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Friday Roundup

A focus on asset recovery, a substantial upgrade to the DOJ’s FCPA website, might Comverse Technologies face a double prosecution, Cosgrove is sentenced to home confinement, and on-point.  It’s all here in the Friday roundup.

Asset Recovery

The Arab Forum of Asset Recovery (here) took place earlier this week in Doha, Qatar.  President Obama delivered this recorded message.  Attorney General Eric Holder delivered this speech at the event and stated as follows.  “Corruption has long been recognized as a transnational problem that demands a coordinated, global response.  Time and again, we’ve seen its destructive, corrosive effects – hindering development, impeding advancement, and siphoning precious resources away from those in need at a time when they could hardly be more scarce – and when the world economy could hardly be more vulnerable.  We’ve come to understand its impact in eroding trust, favoring the interests of a dishonest few over the needs of the hardworking many, and even breeding contempt for the rule of law.”  In his speech, Holder provided some highlights of the DOJ’s Kleptocracy Asset Recovery Initiative as well as outlined a U.S. committment to additional resources including two additional Justice Department attorneys to work exclusively on asset recovery and mutual legal assistance issues.

During this speech Holder further stated as follows.  “As Attorney General, I’ve consistently worked to ensure that anticorruption remains a top priority for my colleagues at every level of the Justice Department.  From our robust enforcement of the Foreign Corrupt Practices Act – an important law under which we have secured more than 30 individual convictions and over 40 corporate resolutions, totaling more than $2.1 billion in penalties, over the last three years alone; to the anticorruption work of our prosecutors stationed both in the United States and overseas – I’m proud to report that we’ve made great strides in our fight against corruption, within – as well as beyond – our borders.”

DOJ FCPA Website

As previously reported by the on-line news site Main Justice (here), the DOJ recently upgraded its FCPA website.  Of particular note from a research perspective, the DOJ’s list of enforcement actions now appears to be complete – see here.  A link to the DOJ’s FCPA website, as well as numerous other resources, is included on the resources page of this website – here.

Comverse Technology

As noted in this previous post, in 2011 Comverse Technology resolved a DOJ and SEC enforcement action by agreeing to pay $2.8 million (a $1.2 million criminal fine via a DOJ non prosecution agreement; $1.6 million in disgorgement and prejudgment interest via a SEC settled complaint).

The resolution documents contained the standard template clauses.

The two-year NPA (here) stated that for the term of the agreement, Comverse shall “commit no crimes whatsover” and that if the “Department in its sole discretion determines that Comverse has committed any crime after signing this Agreement” that Comverse “shall thereafter be subject to prosecution for any violation of federal law of which the Department has knowledge  …”.

The SEC release (here) noted that Comverse consented to a “conduct-based injunction that prohibits Comverse from having books and records that do not accurately reflect, or from having internal controls that do not prevent or detect, any illegal payments made to obtain or retain business.”

Last week in an SEC filing (here) Comverse (CTI) disclosed as follows, after describing its 2011 resolution action and compliance obligations.

“CTI had implemented safeguards in an effort to eliminate improper practices by our employees, consultants, external sales agents and resellers. These safeguards, however, have proven to be ineffective in some instances. In response to the findings of the CTI Audit Committee’s internal investigation, CTI identified a material weakness in our anti-fraud program controls, including those relating to the FCPA, and as part of its remediation our safeguards were modified. However, these modified safeguards, the implementation of these remedial measures and any future improvements may prove to be less than effective, and our employees, consultants, external sales agents or distributors may engage in the future in conduct for which we might be held responsible. Violations of the FCPA and other laws of the United States and other countries may result in significant civil and/or criminal penalties and other sanctions, which could have a material adverse effect on our business, financial condition and results of operations.”

One can look at Comverse’s recent disclosure in two ways.  That the company does not have a committment to FCPA compliance and has not taken its post-enforcement action compliance obligations seriously.  The other is that even a company under the threat of double prosecution (the first being for conduct at issue in the NPA, the second being the post-enforcement action conduct) can not, despite presumed good faith best efforts, guarantee FCPA compliance across its vast business organization and can not ensure that its numerous employees, consultants, external sales agents and resellers will not engage in problematic conduct.

Cosgrove Sentence

As noted in this previous post, in May Paul Cosgrove (one of the defendants in the so-called Carson case involving former employees of Control Components Inc.) pleaded guilty to a one-count superseding information charging him with making a “corrupt payment to a foreign government official in China in violation of the FCPA.”  As noted in the prior post and as detailed in the plea agreement, Cosgrove suffers from significant health issues.  The DOJ stated, in its sentencing memo (here) as follows.  “Absent defendant’s health condition, the government would recommend a term of incarceration of 15 months. However, to the extent the Court believes that defendant’s health condition warrants a non-incarceratory sentence, the government recommends that the term of home confinement be 15 months.”

As noted in this article from the Orange County Register, yesterday U.S. District Court Judge James Selna sentenced Cosgrove to 13 months home confinement.


Russell Ryan (a former assistant director of the SEC’s division of enforcement and currently with King & Spalding – here) had a dandy op-ed (here) recently in the Wall Street Journal concerning the SEC seeking to punish, not just conduct, but an individual being  “unrepentant” and “impenitent.”  Ryan’s piece reminded me of this prior post in which the DOJ criticized an FCPA corporate defendant for not cooperating “based on jurisdictional issues.”  Once again, do the enforcement agencies expect defendants to roll over and play dead?


A good weekend to all.

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