….

Philip Urofsky of Shearman & Sterling.  In this article recently published in Bloomberg BNA’s Securities Regulation and Law Report, Urofsky (the former Assistant Chief of the DOJ Fraud Section) asked, in connection with the recent Ralph Lauren enforcement action, “are there any limits to parent corporation liability?”

In the article, Urofsky stated, in pertinent part, as follows.

“The facts of the case … point to the steady entrenchment of a more ominous prosecution theory:  an approach that appears to approximate strict criminal and civil liability of parent corporations for their subsidiaries’ corrupt acts.  Although this disregard of corporate structures has been hinted at in previous SEC matters – and the theoretical underpinnings discussed in last year’s DOJ/SEC Resource Guide – the RLC case puts both agencies firmly in the camp of this aggressive and unprecedented expansion of corporate liability.”

“This approach, however, fails to honor the corporate form and the black-letter rule that to ‘pierce the corporate veil’ the government and other litigants must show that the parent operated the subsidiary as an alter ego, and itself paid no attention to the corporate form.  Moreover, it is contrary to the language of the [FCPA’s] original history.”

In conclusion, Urofsky stated as follows.

“It is disquieting [that in the RLC case] the DOJ appears to have jumped on the charge-the-parent bandwagon, bringing a bribery case against a parent without alleging any involvement by the parent in those violations.  One can only speculate that it did so because it had no jurisdiction over the foreign subsidiary itself, given that it also did not allege any act by the subsidiary in U.S. territory.  However, as always, the maxim that bad facts make bad law applies, and evidentiary weaknesses cannot excuse the distortion of the statute’s previously clear and reasonable allocation of responsibility.”