United States: White Collar Roundup - April 2017

U.S. Department of Justice Extends Its FCPA "Pilot Program"

The U.S. Department of Justice (DOJ) launched the so-called Pilot Program in April 2016 to "promote greater accountability for individuals and companies that engage in corporate crime by motivating companies to voluntarily self-disclose [Foreign Corrupt Practices Act]-related misconduct, fully cooperate..., and, where appropriate, remediate flaws in their controls and compliance programs." To review the original announcement and documents, click here. Following the resolution of several FCPA investigations pursuant to the Pilot Program in 2016, the program was due to expire on April 5. But Acting Assistant Attorney General Kenneth A. Blanco announced during a speech at the American Bar Association's National Institute on White Collar Crime that the DOJ would continue with the Pilot Program for the time being. He said that when the Pilot Program expires, DOJ will review its "utility and efficacy" to determine "whether to extend it, and what revisions, if any, [DOJ] should make to it." He also said, "The program will continue in full force until we reach a final decision on those issues." To read about Blanco's announcement, click here.

DOJ Persists – And So Far Prevails – in Two New Warrant Applications for Users' Content Stored Abroad

The government's clash with providers of electronic communication services continues, with the government seeming to have the upper hand in the newest skirmishes. In criminal investigations, the government has long invoked the Stored Communications Act (SCA) to obtain search warrants requiring the providers to disclose e-mail and other content that they've stored abroad. But in July 2016, a Second Circuit panel ruled in favor of Microsoft, holding it unreasonable to construe that the SCA supplies extraterritorial authority when it contains no express provisions on that score. Moreover, as we reported here, an evenly split en banc panel denied the government's petition for rehearing, with four judges sharply dissenting. In the meantime, however, two courts elsewhere have preliminarily adopted the dissenters' views. In In re Search Warrant No. 16-1061-M to Google, venued in the Eastern District of Pennsylvania, Google is trying to persuade a district judge to overturn Magistrate Judge Thomas J. Rueter's February order compelling disclosure of content wherever stored, including overseas. In that order, echoing the Second Circuit dissenters, Magistrate Judge Rueter held that a warrant that requires a provider from within the United States to search for and copy content stored abroad does not involve an extraterritorial search or seizure. Accordingly, no additional authority is required under the SCA or other statute. In the alternative, Magistrate Judge Rueter held that it would be unreasonable to construe the SCA to lack extraterritorial reach. He reasoned that because Google's algorithms unpredictably shift data storage from country to country, the retrieval of data by requests to the host country by multilateral legal assistance treaty would be impossible. In another ongoing case, In re: Two email accounts stored at Google, Inc., No. 17-M-01235, venued in the Eastern District of Wisconsin, Google has moved to amend the search warrant to delete the requirement to produce content stored overseas. In his order resolving the motion, Magistrate Judge William E. Duffin squarely endorsed the view of the four Second Circuit dissenters who had favored en banc review: "Provided the service provider is within the reach of the court, the court may lawfully order that service provider to disclose data in the provider's custody or control, without regard of where [sic] the provider might choose to store the ones and zeros that comprise the relevant data."

Cybersecurity Disclosure Might Become Law

Senators Jack Reed (D-RI), Susan Collins (R-ME), and Mark Warner (D-VA) introduced Senate Bill 536, titled the "Cybersecurity Disclosure Act of 2017." The bill is designed "to promote transparency in the oversight of cybersecurity risks at publicly traded companies." It requires that the Securities and Exchange Commission (SEC) issue rules within a year that require registrants "to disclose whether any member of the governing body, such as the board of directors or general partner, of the reporting company has expertise or experience in cybersecurity" with details of that experience. If any registrant has no such expertise or experience, it must "describe what other cybersecurity steps taken by the reporting company were taken into account" by those responsible for identifying and evaluating nominees for the company's governing body. The bill further directs the SEC to consult with the National Institute of Standards and Technology (NIST) to "define what constitutes expertise or experience in cybersecurity." Specifically, the focus should be on "professional qualifications to administer information security program functions or experience detecting, preventing, mitigating or addressing cybersecurity threats," consistent with NIST Special Publication 800–181.

Muni-Bonds: A $3.7 Trillion Industry Ripe for Criminal Prosecution

Before leaving office, Southern District of New York U.S. Attorney Preet Bharara announced the guilty plea of N. Aaron Troodler, former executive director of the Ramapo Local Development Corporation (RLDC). Bharara asserted that Troodler "defrauded both the citizens of Ramapo and thousands of investors around the country, helping to sell over $150 million of municipal bonds on fabricated financials." Troodler pleaded guilty and admitted to committing securities fraud. Bharara continued, "This guilty plea, in what we believe to be the first municipal bond-related criminal securities fraud prosecution, is a big step in policing and bringing accountability to the $3.7 trillion municipal bond market." The information alleged that Troodler and others misrepresented the finances of the Town of Ramapo, "in order to conceal the deteriorating state of the Town's finances and the inability of the RLDC to make scheduled payments of principal and interest to the holders of its bonds from its own money." Troodler agreed that he lied to investors by "making up" false assets in the Town's general fund, which is its primary operating fund. He also lied to the "RLDC's bond rating service" and inflated the general fund with a "fake receivable." Troodler's sentencing is scheduled for September 18.

Prominent Twitter Accounts Hacked to Spread Hate Speech

Twitter accounts for several individuals as well as various organizations, such as Forbes, Amnesty International, and BBC News, recently began tweeting swastikas and other Nazi-related messages. According to this article, the hacking is thought to be related to Turkey's diplomatic spat with the Netherlands and Germany. [The various victims re-gained control of their accounts, but it appears the accounts were compromised by an attack on the third-party service, Twitter Counter. Both Twitter Counter and Twitter are investigating the matter. Cybersecurity experts urge users of Twitter to review their passwords and the permissions granted to third-party apps and services to help limit the risk of future compromises. To read more, click here and here.

Convicted Congressman Charges Government with Hiding Evidence

Former Arizona Congressman Rick Renzi argued for a new trial before the U.S. Court of Appeals for the Ninth Circuit. His claim? That he only recently learned that the Federal Bureau of Investigation (FBI) had promised to pay the government's cooperating witness $25,000 for his cooperation. At Renzi's trial, investor Philip Aries testified about his involvement with Renzi in a land deal, which the government claimed was part of Renzi's scheme to use his office to enrich himself. Renzi argued that the government had an obligation to disclose the compensation and that its failure to do so justifies a new trial. Renzi claims the government invoked Aries' testimony 90 times during its closing and asserted that Aries hadn't received "one thin dime" for his cooperation. But it turns out that weeks before Renzi's cert. petition to the Supreme Court was denied, Aries e-mailed the lead prosecutor to obtain his $25,000 payment for his testimony. Upon receiving this e-mail, the prosecutor notified the defendant. Renzi's attorney argued to the Ninth Circuit, "Had Mr. Aries sent the same email to the prosecutor after the decision, the government presumably would have paid him his reward by now, as the agents had planned all along, and the defense never would have known a thing, which is what the government had intended. We never would have known that in November 2006 the FBI coaxed Mr. Aries into continuing to cooperate by ... telling him that recording calls was exactly the sort of thing that the FBI rewarded. We never would have known that the lead AUSA reviewed admonishments just before trial, forms that the district court found clearly contemplated payments to witnesses, and decided not to give them to defense." Unsurprisingly, the government disagreed and minimized the importance of Aries' testimony at the trial. To watch a video of the argument, click here.</<p>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.

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.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.