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Business Crimes Hotline
CALIFORNIA
Control Components Pleads Guilty to FCPA Charges
Rancho Santa Margarita-based Control Components, Inc. (“CCI”) pleaded guilty to three counts of violating the Foreign Corrupt Practices Act (“FCPA”) and Travel Act. CCI designs and sells severe service control valves used by the power, oil and gas, and pulp and paper industries. It is owned by IMI plc, based in the United Kingdom.
The charges arose from an alleged scheme to bribe foreign officials and private individuals ' lasting from 1998 to 2007 ' in 36 countries, including China, Korea, Malaysia, and the United Arab Emirates. From 2003 to 2007, the company paid approximately $4.9 million in bribes to foreign officials and $1.95 million in bribes to officers and employees of private entities over approximately 236 payments netting the company $46.5 million in sales.
As a result of its plea, CCI will pay an $18.2 million criminal fine, implement an anti-bribery compliance program and appoint a three-year independent compliance monitor, and cooperate with the DOJ's ongoing investigation. The company will also be on probation for three years.
Related individual prosecutions have already been active. In April 2009, six former executives were charged with violations of the FCPA, the Travel Act, and other statutes. Their trial is currently scheduled for Dec. 8, 2009. Prior to that, two former executives ' Mark Covino (former director of worldwide factory sales) and Richard Morlock (former finance director) pleaded guilty to conspiring to bribe foreign officials. Both are scheduled to be sentenced on Jan. 25, 2010.
FLORIDA
U.S. and UBS Reach Agreement Regarding Swiss Accounts
The United States and UBS have reached an agreement in the government's effort to obtain the names of approximately 52,000 U.S. taxpayers it suspects of hiding money in UBS's Swiss accounts.
In February 2009, UBS, as part of a deferred prosecution agreement, admitted to helping clients hide money from U.S. authorities, and agreed to pay $780 million in fines. The U.S. government then filed a civil suit to seek the disclosure of the account holders. Authorities believe that there may be up to $15 billion in secret accounts. Although UBS initially said it would reveal information about the alleged tax cheats, the Swiss government objected based on Swiss confidentiality laws.
The judge had been prepared to set a trial date as early as this month, although the agreement avoids a trial. The details of the agreement should be released in the coming weeks.
In addition, Bradley Birkenfeld, a UBS banker, pleaded guilty to assisting Americans to evade taxes. He has been cooperating with prosecutors. Raoul Weil, another banker, was indicted and is a fugitive. As part of an ongoing program, a number of account holders have already come forward to disclose their off-shore accounts to the IRS in exchange for reduced penalties. Three UBS clients have pleaded guilty.
NEW YORK
Former Madoff Investment CFO Pleads Guilty
Frank DiPascali, the former CFO of Bernard L. Madoff Investment Securities, pleaded guilty to 10 counts of fraud, money laundering, and other charges.
At his hearing, Mr. DiPascali explained additional details of the long-running Ponzi scheme headed by Mr. Madoff, including the creation of false account statements, trading slips, and fraudulent money transfers. He explained that the company even had a random number generator to assign times and amounts to the fake trade records in order to avoid detection.
As a result of the plea, Mr. DiPascali faces up to 125 years in jail. Despite the request of prosecutors, Judge Richard Sullivan refused to release Mr. DiPascali on bail, citing concern that he would not show up for sentencing.
At the same time, the SEC filed a civil suit against Mr. DiPascali. He has agreed to cooperate. Mr. Madoff was sentenced to 150 years in prison in June 2009. Mr. Madoff's accountant has also been charged with securities fraud but has pleaded not guilty.
Business Crimes Hotline was written by Associate Editor Kenneth S. Clark, an associate at Kirkland & Ellis LLP, Washington, DC.
CALIFORNIA
Control Components Pleads Guilty to FCPA Charges
Rancho Santa Margarita-based Control Components, Inc. (“CCI”) pleaded guilty to three counts of violating the Foreign Corrupt Practices Act (“FCPA”) and Travel Act. CCI designs and sells severe service control valves used by the power, oil and gas, and pulp and paper industries. It is owned by IMI plc, based in the United Kingdom.
The charges arose from an alleged scheme to bribe foreign officials and private individuals ' lasting from 1998 to 2007 ' in 36 countries, including China, Korea, Malaysia, and the United Arab Emirates. From 2003 to 2007, the company paid approximately $4.9 million in bribes to foreign officials and $1.95 million in bribes to officers and employees of private entities over approximately 236 payments netting the company $46.5 million in sales.
As a result of its plea, CCI will pay an $18.2 million criminal fine, implement an anti-bribery compliance program and appoint a three-year independent compliance monitor, and cooperate with the DOJ's ongoing investigation. The company will also be on probation for three years.
Related individual prosecutions have already been active. In April 2009, six former executives were charged with violations of the FCPA, the Travel Act, and other statutes. Their trial is currently scheduled for Dec. 8, 2009. Prior to that, two former executives ' Mark Covino (former director of worldwide factory sales) and Richard Morlock (former finance director) pleaded guilty to conspiring to bribe foreign officials. Both are scheduled to be sentenced on Jan. 25, 2010.
FLORIDA
U.S. and UBS Reach Agreement Regarding Swiss Accounts
The United States and UBS have reached an agreement in the government's effort to obtain the names of approximately 52,000 U.S. taxpayers it suspects of hiding money in UBS's Swiss accounts.
In February 2009, UBS, as part of a deferred prosecution agreement, admitted to helping clients hide money from U.S. authorities, and agreed to pay $780 million in fines. The U.S. government then filed a civil suit to seek the disclosure of the account holders. Authorities believe that there may be up to $15 billion in secret accounts. Although UBS initially said it would reveal information about the alleged tax cheats, the Swiss government objected based on Swiss confidentiality laws.
The judge had been prepared to set a trial date as early as this month, although the agreement avoids a trial. The details of the agreement should be released in the coming weeks.
In addition, Bradley Birkenfeld, a UBS banker, pleaded guilty to assisting Americans to evade taxes. He has been cooperating with prosecutors. Raoul Weil, another banker, was indicted and is a fugitive. As part of an ongoing program, a number of account holders have already come forward to disclose their off-shore accounts to the IRS in exchange for reduced penalties. Three UBS clients have pleaded guilty.
Former Madoff Investment CFO Pleads Guilty
Frank DiPascali, the former CFO of Bernard L. Madoff Investment Securities, pleaded guilty to 10 counts of fraud, money laundering, and other charges.
At his hearing, Mr. DiPascali explained additional details of the long-running Ponzi scheme headed by Mr. Madoff, including the creation of false account statements, trading slips, and fraudulent money transfers. He explained that the company even had a random number generator to assign times and amounts to the fake trade records in order to avoid detection.
As a result of the plea, Mr. DiPascali faces up to 125 years in jail. Despite the request of prosecutors, Judge Richard Sullivan refused to release Mr. DiPascali on bail, citing concern that he would not show up for sentencing.
At the same time, the SEC filed a civil suit against Mr. DiPascali. He has agreed to cooperate. Mr. Madoff was sentenced to 150 years in prison in June 2009. Mr. Madoff's accountant has also been charged with securities fraud but has pleaded not guilty.
Business Crimes Hotline was written by Associate Editor Kenneth S. Clark, an associate at
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