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.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
Daniel E. Wenner
Dennis T. Kearney
Steven A. Cash
 
In association with
Related Topics
 
Related Articles
 
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
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.

Disclaimer

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.

General

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