United States: White Collar Roundup - November 2014

Last Updated: November 5 2014
Article by Day Pitney LLP

DOJ's 10 Hallmarks of a Good Compliance Program

In a speech at an ethics and compliance conference in Atlanta, GA, Leslie Caldwell, Assistant Attorney General for the Justice Department's Criminal Division, articulated 10 hallmarks of a good internal compliance program. Although the hallmarks were somewhat predictable (number one is "tone at the top"), Caldwell set forth several examples of actions to avoid (firing low-level employees but not their bosses, who may have directed the conduct) and actions to embrace (assigning responsibility to senior executives for implementing and overseeing a company's compliance program). She also gave suggestions on how a company can cooperate fully with the government, noting, for example, that withholding documents based on a broad reading of foreign data protection laws is likely to prevent full cooperation credit.

More DOJ Thoughts on Compliance

At yet another speech on ethics and compliance, Marshall Miller, Principal Deputy Assistant Attorney General for the Justice Department's Criminal Division, emphasized that a company's "culture of compliance" must extend beyond U.S. borders. Miller cited the cases brought against BNP Paribas, Credit Suisse, HSBC and Standard Chartered, in which foreign bank employees explicitly circumvented U.S.-based compliance policies. In that connection, Miller noted, even when a company has good compliance policies, failing to monitor or test adherence to those policies exposes the company to great risk. Miller also cited the case of Weatherford International, a Swiss oil company listed on the NYSE that pleaded guilty to violations of the FCPA and export control laws. One of the most glaring compliance problems, Miller noted, was Weatherford's failure to translate its compliance policy into languages other than English, despite having subsidiaries and operations in more than 100 countries around the world.

Conviction Based on "Russian Facebook" Page Vacated

On October 3, 2014, the U.S. Court of Appeals for the Second Circuit vacated the conviction of Aliaksandr Zhyltsou on charges of unlawfully transferring a false identification document. At trial, in support of its contention that Zhyltsou used the moniker "Azmadeuz," the government offered into evidence a printed copy of a webpage, which it claimed was Zhyltsou's profile page from VK.com, "the Russian equivalent of Facebook." Zhyltsou objected that the page had not been properly authenticated under Rule 901 of the Federal Rules of Evidence. The district court admitted the document over Zhyltsou's objection. The Second Circuit held that the district court erred because the government had not presented sufficient evidence that Zhyltsou had created the profile page or was responsible for its contents. The Second Circuit noted that the information contained on the profile page was general and known by individuals who may have had reasons to forge the page and attribute it to Zhyltsou, and that there was no evidence that identity verification was necessary to create a page with VK.

Challenges to Constitutionality of SEC ALJ Proceedings

Two lawsuits recently filed in the Southern District of New York argue that SEC administrative proceedings violate Article II of the U.S. Constitution, which provides that the "executive Power shall be vested in a President of the United States of America." In Stillwell v. SEC, the plaintiff argues that SEC Administrative Law Judges (ALJs) are executive branch officers within the meaning of Article II and thus may not be separated from presidential supervision and removal by more than one layer of tenure protection. In violation of that standard, the plaintiff argues, SEC ALJs enjoy two or more layers of tenure protection. In Peixoto v. SEC, the plaintiff makes the same constitutional argument, and further asserts that the SEC sued him administratively because it could not win at a jury trial in light of the weak evidence and novel application of the insider trading laws.

No Harm Required to Prove Honest-Services Fraud

The Seventh Circuit in United States v. Nayak defined the scope of prosecutions for private-sector honest-services fraud. Raghuveer Nayak pleaded guilty to mail fraud for bribing physicians in exchange for referrals to his outpatient surgery centers. In the plea agreement, the government agreed to let Nayak appeal the conviction and argue that "the indictment was legally insufficient because the government did not allege that his conduct caused or was intended to cause tangible harm to any of the referring physicians' patients." The government did not allege that Nayak's scheme resulted in any tangible harm to the patients in the form of either higher costs or inferior care. After noting that honest-services mail fraud focused on "the defendant's benefit" and not the victim's harm, the court rejected Nayak's argument. It held that "actual or intended tangible harm is not an element of the offense of honest-services mail fraud." Therefore, it affirmed.

Reality TV Can Be Taxing

The U.S. Attorney's Office for the District of New Jersey has its hands full with reality TV stars with tax problems. And some are faring better than others - for now. Teresa Giudice, who was a "Real Housewife of New Jersey," lost her bid to convert 12 months of her 15-month sentence for tax evasion from incarceration to home confinement. Meanwhile, Mike "The Situation" Sorrentino, who lived on "Jersey Shore," was released on $250,000 bail in advance of his tax-evasion trial due to begin in December. One thing is clear: If you are paid millions of dollars to be on a reality show, file accurate tax returns.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions