U.S. criminal law has a long reach outside the borders of the United States. Australian companies and individuals whose activities touch on the United States-even without having offices or any physical presence in the United States-have the potential to appear on the radar of U.S. enforcement authorities. As some recent U.S. cases show, U.S. and Australian authorities are both increasingly willing to utilise their shared ability to cooperate in investigations of white collar and corporate crime.
This White Paper examines the treaty framework between Australia and the United States, by which one country can request and obtain evidence for use in a criminal proceeding or seek to extradite a person to stand trial or serve a criminal sentence. The applicable procedures for mutual legal assistance are then examined, including by way of comparison with procedures available to U.S. regulators seeking civil penalties. This is followed by an overview of relevant legal privileges and protections which apply to mutual assistance requests, together with some concluding observations and practical considerations for Australian corporations and their directors and officers.
As detailed in a prior article, U.S. criminal law has a long reach outside the borders of the United States-a result of several factors, including laws that allow for the exercise of criminal jurisdiction based on minimal contacts with the United States, such as use of the U.S. banking system; federal prosecutors who are motivated to use those laws to reach beyond U.S. borders and who are increasingly working in conjunction with authorities in other countries; and federal law enforcement agencies that have the resources to conduct and support international investigations.
Australian companies and individuals whose activities touch on the United States-even without having offices or any physical presence in the United States-have the potential to appear on the radar of U.S. enforcement authorities. While this may be as a target in an investigation or even as a defendant in an active prosecution, it may also be as merely a witness. Through channels of international law enforcement cooperation, U.S. authorities can obtain evidence in Australia through their Australian counterparts by means of the compelled production of documents, compelled testimony or invasive search warrants. Further, U.S. authorities may seek the extradition of Australian nationals or residents to the United States to face prosecution there.
U.S. and Australian authorities are both increasingly willing to utilise their shared ability to cooperate in investigations of white collar and corporate crime. This cooperation has been highlighted in some recent U.S. cases:
- In December 2016, the U.S. Department of Justice ("DOJ") announced a resolution with Redflex Traffic Systems Inc. ("Redflex"), a U.S. automated safety company owned by Redflex Holdings Group of Melbourne, which owns a network of digital speed and red-light cameras worldwide, to record and ticket drivers who run red lights.1 The former CEO of Redflex was convicted, along with a Chicago city official and a lobbyist from Columbus, Ohio, in connection with a probe into bribes paid to elected officials to procure or expand government contracts with Chicago and Columbus. Based on the company's cooperation in these prosecutions, as well as its payment of restitution, the DOJ entered into a nonprosecution agreement with Redflex as part of which "Redflex agreed to cooperate fully with DOJ and any other law enforcement agency designated by DOJ, including the Australian Federal Police and other Australian law enforcement authorities".2
- In January 2020, Australian derivatives trading firm Propex Derivatives Pty Ltd ("Propex") entered into a deferred prosecution agreement with the DOJ to resolve allegations relating to "spoofing", the practice of placing large orders to buy and sell futures contracts with the intent to cancel them before execution, in order to inject misleading liquidity and pricing information into the futures market.3 Propex agreed to pay USD $1 million in criminal penalties, criminal disgorgement and victim compensation, and reached a separate settlement with the U.S. Commodities Futures Trading Commission ("CFTC") in a related proceeding. The DOJ publicly acknowledged assistance from the Australian Attorney-General's Department, the Australian Federal Police ("AFP") and the Australian Securities and Investments Commission ("ASIC").
- In January 2021, the DOJ announced the extradition from Australia of two individuals, an Australian national and a Chinese national, on criminal charges including fraud and identity theft.4 U.S. prosecutors allege that the two individuals conspired with others to generate more than USD $50 million through a scheme to charge hundreds of thousands of mobile phone customers in monthly fees for unsolicited text messages on topics such as horoscopes, celebrity gossip and fun facts. The DOJ publicly acknowledged the assistance of law enforcement partners in Australia, including the International Crime Cooperation Central Authority, the AFP and the New South Wales Police Force.
This increased cooperation should be viewed in the context of an enhanced focus on white collar crime and corporate wrongdoing in Australia in recent years which may increase the frequency of prosecutions. A recent White Paper addressed the Australian Law Reform Commission's Final Report on Corporate Criminal Responsibility which, among other things, recommended an expansion of the scope of corporate criminal responsibility. Similarly, ASIC recently published a new policy which provides immunity to individuals who report involvement in market misconduct, such as insider trading, market manipulation, false trading and market rigging. If such developments lead to an uptick in white collar prosecutions in Australia, we expect that the scope of cooperation between U.S. and Australian authorities will broaden correspondingly.
To read the full article, please click here.
1. See U.S. DOJ Press Release, "Redflex Traffic Systems Enters into Non-Prosecution Agreement with United States" (Dec. 27, 2016), available at https://www.justice.gov/opa/pr/redflex-traffic-systemsenters-non-prosecution-agreement-united-states.
2. Ibid (emphasis added). Specifically, the company is required to provide the Australian Federal Police, and other Australian law enforcement authorities, upon request, all non-privileged information, documents, records, or other tangible evidence.
3. See U.S. DOJ Press Release, "Propex Derivatives Pty Ltd Agrees to Pay $1 Million in Connection with Spoofing Scheme" (Jan. 21, 2020), available at https://www.justice.gov/opa/pr/propex-derivatives-pty-ltd-agrees-pay-1-million-connection-spoofing-scheme.
4. See U.S. DOJ Press Release, "U.S. Attorney Announces Extradition Of Two Defendants In Multimillion-Dollar Text Messaging Consumer Fraud Scheme" (Jan. 26, 2021), available at https:// www.justice.gov/usao-sdny/pr/us-attorney-announces-extraditiontwo-defendants-multimillion-dollar-text-messaging.
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.