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SEC Obtains $550,092 Default Judgement Against Li

By on July 6, 2022 in Herbalife, SEC Enforcement Action, Yanliang Li
Judicial Decision

In November 2019, the DOJ announced that Yanliang Li (a citizen of China and former Managing Director of a Chinese division of Herbalife) and Hongwei Yang (a citizen of China and former head the External Affairs Department of a Chinese division of Herbalife) were criminally charged “for their roles in a scheme to violate the anti-bribery and the internal controls provisions of the FCPA.” Li was charged with one count of conspiring to violate the FCPA, one count of perjury and one count of destruction of records in a federal investigation. Yang was charged with conspiracy to violate the FCPA.

In addition, the SEC charged Li with violating the FCPA’s anti-bribery provisions and aiding and abetting books and records and internal controls violations.

Recently, Judge J. Paul Oetken (S.D.N.Y.) granted the SEC’s motion for a $550,092 default judgment against Li.

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In The Herbalife Enforcement Action, The Government Failed To Present The “Complete Picture” Regarding The Company’s Internal Audit Function

By on September 9, 2020 in Herbalife, Internal Audit Issues, Internal Controls
incomplete3

When the government charges individuals with Foreign Corrupt Practices Act violations and then subsequently charges a business organization with FCPA violations based on the same core allegations one might expect the allegations to be consistent.

However, as highlighted below in connection with the DOJ/SEC’s individual enforcement action against former Herbalife China executives (see here for the prior post) and its subsequent enforcement against Herbalife (see here and here for prior posts), in the later enforcement action the government failed to present the “complete picture” regarding the company’s internal audit function (a key portion of the internal controls allegations against the company).

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Employee Reimbursements Gone Wild

By on September 8, 2020 in Employee Reimbursements, Herbalife
receipts

Numerous Foreign Corrupt Practices Act enforcement actions (Bristol Myers, Eli Lilly, PTC, FLIR Sytems, Sanofi, Novartis, and Avon to name a few) have involved abuse of employee reimbursements.

The most recent example involved the Herbalife enforcement action (see here and here for prior posts) which largely focused on former Herbalife China executives Yanliang Li (a citizen of China and former Managing Director of a Chinese division of Herbalife) and Hongwei Yang (a citizen of China and former head the External Affairs Department of a Chinese division of Herbalife).

As discussed below, the abuse of employee reimbursements in the Herbalife matter is in a league of its own and represents employee reimbursements gone wild as the culpable employees allegedly entertained thousands of Chinese officials including expensive meals, alcohol, karaoke, and luxury gifts and also involved a purported purchase of hundreds of pounds of fruits and vegetables. Further, the government alleged that the culpable employees discussed using fake meal invoices or fake gift invoices to avoid internal audit oversight

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Next Up For Herbalife – The Plaintiffs’ Lawyers

By on September 4, 2020 in Herbalife, Related Civil Litigation
Greedy Lawyers

It is as predictable as the sun rising in the east and dogs barking.

In the aftermath of a Foreign Corrupt Practices Act enforcement action (or mere instances of FCPA scrutiny), plaintiffs’ lawyers representing shareholders on a contingent fee basis announce “investigations” or file securities fraud claims against the company and/or certain officers or directors. Such FCPA-related claims are frequently dismissed, but the “investigations” continue and claims continue to be filed.

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Issues To Consider From The Herbalife Enforcement Action

By on September 1, 2020 in Disgorgement, Gray Cloud, Herbalife, Internal Controls, Root Causes
Issues

This prior post went in-depth into the recent $123 million Foreign Corrupt Practices Act enforcement action against Herbalife and this post highlights additional issues to consider.

Timeline

As highlighted in this post, Herbalife disclosed its FCPA scrutiny in early 2017.  Thus, from start to finish, its scrutiny lasted more than 3.5 years. I’ve said it many times, and will continue saying it until the cows come home, if the DOJ/SEC wants their FCPA enforcement programs to be viewed as credible and effective they must resolve instances of FCPA scrutiny much quicker.

This is particularly true in the Herbalife matter given that the conduct focused on a single country as well as the following language from the enforcement agencies.

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