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Sarbanes-Oxley Certifications As A Basis For Books And Records Violations

Certification

As highlighted in this prior post, the DOJ recently announced criminal charges against Abraham Cigarroa Cervantes (a Mexican citizen described as a former finance director of the Latin America division of Stericycle).

The alleged conduct was in connection with the same bribery schemes at issue in Stericycle’s 2022 FCPA enforcement action as well as the related 2024 FCPA enforcement action against Mauricio Gomez Baez (a Mexican citizen who was the former Senior Vice President of Stericycle’s Latin American).

As stated in the DOJ release announcing the Cigarroa enforcement action:

“Between 2011 and 2016, Abraham Cigarroa Cervantes, 51, of Mexico, and others allegedly caused hundreds of bribe payments to be made to government officials in Brazil, Mexico, and Argentina to obtain and retain business and to secure improper advantages for Stericycle, a U.S. securities issuer, in connection with providing waste management services. As part of the scheme, employees at Stericycle’s offices in Mexico, Brazil, and Argentina allegedly made bribe payments, typically in cash, and calculated the amount of the bribes as a percentage of underlying contract payments made by or owing from a government customer. In all three countries, Cigarroa and his co-conspirators allegedly tracked the bribe payments through spreadsheets and described the bribes through code words and euphemisms. To conceal the corrupt payments, Cigarroa and others allegedly maintained false books, records, and accounts that did not accurately and fairly reflect the transactions and dispositions of Stericycle’s assets, causing Stericycle to falsely record bribe payments as legitimate expenses in its consolidated books, records, and accounts. Cigarroa also allegedly submitted and maintained falsified Sarbanes-Oxley certifications and business unit representation letters falsely attesting that the books, records, and accounts were accurate.”

Cigarroa was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act’s (FCPA) anti-bribery provisions and one count of conspiracy to violate the FCPA’s books and records provisions.

Regarding the later, the Cigarroa matter is interesting in that the DOJ alleged that an individual’s improper conduct included acts or omissions in connection with certifications relevant to a public company’s books and records. To my knowledge, this is only the fourth instance of such allegations in an FCPA criminal matter.

In pertinent part, the Cigarroa indictment alleges:

“On or about December 31, 2015, Cigarroa signed a quarterly Sarbanes-Oxley certification that falsely stated, in sum and substance, that Cigarroa was not aware of any material event or potential material event – defined to include a “violation or alleged violation of any applicable law or regulation” in the Stericycle LATAM business during the relevant period. This certification failed to disclose, among other things, the bribe payments to various foreign officials in Brazil, Mexico, and Argentina, and the existence of false books, records, and accounts related to the concealment of those payments.

On or about January 11, 2016, Cigarroa emailed Stericycle Vice President of Corporate Finance in Lake Forest, Illinois a quarterly Sarbanes-Oxley certification that Cigarroa had signed that falsely stated, in sum and substance, that he was not aware of any material event or potential material event – defined to include a violation or alleged violation of any applicable law or regulation – in the Stericycle Mexico business for the quarter ending December 31, 2015.

On or about March 31, 2016, Cigarroa signed a quarterly Sarbanes-Oxley certification that falsely stated, in sum and substance, that Cigarroa was not aware of any material event or potential material event- defined to include a “violation or alleged violation of any applicable law or regulation” in the Stericycle LATAM business during the relevant period. This certification failed to disclose, among other things, the bribe payments to various foreign officials in Brazil, Mexico, and Argentina, and the existence of false books, records, and accounts related to the concealment of those payments.

On or about April 5, 2016, Cigarroa, in his capacity as Finance Director, Mexico emailed the Stericycle Director of Corporate Reporting in Lake Forest, Illinois, a quarterly Sarbanes-Oxley certification that Cigarroa had signed that falsely did not disclose any material event or potential material event – defined to include a violation or alleged violation of any applicable law or regulation – in the Stericycle Mexico business for the quarter ending March 31, 2016.

[…]

On or about April 26, 2016, Cigarroa, in his capacity as Financial Controller for Stericycle Mexico, emailed a Stericycle Senior Accountant for Consolidation and Reporting, in Lake Forest, Illinois, a quarterly Business Unit Representation that Cigarroa had signed that falsely stated that he had “no knowledge of actual or suspected fraud, bribery, or corrupt payments affecting the business Unit” for the quarter ending March 31, 2016.”

The Cigarroa matter also seemingly presents an interesting statute of limitations issue in that the most “recent’ conduct in the 2024 indictment is from 2016. Unless of course 18 USC 3292 is relevant.

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